EX-99.1 2 a6809902ex991.htm EXHIBIT 99.1

Exhibit 99.1

UnionBanCal Corporation Reports Second Quarter Net Income of $242 Million

Second Quarter Highlights:

  • Net income was $242 million, up from $235 million for the prior quarter, and $154 million for the year-ago quarter.
  • Key asset quality metrics continued to be strong in second quarter. Excluding FDIC covered assets:
    • Nonperforming assets at quarter-end were $678 million, or 0.86 percent of total assets, down from $815 million, or 1.03 percent of total assets, prior quarter.
    • Allowance for credit losses to nonaccrual loans was 144 percent at quarter-end, down from 148 percent prior quarter.
  • Net interest margin was 3.44 percent, down 5 basis points from the prior quarter, and up 33 basis points from the year-ago quarter.
  • Loan-to-deposit ratio was 86 percent at June 30, 2011, up from 82 percent at March 31, 2011, and up from 73 percent at June 30, 2010, due to a combination of planned deposit runoff and loan growth.
  • Capital levels strengthened during the quarter:
    • Tangible common equity ratio was 10.29 percent at June 30, 2011, compared with 9.80 percent at March 31, 2011.
    • Tier 1 common capital ratio was 13.08 percent at June 30, 2011, compared with 12.84 percent at March 31, 2011.

SAN FRANCISCO--(BUSINESS WIRE)--July 28, 2011--UnionBanCal Corporation (the Company or UB), parent company of San Francisco-based Union Bank, N.A., today reported second quarter 2011 results. Net income for second quarter was $242 million, up from $235 million for the prior quarter, and $154 million for the year-ago quarter. The improvement in net income compared with the prior quarter was primarily driven by lower noninterest expense.

Summary of Second Quarter Results

Second Quarter Total Revenue and Net Interest Income

For second quarter 2011, total revenue (net interest income plus noninterest income) was $854 million, down $4 million compared with the prior quarter. Net interest income decreased 1 percent, and noninterest income was flat. The net interest margin was 3.44 percent.

Net interest income for second quarter 2011 was $614 million, down $4 million, or 1 percent, compared with first quarter 2011. The decrease in net interest income was primarily due to a 5 basis point decline in the net interest margin, which was largely attributable to higher average rates paid on interest bearing liabilities, a lower average yield on total loans held for investment, and a higher average balance of lower-yielding interest bearing deposits in banks. A higher average yield on the securities portfolio, reflecting a continued portfolio remix, and a higher average balance of noninterest bearing deposits partially offset the decline in the margin.


Average total loans increased $566 million, or 1 percent, compared with first quarter 2011. Excluding FDIC covered loans, average total loans increased $700 million, or 1 percent, reflecting growth in residential mortgage loans and commercial & industrial loans. Average FDIC covered loans decreased $134 million, or 9 percent, due to expected runoff of the portfolio. Average noninterest bearing deposits increased $819 million, or 5 percent. Average interest bearing deposits decreased $2 billion, or 5 percent, primarily due to planned deposit runoff resulting from targeted rate reductions in transaction and money market accounts.

Compared with second quarter 2010, total revenue increased 1 percent, with net interest income up 2 percent and noninterest income down 2 percent. Average total loans increased 2 percent, primarily due to growth in residential mortgage loans and commercial & industrial loans. Average noninterest bearing deposits increased $3 billion, or 21 percent. Average interest bearing deposits decreased $13 billion, or 24 percent, primarily due to planned deposit runoff resulting from targeted rate reductions. The net interest margin, which increased 33 basis points compared with the year-ago quarter, benefited from a higher yield on securities; lower rates paid on total interest bearing deposits; and an improved earning assets mix, including a decreased volume of low-yielding interest bearing deposits in banks. Partially offsetting these benefits was a lower yield on average total loans.

Second Quarter Noninterest Income and Noninterest Expense

For second quarter 2011, noninterest income was $240 million, flat compared with prior quarter. Higher merchant banking fees were offset by lower trading account activities and lower other noninterest income. Other noninterest income decreased primarily due to a gain on the sale of MasterCard shares recorded in first quarter 2011, and an accretion adjustment to the indemnification asset associated with FDIC covered loans.

Noninterest income decreased $4 million, or 2 percent, compared with second quarter 2010. Service charges on deposit accounts decreased $8 million, reflecting lower overdraft volumes, and other noninterest income decreased $9 million, primarily due to an accretion adjustment to the indemnification asset associated with FDIC covered loans recorded in second quarter 2011. These decreases were partially offset by a $7 million increase in merchant banking fees.

