-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D24PaWWVhw7VXY1V1cNqnL9oZRed3EDVzN2435t+WgJoXdFOWkgQohUVRuM0VbEX GMxZVLaIt+0MNWiGwq6m3A== 0001157523-06-000464.txt : 20060120 0001157523-06-000464.hdr.sgml : 20060120 20060119182636 ACCESSION NUMBER: 0001157523-06-000464 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060119 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060120 DATE AS OF CHANGE: 20060119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIONBANCAL CORP CENTRAL INDEX KEY: 0001011659 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 941234979 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15081 FILM NUMBER: 06539148 BUSINESS ADDRESS: STREET 1: 400 CALIFORNIA STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104-1476 BUSINESS PHONE: 4157652969 MAIL ADDRESS: STREET 1: 400 CALIFORNIA STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104-1476 8-K 1 a5060276.txt UNIONBANCAL CORPORATION, 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report: January 19, 2006 UnionBanCal Corporation (Exact name of registrant as specified in its charter) Delaware 001-15081 94-1234979 (State of Incorporation) (Commission File Number) (IRS Employer Identification No.) 400 California Street San Francisco, CA 94104-1302 Tel. (415) 765-2969 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On January 19, 2006, the Company issued a press release concerning earnings for the fourth quarter of 2005, a copy of which is furnished herewith as Exhibit 99.1. Item 9.01 Financial Statements and Exhibits (c) Exhibits: Exhibit No. Description - -------------------------------------------------------------------------------- 99.1 Press release dated January 19, 2006. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: January 19, 2006 UNIONBANCAL CORPORATION By: /S/ DAVID I. MATSON ------------------------------------------- David I. Matson Chief Financial Officer (Duly Authorized Officer) EXHIBIT INDEX Exhibit No. Description - -------------------------------------------------------------------------------- 99.1 Press release dated January 19, 2006. EX-99.1 2 a5060276ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 UnionBanCal Corporation Reports Record Income from Continuing Operations for 2005 SAN FRANCISCO--(BUSINESS WIRE)--Jan. 20, 2006--UnionBanCal Corporation (NYSE:UB) 2005 Highlights: -- Record income from continuing operations of $730.6 million and record diluted earnings per share from continuing operations of $4.94 -- Net interest margin expansion of 14 basis points, to 4.31 percent -- Record revenue from continuing operations of $2.6 billion -- Strong year-end capital levels, with tangible equity ratio at 8.31 percent -- Excellent asset quality metrics, including 59 percent reduction in nonperforming assets and year-end nonperforming assets to total assets ratio of 0.12 percent Fourth Quarter 2005 Highlights: -- Diluted earnings per share from continuing operations, excluding loss on securities portfolio rebalancing, of $1.26, up 7 percent from fourth quarter 2004 -- Net interest margin expansion of 27 basis points compared with fourth quarter 2004, to 4.42 percent -- Strong loan and deposit growth compared with fourth quarter 2004 -- Average total loans up 18 percent -- Average commercial loans up 21 percent -- Average residential mortgage loans up 21 percent -- Average commercial mortgage loans up 11 percent -- Average total deposits up 6 percent -- Average noninterest bearing deposits up 5 percent -- Annualized average all-in cost of funds was 1.12 percent for the quarter -- Average noninterest bearing deposits were 47.9 percent of average total deposits -- Sold international correspondent banking business to Wachovia Bank, recognizing $147.4 million after-tax gain on sale -- Rebalanced investment securities portfolio for diversification purposes, recognizing a $22.9 million after-tax loss on sale, which is expected to be more than offset by incremental interest income in 2006 through 2008 UnionBanCal Corporation (NYSE: UB) today reported fourth quarter 2005 net income of $308.5 million, or $2.09 per diluted common share, and income from continuing operations of $162.2 million, or $1.10 per diluted common share. Net income from discontinued operations was $146.3 million, or $0.99 per diluted common share. Results from discontinued operations were comprised of a net loss from discontinued operations of $1.1 million and an after-tax gain on the sale of the international banking business of $147.4 million. Excluding an after-tax loss on the sale of securities of $22.9 million, or $0.16 per diluted common share, related to the rebalancing of the Company's securities portfolio, fourth quarter income from continuing operations was $185.1 million, or $1.26 per diluted common share. For the full year 2005, the Company reported net income of $862.9 million, or $5.84 per diluted common share, and income from continuing operations of $730.6 million, or $4.94 per diluted common share. For the full year 2004, the Company reported net income of $732.5 million, or $4.87 per diluted common share, and income from continuing operations of $710.1 million, or $4.72 per diluted common share. For the full year 2004, the Company reported operating net income of $677.9 million, or $4.51 per diluted common share, and operating income from continuing operations of $655.4 million, or $4.36 per diluted common share. Operating income from continuing operations for 2004 excluded an after-tax gain of $58 million, or $0.39 per diluted common share, on the sale of the Company's merchant card portfolio; an after-tax gain of $5 million, or $0.04 per diluted common share, on the sale of real property; and an $8 million, or $0.06 per diluted common share, adjustment to state income tax. "I am pleased with our fourth quarter and full-year performance," stated Takashi Morimura, President and Chief Executive Officer. "During 2005, the strength of our business model was evident from the strong core earnings growth and return on equity we reported today. These results enabled us to return a significant amount of capital to shareholders in 2005. We increased our common stock dividend by 14 percent in April, declaring $230 million in regular dividends for the year, and we repurchased $389 million of common stock. Despite this significant return of capital, we enter the new year with strong capital levels, as evidenced by a year-end tangible equity ratio of 8.31 percent." "We continue to execute our strategic initiatives and to generate strong financial results," added Chief Operating Officer Philip Flynn. "Adjusting for the impact of the investment securities portfolio rebalance, our fourth quarter results were in line with the forecast we provided on October 21. With the rebalancing of our portfolio, we believe our revenue stream will be enhanced, while reducing our concentration risk and maintaining the short duration of the portfolio. "I am particularly pleased with the loan growth and strong net interest margin we generated during the fourth quarter. Credit quality throughout the loan portfolio remains healthy. Looking to 2006, we are well-positioned to continue to participate in the expansion of the California economy across all our business lines." Portfolio Rebalancing During the fourth quarter of 2005, the Company implemented a strategic rebalancing of its securities portfolio, selling approximately $1 billion of agency debentures with the intent of reinvesting the proceeds primarily into "AAA"-rated non-agency mortgage-backed securities. The sales were completed during the fourth quarter of 2005, and the redeployment of proceeds is anticipated to be completed during the first quarter of 2006. It is expected that the overall duration of the securities portfolio will be largely unaffected by the rebalancing. The rebalancing of the securities portfolio is expected to reduce the Company's concentration in agency securities from approximately 81 percent of the portfolio at September 30, 2005, to approximately 64 percent by the end of 2006, while at the same time increasing the Company's concentration in non-agency mortgage-backed securities from zero to an estimated 10 percent in the same period, bringing the Company's securities portfolio distribution into closer alignment with that of peer banks. The pre-tax loss of approximately $36.8 million recognized in fourth quarter 2005 is expected to be offset by incremental interest income of an estimated $26 million in 2006, an estimated $17 million in 2007, and an estimated $8 million in 2008. Discontinued Operations On September 22, 2005, the Company announced the signing of a definitive agreement to sell its international correspondent banking business (the Business) to Wachovia Bank, N.A. The principal legal closing of the transaction took place on October 6, 2005, with the Company receiving $245 million in cash from Wachovia. The Company is continuing to operate the Business over a transition period which will extend into the second quarter of 2006, during which time it is expected that the majority of the Company's international correspondent bank customers will transfer to Wachovia. Under the terms of the transaction, the Company earned the base purchase price of $245 million during fourth quarter 2005, based on certain negotiated business retention standards. The Company may also earn a contingent payment not to exceed $45 million, based on the results of conversion of the Business's customer base to Wachovia. Any such contingent payment will be earned and paid in cash to the Company in the second quarter of 2006. The Company will continue to operate the Business during the transition period, and expects its exit from international correspondent banking to be complete in the second quarter of 2006. As customers are transferred to Wachovia during the coming months, the Company's international correspondent banking revenue will decline. International correspondent banking expenses will also decline, though not necessarily at the same rate as revenue. Commencing in third quarter 2005, all results of the international correspondent banking business have been reported as discontinued operations. The Company recorded an after-tax expense of $15.4 million, or $0.10 per fully diluted share, in the third quarter of 2005, primarily reflecting severance costs associated with the transaction. In the fourth quarter of 2005, the Company recorded an after-tax gain on the transaction of approximately $147.4 million, or $1.00 per fully diluted share, and a net loss from discontinued operations of $1.1 million, or $0.01 per fully diluted common share. The transaction has been accounted for as a discontinued operation and all prior periods have been restated to reflect this accounting treatment. All of the assets and liabilities of the discontinued operations have been separately identified on the consolidated balance sheets (see Exhibit 7) and the average net assets or liabilities of the discontinued operations are reflected in the analysis of net interest margin (see Exhibits 9 and 10). Hereafter, in this press release, all financial results references are for continuing operations only. Fourth Quarter Total Revenue From Continuing Operations For fourth