EX-99.1 2 a4934692ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 UnionBanCal Reports 13% Increase in Second Quarter Operating EPS SAN FRANCISCO--(BUSINESS WIRE)--July 20, 2005--UnionBanCal Corporation (NYSE:UB) today reported second quarter 2005 net income of $187 million, or $1.27 per diluted common share. The Company reported net income of $231 million, or $1.54 per diluted common share, in the second quarter of 2004, including non-recurring after-tax gains of $58 million, or $0.38 per diluted common share, on the sale of its merchant card portfolio and $5 million, or $0.04 per diluted common share, on the sale of real property. On an operating earnings basis (which excludes the non-recurring gains in second quarter 2004), second quarter 2005 earnings increased 11.0 percent and earnings per diluted common share increased 13.4 percent. For the first half of 2005, net income was $369 million, up 13.2 percent from operating earnings of $326 million in the first half of 2004. First half earnings per diluted common share were $2.49, up 14.8 percent over operating earnings per diluted common share of $2.17 in the same period last year. Operating earnings for first half 2004 excluded the previously referenced non-recurring gains recorded in second quarter 2004. "I am pleased with the financial performance of our Company during the second quarter," stated Takashi Morimura, President and Chief Executive Officer. "The Company produced organic loan growth of approximately 15 percent and organic noninterest bearing deposit growth of approximately 5 percent over second quarter last year. The ongoing strength of our deposit-generating businesses is best reflected in our ratio of average noninterest bearing deposits to average total deposits of 47.5 percent and our average annualized all-in cost of funds of 0.90 percent, for second quarter 2005. Credit quality improved further, with our third consecutive quarter of net recoveries and a 63 percent decline in nonperforming assets from a year earlier. Once again, the combination of net recoveries and improvement in overall credit quality resulted in a negative provision for credit losses for the quarter. "We continued to return excess capital to our shareholders by repurchasing $89 million of our common shares in the open market during second quarter, and by increasing our common stock dividend rate 14 percent, to $0.41 per quarter," concluded Morimura. Chief Operating Officer Philip Flynn added, "I am particularly pleased with the continued strong growth in all major components of our loan portfolio. Net interest income improved significantly in the second quarter, reflecting good growth in loan and deposit volumes, as well as the inherent asset-sensitivity of our balance sheet and our effective management of deposit pricing." Second Quarter Total Revenue For second quarter 2005, total revenue (taxable-equivalent net interest income plus noninterest income) was $686 million, an increase of $56 million, or 8.9 percent, compared with total revenue on an operating basis of $630 million in second quarter 2004 (which excluded $102 million in non-recurring gains). Net interest income increased 16.0 percent, and noninterest income on an operating basis decreased 3.5 percent. Compared with first quarter 2005, total revenue increased 3.3 percent, with net interest income increasing 5.2 percent, and noninterest income flat. Second Quarter Net Interest Income (Taxable-equivalent) Net interest income was $465 million in second quarter 2005, up $64 million, or 16.0 percent, from the same quarter a year ago. Strong growth in earning assets and deposits, the positive effects of the rising short-term interest rate environment, and higher interest recoveries accounted for the growth. Average earning assets increased $4.1 billion, or 10.2 percent, primarily due to a $5.4 billion, or 20.1 percent, increase in average loans, partially offset by a $0.7 billion, or 6.2 percent, decrease in average securities. Average residential mortgages increased $2.6 billion, or 33.1 percent; average commercial loans increased $1.3 billion, or 14.0 percent; and average commercial mortgages increased $1.1 billion, or 25.8 percent, primarily due to the Jackson Federal acquisition, which closed October 28, 2004. Excluding the Jackson Federal acquisition, average loans increased approximately 15.5 percent. Compared to second quarter 2004, average noninterest bearing deposits increased $1.0 billion, or 5.6 percent. Excluding the Jackson Federal acquisition, average noninterest bearing deposits increased approximately 5.1 percent. Average title and escrow deposits declined $187 million. Average noninterest bearing deposits represented 47.5 percent of average total deposits in second quarter. The annualized average all-in cost of funds was 0.90 percent, reflecting the Company's strong average deposit-to-loan ratio of 126.4 percent and the high proportion of noninterest bearing deposits to total deposits. The average yield on earning assets of $44.5 billion was 5.07 percent, up 67 basis points over second quarter last year, with the average loan yield increasing 70 basis points. The average rate on interest bearing liabilities of $24.7 billion was 1.60 percent, up 82 basis points, reflecting higher short-term interest rates compared with second quarter 2004. Average interest bearing deposits were $21.4 billion and the weighted average rate was 1.37 percent. Interest recoveries were approximately $7 million higher than prior year. The net interest margin in second quarter 2005 was 4.18 percent, compared with 3.98 percent in second quarter 2004. On a sequential quarter basis, net interest income increased $23 million, or 5.2 percent. Average earning assets increased $1.0 billion, or 2.4 percent, primarily due to an increase in average loans of $0.9 billion. Average residential mortgages increased $460 million, or 4.7 percent, and average commercial loans increased $243 million, or 2.4 percent. Average noninterest bearing deposits increased $639 million, or 3.4 percent, primarily due to a $490 million increase in title and escrow deposits. The average yield on earning assets increased 22 basis points and the average rate on interest bearing liabilities increased 24 basis points, reflecting rising short-term interest rates. The net interest margin improved 9 basis points to 4.18 percent. Second Quarter Noninterest Income In second quarter 2005, noninterest income was $221 million, down $8 million, or 3.5 percent, from noninterest income on an operating basis of $229 million for the same quarter a year ago (which excluded a $93 million gain on the sale of the Company's merchant card portfolio, and a $9 million gain on the sale of real property). Service charges on deposit accounts decreased $9 million, or 10.3 percent, primarily due to lower account analysis fees, stemming from an increase in the earnings credit rate on deposit balances. Trust and investment management fees increased $5 million, or 13.1 percent, primarily due to the August 1, 2004, acquisition of TruSource (formerly CNA Trust), and an increase in trust assets. Merchant banking fees increased $10 million, primarily due to a higher volume of syndications completed. Card processing fees, net, decreased $9 million, primarily due to the May 31, 2004, sale of the Company's merchant card portfolio. Securities gains (losses), net, reflected a $13 million loss on the sale of $475 million of U.S. Government Agency securities in second quarter 2005, with the proceeds deployed into higher-yielding earning assets. Compared with first quarter 2005, second quarter 2005 noninterest income was flat. Service charges on deposit accounts were essentially unchanged, with a decrease in account analysis fees, stemming from an increase in the earnings credit rate on deposit balances, offset by two more processing days in the quarter. Insurance commissions decreased $2.7 million, or 12.2 percent, reflecting normal seasonal factors. Second Quarter Noninterest Expense Noninterest expense for second quarter 2005 was $409 million, an increase of $33 million, or 8.7 percent, over second quarter 2004. Salaries and employee benefits expense increased $24 million, or 11.1 percent, primarily due to higher employee count associated with acquisitions, annual merit increases, higher performance-related incentive expense, higher restricted stock expense, and higher pension expense. Outside services expense increased $10 million, or 57.0 percent, primarily due to higher vendor billings related to title and escrow balances, stemming from the higher earnings credit rate in second quarter 