Noninterest expense for second quarter 2011 was $578 million, down $37 million, or 6 percent, compared with first quarter 2011. The decrease was primarily due to a $44 million decrease in other noninterest expense, partially offset by an $11 million increase in professional and outside services expense. The decrease in other noninterest expense was primarily due to certain reserves for contingencies recorded in first quarter 2011. The provision for losses on off-balance sheet commitments was a benefit of $18 million in second quarter 2011, compared with a benefit of $13 million in first quarter 2011.

Noninterest expense for second quarter 2011 decreased $6 million, or 1 percent, compared with second quarter 2010. The decrease was primarily due to a reduction in the provision for off-balance sheet commitments and lower regulatory agencies expense, resulting from a reduction in the assessment rate for deposit insurance and lower deposit balances. The decrease was substantially offset by higher salaries and employee benefits expense.

Balance Sheet

At June 30, 2011, the Company had total assets of $80.1 billion, down $0.5 billion, or 1 percent, compared with March 31, 2011, and down $4.2 billion, or 5 percent, compared with June 30, 2010.


At June 30, 2011, total deposits were $57.2 billion, down $1.5 billion, or 3 percent, compared with March 31, 2011, and down $9.1 billion, or 14 percent, compared with June 30, 2010. Core deposits at June 30, 2011, were $46.4 billion, down $1.6 billion, or 3 percent, compared with March 31, 2011, and down $6.5 billion, or 12 percent, compared with June 30, 2010. The decline in total deposits and core deposits reflects planned runoff of targeted higher-rate deposits. At June 30, 2011, the Company’s loan-to-deposit ratio was 86 percent, up from 82 percent at March 31, 2011, and up from 73 percent at June 30, 2010.

Credit Quality

The total provision for credit losses was a benefit of $112 million for second quarter 2011, compared with a benefit of $115 million for first quarter 2011, as asset quality continued to improve overall. Nonperforming assets, excluding FDIC covered assets, declined $137 million, or 17 percent, compared with prior quarter. Net charge-offs increased $58 million, or 109 percent, compared with prior quarter, primarily reflecting the charge-off of a single large lease financing credit, which had been substantially reserved for in prior quarters.

Excluding FDIC covered assets, nonperforming assets were $678 million, or 0.86 percent of total assets at June 30, 2011, compared with $815 million, or 1.03 percent of total assets, at March 31, 2011, and $1.381 billion, or 1.68 percent of total assets, at June 30, 2010.

Net charge-offs for second quarter 2011 were $111 million, up from $53 million for first quarter 2011, reflecting the charge-off of a $71 million lease financing credit in second quarter 2011. As a percent of average total loans, excluding FDIC covered assets, net charge-offs for second quarter 2011 were 0.92 percent annualized, up from 0.46 percent annualized for first quarter 2011. For second quarter 2010, net charge-offs were $94 million, or 0.81 percent annualized of average total loans.

The total provision for credit losses is comprised of the provision for loan losses and the provision for losses on off-balance sheet commitments, which is classified in noninterest expense. In second quarter 2011, the provision for loan losses was a benefit of $94 million and the provision for losses on off-balance sheet commitments was a benefit of $18 million.

The allowance for credit losses as a percent of total loans, excluding FDIC covered loans, was 1.97 percent at June 30, 2011, compared with 2.48 percent at March 31, 2011, and 3.29 percent at June 30, 2010. The allowance for credit losses as a percent of nonaccrual loans, excluding FDIC covered loans, was 144 percent at June 30, 2011, compared with 148 percent at March 31, 2011, and 115 percent at June 30, 2010.

Capital

Total stockholder’s equity was $10.7 billion and tangible common equity was $8.0 billion at June 30, 2011. The Company’s tangible common equity ratio was 10.29 percent at June 30, 2011, up 49 basis points from 9.80 percent at March 31, 2011, and up 150 basis points from 8.79 percent at June 30, 2010. The Basel I Tier 1 common capital ratio at June 30, 2011, was 13.08 percent, compared with 12.84 percent at March 31, 2011. The Company’s Basel I Tier 1 and Total risk-based capital ratios at June 30, 2011, were 13.08 percent and 15.41 percent, respectively.

Non-GAAP Financial Measures

This press release contains certain references to financial measures identified as excluding privatization transaction expenses, foreclosed asset expense, (reversal of) provision for losses on off-balance sheet commitments, low income housing credit investment amortization expense, expenses of the consolidated variable interest entities, merger costs related to acquisitions, or asset impairment charges, which are adjustments from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (GAAP). These financial measures, as used herein, differ from financial measures reported under GAAP in that they exclude unusual or non-recurring charges, losses or credits. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. 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. This press release also includes additional capital ratios (the tangible common equity and Tier 1 common capital ratios) to facilitate the understanding of the Company’s capital structure and for use in assessing and comparing the quality and composition of UnionBanCal’s capital structure to other financial institutions. 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.