quarter 2005, total revenue (taxable-equivalent net interest income plus noninterest income) was $665.2 million, an increase of $23.9 million, or 3.7 percent, compared with total revenue of $641.3 million in fourth quarter 2004. Net interest income increased 12.3 percent, and noninterest income decreased 13.6 percent. Excluding the $36.8 million fourth quarter 2005 loss on the sale of securities discussed above, total revenue increased $60.7 million, or 9.5 percent, with net interest income increasing 12.3 percent and noninterest income increasing 3.7 percent. Compared with third quarter 2005, total revenue decreased 1.8 percent, with net interest income increasing 3.6 percent, and noninterest income decreasing 13.6 percent. Excluding the loss on the sale of securities in fourth quarter 2005, total revenue in sequential quarters increased 3.6 percent, with net interest income increasing 3.6 percent and noninterest income increasing 3.8 percent. Fourth Quarter Net Interest Income (Taxable-equivalent) From Continuing Operations Net interest income was $481.8 million in fourth quarter 2005, up $52.9 million, or 12.3 percent, from the same quarter a year ago, primarily due to strong growth in loans and deposits. Average earning assets increased $2.2 billion, or 5.5 percent, primarily due to a $5.1 billion, or 18.0 percent, increase in average loans, and a $2.8 billion, or 23.5 percent, decrease in average securities. Average commercial loans increased $2.1 billion, or 21.5 percent; average residential mortgages increased $2.0 billion, or 21.5 percent; and average commercial mortgages increased $0.5 billion, or 10.7 percent. Compared to fourth quarter 2004, average noninterest bearing deposits increased $0.8 billion, or 4.6 percent. Average title and escrow deposits increased $66.9 million, or 2.2 percent. Average noninterest bearing deposits represented 47.9 percent of average total deposits in fourth quarter 2005. The annualized average all-in cost of funds was 1.12 percent, reflecting the Company's strong average deposit-to-loan ratio of 121 percent and the high proportion of noninterest bearing deposits to total deposits. The average yield on earning assets of $43.5 billion was 5.51 percent, up 79 basis points over fourth quarter last year, with the average loan yield increasing 63 basis points. The average rate on interest bearing liabilities of $23.1 billion was 2.05 percent, up 98 basis points, reflecting higher short-term interest rates compared with fourth quarter 2004. Average interest bearing deposits were $21.0 billion and the weighted average rate was 1.84 percent. The net interest margin in fourth quarter 2005 was 4.42 percent, compared with 4.15 percent in fourth quarter 2004, an increase of 27 basis points. On a sequential quarter basis, net interest income increased $16.6 million, or 3.6 percent. Average earning assets increased 0.2 percent, primarily due to a $1.1 billion, or 3.4 percent, increase in average loans, and a decrease in average securities of $0.9 billion, or 9.4 percent. Average commercial loans increased $0.5 billion, or 4.7 percent, and average residential mortgages increased $0.4 billion, or 3.5 percent. Average noninterest bearing deposits decreased $124 million, or 0.6 percent, primarily due to a $361 million decrease in title and escrow deposits. The average yield on earning assets increased 30 basis points and the average rate on interest bearing liabilities increased 29 basis points. The net interest margin increased 15 basis points to 4.42 percent, primarily due to higher short-term interest rates and higher loan fees as compared with third quarter. Fourth Quarter Noninterest Income From Continuing Operations In fourth quarter 2005, noninterest income was $183.4 million, down $29.0 million, or 13.6 percent, from the same quarter a year ago. Excluding the $36.8 million loss on the sale of securities described above, fourth quarter noninterest income was $220.2 million, up $7.8 million, or 3.7 percent, from the same quarter a year ago. Service charges on deposit accounts decreased $2.2 million, or 2.7 percent, primarily due to lower account analysis fees, stemming from an increase in the earnings credit rate on deposit balances, partially offset by a change in the overdraft and NSF fee structure. Trust and investment management fees increased $5.1 million, or 12.3 percent, primarily due to an increase in trust assets. Merchant banking fees decreased $4.5 million, or 35.4 percent, primarily due to a lower volume of syndications completed compared with fourth quarter 2004, which contained an unusually high volume of syndications. Securities gains (losses), net, reflected a $36.8 million loss on the sale of $1 billion of agency debentures associated with the strategic rebalancing of the Company's securities portfolio. This compares with a loss on the sale of securities in fourth quarter 2004 of $13.7 million. Compared with third quarter 2005, fourth quarter 2005 noninterest income decreased $28.8 million, or 13.6 percent, and, excluding the loss on the sale of securities, increased $8.0 million, or 3.8 percent. Service charges on deposit accounts decreased $4.8 million, or 5.6 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 $3.0 million, or 6.8 percent, and insurance commissions increased $1.9 million, or 10.8 percent. Fourth Quarter Noninterest Expense From Continuing Operations Noninterest expense for fourth quarter 2005 was $429.2 million, an increase of $40.4 million, or 10.4 percent, over fourth quarter 2004. Salaries and employee benefits expense increased $16.2 million, or 7.5 percent, primarily due to annual merit increases and higher performance-related incentive expense. Net occupancy expense increased $6.8 million, or 20.0 percent, primarily due to charges associated with the consolidation of offices in San Francisco. Professional services expense decreased $5.6 million, or 37.4 percent, primarily due to lower consulting and legal expenses and a recovery of legal fees in fourth quarter 2005. Outside services expense increased $18.1 million, or 79.2 percent, primarily due to higher cost of services related to title and escrow balances, stemming from a higher earnings credit rate and higher balances in fourth quarter 2005. Intangible asset amortization expense was $5.0 million, versus $5.7 million in fourth quarter 2004. The provision for off-balance sheet commitments in fourth quarter 2005 was $5.0 million, compared with none in fourth quarter 2004. Compared with third quarter 2005, noninterest expense increased $32.5 million, or 8.2 percent. Salaries and employee benefits expense decreased $3.6 million, or 1.5 percent, primarily due to a decrease in incentive expense, and an actuarial adjustment for post-employment liabilities. Net occupancy expense increased $6.7 million, or 19.5 percent, primarily due to charges associated with the consolidation of offices in San Francisco. Outside services expense increased $12.4 million, or 43.5 percent, primarily due to higher cost of services related to title and escrow balances, stemming from a higher earnings credit rate. The provision for off-balance sheet commitments in fourth quarter 2005 was $5.0 million, compared with none in third quarter 2005. Income Tax Expense From Continuing Operations The effective tax rate for fourth quarter 2005 was 33.8 percent, compared with an effective tax rate of 33.6 percent for fourth quarter 2004 and an effective tax rate of 31.7 percent for third quarter 2005. Third quarter 2005 income tax expense included a $5.9 million credit primarily related to the adjustment of California taxes to reflect tax returns filed on the worldwide unitary method, and $3.1 million in California Enterprise Zone credits. The effective tax rate for the full year 2005 was 32.8 percent, compared with 34.9 percent on an operating basis for the full year 2004. The decrease in the effective tax rate in 2005 was due primarily to a reduction in reserves of $10.0 million for estimated amounts owed to the Internal Revenue Service with respect to certain leveraged leasing transactions, a $4.1 million reduction to income tax expense related to the adjustment of California taxes to reflect tax returns filed on the worldwide unitary method, and $3.1 million of California Enterprise Zone credits for which the Company became eligible in 2005. Full Year Results From Continuing Operations Total revenue for 2005 was $2.6 billion, up 4.2 percent compared with total revenue on a reported basis for prior year. Net interest income increased 13.3 percent, and noninterest income decreased 11.8 percent, primarily due to non-recurring gains in 2004. Total revenue for 2005 increased 8.6 percent compared with total revenue on an operating basis for prior year, with net interest income increasing 13.3 percent and noninterest income decreasing 0.8 percent due to the $36.8 million loss on the sale of securities recorded in fourth quarter 2005. Net interest income was $1.8 billion in 2005, a $215.7 million, or 13.3 percent, increase from prior year, reflecting strong growth in loans and deposits and higher short-term interest rates in 2005 as compared with 2004. Compared with prior year, the net interest margin increased 14 basis points, to 4.31 percent. Noninterest income on a reported basis in 2005 was $804.8 million, a decrease of $108.0 million, or 11.8 percent, compared with 2004 noninterest income of $912.8 million. Excluding the fourth quarter 2005 loss on the sale of securities of $36.8 million, noninterest income in 2005 increased $30.3 million, or 3.7 percent, compared with noninterest income on an operating basis in 2004 of $811.3 million (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 $11.3 million, or 3.4 percent, primarily due to lower account analysis fees stemming from a higher earnings credit rate in 2005, partially offset by higher deposit balances and a change in the overdraft and NSF fee structure. Trust and investment management fees increased $20.4 million, or 13.3 percent, primarily due to an increase in trust assets. Card processing fees, net, decreased $9.0 million primarily due to the May 31, 2004, sale of the Company's merchant card portfolio. For 2005, noninterest expense increased $133.7 million, or 9.1 percent, over 2004. Salaries and employee benefits expense increased $85.6 million, or 10.1 percent, primarily due to higher employee count associated with recent acquisitions, merit increases, higher performance-related incentive expense, higher health insurance expense and higher pension expense. Net occupancy expense increased $13.6 million, or 10.6 percent, primarily due to charges associated with the consolidation of offices in San Francisco. Outside services expense increased $42.2 million, or 56.3 percent, primarily due to higher cost of services related to title and escrow balances, stemming from a higher earnings credit rate and higher balances in 2005. Intangible asset amortization expense was $19.9 million, compared with $19.5 million in prior year. Credit Quality Nonperforming assets at December 31, 2005, were $62 million, or 0.12 percent of total assets. This compares with $38 million, or 0.07 percent of total assets at September 30, 2005, and $150 million, or 0.31 