2005. Professional services expense increased $10 million, or 101.0 percent, primarily due to higher compliance-related expense. Intangible asset amortization expense was $5 million, an increase of $0.5 million compared with prior year. The provision for off-balance sheet commitments was negative $4.0 million in second quarter 2005. The Company began recording separate provisions for on-balance sheet and off-balance sheet credit obligations in first quarter 2005. The provision for off-balance sheet commitments is required to be classified in noninterest expense. Compared with first quarter 2005, noninterest expense increased $2 million, or 0.4 percent. Income Tax Expense The effective tax rate for second quarter 2005 was 34.8 percent, compared with an effective tax rate of 35.9 percent on an operating basis for second quarter 2004 and an effective tax rate of 31.1 percent for first quarter 2005. First quarter 2005 income tax expense included a credit adjustment of $10 million, or 7 cents per common share, to reflect a reduction in reserves for estimated amounts owed to the Internal Revenue Service with respect to the tax treatment of certain leasing transactions. Excluding this credit adjustment, the effective tax rate for first quarter 2005 was 34.9 percent. Year-To-Date Results Total revenue was $1.4 billion in the first six months of 2005, an increase of $108 million, or 8.7 percent, compared with total revenue on an operating basis of $1.3 billion in the same period of 2004 (which excluded $102 million in non-recurring gains). Net interest income increased 13.1 percent, and noninterest income on an operating basis increased 0.8 percent. Net interest income was $907 million in the first half of 2005, a $105 million, or 13.1 percent, increase from prior year, primarily due to the positive effects of the higher interest rate environment in 2005, and higher volumes of earning assets and noninterest bearing deposits. Compared with prior year, net interest margin increased 7 basis points, to 4.14 percent. Noninterest income in the first half of 2005 was $444 million, an increase of $3 million, or 0.8 percent, over noninterest income on an operating basis of $441 million for the same period in 2004 (which excluded a $93 million gain on the sale of the Company's merchant card portfolio, and a $9 million gain on the sale of real property). Service charges on deposit accounts decreased $10 million, or 5.8 percent, primarily due to lower account analysis fees stemming from the higher earnings credit rate in the first half of 2005. Trust and investment management fees increased $11 million, or 15.1 percent, primarily due to the August 1, 2004, acquisition of TruSource (formerly CNA Trust), and increased trust assets. Merchant banking fees increased $9 million, or 60.6 percent, primarily due to a higher number of syndications completed in the first six months of 2005. Card processing fees, net, decreased $12 million primarily due to the May 31, 2004, sale of the Company's merchant card portfolio. Securities gains (losses), net, reflected a $13 million loss on the sale of U.S. Government Agency securities in 2005. Net gains on private equity investments increased $6 million in the first half of 2005. For the first half of 2005, noninterest expense increased $67 million, or 9.0 percent, over the first half of 2004. Salaries and employee benefits expense increased $44 million, or 10.1 percent, primarily due to higher employee count associated with acquisitions, merit increases, higher performance-related incentive expense and higher pension expense. Outside services expense increased $15 million, or 45.3 percent, primarily due to higher vendor billings related to title and escrow balances, stemming from the higher earnings credit rate in the first half of 2005. Professional services expense increased $13 million, or 59.3 percent, primarily due to higher compliance-related expense. Intangible asset amortization expense was $10 million, reflecting a $1.3 million increase compared with prior year, due to acquisitions. Credit Quality Nonperforming assets at June 30, 2005, were $69 million, or 0.13 percent of total assets. This compares with $107 million, or 0.22 percent of total assets at March 31, 2005, and $184 million, or 0.40 percent of total assets, at June 30, 2004. Nonperforming assets declined 63 percent between June 30, 2004, and June 30, 2005. In second quarter 2005, the total provision for credit losses was negative $15 million, compared with negative $5 million in first quarter 2005, and negative $10 million in second quarter 2004. The total provision for credit losses in second quarter 2005 consisted of a provision for loan losses of negative $11 million and a provision for off-balance sheet commitments of negative $4 million, which is classified in noninterest expense. For the third consecutive quarter, the Company realized net loan recoveries. In second quarter 2005, net loan recoveries were $2 million, compared with net loan recoveries of $5 million in first quarter 2005. In second quarter 2004, net charge-offs were $10 million. At June 30, 2005, the allowance for credit losses as a percent of total loans and as a percent of nonaccrual loans was 1.47 percent and 721.1 percent, respectively. These ratios were 1.56 percent and 480.5 percent, respectively, at March 31, 2005, and 1.82 percent and 281.6 percent, respectively, at June 30, 2004. Balance Sheet and Capital Ratios At June 30, 2005, the Company had total assets of $51.2 billion. Total loans were $32.5 billion and total deposits were $42.7 billion, resulting in a period-end deposit-to-loan ratio of 131.5 percent. At period-end, total stockholders' equity was $4.3 billion, the tangible equity ratio was 7.41 percent, and the ratio of tangible common equity to risk-weighted assets was 8.74 percent. Book value per share at June 30, 2005, was $29.51, up 9.4 percent from a year earlier. The Company's Tier I and total risk-based capital ratios at period-end were 8.88 percent and 11.01 percent, respectively. Stock Repurchases During second quarter 2005, the Company repurchased approximately 1.4 million shares of common stock at a total cost of $89 million, or $62.78 per repurchased share. For the first six months of 2005, the Company repurchased 5.5 million shares of common stock at a total cost of $329 million, or $59.41 per repurchased share. At June 30, 2005, the Company was authorized by its Board of Directors to repurchase an additional $162 million of common stock. Common shares outstanding at June 30, 2005, were 144.2 million, a decrease of 3.6 million shares, or 2.5 percent, from one year earlier, primarily reflecting shares repurchased, net of shares issued in acquisitions. Third Quarter and Full Year 2005 Earnings Per Share Forecast The Company currently estimates that fully diluted earnings per share will be in the range of $1.23 to $1.28 for third quarter 2005, and $5.00 to $5.10 for full year 2005. These estimates assume a total provision for credit losses of approximately negative $10 million in third quarter 2005, and a total provision for credit losses of approximately negative $35 million for full year 2005. 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 the fact that they do not relate strictly to historical or current facts. Often, they include the words "believe," "expect," "target," "anticipate," "intend," "plan," "estimate," "potential," "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. Forward-looking statements in this press release include those related to earnings guidance. There are numerous risks and uncertainties that could and will cause actual results to differ materially from those discussed in the Company's forward-looking statements. Many of these factors are beyond the Company's ability to control or predict and could have a material adverse effect on the Company's stock price, financial condition, and results of operations or prospects. Such risks and uncertainties include, but are not limited to, adverse economic and fiscal conditions in California, including the continuing financial difficulties of the California state government; global political and general economic conditions related to the war on terrorism and other hostilities; fluctuations in interest rates; the controlling interest in UnionBanCal Corporation of The Bank of Tokyo-Mitsubishi, Ltd., which is a wholly-owned subsidiary of Mitsubishi Tokyo Financial Group, Inc.; competition in the banking and financial services industries; adverse effects of current and future banking laws, rules and regulations and their enforcement, or governmental fiscal or monetary policies; declines or disruptions in the stock or bond markets which may adversely affect the Company or the Company's borrowers or other customers; changes in accounting practices or requirements; risks associated with various strategies the Company may pursue, including potential acquisitions, divestitures and restructurings. 