Headquartered in San Francisco, UnionBanCal Corporation is a financial holding company with assets of $80.1 billion at June 30, 2011. Its primary subsidiary, Union Bank, N.A., is a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies, and major corporations. The bank operated 403 full-service branches in California, Washington, Oregon and Texas, as well as two international offices, on June 30, 2011. UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG, NYSE:MTU), one of the world’s largest financial organizations. Visit www.unionbank.com for more information.


 
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)

Exhibit 1

  As of and for the Three Months Ended    

Percent Change to
June 30, 2011 from

(Dollars in millions)

June 30,
2011

 

March 31,
2011

 

December 31,
2010

 

September 30,
2010

 

June 30,
2010

March 31,
2011

   

June 30,
2010

 
Results of operations:  
Net interest income $ 614 $ 618 $ 631 $ 618 $ 601 (1 ) % 2 %
Noninterest income   240     240     251     218   244 - (2 )
Total revenue 854 858 882 836 845 - 1
Noninterest expense   578     615     701     562   584 (6 ) (1 )
Pre-tax, pre-provision income 276 243 181 274 261 14 6
(Reversal of) provision for loan losses   (94 )   (102 )   (40 )   8   44 8 nm

Income before income taxes and including noncontrolling interests

370 345 221 266 217 7 71
Income tax expense   131     114     58     99   67 15 96
Net income including noncontrolling interests 239 231 163 167 150 3 59
Deduct: Net loss from noncontrolling interests   3     4     9     3   4 (25 ) (25 )

Net income attributable to UnionBanCal Corporation (UNBC)

$ 242   $ 235   $ 172   $ 170 $ 154 3 57
 
Balance sheet (end of period):
Total assets $ 80,093 $ 80,642 $ 79,097 $ 79,840 $ 84,310 (1 ) (5 )
Total securities 19,430 21,673 22,114 19,630 23,055 (10 ) (16 )
Total loans held for investment 48,967 48,105 48,094 47,893 48,320 2 1
Core deposits (3) 46,443 48,018 48,667 50,596 52,935 (3 ) (12 )
Total deposits 57,181 58,677 59,954 61,541 66,271 (3 ) (14 )
Long-term debt 7,069 6,078 5,598 4,458 4,716 16 50
UNBC stockholder's equity 10,667 10,355 10,125 10,134 9,942 3 7
 
Balance sheet (period average):
Total assets $ 80,334 $ 80,056 $ 80,182 $ 82,265 $ 85,511 - (6 )
Total securities 20,543 21,601 21,560 22,487 23,089 (5 ) (11 )
Total loans held for investment 48,849 48,283 47,952 48,105 47,827 1 2
Earning assets 71,709 71,351 71,517 73,603 77,412 1 (7 )
Core deposits (3) 47,510 48,399 50,778 52,299 54,381 (2 ) (13 )
Total deposits 58,333 59,471 61,728 64,822 68,104 (2 ) (14 )
UNBC stockholder's equity 10,366 10,167 10,034 9,913 9,631 2 8
 
Performance ratios:
Return on average assets (2) 1.21 % 1.19 % 0.85 % 0.82 % 0.72 %
Return on average UNBC stockholder's equity (2) 9.36 9.38 6.81 6.80 6.40
Net interest margin (1) (2) 3.44 3.49 3.53 3.36 3.11
 
Capital ratios:
Tier 1 risk-based capital ratio (7) 13.08 % 12.84 % 12.44 % 12.27 % 11.95 %
Total risk-based capital ratio (7) 15.41 15.41 15.01 14.97 14.64
Leverage ratio (7) 10.96 10.66 10.34 9.86 9.23
Tier 1 common capital ratio (6) (7) 13.08 12.84 12.42 12.25 11.93
Tangible common equity ratio (5) 10.29 9.80 9.67 9.56 8.79
 

Selected financial ratios excluding impact of privatization transaction (11):

From net income attributable to UNBC:
Return on average assets (2) 1.28 % 1.24 % 0.92 % 0.89 % 0.78 %
Return on average stockholder's equity (2) 12.45 12.41 9.32 9.43 9.01
Core efficiency ratio (4) 63.74 67.47 68.83 61.13 62.39
 
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)

Exhibit 2

     

As of and for the Six Months Ended

Percent Change to June 30,
2011 from

(Dollars in millions)

June 30,
2011 (1)

June 30,
2010 (1)

June 30,
2010

Results of operations:
Net interest income $ 1,232 $ 1,175 5 %
Noninterest income   480     454   6
Total revenue 1,712 1,629 5
Noninterest expense   1,193     1,109   8
Pre-tax, pre-provision income 519 520 -
(Reversal of) provision for loan losses   (196 )  