percent of total assets, at December 31, 2004. Nonperforming assets declined 59 percent between December 31, 2004, and December 31, 2005. In fourth quarter 2005, the total provision for credit losses was negative $5.0 million. The total provision for credit losses was negative $15.0 million in third quarter 2005 and negative $16.7 million in fourth quarter 2004. The total provision for credit losses in fourth quarter 2005 consisted of a provision for loan losses of negative $10.0 million and a provision for off-balance sheet commitments (classified in noninterest expense) of $5.0 million. In fourth quarter 2005, net charge-offs were $3 million, compared with net charge-offs of $16 million in third quarter 2005, and net recoveries of $4 million in fourth quarter 2004. For the full year 2005, the total provision for credit losses was negative $46.7 million, compared with negative $45.8 million in 2004. The total provision for credit losses in 2005 consisted of a provision for loan losses of negative $50.7 million and a provision for off-balance sheet commitments (classified in noninterest expense) of $4.0 million. At December 31, 2005, the allowance for credit losses as a percent of total loans and as a percent of nonaccrual loans was 1.32 percent and 743.6 percent, respectively. These ratios were 1.39 percent and 1272.3 percent, respectively, at September 30, 2005, and 1.65 percent and 337.7 percent, respectively, at December 31, 2004. Balance Sheet and Capital Ratios At December 31, 2005, the Company had total assets of $49.4 billion. Total loans were $33.1 billion and total deposits were $40.1 billion, resulting in a period-end deposit-to-loan ratio of 121.1 percent. At period-end, total stockholders' equity was $4.6 billion, the tangible equity ratio was 8.31 percent, and the ratio of tangible common equity to risk-weighted assets was 8.93 percent. Book value per share at December 31, 2005, was $31.62, up 9.3 percent from a year earlier. The Company's Tier I and total risk-based capital ratios at period-end were 9.18 percent and 11.11 percent, respectively. Stock Repurchases During fourth quarter 2005, the Company repurchased 886,200 shares of common stock at a total price of $59.7 million, or $67.42 per repurchased share. For full year 2005, the Company repurchased 6.4 million shares of common stock at a total cost of $389.1 million, or $60.51 per repurchased share. At December 31, 2005, the Company was authorized by its Board of Directors to repurchase an additional $102 million of common stock. Common shares outstanding at December 31, 2005, were 144.2 million, a decrease of 4.2 million shares, or 2.8 percent, from one year earlier, primarily reflecting shares repurchased. First Quarter and Full Year 2006 Earnings Per Share Forecast The Company currently estimates that first quarter 2006 fully diluted earnings per share from continuing operations will be in the range of $1.19 to $1.24, including estimated stock option expense of $0.03 per share and an estimated total provision for credit losses of negative $5 million. In addition, the Company expects to record a net loss from discontinued operations of approximately $0.05 per diluted common share. Therefore, net income per diluted common share is expected to be in the range of $1.14 to $1.19. For full year 2006, the Company currently estimates that fully diluted earnings per share from continuing operations will be in the range of $5.30 to $5.50, including estimated stock option expense of $0.10 per share and an estimated total provision for credit losses of $20 million. In addition, the Company expects to record a net loss from discontinued operations of approximately $0.08 per diluted common share. Therefore, net income per diluted common share is expected to be in the range of $5.22 to $5.42. 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" or that exclude a loss on the sale of securities related to the rebalancing of the Company's securities portfolio, 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, differ from net income reported under GAAP in that operating earnings exclude unusual or non-recurring charges, losses, credits or gains. Similarly, other financial measures that are identified herein as being stated on "an operating basis" or qualified by the word "operating" exclude these unusual or non-recurring charges, losses, credits or gains. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Because these items and their impact on the Company's performance are difficult to predict, management believes that financial presentations excluding the impact of these items provide useful supplemental information which is important to a proper understanding of the Company's core business results by investors. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies. For a detailed reconciliation of data presented on an operating basis to GAAP financial measures, please refer to Exhibits 5 and 6 accompanying this press release. Forward-Looking Statements The following appears in accordance with the Private Securities Litigation Reform Act. This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements can be identified by 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, the intent, timing and effect of the sale and redeployment of proceeds of agency debentures, the Company's strategic initiatives, the Company's participation in the expansion of the California economy, and the transition and financial impact of the sale of the international correspondent banking business. 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; increased energy costs due to hurricanes; 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 UFJ, Ltd., which is a wholly-owned subsidiary of Mitsubishi UFJ 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; the Company's ability to transition international correspondent bank customers; and 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 fourth quarter results at 8:30 AM Pacific Time (11:30 AM Eastern Time) on January 20, 2006. Interested parties calling from locations within the United States should call 888-428-4480 (612-288-0318 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 Pacific Time (3:00 PM Eastern Time), January 20, through 11:59 PM Pacific Time, January 27 (2:59 AM Eastern Time, January 28). The reservation number for this playback is 808873. Based in San Francisco, UnionBanCal Corporation is a bank holding company with assets of $49.4 billion at December 31, 2005. Its primary subsidiary, Union Bank of California, N.A., had 319 banking offices in California, Oregon and Washington, and 20 international facilities, at December 31, 2005. Exhibit 1 UnionBanCal Corporation and Subsidiaries Financial Highlights (Unaudited) Percent Change to On a Reported As of and for December 31, Earnings the Three Months Ended 2005 from Basis (1) : - --------------------------------------------------- ----------------- (Dollars in thousands, except per Dec. 31, Sept. 30, Dec. 31, Dec. 31, Sept. 30, share data) 2004 2005 2005 2004 2005 - ------------------------- ------------ ------------ -------- -------- Results of operations: Net interest income (2) $428,899 $465,193 $481,828 12.34% 3.58% Noninterest income 212,389 212,188 183,420 (13.64%) (13.56%) ------------ ------------ ------------ Total revenue 641,288 677,381 665,248 3.74% (1.79%) Noninterest expense (3) 388,838 396,696 429,198 10.38% 8.19% Reversal of allowance for loan losses (16,719) (15,000) (10,000) (40.19%) (33.33%) ------------ ------------ ------------ Income from continuing operations before income taxes (2) 269,169 295,685 246,050 (8.59%) (16.79%) Taxable- equivalent adjustment 1,128 1,051 1,228 8.87% 16.84% Income tax expense 89,944 93,388 82,657 (8.10%) (11.49%) ------------ ------------ ------------ Income from continuing operations 178,097 201,246 162,165 (8.95%) (19.42%) (Loss)/Income from discontinued operations 2,415 (15,961) 146,324 nm nm ------------ ------------ ------------ Net income $180,512 $185,285 $308,489 70.90% 66.49% ============ ============ ============ Per common share: Basic earnings: From continuing operations $1.20 $1.39 $1.12 (6.67%) (19.42%) Net income 1.22 1.28 2.14 75.41% 67.19% Diluted earnings: From continuing operations 1.18 1.36 1.10 (6.78%) (19.12%) Net income 1.19 1.26 2.09 75.63% 65.87% Dividends (4) 0.36 0.41 0.41 13.89% 0.00% Book value (end of period) 28.93 30.07 31.62 9.30% 5.15% Common shares outstanding (end of period) 148,359,918 144,584,972 144,207,072 (2.80%) (0.26%) Weighted average common shares outstanding - basic 148,421,593 144,459,465 144,466,374 (2.66%) 0.00% Weighted average common shares outstanding - - diluted 151,513,258 147,613,377 147,385,734 (2.72%) (0.15%) Balance sheet (end of period): Total assets (9) $48,098,021 $51,298,842 $49,382,746 2.67% (3.74%) Total loans 29,109,415 32,004,747 33,095,595 13.69% 3.41% Nonaccrual loans 142,573 34,980 58,892 (58.69%) 68.36% Nonperforming assets 149,855 37,507 61,645 (58.86%) 64.36% Total deposits 38,719,506 41,648,355 40,082,239 3.52% (3.76%) Medium and long-term debt 816,113 806,353 801,095 (1.84%) (0.65%) Junior subordinated debt 15,790 15,451 15,338 (2.86%) (0.73%) Stockholders' equity 4,292,244 4,346,956 4,559,700 6.23% 4.89% Balance sheet (period average): Total assets $45,578,404 $48,212,029 $48,406,487 6.20% 0.40% Total loans 28,190,340 32,177,816 33,260,944 17.99% 3.37% Earning assets 41,203,535 43,371,177 43,451,686 5.46% 0.19% Total deposits 37,828,870 40,293,528 40,253,861 6.41% (0.10%) Stockholders' equity 4,246,844 4,275,122 4,488,396 5.69% 4.99% Financial ratios: Return on average assets (5) : From continuing operations 1.55% 1.66% 1.33% Net income 1.58% 1.52% 2.53% Return on average stockholders' equity (5) : From continuing operations 16.68% 18.68% 14.33% Net income 16.91% 17.19% 27.27% Efficiency ratio (6) 60.53% 59.07% 63.77% Net interest margin (2) 4.15% 4.27% 4.42% Dividend payout ratio 30.00% 29.50% 36.61% Tangible equity ratio 7.94% 7.57% 8.31% Tier 1 risk- based capital ratio (7)(9) 9.71% 8.88% 9.18% Total risk-based capital ratio (7)(9) 12.17% 10.86% 11.11% Leverage ratio (7)(9) 8.09% 7.96% 8.39% Allowance for credit losses to total loans (8) 1.65% 1.39% 1.32% Allowance for credit losses to nonaccrual loans (8) 337.74% 1272.29% 743.58% Net loans charged off (recovered) to average total loans (5) -0.06% 0.20% 0.03% Nonperforming assets to total loans, foreclosed assets, and distressed loans held for sale 0.51% 0.12% 0.19% Nonperforming assets to total assets (9) 0.31% 0.07% 0.12% On an Operating Earnings from Continuing Operations Basis (1) : - ----------------------------------------------------------- Selected financial data on continuing operations on an operating earnings basis (see bottom of exhibit 5 for non-recurring items): Operating earnings per common share (basic) $1.20 $1.39 $1.12 Operating earnings per common share (diluted) $1.18 $1.36 $1.10 Operating return on average assets (5) 1.55% 1.66% 1.33% Operating return on average stockholders' equity (5) 16.68% 18.68% 14.33% Operating efficiency ratio (6) 60.53% 59.07% 63.77% Operating dividend payout ratio 30.00% 29.50% 36.61% - ----------------------------------------------------------- (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect discontinued operations. Average balances used to calculate our financial ratios are based on continuing operations data only, unless otherwise indicated. (2) Taxable-equivalent basis. (3) Included in noninterest expense at December 31, 2005 was a $5 million provision for off-balance sheet commitments. (4) Dividends per share reflect dividends declared on UnionBanCal Corporation's common stock outstanding as of the declaration date. (5) Annualized. (6) 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 and is calculated for continuing operations only. (7) Estimated as of December 31, 2005. The regulatory capital and leverage ratios were not restated and therefore include discontinued operations. (8) The allowance for credit losses ratios include the allowance for loan losses and losses on off-balance sheet commitments. These ratios relate to continuing operations only. (9) End of period total assets and assets used in calculating these ratios include those of discontinued operations. nm = not meaningful Exhibit 2 UnionBanCal Corporation and Subsidiaries Financial Highlights (Unaudited) Percent Change to On a Reported Earnings As of and for the Twelve Dec. 31, Basis (1) : Months Ended 2005 from - --------------------------------- ------------------------- --------- Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands, except per share data) 2004 2005 2004 - ---------------------------------------------- ------------ -------- Results of operations: Net interest income (2) $1,627,761 $1,843,466 13.25% Noninterest income 912,823 804,787 (11.84%) ------------ ------------ Total revenue 2,540,584 2,648,253 4.24% Noninterest expense (3) 1,473,589 1,607,246 9.07% Reversal of allowance for loan losses (45,757) (50,683) 10.77% ------------ ------------ Income from continuing operations before income taxes (2) 1,112,752 1,091,690 (1.89%) Taxable-equivalent adjustment 3,745 4,352 16.21% Income tax expense 398,933 356,698 (10.59%) ------------ ------------ Income from continuing operations 710,074 730,640 2.90% (Loss)/Income from discontinued operations 22,460 132,293 489.02% ------------ ------------ Net income $732,534 $862,933 17.80% ============ ============ Per common share: Basic earnings: From continuing operations $4.81 $5.04 4.78% Net income 4.96 5.95 19.96% Diluted earnings: From continuing operations 4.72 4.94 4.66% Net income 4.87 5.84 19.92% Dividends (4) 1.39 1.59 14.39% Book value (end of period) 28.93 31.62 9.30% Common shares outstanding (end of period) 148,359,918 144,207,072 (2.80%) Weighted average common shares outstanding - basic 147,767,238 145,109,058 (1.80%) Weighted average common shares outstanding - diluted 150,302,831 147,791,565 (1.67%) Balance sheet (end of period): Total assets (8) $48,098,021 $49,382,746 2.67% Total loans 29,109,415 33,095,595 13.69% Nonaccrual loans 142,573 58,892 (58.69%) Nonperforming assets 149,855 61,645 (58.86%) Total deposits 38,719,506 40,082,239 3.52% Medium and long-term debt 816,113 801,095 (1.84%) Junior subordinated debt 15,790 15,338 (2.86%) Stockholders' equity 4,292,244 4,559,700 6.23% Balance sheet (period average): Total assets $43,158,714 $47,610,818 10.32% Total loans 26,047,852 31,452,606 20.75% Earning assets 39,033,107 42,796,688 9.64% Total deposits 36,006,833 39,543,986 9.82% Stockholders' equity 4,050,202 4,280,085 5.68% Financial ratios: Return on average assets: From continuing operations 1.65% 1.53% Net income 1.70% 1.81% Return on average stockholders' equity: From continuing operations 17.53% 17.07% Net income 18.09% 20.16% Efficiency ratio (5) 57.95% 60.75% Net interest margin (2) 4.17% 4.31% Dividend payout ratio 28.90% 31.55% Tangible equity ratio 7.94% 8.31% Tier 1 risk-based capital ratio (6) (8) 9.71% 9.18% Total risk-based capital ratio (6) (8) 12.17% 11.11% Leverage ratio (6) (8) 8.09% 8.39% Allowance for credit losses to total loans (7) 1.65% 1.32% Allowance for credit losses to nonaccrual loans (7) 337.74% 743.58% Net loans charged off (recovered) to average total loans 0.09% -0.01% Nonperforming assets to total loans, foreclosed assets, and distressed loans held for sale 0.51% 0.19% Nonperforming assets to total assets (8) 0.31% 0.12% On an Operating Earnings from Continuing Operations Basis (1): - ----------------------------------------------------------- Selected financial data on continuing operations on an operating earnings basis (see bottom of exhibit 6 for non-recurring items): Operating earnings per common share (basic) $4.44 $5.04 Operating earnings per common share (diluted) $4.36 $4.94 Operating return on average assets 1.52% 1.53% Operating return on average stockholders' equity 16.18% 17.07% Operating efficiency ratio (5) 60.37% 60.75% Operating dividend payout ratio 31.31% 31.55% - ------------------------------------------------------------ (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect discontinued operations. Average balances used to calculate our financial ratios are based on continuing operations data only, unless otherwise indicated. (2) Taxable-equivalent basis. (3) Included in noninterest expense at December 31, 2005 was a $4 million provision for off-balance sheet commitments. (4) Dividends per share reflect dividends declared on UnionBanCal Corporation's common stock outstanding as of the declaration date. (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 and is calculated for continuing operations only. (6) Estimated as of December 31, 2005. The regulatory capital and leverage ratios were not restated and therefore include discontinued operations. (7) The allowance for credit losses ratios include the allowance for loan losses and losses on off-balance sheet commitments. These ratios relate to continuing operations only. (8) End of period total assets and assets used in calculating these ratios include those of discontinued operations. Exhibit 3 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (1) (Taxable-Equivalent Basis) On a Reported Earnings Basis - ---------------------------------------------------------------------- For the Three Months Ended For the Twelve Months Ended ----------------------------- ----------------------- Amounts in thousands, except per Dec. 31, Sept. 30, Dec. 31, Dec. 31, share data) 2004 2005 2005 2004 2005 - ---------------- --------- --------- --------- ----------- ----------- Interest Income Loans $376,398 $461,892 $497,046 $1,368,438 $1,802,853 Securities 106,033 98,056 95,436 427,598 397,775 Interest bearing deposits in banks 1,471 303 1,244 3,417 2,676 Federal funds sold and securities purchased under resale agreements 2,686 6,777 6,129 9,189 20,535 Trading account assets 1,050 1,115 1,422 3,778 4,494 --------- --------- --------- ----------- ----------- Total interest income 487,638 568,143 601,277 1,812,420 2,228,333 --------- --------- --------- ----------- ----------- Interest Expense Domestic deposits 44,686 78,983 91,484 144,879 289,285 Foreign deposits 857 3,813 5,819 1,808 14,066 Federal funds purchased and securities sold under repurchase agreements 3,114 294 1,042 6,654 10,372 Commercial paper 3,016 9,394 9,911 6,899 31,672 Medium and long-term debt 5,572 8,520 9,695 16,773 32,206 Trust notes 227 239 238 2,780 953 Other borrowed funds 1,267 1,707 1,260 4,866 6,313 --------- --------- --------- ----------- ----------- Total interest expense 58,739 102,950 119,449 184,659 384,867 --------- --------- --------- ----------- ----------- Net Interest Income 428,899 465,193 481,828 1,627,761 1,843,466 Reversal of allowance for loan losses (2) (16,719) (15,000) (10,000) (45,757) (50,683) --------- --------- --------- ----------- ----------- Net interest income after reversal of allowance for loan losses 445,618 480,193 491,828 1,673,518 1,894,149 --------- --------- --------- ----------- ----------- Noninterest Income Service charges on deposit accounts 82,233 84,822 80,030 335,207 323,865 Trust and investment management fees 41,384 43,500 46,465 153,083 173,518 Insurance commissions 20,024 17,819 19,739 77,874 78,915 Merchant banking fees 12,783 11,257 8,261 39,646 43,898 Foreign exchange gains, net 7,795 8,849 8,332 32,004 33,902 Brokerage commissions and fees 8,216 5,290 7,171 33,063 30,038 Card processing fees, net 5,246 6,597 6,437 34,147 25,105 Securities losses, net (13,697) (320) (36,750) (12,085) (50,039) Other 48,405 34,374 43,735 219,884 145,585 --------- --------- --------- ----------- ----------- Total noninterest income 212,389 212,188 183,420 912,823 804,787 --------- --------- --------- ----------- ----------- Noninterest Expense Salaries and employee benefits 216,254 236,124 232,496 848,717 934,354 Net occupancy 34,203 34,336 41,048 127,720 141,299 Outside services 22,848 28,533 40,942 74,978 117,190 Equipment 18,482 15,828 18,042 67,839 68,206 Software 14,555 14,378 15,427 51,877 58,511 Professional services 14,961 11,240 9,369 48,371 45,500 Communications 10,283 10,808 10,959 42,011 41,909 Foreclosed asset expense (income) 685 (3,435) (29) 1,211 (5,635) Provision for losses on off- balance sheet commitments (2) - - 5,000 - 4,000 Other 56,567 48,884 55,944 210,865 201,912 --------- --------- --------- ----------- ----------- Total noninterest expense 388,838 396,696 429,198 1,473,589 1,607,246 --------- --------- --------- ----------- ----------- Income from continuing operations before income taxes 269,169 295,685 246,050 1,112,752 1,091,690 Taxable- equivalent adjustment 1,128 1,051 1,228 3,745 4,352 Income tax expense 89,944 93,388 82,657 398,933 356,698 --------- --------- --------- ----------- ----------- Income from Continuing Operations 178,097 201,246 162,165 710,074 730,640 --------- --------- --------- ----------- ----------- Income (loss) from discontinued operations before income taxes 3,666 (25,612) 227,967 36,339 205,582 Income tax expense (benefit) 1,251 (9,651) 81,643 13,879 73,289 --------- --------- --------- ----------- ----------- Income (loss) from Discontinued Operations 2,415 (15,961) 146,324 22,460 132,293 --------- --------- --------- ----------- ----------- Net Income $180,512 $185,285 $308,489 $732,534 $862,933 ========= ========= ========= =========== =========== Income from continuing operations per common share - basic $1.20 $1.39 $1.12 $4.81 $5.04 ========= ========= ========= =========== =========== Net Income per common share - basic $1.22 $1.28 $2.14 $4.96 $5.95 ========= ========= ========= =========== =========== Income from continuing operations per common share - diluted $1.18 $1.36 $1.10 $4.72 $4.94 ========= ========= ========= =========== =========== Net income per common share - diluted $1.19 $1.26 $2.09 $4.87 $5.84 ========= ========= ========= =========== =========== Weighted average common shares outstanding - basic 148,422 144,459 144,466 147,767 145,109 ========= ========= ========= =========== =========== Weighted average common shares outstanding - diluted 151,513 147,613 147,386 150,303 147,792 ========= ========= ========= =========== =========== (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect the discontinued operations. (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 4 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (1) (Taxable-Equivalent Basis) On an Operating Earnings Basis (2) - ---------------------------------------------------------------------- For