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 Pacific Time (11:30 AM Eastern Time) on July 21, 2005. Interested parties calling from locations within the United States should call 877-260-8899 (612-332-0228 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 Web site 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 p.m. Pacific Time (3:00 p.m. Eastern Time), July 21, through 11:59 p.m. Pacific Time, July 28 (2:59 a.m. Eastern Time, July 29). The reservation number for this playback is 786168. Based in San Francisco, UnionBanCal Corporation is a bank holding company with assets of $51.2 billion at June 30, 2005. Its primary subsidiary, Union Bank of California, N.A., had 318 banking offices in California, Oregon and Washington, and 21 international facilities, at June 30, 2005. Exhibit 1 UnionBanCal Corporation and Subsidiaries Financial Highlights (Unaudited) On a Reported Earnings Basis: ---------------------------- As of and for the Percent Change to (Dollars in Three Months Ended June 30, 2005 from thousands, ------------------------------- ------------------ except per June 30, March 31, June 30, June 30, March 31, share data) 2004 2005 2005 2004 2005 -------------- -------- --------- --------- --------- -------- Results of operations: Net interest income (1) $400,661 $441,854 $464,874 16.03% 5.21% Noninterest income 331,010 222,761 221,350 (33.13%) (0.63%) ------------ ------------ ------------ Total revenue 731,671 664,615 686,224 (6.21%) 3.25% Noninterest expense (2) 376,402 407,467 409,190 8.71% 0.42% Reversal of allowance for loan losses (10,000) (8,000) (11,000) 10.00% 37.50% ------------ ------------ ------------ Income before income taxes (1) 365,269 265,148 288,034 (21.14%) 8.63% Taxable- equivalent adjustment 803 1,055 1,018 26.77% (3.51%) Income tax expense 133,369 82,116 99,834 (25.14%) 21.58% ------------ ------------ ------------ Net income $231,097 $181,977 $187,182 (19.00%) 2.86% ============ ============ ============ Per common share: Net income- basic $1.56 $1.24 $1.29 (17.31%) 4.03% Net income- diluted 1.54 1.21 1.27 (17.53%) 4.96% Dividends (3) 0.36 0.36 0.41 13.89% 13.89% Book value (end of period) 26.98 28.41 29.51 9.38% 3.87% Common shares outstanding (end of period) 147,845,160 144,575,615 144,205,458 (2.46%) (0.26%) Weighted average common shares outstanding - basic 147,687,350 146,997,649 144,547,697 (2.13%) (1.67%) Weighted average common shares outstanding - diluted 150,183,938 149,915,503 147,222,390 (1.97%) (1.80%) Balance sheet (end of period): Total assets $46,295,831 $49,432,871 $51,178,058 10.55% 3.53% Total loans 27,594,271 31,365,540 32,498,221 17.77% 3.61% Nonaccrual loans 178,062 101,904 66,063 (62.90%) (35.17%) Nonperforming assets 183,913 107,136 68,945 (62.51%) (35.65%) Total deposits 39,367,911 41,711,266 42,730,027 8.54% 2.44% Junior subordinated debt 16,017 15,677 15,564 (2.83%) (0.72%) Medium and long-term debt 800,988 803,233 821,664 2.58% 2.29% Stockholders' equity 3,988,676 4,107,223 4,254,991 6.68% 3.60% Balance sheet (period average): Total assets $44,611,351 $48,277,725 $49,465,234 10.88% 2.46% Total loans 26,838,622 31,302,779 32,223,991 20.07% 2.94% Earning assets 40,351,016 43,461,399 44,482,833 10.24% 2.35% Total deposits 37,810,048 39,668,832 40,723,333 7.71% 2.66% Stockholders' equity 3,933,788 4,208,650 4,145,150 5.37% (1.51%) Financial ratios: Return on average assets (4) 2.08% 1.53% 1.52% Return on average stock- holders' equity (4) 23.63% 17.54% 18.11% Efficiency ratio (5) 51.44% 60.80% 60.59% Net interest margin (1) 3.98% 4.09% 4.18% Dividend payout ratio 23.08% 29.03% 31.78% Tangible equity ratio 7.88% 7.36% 7.41% Tier 1 risk- based capital ratio (6) 10.46% 9.06% 8.88% Total risk- based capital ratio (6) 13.07% 11.41% 11.01% Leverage ratio (6) 8.36% 7.79% 7.77% Allowance for credit losses to total loans (7) 1.82% 1.56% 1.47% Allowance for credit losses to nonaccrual loans (7) 281.60% 480.46% 721.05% Net loans charged off (recovered) to average total loans (4) 0.15% (0.07%) (0.02%) Nonperforming assets to total loans, foreclosed assets, and distressed loans held for sale 0.67% 0.34% 0.21% Nonperforming assets to total assets 0.40% 0.22% 0.13% 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) $1.14 $1.24 $1.29 Operating earnings per common share (diluted) $1.12 $1.21 $1.27 Operating return on average assets (3) 1.52% 1.53% 1.52% Operating return on average stockholders' equity (3) 17.24% 17.54% 18.11% Operating efficiency ratio (4) 59.73% 60.80% 60.59% Operating dividend payout ratio 31.58% 29.03% 31.78% ---------------------------------------- (1) Taxable-equivalent basis. (2) Included in noninterest expense at March 31, 2005 and June 30, 2005 was a $3 million provision for and a $4 million reversal of losses on off-balance sheet commitments, respectively. (3) Dividends per share reflect dividends declared on UnionBanCal Corporation's common stock outstanding as of the declaration date. (4) Annualized. (5) The efficiency ratio is noninterest expense, excluding foreclosed asset expense (income) and the (reversal of) provision for losses on off-balance sheet commitments, as a percentage of net interest income (taxable-equivalent basis) and noninterest income. (6) Estimated as of June 30, 2005. (7) The allowance for credit losses ratios include the allowance for loan losses and losses on off-balance sheet commitments. nm = not meaningful Exhibit 2 UnionBanCal Corporation and Subsidiaries Financial Highlights (Unaudited) Percent Change to On a Reported Earnings Basis: As of and for the Six June 30, Months Ended 2005 from --------------------------------- --------------------------- -------- (Dollars in thousands, except per June 30, June 30, June 30, share data) 2004 2005 2004 --------------------------------- ------------ ------------ -------- Results of operations: Net interest income (1) $ 801,884 $ 906,728 13.07% Noninterest income 542,215 444,111 (18.09%) ------------- ------------- Total revenue 1,344,099 1,350,839 0.50% Noninterest expense (2) 749,508 816,657 8.96% Reversal of allowance for loan losses (15,000) (19,000) 26.67% ------------- ------------- Income before income taxes (1) 609,591 553,182 (9.25%) Taxable-equivalent adjustment 1,605 2,073 29.16% Income tax expense 219,402 181,950 (17.07%) ------------- ------------- Net income $ 388,584 $ 369,159 (5.00%) ============= ============= Per common share: Net income-basic $ 2.63 $ 2.53 (3.80%) Net income-diluted 2.59 2.49 (3.86%) Dividends (3) 0.67 0.77 14.93% Book value (end of period) 26.98 29.51 9.38% Common shares outstanding (end of period) 147,845,160 144,205,458 (2.46%) Weighted average common shares outstanding - basic 147,543,824 145,765,905 (1.21%) Weighted average common shares outstanding - diluted 149,991,567 148,412,390 (1.05%) Balance sheet (end of period): Total assets $ 46,295,831 $ 51,178,058 10.55% Total loans 27,594,271 32,498,221 17.77% Nonaccrual loans 178,062 66,063 (62.90%) Nonperforming assets 183,913 68,945 (62.51%) Total deposits 39,367,911 42,730,027 8.54% Junior subordinated debt 16,017 15,564 (2.83%) Trust preferred securities 800,988 821,664 2.58% Stockholders' equity 3,988,676 4,254,991 6.68% Balance sheet (period average): Total assets $ 43,831,266 $ 48,874,761 11.51% Total loans 26,490,239 31,765,930 19.92% Earning assets 39,613,622 43,974,939 11.01% Total deposits 36,874,787 40,198,996 9.01% Stockholders' equity 3,941,855 4,176,724 5.96% Financial ratios: Return on average assets (4) 1.78% 1.52% Return on average stockholders' equity (4) 19.82% 17.82% Efficiency ratio (5) 55.72% 60.69% Net interest margin (1) 4.07% 4.14% Dividend payout ratio 25.48% 30.43% Tangible equity ratio 7.88% 7.41% Tier 1 risk-based capital ratio (6) 10.46% 8.88% Total risk-based capital ratio (6) 13.07% 11.01% Leverage ratio (6) 8.36% 7.77% Allowance for credit losses to total loans (7) 1.82% 1.47% Allowance for credit losses to nonaccrual loans (7) 281.60% 721.05% Net loans charged off to average total loans (4) 0.17% (0.04%) Nonperforming assets to total loans, foreclosed assets, and distressed loans held for sale 0.67% 0.21% Nonperforming assets to total assets 0.40% 0.13% 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) $ 2.21 $ 2.53 Operating earnings per common share (diluted) $ 2.17 $ 2.49 Operating return on average assets (3) 