the Three Months Ended For the Twelve Months Ended ----------------------------- ----------------------- (Amounts in thousands, except per Dec. 31, Sept.30, Dec. 31, Dec. 31, share data) 2004 2005 2005 2004 2005 --------- --------- --------- ----------- ----------- Interest Income Loans $376,398 $461,892 $497,046 $1,368,438 $1,802,853 Securities 106,033 98,056 95,436 427,598 397,775 Interest bearing deposits in banks 1,471 303 1,244 3,417 2,676 Federal funds sold and securities purchased under resale agreements 2,686 6,777 6,129 9,189 20,535 Trading account assets 1,050 1,115 1,422 3,778 4,494 --------- --------- --------- ----------- ----------- Total interest income 487,638 568,143 601,277 1,812,420 2,228,333 --------- --------- --------- ----------- ----------- Interest Expense Domestic deposits 44,686 78,983 91,484 144,879 289,285 Foreign deposits 857 3,813 5,819 1,808 14,066 Federal funds purchased and securities sold under repurchase agreements 3,114 294 1,042 6,654 10,372 Commercial paper 3,016 9,394 9,911 6,899 31,672 Medium and long-term debt 5,572 8,520 9,695 16,773 32,206 Trust notes 227 239 238 2,780 953 Other borrowed funds 1,267 1,707 1,260 4,866 6,313 --------- --------- --------- ----------- ----------- Total interest expense 58,739 102,950 119,449 184,659 384,867 --------- --------- --------- ----------- ----------- Net Interest Income 428,899 465,193 481,828 1,627,761 1,843,466 Reversal of allowance for loan losses (3) (16,719) (15,000) (10,000) (45,757) (50,683) --------- --------- --------- ----------- ----------- Net interest income after reversal of allowance for loan losses 445,618 480,193 491,828 1,673,518 1,894,149 --------- --------- --------- ----------- ----------- Noninterest Income Service charges on deposit accounts 82,233 84,822 80,030 335,207 323,865 Trust and investment management fees 41,384 43,500 46,465 153,083 173,518 Insurance commissions 20,024 17,819 19,739 77,874 78,915 Merchant banking fees 12,783 11,257 8,261 39,646 43,898 Foreign exchange gains, net 7,795 8,849 8,332 32,004 33,902 Brokerage commissions and fees 8,216 5,290 7,171 33,063 30,038 Card processing fees, net 5,246 6,597 6,437 34,147 25,105 Securities losses, net (13,697) (320) (36,750) (12,085) (50,039) Other 48,405 34,374 43,735 118,349 145,585 --------- --------- --------- ----------- ----------- Total noninterest income 212,389 212,188 183,420 811,288 804,787 --------- --------- --------- ----------- ----------- Noninterest Expense Salaries and employee benefits 216,254 236,124 232,496 848,717 934,354 Net occupancy 34,203 34,336 41,048 127,720 141,299 Outside services 22,848 28,533 40,942 74,978 117,190 Equipment 18,482 15,828 18,042 67,839 68,206 Software 14,555 14,378 15,427 51,877 58,511 Professional services 14,961 11,240 9,369 48,371 45,500 Communications 10,283 10,808 10,959 42,011 41,909 Foreclosed asset expense (income) 685 (3,435) (29) 1,211 (5,635) Provision for losses on off- balance sheet commitments (3) - - 5,000 - 4,000 Other 56,567 48,884 55,944 210,865 201,912 --------- --------- --------- ----------- ----------- Total noninterest expense 388,838 396,696 429,198 1,473,589 1,607,246 --------- --------- --------- ----------- ----------- Income from continuing operations before income taxes 269,169 295,685 246,050 1,011,217 1,091,690 Taxable- equivalent adjustment 1,128 1,051 1,228 3,745 4,352 Income tax expense 89,944 93,388 82,657 352,066 356,698 --------- --------- --------- ----------- ----------- Income from Continuing Operations 178,097 201,246 162,165 655,406 730,640 --------- --------- --------- ----------- ----------- Income (loss) from discontinued operations before income taxes 3,666 (25,612) 227,967 36,339 205,582 Income tax expense (benefit) 1,251 (9,651) 81,643 13,879 73,289 --------- --------- --------- ----------- ----------- Income (loss) from Discontinued Operations 2,415 (15,961) 146,324 22,460 132,293 --------- --------- --------- ----------- ----------- Net Income $180,512 $185,285 $308,489 $677,866 $862,933 ========= ========= ========= =========== =========== Income from continuing operations per common share - basic $1.20 $1.39 $1.12 $4.44 $5.04 ========= ========= ========= =========== =========== Net Income per common share - basic $1.22 $1.28 $2.14 $4.59 $5.95 ========= ========= ========= =========== =========== Income from continuing operations per common share - diluted $1.18 $1.36 $1.10 $4.36 $4.94 ========= ========= ========= =========== =========== Net income per common share - diluted $1.19 $1.26 $2.09 $4.51 $5.84 ========= ========= ========= =========== =========== Weighted average common shares outstanding - basic 148,422 144,459 144,466 147,767 145,109 ========= ========= ========= =========== =========== Weighted average common shares outstanding - diluted 151,513 147,613 147,386 150,303 147,792 ========= ========= ========= =========== =========== (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect the discontinued operations. See exhibits 5 and 6 for reconciliation of 'reported earnings' (2) to 'operating earnings' from continuing operations. Beginning in the quarter ending March 31, 2005, the net change in (3) 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 from Continuing Operations - ---------------------------------------------------------------------- For the Three Months Ended December 31, 2004 ----------------------------- (Amounts in thousands, Reported Non- Operating except per share data) recurring Items - ---------------------------------------------------------------------- Net Interest Income $428,899 $- $428,899 Reversal of allowance for loan losses (16,719) - (16,719) --------- --------- --------- Net interest income after reversal of allowance for loan losses 445,618 - 445,618 --------- --------- --------- Noninterest Income All other (no adjustments) 212,389 - 212,389 --------- --------- --------- Total noninterest income 212,389 - 212,389 --------- --------- --------- Noninterest Expense All other (no adjustments) 388,838 - 388,838 --------- --------- --------- Total noninterest expense 388,838 - 388,838 --------- --------- --------- Income from continuing operations before income taxes 269,169 - 269,169 Taxable-equivalent adjustment 1,128 - 1,128 Income tax expense 89,944 - 89,944 --------- --------- --------- Income/Operating Earnings from Continuing Operations $178,097 $- $178,097 ========= ========= ========= Income/Operating earnings from continuing operations per common share - basic $1.20 $- $1.20 ========= ========= ========= Income/Operating earnings from continuing operations per common share - diluted $1.18 $- $1.18 ========= ========= ========= Weighted average common shares outstanding - basic 148,422 148,422 ========= ========= Weighted average common shares outstanding - diluted 151,513 151,513 ========= ========= Reported Income from Continuing Operations $178,097 ------------------------------ Non-recurring Items ------------------------------ Operating Earnings from Continuing Operations $178,097 ============================== For the Three Months Ended September 30, 2005 ----------------------------- (Amounts in thousands, except per Reported Non- Operating share data) recurring Items - ----------------------------------------------------------------- Net Interest Income $465,193 $- $465,193 Reversal of allowance for loan losses (15,000) - (15,000) --------- --------- --------- Net interest income after reversal of allowance for loan losses 480,193 - 480,193 --------- --------- --------- Noninterest Income All other (no adjustments) 212,188 - 212,188 --------- --------- --------- Total noninterest income 212,188 - 212,188 --------- --------- --------- Noninterest Expense All other (no adjustments) 396,696 - 396,696 --------- --------- --------- Total noninterest expense 396,696 - 396,696 --------- --------- --------- Income from continuing operations before income taxes 295,685 - 295,685 Taxable-equivalent adjustment 1,051 - 1,051 Income tax expense 93,388 - 93,388 --------- --------- --------- Income/Operating Earnings from Continuing Operations $201,246 $- $201,246 ========= ========= ========= Income/Operating earnings from continuing operations per common share - basic $1.39 $- $1.39 ========= ========= ========= Income/Operating earnings from continuing operations per common share - diluted $1.36 $- $1.36 ========= ========= ========= Weighted average common shares outstanding - basic 144,459 144,459 ========= ========= Weighted average common shares outstanding - diluted 147,613 147,613 ========= ========= Reported Income from Continuing Operations $201,246 ------------------------------ Non-recurring Items ------------------------------ Operating Earnings from Continuing Operations $201,246 ============================== For the Three Months Ended December 31, 2005 ----------------------------- (Amounts in thousands, except per Reported Non- Operating share data) recurring Items - ------------------------------------------------------------------- Net Interest Income $481,828 $- $481,828 Reversal of allowance for loan losses (10,000) - (10,000) --------- --------- --------- Net interest income after reversal of allowance for loan losses 491,828 - 491,828 --------- --------- --------- Noninterest Income All other (no adjustments) 183,420 - 183,420 --------- --------- --------- Total noninterest income 183,420 - 183,420 --------- --------- --------- Noninterest Expense All other (no adjustments) 429,198 - 429,198 --------- --------- --------- Total noninterest expense 429,198 - 429,198 --------- --------- --------- Income from continuing operations before income taxes 246,050 - 246,050 Taxable-equivalent adjustment 1,228 - 1,228 Income tax expense 82,657 - 82,657 --------- --------- --------- Income/Operating Earnings from Continuing Operations $162,165 $- $162,165 ========= ========= ========= Income/Operating earnings from continuing operations per common share - basic $1.12 $- $1.12 ========= ========= ========= Income/Operating earnings from continuing operations per common share - diluted $1.10 $- $1.10 ========= ========= ========= Weighted average common shares outstanding - basic 144,466 144,466 ========= ========= Weighted average common shares outstanding - diluted 147,386 147,386 ========= ========= Reported Income from Continuing Operations $162,165 ----------------------------- Non-recurring Items ----------------------------- Operating Earnings from Continuing Operations $162,165 ============================= Exhibit 6 UnionBanCal Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) Reconciliations (Taxable-Equivalent Basis) Reported Earnings Reconciliation to Operating Earnings from Continuing Operations - ---------------------------------------------------------------------- For the Twelve Months Ended December 31, 2004 --------------------------------- (Amounts in thousands, Reported Non- Operating except per share data) recurring Items - ---------------------------------------------------------------------- Net Interest Income $1,627,761 $- $1,627,761 Reversal of allowance for loan losses (45,757) - (45,757) ----------- --------- ----------- Net interest income after reversal of allowance for loan losses 1,673,518 - 1,673,518 ----------- --------- ----------- Noninterest Income Other (1)(2) 219,884 (101,535) 118,349 All other (no adjustments) 692,939 - 692,939 ----------- --------- ----------- Total noninterest income 912,823 (101,535) 811,288 ----------- --------- ----------- Noninterest Expense All other (no adjustments) 1,473,589 - 1,473,589 ----------- --------- ----------- Total noninterest expense 1,473,589 - 1,473,589 ----------- --------- ----------- Income from continuing operations before income taxes 1,112,752 (101,535) 1,011,217 Taxable-equivalent adjustment 3,745 - 3,745 Income tax expense (3)(4) 398,933 (46,867) 352,066 ----------- --------- ----------- Income/Operating Earnings from Continuing Operations $710,074 $(54,668) $655,406 =========== ========= =========== Income/Operating earnings from continuing operations per common share - basic $4.81 $(0.37) $4.44 =========== ========= =========== Income/Operating earnings from continuing operations per common share - diluted $4.72 $(0.36) $4.36 =========== ========= =========== Weighted average common shares outstanding - basic 147,767 147,767 =========== =========== Weighted average common shares outstanding - diluted 150,303 150,303 =========== =========== Reported Income from Continuing Operations $710,074 ---------------------------------- 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 (4) Adjustment to CA state income tax (3rd quarter 2004) 7,843 ---------------------------------- Operating Earnings from Continuing Operations $655,406 ================================== For the Twelve Months Ended December 31, 2005 --------------------------------- (Amounts in thousands, Reported Non- Operating except per share data) recurring Items - ---------------------------------------------------------------------- Net Interest Income $1,843,466 $- $1,843,466 Reversal of allowance for loan losses (50,683) - (50,683) ----------- --------- ----------- Net interest income after reversal of allowance for loan losses 1,894,149 - 1,894,149 ----------- --------- ----------- Noninterest Income Other (1)(2) 145,585 - 145,585 All other (no adjustments) 659,202 - 659,202 ----------- --------- ----------- Total noninterest income 804,787 - 804,787 ----------- --------- ----------- Noninterest Expense All other (no adjustments) 1,607,246 - 1,607,246 ----------- --------- ----------- Total noninterest expense 1,607,246 - 1,607,246 ----------- --------- ----------- Income from continuing operations before income taxes 1,091,690 - 1,091,690 Taxable-equivalent adjustment 4,352 - 4,352 Income tax expense (3)(4) 356,698 - 356,698 ----------- --------- ----------- Income/Operating Earnings from Continuing Operations $730,640 $- $730,640 =========== ========= =========== Income/Operating earnings from continuing operations per common share - basic $5.04 $- $5.04 =========== ========= =========== Income/Operating earnings from continuing operations per common share - diluted $4.94 $- $4.94 =========== ========= =========== Weighted average common shares outstanding - basic 145,109 145,109 =========== =========== Weighted average common shares outstanding - diluted 147,792 147,792 =========== =========== Reported Income from Continuing Operations $730,640 --------------------------------- 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) - (4) Adjustment to CA state income tax (3rd quarter 2004) - --------------------------------- Operating Earnings from Continuing Operations $730,640 ================================= Exhibit 7 UnionBanCal Corporation and Subsidiaries Consolidated Balance Sheet (Unaudited) December 31, ------------------------- (Dollars in thousands) 2004 2005 - -------------------------------------------- ------------ ------------ Assets Cash and due from banks $1,977,422 $2,402,212 Interest bearing deposits in banks 277,482 771,164 Federal funds sold and securities purchased under resale agreements 944,950 796,500 ------------ ------------ Total cash and cash equivalents 3,199,854 3,969,876 Trading account assets 235,840 312,655 Securities available for sale: Securities pledged as collateral 144,240 96,994 Held in portfolio 10,994,981 8,072,286 Loans (net of allowance for loan losses: 2004, $399,156; 2005, $351,532) 28,710,259 32,744,063 Due from customers on acceptances 23,841 19,252 Premises and equipment, net 526,543 536,074 Intangible assets 61,737 42,616 Goodwill 450,961 454,015 Other assets 1,731,355 2,080,321 Assets of discontinued operations to be disposed or sold (1) 2,018,410 1,054,594 ------------ ------------ Total assets $48,098,021 $49,382,746 ============ ============ Liabilities Domestic deposits: Noninterest bearing $19,100,128 $19,489,377 Interest bearing 19,402,379 19,789,496 Foreign deposits: Interest bearing 216,999 803,366 ------------ ------------ Total deposits 38,719,506 40,082,239 Federal funds purchased and securities sold under repurchase agreements 587,249 651,529 Commercial paper 824,887 680,027 Other borrowed funds 172,549 134,485 Acceptances outstanding 23,841 19,252 Other liabilities 1,112,743 1,433,222 Medium and long-term debt 816,113 801,095 Junior subordinated debt payable to subsidiary grantor trust 15,790 15,338 Liabilities of discontinued operations to be extinguished or assumed (1) 1,533,099 1,005,859 ------------ ------------ Total liabilities 43,805,777 44,823,046 ------------ ------------ Commitments and contingencies Stockholders' Equity Preferred stock: Authorized 5,000,000 shares, no shares issued or outstandingat December 31, 2004 or 2005 - - Common stock, par value $1 per share in 2004 and in 2005: Authorized 300,000,000 shares, issued 152,191,818 shares in 2004 and 154,469,215 shares in 2005 152,192 154,469 Additional paid-in capital 881,928 994,956 Treasury stock - 3,831,900 shares in 2004 and 10,262,143 shares in 2005 (223,361) (612,732) Retained earnings 3,526,312 4,141,400 Accumulated other comprehensive loss (44,827) (118,393) ------------ ------------ Total stockholders' equity 4,292,244 4,559,700 ------------ ------------ Total liabilities and stockholders' equity $48,098,021 $49,382,746 ============ ============ (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All prior periods presented have been restated to reflect the discontinued operations. Exhibit 8 UnionBanCal Corporation and Subsidiaries Loans (Unaudited) Percent Change to Three Months Ended December 31, 2005 from -------------------------- ------------------ Dec. 31, Sept. 30, Dec. 31, Dec. 31, Sept. 30, (Dollars in millions) 2004 2005 2005 2004 2005 - ----------------------- -------- -------- -------- --------- -------- Loans (period average) Commercial, financial and industrial $9,676 $11,225 $11,754 21.48% 4.71% Construction 1,132 1,299 1,414 24.91% 8.85% Mortgage - Commercial 5,107 5,589 5,653 10.69% 1.15% Mortgage - Residential 9,173 10,763 11,143 21.48% 3.53% Consumer 2,313 2,478 2,490 7.65% 0.48% Lease financing 607 593 576 (5.11%) (2.87%) Loans originated in foreign branches 180 228 227 26.11% (0.44%) -------- -------- -------- Total loans held to maturity $28,188 $32,175 $33,257 17.98% 3.36% Total loans held for sale 2 3 4 100.00% 33.33% -------- -------- -------- Total loans $28,190 $32,178 $33,261 17.99% 3.37% ======== ======== ======== Nonperforming assets (period end) Nonaccrual loans: Commercial, financial and industrial $59 $25 $50 (15.25%) 100.00% Construction 3 - - (100.00%) 0.00% Mortgage - Commercial 26 10 9 (65.38%) (10.00%) Lease 55 - - (100.00%) 0.00% -------- -------- -------- Total nonaccrual loans 143 35 59 (58.74%) 68.57% Foreclosed assets 7 3 3 (57.14%) 0.00% -------- -------- -------- Total nonperforming assets $150 $38 $62 (58.67%) 63.16% ======== ======== ======== Loans 90 days or more past due and still accruing $4 $5 $5 25.00% 0.00% ======== ======== ======== Analysis of Allowance for Credit Losses (1) Beginning balance $482 $395 $364 Reversal of provision for credit losses (17) (15) (10) Foreign translation adjustment and other net additions (deductions) (2) (70) - - Loans charged off: Commercial, financial and industrial (17) (9) (4) Consumer (2) (1) (1) Mortgage - - (1) Lease financing - (19) - -------- -------- -------- Total loans charged off (19) (29) (6) -------- -------- -------- Loans recovered: Commercial, financial and industrial 21 13 3 Consumer 1 - - Lease financing 1 - - -------- -------- -------- Total loans recovered 23 13 3 -------- -------- -------- Net loans (charged off) recovered 4 (16) (3) -------- -------- -------- Ending balance of allowance for loan losses $399 $364 $351 Allowance for off- balance sheet commitment losses (2) 83 82 87 -------- -------- -------- Allowance for credit losses $482 $446 $438 ======== ======== ======== - ----------------------- (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All prior periods presented have been restated to reflect the discontinued operations. (2) 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 September 30, 2005 and December 31, 2005, the allowance related to off-balance sheet commitments was $82 million and $87 million, respectively. Exhibit 9 UnionBanCal Corporation and Subsidiaries Net Interest Income (Unaudited) For the Three Months Ended ----------------------------------------- December 31, 2004 ----------------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1)(2) - --------------------------- ------------------- ----------- ------ Assets Loans: (3) Domestic $28,009,985 $374,241 5.32% Foreign (4) 180,355 2,157 4.76 Securities - taxable 11,814,576 104,657 3.54 Securities - tax-exempt 69,231 1,376 7.95 Interest bearing deposits in banks 327,783 1,471 1.79 Federal funds sold and securities purchased under resale agreements 522,166 2,686 2.05 Trading account assets 279,439 1,050 1.49 ------------ ----------- Total earning assets 41,203,535 487,638 4.72 ----------- Allowance for loan losses (5) (494,614) Cash and due from banks 2,254,283 Premises and equipment, net 505,089 Other assets 2,110,111 ------------ Total assets $45,578,404 ============ Liabilities Domestic deposits: Interest bearing $12,231,641 22,807 0.74 Savings and consumer time 4,874,691 12,092 0.99 Large time 2,026,050 9,787 1.92 Foreign deposits (4) 278,870 857 1.22 ------------ ----------- Total interest bearing deposits 19,411,252 45,543 0.93 ------------ ----------- Federal funds purchased and securities sold under repurchase agreements 775,182 3,376 1.73 Net funding allocated from (to) discontinued operations (6) (60,351) (262) 1.73 Commercial paper 778,724 3,016 1.54 Other borrowed funds 126,550 1,267 3.98 Medium and long-term debt 810,665 5,572 2.73 Trust notes 15,845 227 5.73 ------------ ----------- Total borrowed funds 2,446,615 13,196 2.15 ------------ ----------- Total interest bearing liabilities 21,857,867 58,739 1.07 ----------- Noninterest bearing deposits 18,417,618 Other liabilities (5) 1,056,075 ------------ Total liabilities 41,331,560 Stockholders' Equity Common equity 4,246,844 ------------ Total stockholders' equity 4,246,844 ------------ Total liabilities and stockholders'equity $45,578,404 ============ Reported Net Interest Income/Margin Net interest income/margin (taxable-equivalent basis) 428,899 4.15% Less: taxable-equivalent adjustment 1,128 ----------- Net interest income $427,771 =========== - ---------------------------------------------------------------------- Average Assets and Liabilities of Discontinued Operations for Period Ended: December 31, 2004 ------------------ Assets $1,920,421 Liabilities $1,860,070 Net Asset (Liabilities) $ 60,351 - ---------------------------------------------------------------------- For the Three Months Ended ----------------------------------------- September 30, 2005 ----------------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1)(2) - --------------------------- ------------------- ----------- ------ Assets Loans: (3) Domestic $31,949,929 $459,280 5.72% Foreign (4) 227,887 2,612 4.55 Securities - taxable 9,971,085 96,706 3.88 Securities - tax-exempt 65,800 1,350 8.21 Interest bearing deposits in banks 57,042 303 2.11 Federal funds sold and securities purchased under resale agreements 770,116 6,777 3.49 Trading account assets 329,318 1,115 1.34 ------------ ----------- Total earning assets 43,371,177 568,143 5.21 ----------- Allowance for loan losses (5) (392,651) Cash and due from banks 2,232,281 Premises and equipment, net 514,156 Other assets 2,487,066 ------------ Total assets $48,212,029 ============ Liabilities Domestic deposits: Interest bearing $13,157,103 44,318 1.34 Savings and consumer time 4,642,782 15,668 1.34 Large time 2,588,559 18,997 2.91 Foreign deposits (4) 517,298 3,813 2.92 ------------ ----------- Total interest bearing deposits 20,905,742 82,796 1.57 ------------ ----------- Federal funds purchased and securities sold under repurchase agreements 630,272 5,158 3.25 Net funding allocated from (to) discontinued operations (6) (593,732) (4,864) 3.25 Commercial paper 1,207,822 9,394 3.09 Other borrowed funds 173,853 1,707 3.89 Medium and long-term debt 817,602 8,520 4.13 Trust notes 15,506 239 6.15 ------------ ----------- Total borrowed funds 2,251,323 20,154 3.55 ------------ ----------- Total interest bearing liabilities 23,157,065 102,950 1.76 ----------- Noninterest bearing deposits 19,387,786 Other liabilities (5) 1,392,056 ------------ Total liabilities 43,936,907 Stockholders' Equity Common equity 4,275,122 ------------ Total stockholders' equity 4,275,122 ------------ Total liabilities and stockholders' equity $48,212,029 ============ Reported Net Interest Income/Margin Net interest income/margin (taxable-equivalent basis) 465,193 4.27% Less: taxable-equivalent adjustment 1,051 ----------- Net interest income $464,142 =========== - ---------------------------------------------------------------------- Average Assets and Liabilities of Discontinued Operations for Period Ended: September 30, 2005 ------------------ Assets $1,978,255 Liabilities $1,384,523 Net Asset (Liabilities) $ 593,732 - ---------------------------------------------------------------------- For the Three Months Ended ----------------------------------------- December 31, 2005 ----------------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate (1) (1)(2) - --------------------------- ------------------- ----------- ------ Assets Loans: (3) Domestic $33,034,251 $494,273 5.95% Foreign (4) 226,693 2,773 4.85 Securities - taxable 9,027,589 94,135 4.17 Securities - tax-exempt 65,582 1,301 7.93 Interest bearing deposits in banks 157,604 1,244 3.13 Federal funds sold and securities purchased under resale agreements 595,208 6,129 4.09 Trading account assets 344,759 1,422 1.64 ------------ ----------- Total earning assets 43,451,686 601,277 5.51 ----------- Allowance for loan losses (5) (362,676) Cash and due from banks 2,268,566 Premises and equipment, net 520,586 Other assets 2,528,325 ------------ Total assets $48,406,487 ============ Liabilities Domestic deposits: Interest bearing $13,523,357 57,469 1.69 Savings and consumer time 4,550,219 17,407 1.52 Large time 2,197,863 16,608 3.00 Foreign deposits (4) 718,324 5,819 3.21 ------------ ----------- Total interest bearing deposits 20,989,763 97,303 1.84 ------------ ----------- Federal funds purchased and securities sold under repurchase agreements 533,068 5,025 3.74 Net funding allocated from (to) discontinued operations (6) (422,508) (3,983) 3.74 Commercial paper 1,108,434 9,911 3.55 Other borrowed funds 121,401 1,260 4.12 Medium and long-term debt 804,346 9,695 4.78 Trust notes 15,393 238 6.19 ------------ ----------- Total borrowed funds 2,160,134 22,146 4.07 ------------ ----------- Total interest bearing liabilities 23,149,897 119,449 2.05 ----------- Noninterest bearing deposits 19,264,098 Other liabilities (5) 1,504,096 ------------ Total liabilities 43,918,091 Stockholders' Equity Common equity 4,488,396 ------------ Total stockholders' equity 4,488,396 ------------ Total liabilities and stockholders' equity $48,406,487 ============ Reported Net Interest Income/Margin Net interest income/margin (taxable-equivalent basis) 481,828 4.42% Less: taxable-equivalent adjustment 1,228 ----------- Net interest income $480,600 =========== - ---------------------------------------------------------------------- Average Assets and Liabilities of Discontinued Operations for Period Ended: December 31, 2005 ----------------- Assets $1,668,335 Liabilities $1,245,827 Net Asset (Liabilities) $ 422,508 - ---------------------------------------------------------------------- - ------------------------------- (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 starting in the quarter ended March 31, 2005. Prior periods have not been restated. (6) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect the discontinued operations. Net funding allocated from (to) discontinued operations represents the shortage (excess) of assets over liabilities of discontinued operations. The expense (earnings) on funds allocated from (to) discontinued operations are calculated by taking the net balance of discontinued operations for each quarter and applying an earnings rate or a cost of funds equivalent to the corresponding quarter's fed funds purchased rate. Exhibit 10 UnionBanCal Corporation and Subsidiaries Net Interest Income (Unaudited) - ---------------------------------------------------------------------- For the Twelve Months Ended December 31, 2004 --------------------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense (1) Rate (1) - ---------------------- -------------- --------------- ---------- Assets Loans: (2) Domestic $25,916,631 $1,362,229 5.26 % Foreign (3) 131,221 6,209 4.73 Securities - taxable 11,701,866 422,047 3.61 Securities - tax- exempt 68,399 5,551 8.12 Interest bearing deposits in banks 201,716 3,417 1.69 Federal funds sold and securities purchased under resale agreements 719,714 9,189 1.28 Trading account assets 293,560 3,778 1.29 -------------- ---------------- Total earning assets 39,033,107 1,812,420 4.64 ---------------- Allowance for loan losses (4) (513,165) Cash and due from banks 2,171,838 Premises and equipment, net 507,503 Other assets 1,959,431 -------------- Total assets $43,158,714 ============== Liabilities Domestic deposits: Interest bearing $11,712,648 74,006 0.63 Savings and consumer time 4,405,572 38,374 0.87 Large time 2,145,306 32,499 1.51 Foreign deposits (3) 261,102 1,808 0.69 -------------- ---------------- Total interest bearing deposits 18,524,628 146,687 0.79 -------------- ---------------- Federal funds purchased and securities sold under repurchase agreements 596,997 7,470 1.25 Net funding allocated from (to) discontinued operations (5) (108,425) (816) 0.75 Commercial paper 620,053 6,899 1.11 Other borrowed funds 162,424 4,866 3.00 Medium and long-term debt 807,070 16,773 2.08 Trust notes 62,480 2,780 4.45 -------------- ---------------- Total borrowed funds 2,140,599 37,972 1.77 -------------- ---------------- Total interest bearing liabilities 20,665,227 184,659 0.89 ---------------- Noninterest bearing deposits 17,482,205 Other liabilities (4) 961,080 -------------- Total liabilities 39,108,512 Stockholders' Equity Common equity 4,050,202 -------------- Total stockholders' equity 4,050,202 -------------- Total liabilities and stockholders' equity $43,158,714 ============== Reported Net Interest Income/Margin Net interest income/margin (taxable-equivalent basis) 1,627,761 4.17 % Less: taxable- equivalent adjustment 3,745 ---------------- Net interest income $1,624,016 ================ - ---------------------------------------------------------------------- Average Assets and Liabilities of Discontinued Operations for Period Ended: December 31, 2004 Assets $2,067,591 Liabilities $1,959,166 Net Asset (Liabilities) $108,425 For the Twelve Months Ended December 31, 2005 ----------------------------------------------- Interest Average Average Income/ Yield/ (Dollars in thousands) Balance Expense (1) Rate (1) - -------------------------------------- -------------- ------------ Assets Loans: (2) Domestic $31,238,894 $1,792,513 5.74 % Foreign (3) 213,712 10,340 4.84 Securities - taxable 10,262,274 392,452 3.82 Securities - tax- exempt 66,178 5,323 8.04 Interest bearing deposits in banks 112,247 2,676 2.38 Federal funds sold and securities purchased under resale agreements 610,735 20,535 3.36 Trading account assets 292,648 4,494 1.54 ---------------- ------------- Total earning assets 42,796,688 2,228,333 5.21 ------------- Allowance for loan losses (4) (389,398) Cash and due from banks 2,247,905 Premises and equipment, net 520,084 Other assets 2,435,539 ---------------- Total assets $47,610,818 ================ Liabilities Domestic deposits: Interest bearing $12,843,905 159,221 1.24 Savings and consumer time 4,667,868 60,248 1.29 Large time 2,617,185 69,816 2.67 Foreign deposits (3) 503,870 14,066 2.79 ---------------- ------------- Total interest bearing deposits 20,632,828 303,351 1.47 ---------------- ------------- Federal funds purchased and securities sold under repurchase agreements 898,107 25,854 2.88 Net funding allocated from (to) discontinued operations (5) (507,397) (15,482) 3.05 Commercial paper 1,086,088 31,672 2.92 Other borrowed funds 168,220 6,313 3.75 Medium and long-term debt 807,592 32,206 3.99 Trust notes 15,562 953 6.12 ---------------- ------------- Total borrowed funds 2,468,172 81,516 3.30 ---------------- ------------- Total interest bearing liabilities 23,101,000 384,867 1.67 ------------- Noninterest bearing deposits 18,911,158 Other liabilities (4) 1,318,575 ---------------- Total liabilities 43,330,733 Stockholders' Equity Common equity 4,280,085 ---------------- Total stockholders' equity 4,280,085 ---------------- Total liabilities and stockholders' equity $47,610,818 ================ Reported Net Interest Income/Margin Net interest income/margin (taxable-equivalent basis) 1,843,466 4.31 % Less: taxable- equivalent adjustment 4,352 ------------- Net interest income $1,839,114 ============= - ---------------------------------------------------------------------- Average Assets and Liabilities of Discontinued Operations for Period Ended: December 31, 2005 Assets $1,897,622 Liabilities $1,390,225 Net Asset (Liabilities) $507,397 - ---------------------------------------------------------------------- (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 35 percent. (2) Average balances on loans outstanding include all nonperforming loans. The amortized portion of net loan origination fees (costs) is included in interest income on loans, representing