1.50% 1.52% Operating return on average stockholders' equity (3) 16.64% 17.82% Operating efficiency ratio (4) 60.28% 60.69% Operating dividend payout ratio 30.32% 30.43% ---------------------------------- ------------- ------------- (1) Taxable-equivalent basis. (2) Included in noninterest expense at June 30, 2005 was a $1 million reversal of losses on off-balance sheet commitments. (3) Dividends per share reflect dividends declared on UnionBanCal Corporation's common stock outstanding as of the declaration date. (4) Annualized. (5) The efficiency ratio is noninterest expense, excluding foreclosed asset expense (income) and the (reversal of) provision for losses on off-balance sheet commitments, as a percentage of net interest income (taxable-equivalent basis) and noninterest income. (6) Estimated as of June 30, 2005. (7) The allowance for credit losses ratios include the allowance for loan losses and losses on off-balance sheet commitments. nm = not meaningful Exhibit 3 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 Six Months Ended --------------------------- ------------------------ (Amounts in thousands, except per June 30, March 31, June 30, June 30, share data) 2004 2005 2005 2004 2005 -------------- ----------- --------- --------- --------- ---------- Interest Income Loans $328,647 $416,259 $452,142 $664,258 $868,401 Securities 108,570 101,264 103,019 214,898 204,283 Interest bearing deposits in banks 1,121 2,102 1,892 2,029 3,994 Federal funds sold and securities purchased under resale agreements 2,928 2,373 5,256 4,887 7,629 Trading account assets 883 908 1,049 1,478 1,957 --------- --------- --------- --------- ---------- Total interest income 442,149 522,906 563,358 887,550 1,086,264 --------- --------- --------- --------- ---------- Interest Expense Domestic deposits 32,123 54,562 64,792 65,733 119,354 Foreign deposits 2,761 6,176 8,154 4,893 14,330 Federal funds purchased and securities sold under repurchase agreements 552 7,455 8,217 1,233 15,672 Commercial paper 1,051 4,560 7,807 2,186 12,367 Medium and long-term debt 3,693 6,532 7,459 6,832 13,991 Trust notes 130 238 238 2,311 476 Other borrowed funds 1,178 1,529 1,817 2,478 3,346 --------- --------- --------- --------- ---------- Total interest expense 41,488 81,052 98,484 85,666 179,536 --------- --------- --------- --------- ---------- Net Interest Income 400,661 441,854 464,874 801,884 906,728 Reversal of allowance for loan losses (1) (10,000) (8,000) (11,000) (15,000) (19,000) --------- --------- --------- --------- ---------- Net interest income after reversal of allowance for loan losses 410,661 449,854 475,874 816,884 925,728 --------- --------- --------- --------- ---------- Noninterest Income Service charges on deposit accounts 90,031 80,455 80,757 171,127 161,212 Trust and investment management fees 36,788 41,963 41,590 72,610 83,553 Insurance commissions 18,652 22,017 19,340 40,387 41,357 International commissions and fees 18,102 17,674 18,326 35,647 36,000 Merchant banking fees 7,714 6,266 18,114 15,181 24,380 Foreign exchange gains, net 8,294 8,940 9,296 16,638 18,236 Brokerage commissions and fees 8,023 8,972 8,605 16,320 17,577 Card processing fees, net 15,456 5,607 6,464 24,248 12,071 Securities gains (losses), net (4) 344 (13,313) 1,618 (12,969) Other 127,954 30,523 32,171 148,439 62,694 --------- --------- --------- --------- ---------- Total noninterest income 331,010 222,761 221,350 542,215 444,111 --------- --------- --------- --------- ---------- Noninterest Expense Salaries and employee benefits 217,597 239,480 241,653 437,020 481,133 Net occupancy 32,173 33,525 34,681 63,755 68,206 Outside services 17,406 21,896 27,320 33,865 49,216 Equipment 16,883 17,733 17,292 34,154 35,025 Professional services 10,290 13,710 20,682 21,593 34,392 Software 12,908 14,628 15,617 25,903 30,245 Communications 11,810 11,536 11,067 23,968 22,603 Foreclosed asset expense (income) 17 406 (2,577) 536 (2,171) (Reversal of) provision for losses on off-balance sheet commitments (1) -- 3,000 (4,000) -- (1,000) Other 57,318 51,553 47,455 108,714 99,008 --------- --------- --------- --------- ---------- Total noninterest expense 376,402 407,467 409,190 749,508 816,657 --------- --------- --------- --------- ---------- Income before income taxes 365,269 265,148 288,034 609,591 553,182 Taxable- equivalent adjustment 803 1,055 1,018 1,605 2,073 Income tax expense 133,369 82,116 99,834 219,402 181,950 --------- --------- --------- --------- ---------- Net Income $231,097 $181,977 $187,182 $388,584 $369,159 ========= ========= ========= ========= ========== Net income per common share -- basic $1.56 $1.24 $1.29 $2.63 $2.53 ========= ========= ========= ========= ========== Net income per common share -- diluted $1.54 $1.21 $1.27 $2.59 $2.49 ========= ========= ========= ========= ========== Weighted average common shares outstanding -- basic 147,687 146,998 144,548 147,544 145,766 ========= ========= ========= ========= ========== Weighted average common shares outstanding -- diluted 150,184 149,916 147,222 149,992 148,412 ========= ========= ========= ========= ========== --------------------------------------- (1) Beginning in the quarter ending March 31, 2005, the net change in the allowance for losses on off-balance sheet commitments was recognized separately from the change in the allowance for loan losses. Prior periods have not been restated. Exhibit 4 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (Taxable-Equivalent Basis) On an Operating Earnings Basis (1) ---------------------------------- For the Three Months Ended For the Six Months Ended ---------------------------- ------------------------ (Amounts in thousands, except per June 30, March 31, June 30, June 30, share data) 2004 2005 2005 2004 2005 --------- --------- --------- --------- ---------- Interest Income Loans $328,647 $416,259 $452,142 $664,258 $868,401 Securities 108,570 101,264 103,019 214,898 204,283 Interest bearing deposits in banks 1,121 2,102 1,892 2,029 3,994 Federal funds sold and securities purchased under resale agreements 2,928 2,373 5,256 4,887 7,629 Trading account assets 883 908 1,049 1,478 1,957 --------- --------- --------- --------- ----------- Total interest income 442,149 522,906 563,358 887,550 1,086,264 --------- --------- --------- --------- ----------- Interest Expense Domestic deposits 32,123 54,562 64,792 65,733 119,354 Foreign deposits 2,761 6,176 8,154 4,893 14,330 Federal funds purchased and securities sold under repurchase agreements 552 7,455 8,217 1,233 15,672 Commercial paper 1,051 4,560 7,807 2,186 12,367 Medium and long-term debt 3,693 6,532 7,459 6,832 13,991 Trust notes 130 238 238 2,311 476 Other borrowed funds 1,178 1,529 1,817 2,478 3,346 --------- --------- --------- --------- ----------- Total interest expense 41,488 81,052 98,484 85,666 179,536 --------- --------- --------- --------- ----------- Net Interest Income 400,661 441,854 464,874 801,884 906,728 Reversal of allowance for loan losses (2) (10,000) (8,000) (11,000) (15,000) (19,000) --------- --------- --------- --------- ----------- Net interest income after reversal of allowance for loan losses 410,661 449,854 475,874 816,884 925,728 --------- --------- --------- --------- ----------- Noninterest Income Service charges on deposit accounts 90,031 80,455 80,757 171,127 161,212 Trust and investment management fees 36,788 41,963 41,590 72,610 83,553 Insurance commissions 18,652 22,017 19,340 40,387 41,357 International commissions and fees 18,102 17,674 18,326 35,647 36,000 Merchant banking fees 7,714 6,266 18,114 15,181 24,380 Foreign exchange gains, net 8,294 8,940 9,296 16,638 18,236 Brokerage commissions and fees 8,023 8,972 8,605 16,320 17,577 Card processing fees, net 15,456 5,607 6,464 24,248 12,071 Securities gains (losses), net (4) 344 (13,313) 1,618 (12,969) Other 26,419 30,523 32,171 46,904 62,694 --------- --------- --------- --------- ----------- Total noninterest income 229,475 222,761 221,350 440,680 444,111 --------- --------- --------- --------- ----------- Noninterest Expense Salaries and employee benefits 217,597 239,480 241,653 437,020 481,133 Net occupancy 32,173 33,525 34,681 63,755 68,206 Outside services 17,406 21,896 27,320 33,865 49,216 Equipment 16,883 17,733 17,292 34,154 35,025 Professional services 10,290 13,710 20,682 21,593 34,392 Software 12,908 14,628 15,617 25,903 30,245 Communications 11,810 11,536 11,067 23,968 22,603 Foreclosed asset expense (income) 17 406 (2,577) 536 (2,171) (Reversal of) provision for losses on off-balance sheet commitments (2) -- 3,000 (4,000) -- (1,000) Other 57,318 51,553 47,455 108,714 99,008 --------- --------- --------- --------- ----------- Total noninterest expense 376,402 407,467 409,190 749,508 816,657 --------- --------- --------- --------- ----------- Income before income taxes 263,734 265,148 288,034 508,056 553,182 Taxable- equivalent adjustment 803 1,055 1,018 1,605 2,073 Income tax expense 94,345 82,116 99,834 180,378 181,950 --------- --------- --------- --------- ----------- Net Income $168,586 $181,977 $187,182 $326,073 $369,159 ========= ========= ========= ========= =========== Net income per common share -- basic $1.14 $1.24 $1.29 $2.21 $2.53 ========= ========= ========= ========= =========== Net income per common share -- diluted $1.12 $1.21 $1.27 $2.17 $2.49 ========= ========= ========= ========= =========== Weighted average common shares outstanding -- basic 147,687 146,998 144,548 147,544 145,766 ========= ========= ========= ========= =========== Weighted average common shares outstanding -- diluted 150,184 149,916 147,222 149,992 148,412 ========= ========= ========= ========= =========== --------------------------------------- (1) See exhibits 5 and 6 for reconciliation of 'reported earnings' to 'operating earnings'. (2) Beginning in the quarter ending March 31, 2005, the net change in the allowance for losses on off-balance sheet commitments was recognized separately from the change in the allowance for loan losses. Prior periods have not been restated. Exhibit 5 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 ----------------------------------- June 30, 2004 ----------------------------------- Non- (Amounts in thousands, except per Reported recurring Operating share data) Items ---------------------------------- ------------- ---------- ---------- Net Interest Income $400,661 $ - $400,661 Reversal of allowance for loan losses (10,000) - (10,000) -------- --------- -------- Net interest income after reversal of allowance for loan losses 410,661 - 410,661 -------- --------- -------- Noninterest Income Other (1)(2) 127,954 (101,535) 26,419 All other (no adjustments) 203,056 - 203,056 -------- --------- -------- Total noninterest income 331,010 (101,535) 229,475 -------- --------- -------- Noninterest Expense All other (no adjustments) 376,402 - 376,402 -------- --------- -------- Total noninterest expense 376,402 - 376,402 -------- --------- -------- Income before income taxes 365,269 (101,535) 263,734 Taxable-equivalent adjustment 803 - 803 Income tax expense (3) 133,369 (39,024) 94,345 -------- --------- -------- Net Income/Operating Earnings $231,097 $ (62,511) $168,586 ======== ========= ======== Net income/Operating earnings per common share - basic $ 1.56 $ (0.42) $ 1.14 ======== ========= ======== Net income/Operating earnings per common share - diluted $ 1.54 $ (0.42) $ 1.12 ======== ========= ======== Weighted average common shares outstanding - basic 147,687 147,687 ======== ======== Weighted average common shares outstanding - diluted 150,184 150,184 ======== ======== Reported Net Income $231,097 ----------------------------- Non-recurring Items (1) Gain on sale of real property (2nd quarter 2004) (8,535) (2) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) (93,000) (3) Tax impact of items listed above (1)(2) 39,024 ----------------------------- Net Operating Earnings $168,586 ============================= For the Three Months Ended ----------------------------------- March 31, 2005 ----------------------------------- Non- (Amounts in thousands, except per Reported recurring Operating share data) Items ---------------------------------- ------------- ---------- ---------- Net Interest Income $441,854 $ - $441,854 Reversal of allowance for loan losses (8,000) - (8,000) -------- --------- -------- Net interest income after reversal of allowance for loan losses 449,854 - 449,854 -------- --------- -------- Noninterest Income Other (1)(2) 30,523 - 30,523 All other (no adjustments) 192,238 - 192,238 -------- --------- -------- Total noninterest income 222,761 - 222,761 -------- --------- -------- Noninterest Expense All other (no adjustments) 407,467 - 407,467 -------- --------- -------- Total noninterest expense 407,467 - 407,467 -------- --------- -------- Income before income taxes 265,148 - 265,148 Taxable-equivalent adjustment 1,055 - 1,055 Income tax expense (3) 82,116 - 82,116 -------- --------- -------- Net Income/Operating Earnings $181,977 $ - $181,977 ======== ========= ======== Net income/Operating earnings per common share - basic $ 1.24 $ - $ 1.24 ======== ========= ======== Net income/Operating earnings per common share - diluted $ 1.21 $ - $ 1.21 ======== ========= ======== Weighted average common shares outstanding - basic 146,998 146,998 ======== ======== Weighted average common shares outstanding - diluted 149,916 149,916 ======== ======== Reported Net Income $181,977 ----------------------------- Non-recurring Items (1) Gain on sale of real property (2nd quarter 2004) - (2) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) - (3) Tax impact of items listed above (1)(2) - ----------------------------- Net Operating Earnings $181,977 ============================= For the Three Months Ended ----------------------------------- June 30, 2005 ----------------------------------- Non- (Amounts in thousands, except per Reported recurring Operating share data) Items ---------------------------------- ------------- ---------- ---------- Net Interest Income $464,874 $ - $464,874 Reversal of allowance for loan losses (11,000) - (11,000) -------- --------- -------- Net interest income after reversal of allowance for loan losses 475,874 - 475,874 -------- --------- -------- Noninterest Income Other (1)(2) 32,171 - 32,171 All other (no adjustments) 189,179 - 189,179 -------- --------- -------- Total noninterest income 221,350 - 221,350 -------- --------- -------- Noninterest Expense All other (no adjustments) 409,190 - 409,190 -------- --------- -------- Total noninterest expense 409,190 - 409,190 -------- --------- -------- Income before income taxes 288,034 - 288,034 Taxable-equivalent adjustment 1,018 - 1,018 Income tax expense (3) 99,834 - 99,834 -------- --------- -------- Net Income/Operating Earnings $187,182 $ - $187,182 ======== ========= ======== Net income/Operating earnings per common share - basic $ 1.29 $ - $ 1.29 ======== ========= ======== Net income/Operating earnings per common share - diluted $ 1.27 $ - $ 1.27 ======== ========= ======== Weighted average common shares outstanding - basic 144,548 144,548 ======== ======== Weighted average common shares outstanding - diluted 147,222 147,222 ======== ======== Reported Net Income $187,182 ----------------------------- Non-recurring Items (1) Gain on sale of real property (2nd quarter 2004) - (2) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) - (3) Tax impact of items listed above (1)(2) - ----------------------------- Net Operating Earnings $187,182 ============================= Exhibit 6 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, 2004 -------------------------------- Non- (Amounts in thousands, except per Reported recurring Operating share data) Items ------------------------------------- ---------- ---------- --------- Net Interest Income $801,884 $ - $801,884 Reversal of allowance for loan losses (15,000) - (15,000) -------- --------- -------- Net interest income after reversal of allowance for loan losses 816,884 - 816,884 -------- --------- -------- Noninterest Income Other (1)(2) 148,439 (101,535) 46,904 All other (no adjustments) 393,776 - 393,776 -------- --------- -------- Total noninterest income 542,215 (101,535) 440,680 -------- --------- -------- Noninterest Expense All other (no adjustments) 749,508 - 749,508 -------- --------- -------- Total noninterest expense 749,508 - 749,508 -------- --------- -------- Income before income taxes 609,591 (101,535) 508,056 Taxable-equivalent adjustment 1,605 - 1,605 Income tax expense (3) 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 sale of real property (2nd quarter 2004) (8,535) (2) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) (93,000) (3) Tax impact of items listed above (1)(2) 39,024 ------------------------------ Net Operating Earnings $326,073 ============================== For the Six Months Ended -------------------------------- June 30, 2005 -------------------------------- Non- (Amounts in thousands, except per Reported recurring Operating share data) Items ------------------------------------- ---------- ---------- --------- Net Interest Income $906,728 $ - $906,728 Reversal of allowance for loan losses (19,000) - (19,000) -------- --------- -------- Net interest income after reversal of allowance for loan losses 925,728 - 925,728 -------- --------- -------- Noninterest Income Other (1)(2) 62,694 - 62,694 All other (no adjustments) 381,417 - 381,417 -------- --------- -------- Total noninterest income 444,111 - 444,111 -------- --------- -------- Noninterest Expense All other (no adjustments) 816,657 - 816,657 -------- --------- -------- Total noninterest expense 816,657 - 816,657 -------- --------- -------- Income before income taxes 553,182 - 553,182 Taxable-equivalent adjustment 2,073 - 2,073 Income tax expense (3) 181,950 - 181,950 -------- --------- -------- Net Income/Operating Earnings $369,159 $ - $369,159 ======== ========= ======== Net income/Operating earnings per common share - basic $ 2.53 $ - $ 2.53 ======== ========= ======== Net income/Operating earnings per common share - diluted $ 2.49 $ - $ 2.49 ======== ========= ======== Weighted average common shares outstanding - basic 145,766 145,766 ======== ======== Weighted average common shares outstanding - diluted 148,412 148,412 ======== ======== Reported Net Income $ 369,159 ----------------------------- Non-recurring Items (1) Gain on sale of real property (2nd quarter 2004) - (2) Gain on sale of Merchant Card Portfolio (2nd quarter 2004) - (3) Tax impact of items listed above (1)(2) - ----------------------------- Net Operating Earnings $ 369,159 ============================== Exhibit 7 UnionBanCal Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Unaudited) June 30, December 31, June 30, (Dollars in thousands) 2004 2004 2005 ------------------------------- ----------- ----------- ----------- Assets Cash and due from banks $ 2,287,708 $ 2,111,185 $ 2,339,527 Interest bearing deposits in banks 630,451 491,905 279,555 Federal funds sold and securities purchased under resale agreements 1,156,650 944,950 2,782,105 ----------- ----------- ----------- Total cash and cash equivalents 4,074,809 3,548,040 5,401,187 Trading account assets 307,334 236,331 321,134 Securities available for sale: Securities pledged as collateral 77,532 144,240 443,717 Held in portfolio 12,151,635 11,000,754 9,905,235 Loans (net of allowance for loan losses: June 30, 2004, $501,419; December 31, 2004, $407,156; June 30, 2005, $394,972)(1) 27,092,852 30,309,800 32,103,249 Due from customers on acceptances 52,867 55,914 54,189 Premises and equipment, net 502,204 530,431 520,505 Intangible assets 56,696 61,737 51,766 Goodwill 315,356 450,961 450,669 Other assets 1,664,546 1,759,813 1,926,407 ----------- ----------- ----------- Total assets $46,295,831 $48,098,021 $51,178,058 =========== =========== =========== Liabilities Domestic deposits: Noninterest bearing $19,255,245 $19,205,596 $20,730,332 Interest bearing 17,982,340 19,480,868 20,333,740 Foreign deposits: Noninterest bearing 733,394 435,999 383,171 Interest bearing 1,396,932 1,053,373 1,282,784 ----------- ----------- ----------- Total deposits 39,367,911 40,175,836 42,730,027 Federal funds purchased and securities sold under repurchase agreements 294,597 587,249 611,233 Commercial paper 552,038 824,887 1,102,042 Other borrowed funds 180,426 172,549 132,368 Acceptances outstanding 52,867 55,914 54,189 Other liabilities (1) 1,042,311 1,157,439 1,455,980 Medium and long-term debt 800,988 816,113 821,664 Junior subordinated debt payable to subsidiary grantor trust 16,017 15,790 15,564 ----------- ----------- ----------- Total liabilities 42,307,155 43,805,777 46,923,067 ----------- ----------- ----------- Commitments and contingencies Stockholders' Equity Preferred stock: Authorized 5,000,000 shares, no shares issued or outstanding as of June 30, 2004, December 31, 2004, and June 30, 2005 - - - Common stock, par value $1 per share at June 30, 2004, December 31, 2004 and June 30, 2005: Authorized 300,000,000 shares, issued 149,126,860 shares as of June 30, 2004, 152,191,818 shares as of December 31, 2004, and 153,581,401 shares as of June 30, 2005 149,127 152,192 153,581 Additional paid-in capital 712,255 881,928 948,611 Treasury stock - 1,281,700 shares as of June 30, 2004, 3,831,900 shares as of December 31, 2004 and 9,375,943 shares as of June 30, 2005 (68,557) (223,361) (552,786) Retained earnings 3,289,676 3,526,312 3,774,097 Accumulated other comprehensive loss (93,825) (44,827) (68,512) ----------- ----------- ----------- Total stockholders' equity 3,988,676 4,292,244 4,254,991 ----------- ----------- ----------- Total liabilities and stockholders' equity $46,295,831 $48,098,021 $51,178,058 =========== =========== =========== ------------------------------ (1) On December 31, 2004, UnionBanCal Corporation transferred the allowance related to off-balance sheet commitments of $83 million from allowance for loan losses to other liabilities. At June 30, 2005, the allowance related to off-balance sheet commitments was $82 million. Periods prior to December 31, 2004 have not been restated. Exhibit 8 UnionBanCal Corporation and Subsidiaries Loans (Unaudited) Percent Change to Three Months Ended June 30, 2005 from -------------------------- ----------------- June March June June March 30, 31, 30, 30, 31, (Dollars in millions) 2004 2005 2005 2004 2005 ------------------------- ------- ------- ------- --------- ------- Loans (period average) Commercial, financial and industrial $ 9,107 $10,140 $10,383 14.01% 2.40% Construction 1,060 1,114 1,244 17.36% 11.67% Mortgage - Commercial 4,333 5,420 5,451 25.80% 0.57% Mortgage - Residential 7,730 9,830 10,290 33.12% 4.68% Consumer 2,117 2,372 2,434 14.97% 2.61% Lease financing 617 603 594 (3.73%) (1.49%) Loans originated in foreign branches 1,871 1,781 1,811 (3.21%) 1.68% ------- ------- ------- Total loans held to maturity $26,835 $31,260 $32,207 20.02% 3.03% Total loans held for sale 4 43 17 nm (60.47%) ------- ------- ------- Total loans $26,839 $31,303 $32,224 20.06% 2.94% ======= ======= ======= Nonperforming assets (period end) Nonaccrual loans: Commercial, financial and industrial $ 111 $ 36 $ 36 (67.57%) 0.00% Construction 5 1 1 (80.00%) 0.00% Mortgage - Commercial 23 10 11 (52.17%) 10.00% Lease 37 55 18 (51.35%) (67.27%) Foreign 2 - - (100.00%) - ------- ------- ------- Total nonaccrual loans 178 102 66 (62.92%) (35.29%) Foreclosed assets 6 5 3 (50.00%) (40.00%) ------- ------- ------- Total nonperforming assets $ 184 $ 107 $ 69 (62.50%) (35.51%) ======= ======= ======= Loans 90 days or more past due and still accruing $ 10 $ 4 $ 4 (60.00%) 0.00% ======= ======= ======= Analysis of Allowance for Credit Losses Beginning balance $ 521 $ 407 $ 404 Reversal of allowance for loan losses (10) (8) (11) Foreign translation adjustment and other net additions (deductions) (1) - - - Loans charged off: Commercial, financial and industrial (21) (13) (10) Construction - - - Real estate - (1) - Consumer (1) (1) (1) Lease financing (2) - - Loans originated in foreign branches - - - ------- ------- ------- Total loans charged off (24) (15) (11) ------- ------- ------- Loans recovered: Commercial, financial and industrial 12 20 12 Mortgage - Commercial 2 - - Consumer - - 1 Lease financing - - - ------- ------- ------- Total loans recovered 14 20 13 ------- ------- ------- Net loans (charged-off) recovered (10) 5 2 ------- ------- ------- Ending balance of allowance for loan losses $ 501 $ 404 $ 395 Allowance for off- balance sheet commitment losses (1) - 86 82 ------- ------- ------- Allowance for credit losses $ 501 $ 490 $ 477 ======= ======= ======= ------------------------ (1) On December 31, 2004, UnionBanCal Corporation transferred the allowance related to off-balance sheet commitments of $83 million from allowance for loan losses to other liabilities. At March 31, 2005 and June 30, 2005, the allowance related to off-balance sheet commitments was $86 million and $82 million, respectively. Periods prior to December 31, 2004 have not been restated. nm = not meaningful Exhibit 9 UnionBanCal Corporation and Subsidiaries Net Interest Income (Unaudited) 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 loan losses (5) (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 $11,498,694 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) 1,476,095 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 Trust notes 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 (5) 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 ======== For the Three Months Ended ------------------------------- March 31, 2005 ------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1)(2) --------------------------------- ------------ ------------------ Assets Loans: (3) Domestic $29,521,537 $402,626 5.51 % Foreign (4) 1,781,242 13,633 3.10 Securities - taxable 11,123,106 99,939 3.59 Securities - tax-exempt 67,144 1,325 7.89 