an adjustment to the yield. (3) Foreign loans and deposits are those loans and deposits originated in foreign branches. (4) The average allowance related to off-balance sheet commitments was included in other liabilities starting in the quarter ended March 31, 2005. Prior periods have not been restated. (5) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect the discontinued operations. Net funding allocated from (to) discontinued operations represents the shortage (excess) of assets over liabilities of discontinued operations. The expense (earnings) on funds allocated from (to) discontinued operations are calculated by taking the net balance of discontinued operations for each quarter and applying an earnings rate or a cost of funds equivalent to the corresponding quarter's fed funds purchased rate. The year-to-date expense (earnings) amount is the sum of the quarterly amounts. Exhibit 11 UnionBanCal Corporation and Subsidiaries On a Reported Earnings Basis (reference to exhibit 3) (1) - ---------------------------------------------------------------------- Noninterest Income (Unaudited) Percentage Change to For the Three Months Ended December 31, 2005 From ----------------------------- ---------------- (Dollars in Dec. 31, Sept. 30, Dec.31, Dec. 31, Sept. 30, thousands) 2004 2005 2005 2004 2005 --------------------- --------- --------- --------- ------- -------- Service charges on deposit accounts $82,233 $84,822 $80,030 (2.68)% (5.65)% Trust and investment management fees 41,384 43,500 46,465 12.28 6.82 Insurance commissions 20,024 17,819 19,739 (1.42) 10.78 Foreign exchange gains, net 7,795 8,849 8,332 6.89 (5.84) Merchant banking fees 12,783 11,257 8,261 (35.38) (26.61) Brokerage commissions and fees 8,216 5,290 7,171 (12.72) 35.56 Card processing fees, net 5,246 6,597 6,437 22.70 (2.43) Securities losses, net (13,697) (320) (36,750) nm nm Gain on private capital investments, net 18,480 5,692 8,299 nm 45.80 Other 29,925 28,682 35,436 18.42 23.55 --------- --------- --------- Total noninterest income $212,389 $212,188 $183,420 (13.64)% (13.56)% ========= ========= ========= Noninterest Expense (Unaudited) Percentage Change to For the Three Months Ended December 31, 2005 From ----------------------------- ---------------- (Dollars in Dec. 31, Sept. 30, Dec.31, Dec. 31, Sept. 30, thousands) 2004 2005 2005 2004 2005 -------------------- --------- --------- --------- ------- -------- Salaries and other compensation $176,106 $190,293 $191,797 8.91 % 0.79 % Employee benefits 40,148 45,831 40,699 1.37 (11.20) --------- --------- --------- Salaries and employee benefits 216,254 236,124 232,496 7.51 (1.54) Net occupancy 34,203 34,336 41,048 20.01 19.55 Outside services 22,848 28,533 40,942 79.19 43.49 Equipment 18,482 15,828 18,042 (2.38) 13.99 Software 14,555 14,378 15,427 5.99 7.30 Advertising and public relations 10,810 9,114 11,145 3.10 22.28 Communications 10,283 10,808 10,959 6.57 1.40 Professional services 14,961 11,240 9,369 (37.38) (16.65) Data processing 8,112 7,406 7,985 (1.57) 7.82 Intangible asset amortization 5,689 4,985 4,965 (12.73) (0.40) Foreclosed asset expense (income) 685 (3,435) (29) nm (99.16) Provision for losses on off-balance sheet commitments (2) - - 5,000 nm nm Other 31,956 27,379 31,849 (0.33) 16.33 --------- --------- --------- Total noninterest expense $388,838 $396,696 $429,198 10.38 % 8.19 % ========= ========= ========= nm = not meaningful (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect the discontinued operations. (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 12 UnionBanCal Corporation and Subsidiaries On an Operating Earnings Basis (reference to exhibit 4) (1)(2) Noninterest Income (Unaudited) Percentage Change to December 31, 2005 For the Three Months Ended From ----------------------------- ----------------- December September December December September 31, 30, 31, 31, 30, (Dollars in thousands) 2004 2005 2005 2004 2005 - --------------------- --------- --------- --------- -------- -------- Service charges on deposit accounts $82,233 $84,822 $80,030 (2.68)% (5.65)% Trust and investment management fees 41,384 43,500 46,465 12.28 6.82 Insurance commissions 20,024 17,819 19,739 (1.42) 10.78 Foreign exchange gains, net 7,795 8,849 8,332 6.89 (5.84) Merchant banking fees 12,783 11,257 8,261 (35.38) (26.61) Brokerage commissions and fees 8,216 5,290 7,171 (12.72) 35.56 Card processing fees, net 5,246 6,597 6,437 22.70 (2.43) Securities losses, net (13,697) (320) (36,750) nm nm Gain on private capital investments, net 18,480 5,692 8,299 nm 45.80 Other 29,925 28,682 35,436 18.42 23.55 --------- --------- --------- Total noninterest income $212,389 $212,188 $183,420 (13.64)% (13.56)% ========= ========= ========= Noninterest Expense (Unaudited) Percentage Change to December 31, 2005 For the Three Months Ended From ----------------------------- ----------------- December September December December September 31, 30, 31, 31, 30, (Dollars in thousands) 2004 2005 2005 2004 2005 - --------------------- --------- --------- --------- -------- -------- Salaries and other compensation $176,106 $190,293 $191,797 8.91% 0.79% Employee benefits 40,148 45,831 40,699 1.37 (11.20) --------- --------- --------- Salaries and employee benefits 216,254 236,124 232,496 7.51 (1.54) Net occupancy 34,203 34,336 41,048 20.01 19.55 Outside services 22,848 28,533 40,942 79.19 43.49 Equipment 18,482 15,828 18,042 (2.38) 13.99 Software 14,555 14,378 15,427 5.99 7.30 Advertising and public relations 10,810 9,114 11,145 3.10 22.28 Communications 10,283 10,808 10,959 6.57 1.40 Professional services 14,961 11,240 9,369 (37.38) (16.65) Data processing 8,112 7,406 7,985 (1.57) 7.82 Intangible asset amortization 5,689 4,985 4,965 (12.73) (0.40) Foreclosed asset expense (income) 685 (3,435) (29) nm (99.16) Provision for losses on off-balance sheet commitments (3) - - 5,000 nm nm Other 31,956 27,379 31,849 (0.33) 16.33 --------- --------- --------- Total noninterest expense $388,838 $396,696 $429,198 10.38% 8.19% ========= ========= ========= - ------------------------------------- nm = not meaningful (1) See exhibit 5 for reconciliation of 'reported earnings' to 'operating earnings'. (2) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect the discontinued operations. (3) 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 13 UnionBanCal Corporation and Subsidiaries On a Reported Earnings Basis (reference to exhibit 3)(1) -------------------------------------------------------- Noninterest Income (Unaudited) Percentage Change to For the Twelve Months Dec. 31, Ended 2005 From -------------------- -------- Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands) 2004 2005 2004 ---------------------------------- -------- -------- -------- Service charges on deposit accounts $335,207 $323,865 (3.38)% Trust and investment management fees 153,083 173,518 13.35 Insurance commissions 77,874 78,915 1.34 Merchant banking fees 39,646 43,898 10.72 Foreign exchange gains, net 32,004 33,902 5.93 Brokerage commissions and fees 33,063 30,038 (9.15) Card processing fees, net 34,147 25,105 (26.48) Securities losses, net (12,085) (50,039) nm Gain on sale of merchant card portfolio 93,000 - nm Gain on private capital investments, net 26,278 27,187 3.46 Other 100,606 118,398 17.68 ----------- ---------- Total noninterest income $912,823 $804,787 (11.84)% =========== ========== Noninterest Expense (Unaudited) Percentage Change to For the Twelve Months Dec. 31, Ended 2005 From -------------------- -------- Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands) 2004 2005 2004 ---------------------------------- -------- -------- -------- Salaries and other compensation $685,753 $748,046 9.08 % Employee benefits 162,964 186,308 14.32 ----------- ----------- Salaries and employee benefits 848,717 934,354 10.09 Net occupancy 127,720 141,299 10.63 Outside services 74,978 117,190 56.30 Equipment 67,839 68,206 0.54 Software 51,877 58,511 12.79 Professional services 48,371 45,500 (5.94) Communications 42,011 41,909 (0.24) Advertising and public relations 37,965 36,803 (3.06) Data processing 32,528 32,687 0.49 Intangible asset amortization 19,471 19,921 2.31 Foreclosed asset expense (income) 1,211 (5,635) nm Provision for losses on off-balance sheet commitments (2) - 4,000 nm Other 120,901 112,501 (6.95) ----------- ----------- Total noninterest expense $1,473,589 $1,607,246 9.07 % =========== =========== -------------------- nm = not meaningful (1) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its international correspondent banking business. All periods presented have been restated to reflect the discontinued operations. (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 14 UnionBanCal Corporation and Subsidiaries On an Operating Earnings Basis (reference to exhibit 4)(1)(2) ------------------------------------------------------------- Noninterest Income (Unaudited) Percentage Change to For the Twelve Months Dec. 31, Ended 2005 From -------------------- -------- Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands) 2004 2005 2004 ---------------------------------- -------- -------- -------- Service charges on deposit accounts $335,207 $323,865 (3.38)% Trust and investment management fees 153,083 173,518 13.35 Insurance commissions 77,874 78,915 1.34 Merchant banking fees 39,646 43,898 10.72 Foreign exchange gains, net 32,004 33,902 5.93 Brokerage commissions and fees 33,063 30,038 (9.15) Card processing fees, net 34,147 25,105 (26.48) Securities losses, net (12,085) (50,039) nm Gain on private capital investments, net 26,278 27,187 3.46 Other 92,071 118,398 28.59 ----------- ---------- Total noninterest income $811,288 $804,787 (0.80)% =========== ========== Noninterest Expense (Unaudited) Percentage Change to For the Twelve Months Dec. 31, Ended 2005 From -------------------- -------- Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands) 2004 2005 2004 ---------------------------------- -------- -------- -------- Salaries and other compensation $685,753 $748,046 9.08 % Employee benefits 162,964 186,308 14.32 ----------- ----------- Salaries and employee benefits 848,717 934,354 10.09 Net occupancy 127,720 141,299 10.63 Outside services 74,978 117,190 56.30 Equipment 67,839 68,206 0.54 Software 51,877 58,511 12.79 Professional services 48,371 45,500 (5.94) Communications 42,011 41,909 (0.24) Advertising and public relations 37,965 36,803 (3.06) Data processing 32,528 32,687 0.49 Intangible asset amortization 19,471 19,921 2.31 Foreclosed asset expense (income) 1,211 (5,635) nm Provision for losses on off-balance sheet commitments (3) - 4,000 nm Other 120,901 112,501 (6.95) ----------- ----------- Total noninterest expense $1,473,589 $1,607,246 9.07 % =========== =========== ------------------------------------ nm = not meaningful (1) See exhibit 6 for reconciliation of 'reported earnings' to 'operating earnings'. (2) In September 2005, Union Bank of California, N.A. committed to a plan for disposal of its correspondent international banking business. All periods presented have been restated to reflect the discontinued operations. (3) 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. 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) -----END PRIVACY-ENHANCED MESSAGE-----