Interest bearing deposits in banks 359,399 2,102 2.37 Federal funds sold and securities purchased under resale agreements 377,291 2,373 2.55 Trading account assets 231,680 908 1.59 ----------- -------- Total earning assets 43,461,399 522,906 4.85 -------- Allowance for loan losses (5) (411,439) Cash and due from banks 2,294,369 Premises and equipment, net 528,132 Other assets 2,405,264 ----------- Total assets $48,277,725 =========== Liabilities Domestic deposits: Interest bearing $12,255,221 25,468 0.84 Savings and consumer time 4,778,965 13,047 1.11 Large time 2,765,524 16,047 2.35 Foreign deposits (4) 1,174,814 6,176 2.13 ----------- -------- Total interest bearing deposits 20,974,524 60,738 1.17 ----------- -------- Federal funds purchased and securities sold under repurchase agreements 1,279,862 7,455 2.36 Commercial paper 865,460 4,560 2.14 Other borrowed funds 180,541 1,529 3.44 Medium and long-term debt 808,846 6,532 3.27 Trust notes 15,733 238 6.06 ----------- -------- Total borrowed funds 3,150,442 20,314 2.61 ----------- -------- Total interest bearing liabilities 24,124,966 81,052 1.36 -------- Noninterest bearing deposits 18,694,308 Other liabilities (5) 1,249,801 ----------- Total liabilities 44,069,075 Stockholders' Equity Common equity 4,208,650 ----------- Total stockholders' equity 4,208,650 ----------- Total liabilities and stockholders' equity $48,277,725 =========== Net interest income/margin (taxable-equivalent basis) 441,854 4.09 % Less: taxable-equivalent adjustment 1,055 -------- Net interest income $440,799 ======== For the Three Months Ended ------------------------------ June 30, 2005 ------------------------------ Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1)(2) ---------------------------------- ------------ ------------------ Assets Loans: (3) Domestic $30,412,677 $436,339 5.75 % Foreign (4) 1,811,314 15,803 3.50 Securities - taxable 10,964,803 101,672 3.71 Securities - tax-exempt 66,207 1,347 8.14 Interest bearing deposits in banks 275,472 1,892 2.75 Federal funds sold and securities purchased under resale agreements 696,177 5,256 3.03 Trading account assets 256,183 1,049 1.64 ----------- -------- Total earning assets 44,482,833 563,358 5.07 -------- Allowance for loan losses (5) (402,207) Cash and due from banks 2,404,587 Premises and equipment, net 524,941 Other assets 2,455,080 ----------- Total assets $49,465,234 =========== Liabilities Domestic deposits: Interest bearing $12,462,267 32,055 1.03 Savings and consumer time 4,704,180 14,132 1.20 Large time 3,029,992 18,605 2.46 Foreign deposits (4) 1,193,958 8,154 2.74 ----------- -------- Total interest bearing deposits 21,390,397 72,946 1.37 ----------- -------- Federal funds purchased and securities sold under repurchase agreements 1,160,373 8,217 2.84 Commercial paper 1,158,630 7,807 2.70 Other borrowed funds 197,918 1,817 3.68 Medium and long-term debt 799,514 7,459 3.74 Trust notes 15,619 238 6.10 ----------- -------- Total borrowed funds 3,332,054 25,538 3.07 ----------- -------- Total interest bearing liabilities 24,722,451 98,484 1.60 -------- Noninterest bearing deposits 19,332,936 Other liabilities (5) 1,264,697 ----------- Total liabilities 45,320,084 Stockholders' Equity Common equity 4,145,150 ----------- Total stockholders' equity 4,145,150 ----------- Total liabilities and stockholders' equity $49,465,234 =========== Net interest income/margin (taxable-equivalent basis) 464,874 4.18 % Less: taxable-equivalent adjustment 1,018 -------- Net interest income $463,856 ======== ----------------------------- (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) The average allowance related to off-balance sheet commitments was included in other liabilities for the quarters ended March 31, 2005 and June 30, 2005. Periods prior to December 31, 2004 have not been restated. Exhibit 10 UnionBanCal Corporation and Subsidiaries Net Interest Income (Unaudited) For the Six Months Ended -------------------------------- June 30, 2004 ------------------------------ Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (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 loan losses (5) (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 $11,444,746 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) 1,351,457 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 Trust notes 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 (5) 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 ======== For the Six Months Ended ------------------------------- June 30, 2005 ------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1)(2) ------------------------------------------------- ----------- -------- Assets Loans: (3) Domestic $29,969,569 $ 838,966 5.63 % Foreign (4) 1,796,361 29,436 3.30 Securities - taxable 11,043,518 201,611 3.65 Securities - tax-exempt 66,673 2,672 8.02 Interest bearing deposits in banks 317,204 3,994 2.54 Federal funds sold and securities purchased under resale agreements 537,615 7,629 2.86 Trading account assets 243,999 1,957 1.62 ----------- ---------- Total earning assets 43,974,939 1,086,265 4.96 ---------- Allowance for loan losses (5) (406,798) Cash and due from banks 2,349,782 Premises and equipment, net 526,528 Other assets 2,430,310 ----------- Total assets $48,874,761 =========== Liabilities Domestic deposits: Interest bearing $12,359,316 57,523 0.94 Savings and consumer time 4,741,366 27,180 1.16 Large time 2,898,489 34,652 2.41 Foreign deposits (4) 1,184,439 14,330 2.44 ----------- ---------- Total interest bearing deposits 21,183,610 133,685 1.27 ----------- ---------- Federal funds purchased and securities sold under repurchase agreements 1,219,788 15,672 2.59 Commercial paper 1,012,855 12,367 2.46 Other borrowed funds 189,278 3,346 3.56 Medium and long-term debt 804,154 13,991 3.51 Trust notes 15,676 476 6.08 ----------- ---------- Total borrowed funds 3,241,751 45,852 2.85 ----------- ---------- Total interest bearing liabilities 24,425,361 179,537 1.48 ---------- Noninterest bearing deposits 19,015,386 Other liabilities (5) 1,257,290 ----------- Total liabilities 44,698,037 Stockholders' Equity Common equity 4,176,724 ----------- Total stockholders' equity 4,176,724 ----------- Total liabilities and stockholders' equity $48,874,761 =========== Net interest income/margin (taxable-equivalent basis) 906,728 4.14 % Less: taxable-equivalent adjustment 2,073 ---------- Net interest income $ 904,655 ========== ------------------------------------- (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) The average allowance related to off-balance sheet commitments was included in other liabilities for the quarters ended March 31, 2005 and June 30, 2005. Periods prior to December 31, 2004 have not been restated. Exhibit 11 UnionBanCal Corporation and Subsidiaries On a Reported Earnings Basis (reference to exhibit 3) ----------------------------------------------------- Noninterest Income (Unaudited) Percentage Change to For the Three Months Ended June 30, 2005 From ------------------------------- ------------------- June March June June March (Dollars in 30, 31, 30, 30, 31, thousands) 2004 2005 2005 2004 2005 --------------- --------- --------- --------- ---------- ------- Service charges on deposit accounts $90,031 $80,455 $80,757 (10.30) % 0.38 % Trust and investment management fees 36,788 41,963 41,590 13.05 (0.89) Insurance commissions 18,652 22,017 19,340 3.69 (12.16) International commissions and fees 18,102 17,674 18,326 1.24 3.69 Merchant banking fees 7,714 6,266 18,114 nm nm Foreign exchange gains, net 8,294 8,940 9,296 12.08 3.98 Brokerage commissions and fees 8,023 8,972 8,605 7.25 (4.09) Card processing fees, net 15,456 5,607 6,464 (58.18) 15.28 Securities gains (losses), net (4) 344 (13,313) nm nm Gain on sale of merchant card portfolio 93,000 -- -- nm -- Gain on private capital investments, net 4,017 7,935 5,261 30.97 (33.70) Other 30,937 22,588 26,910 (13.02) 19.13 --------- --------- --------- Total noninterest income $331,010 $222,761 $221,350 (33.13) % (0.63)% ========= ========= ========= Noninterest Expense (Unaudited) Percentage Change to For the Three Months Ended June 30, 2005 From ------------------------------- ------------------- June March June June March (Dollars in 30, 31, 30, 30, 31, thousands) 2004 2005 2005 2004 2005 --------------- --------- --------- --------- ---------- ------- Salaries and other compensation $174,894 $185,194 $193,256 10.50 % 4.35 % Employee benefits 42,703 54,286 48,397 13.33 (10.85) --------- --------- --------- Salaries and employee benefits 217,597 239,480 241,653 11.06 0.91 Net occupancy 32,173 33,525 34,681 7.80 3.45 Outside services 17,406 21,896 27,320 56.96 24.77 Professional services 10,290 13,710 20,682 100.99 50.85 Equipment 16,883 17,733 17,292 2.42 (2.49) Software 12,908 14,628 15,617 20.99 6.76 Communications 11,810 11,536 11,067 (6.29) (4.07) Advertising and public relations 10,814 7,750 9,022 (16.57) 16.41 Data processing 8,409 9,090 8,663 3.02 (4.70) Intangible asset amortization 4,485 4,985 4,985 11.15 0.00 Foreclosed asset expense (income) 17 406 (2,577) nm nm (Reversal of) provision for losses on off- balance sheet commitments (1) -- 3,000 (4,000) nm nm Other 33,610 29,728 24,785 (26.26) (16.63) --------- --------- --------- Total noninterest expense $376,402 $407,467 $409,190 8.71 % 0.42 % ========= ========= ========= --------------------------------------- (1) Beginning in the quarter ending March 31, 2005, the net change in the allowance for losses on off-balance sheet commitments was recognized separately from the change in the allowance for loan losses. Prior periods have not been restated. nm = not meaningful Exhibit 12 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 June 30, 2005 From ---------------------------- -------------------- June March June June March (Dollars in 30, 31, 30, 30, 31, thousands) 2004 2005 2005 2004 2005 --------------------- --------- --------- -------- ------- ------- Service charges on deposit accounts $90,031 $80,455 $80,757 (10.30)% 0.38 % Trust and investment management fees 36,788 41,963 41,590 13.05 (0.89) Insurance commissions 18,652 22,017 19,340 3.69 (12.16) International commissions and fees 18,102 17,674 18,326 1.24 3.69 Merchant banking fees 7,714 6,266 18,114 nm nm Foreign exchange gains, net 8,294 8,940 9,296 12.08 3.98 Brokerage commissions and fees 8,023 8,972 8,605 7.25 (4.09) Card processing fees, net 15,456 5,607 6,464 (58.18) 15.28 Securities gains (losses), net (4) 344 (13,313) nm nm Gain on private capital investments, net 4,017 7,935 5,261 30.97 (33.70) Other 22,402 22,588 26,910 20.12 19.13 --------- --------- --------- Total noninterest income $229,475 $222,761 $221,350 (3.54)% (0.63)% ========= ========= ========= Noninterest Expense (Unaudited) Percentage Change to For the Three Months Ended June 30, 2005 From June March June June March (Dollars in 30, 31, 30, 30, 31, thousands) 2004 2005 2005 2004 2005 --------------------- --------- --------- --------- ------- ------- Salaries and other compensation $174,894 $185,194 $193,256 10.50 % 4.35 % Employee benefits 42,703 54,286 48,397 13.33 (10.85) --------- --------- --------- Salaries and employee benefits 217,597 239,480 241,653 11.06 0.91 Net occupancy 32,173 33,525 34,681 7.80 3.45 Outside services 17,406 21,896 27,320 56.96 24.77 Professional services 10,290 13,710 20,682 100.99 50.85 Equipment 16,883 17,733 17,292 2.42 (2.49) Software 12,908 14,628 15,617 20.99 6.76 Communications 11,810 11,536 11,067 (6.29) (4.07) Advertising and public relations 10,814 7,750 9,022 (16.57) 16.41 Data processing 8,409 9,090 8,663 3.02 (4.70) Intangible asset amortization 4,485 4,985 4,985 11.15 0.00 Foreclosed asset expense (income) 17 406 (2,577) nm nm (Reversal of) provision for losses on off-balance sheet commitments (1) -- 3,000 (4,000) nm nm Other 33,610 29,728 24,785 (26.26) (16.63) --------- --------- --------- Total noninterest expense $376,402 $407,467 $409,190 8.71 % 0.42 % ========= ========= ========= --------------------------------------- (1) See exhibit 5 for reconciliation of 'reported earnings' to 'operating earnings'. (2) Beginning in the quarter ending March 31, 2005, the net change in the allowance for losses on off-balance sheet commitments was recognized separately from the change in the allowance for loan losses. Prior periods have not been restated. nm = not meaningful Exhibit 13 UnionBanCal Corporation and Subsidiaries On a Reported Earnings Basis (reference to exhibit 3) ------------------------------------------------ Noninterest Income (Unaudited) Percentage Change to For the Six Months June 30, Ended 2005 From -------------------------------- June 30, June 30, June 30, (Dollars in thousands) 2004 2005 2004 ------------------------------------ ---------- --------- --------- Service charges on deposit accounts $171,127 $161,212 (5.79)% Trust and investment management fees 72,610 83,553 15.07 Insurance commissions 40,387 41,357 2.40 International commissions and fees 35,647 36,000 0.99 Merchant banking fees 15,181 24,380 60.60 Foreign exchange gains, net 16,638 18,236 9.60 Brokerage commissions and fees 16,320 17,577 7.70 Card processing fees, net 24,248 12,071 (50.22) Securities gains (losses), net 1,618 (12,969) nm Gain on sale of merchant card portfolio 93,000 -- nm Gain on private capital investments, net 7,331 13,196 80.00 Other 48,108 49,498 2.89 ---------- --------- Total noninterest income $542,215 $444,111 (18.09)% ========== ========= Noninterest Expense (Unaudited) Percentage Change to For the Six Months June 30, Ended 2005 From -------------------------------- June 30, June 30, June 30, (Dollars in thousands) 2004 2005 2004 ------------------------------------ ---------- --------- --------- Salaries and other compensation $345,324 $378,450 9.59 % Employee benefits 91,696 102,683 11.98 ---------- --------- Salaries and employee benefits 437,020 481,133 10.09 Net occupancy 63,755 68,206 6.98 Outside services 33,865 49,216 45.33 Equipment 34,154 35,025 2.55 Professional services 21,593 34,392 59.27 Software 25,903 30,245 16.76 Communications 23,968 22,603 (5.70) Data processing 16,826 17,752 5.50 Advertising and public relations 19,541 16,773 (14.17) Intangible asset amortization 8,705 9,971 14.54 Foreclosed asset expense (income) 536 (2,171) nm Reversal of losses on off-balance nm sheet commitments (1) -- (1,000) Other 63,642 54,512 (14.35) ---------- --------- Total noninterest expense $749,508 $816,657 8.96 % ========== ========= ------------------------------------- (1) Beginning in the quarter ending March 31, 2005, the net change in the allowance for losses on off-balance sheet commitments was recognized separately from the change in the allowance for loan losses. Prior periods have not been restated. nm = not meaningful Exhibit 14 UnionBanCal Corporation and Subsidiaries On an Operating Earnings Basis (reference to exhibit 4) (1) ----------------------------------------------------------- Noninterest Income (Unaudited) Percentage Change to For the Six Months June 30, Ended 2005 From -------------------------------- June 30, June 30, June 30, (Dollars in thousands) 2004 2005 2004 ------------------------------------ ---------- --------- --------- Service charges on deposit accounts $171,127 $161,212 (5.79)% Trust and investment management fees 72,610 83,553 15.07 Insurance commissions 40,387 41,357 2.40 International commissions and fees 35,647 36,000 0.99 Merchant banking fees 15,181 24,380 60.60 Foreign exchange gains, net 16,638 18,236 9.60 Brokerage commissions and fees 16,320 17,577 7.70 Card processing fees, net 24,248 12,071 (50.22) Securities gains (losses), net 1,618 (12,969) nm Gain on private capital investments, net 7,331 13,196 80.00 Other 39,573 49,498 25.08 ---------- --------- Total noninterest income $440,680 $444,111 0.78 % ========== ========= Noninterest Expense (Unaudited) Percentage Change to For the Six Months June 30, Ended 2005 From -------------------------------- June 30, June 30, June 30, (Dollars in thousands) 2004 2005 2004 ------------------------------------ ---------- --------- --------- Salaries and other compensation $345,324 $378,450 9.59 % Employee benefits 91,696 102,683 11.98 ---------- --------- Salaries and employee benefits 437,020 481,133 10.09 Net occupancy 63,755 68,206 6.98 Outside services 33,865 49,216 45.33 Equipment 34,154 35,025 2.55 Professional services 21,593 34,392 59.27 Software 25,903 30,245 16.76 Communications 23,968 22,603 (5.70) Data processing 16,826 17,752 5.50 Advertising and public relations 19,541 16,773 (14.17) Intangible asset amortization 8,705 9,971 14.54 Foreclosed asset expense (income) 536 (2,171) nm Reversal of losses on off-balance sheet commitments (2) -- (1,000) nm Other 63,642 54,512 (14.35) ---------- --------- Total noninterest expense $749,508 $816,657 8.96 % ========== ========= --------------------------------------- (1) See exhibit 6 for reconciliation of 'reported earnings' to 'operating earnings'. (2) Beginning in the quarter ending March 31, 2005, the net change in the allowance for losses on off-balance sheet commitments was recognized separately from the change in the allowance for loan losses. Prior periods have not been restated. nm = not meaningful 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)