214

 

nm

Income before income taxes and including noncontrolling interests

715 306 134
Income tax expense   245     82   199
Net income including noncontrolling interests 470 224 110

Deduct: Net loss from noncontrolling interests

  7     7   -
Net income attributable to UNBC $ 477   $ 231   106
 
Balance sheet (end of period):
Total assets $ 80,093 $ 84,310 (5 )
Total securities 19,430 23,055 (16 )
Total loans held for investment 48,967 48,320 1
Core deposits (3) 46,443 52,935 (12 )
Total deposits 57,181 66,271 (14 )
Long-term debt 7,069 4,716 50
UNBC stockholder's equity 10,667 9,942 7
 
Balance sheet (period average):
Total assets $ 80,195 $ 85,162 (6 )
Total securities 21,069 23,316 (10 )
Total loans held for investment 48,568 47,340 3
Total earning assets 71,531 77,535 (8 )
Core deposits (3) 47,952 54,484 (12 )
Total deposits 58,899 67,972 (13 )
UNBC stockholder's equity 10,268 9,582 7
 
Performance ratios:
Return on average assets (2) 1.20 % 0.55 %
Return on average UNBC stockholder's equity (2) 9.37 4.86
Net interest margin (1) (2) 3.46 3.05
 
Capital ratios:
Tier 1 risk-based capital ratio (7) 13.08 % 11.95 %
Total risk-based capital ratio (7) 15.41 14.64
Leverage ratio (7) 10.96 9.23
Tier 1 common capital ratio (6) (7) 13.08 11.93
Tangible common equity ratio (5) 10.29 8.79
 

Selected financial ratios excluding impact of privatization transaction (11):

From net income attributable to UNBC:
Return on average assets (2) 1.26 % 0.61 %
Return on average stockholder's equity (2) 12.43 7.08
Core efficiency ratio (4) 65.60 61.97
 
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Credit Quality (Unaudited)

Exhibit 3

 

As of and for the Three Months Ended  

Percent Change to
June 30, 2011 from

(Dollars in millions)

June 30,
2011

 

March 31,
2011

 

December 31,
2010

   

September 30,
2010

 

June 30,
2010

March 31,
2011

 

June 30,
2010

 
Credit Data:
(Reversal of) provision for loan losses, excluding FDIC covered loans $ (92 ) $ (102 ) $ (48 ) $ 8 $

44

 

10 % nm %

(Reversal of) provision for FDIC covered loan losses not subject to FDIC indemnification

(2 ) - 8 - - nm nm
(Reversal of) provision for losses on off-balance sheet commitments   (18 )   (13 )   (2 )   (8 )   1   (38 ) nm
Total (reversal of) provision for credit losses $ (112 ) $ (115 ) $ (42 ) $ -   $ 45   3 nm
Net loans charged off $ 111 $ 53 $ 64 $ 89 $ 94 109 18
Nonperforming assets 865 1,032 1,142 1,487 1,561 (16 ) (45 )
 
Credit Ratios:
Allowance for loan losses to:
Total loans held for investment 1.69 % 2.15 % 2.48 % 2.67 % 2.81 %
Nonaccrual loans 114.05 118.50 123.40 98.38 100.38
Allowances for credit losses to (8) :
Total loans held for investment 1.96 2.46 2.81 3.01 3.17
Nonaccrual loans 132.19 135.61 140.23 111.04 113.13
Net loans charged off to average total loans held for investment (2) 0.91 0.44 0.52 0.74 0.78

Nonperforming assets to total loans held for investment and Other Real Estate Owned (OREO)

1.76 2.14 2.37 3.09 3.22
Nonperforming assets to total assets 1.08 1.28 1.44 1.86 1.85
Nonaccrual loans to total loans held for investment 1.48 1.81 2.01 2.71 2.80
 
Excluding FDIC covered assets (12):
Allowance for loan losses to:
Total loans held for investment 1.70 % 2.17 % 2.50 % 2.76 % 2.92 %
Nonaccrual loans 124.09 129.10 137.32 110.48 102.17
Allowances for credit losses to (8) :
Total loans held for investment 1.97 2.48 2.85 3.12 3.29
Nonaccrual loans 144.23 148.17 156.44 124.70 115.14
Net loans charged off to average total loans held for investment (2) 0.92 0.46 0.54 0.77 0.81

Nonperforming assets to total loans held for investment and OREO

1.42 1.74 1.91 2.60 2.97
Nonperforming assets to total assets 0.86 1.03 1.15 1.54 1.68
Nonaccrual loans to total loans held for investment 1.37 1.68 1.82 2.50 2.86
 
 

As of and for the
Six Months Ended

Percent Change to
June 30, 2011 from

(Dollars in millions)

June 30,
2011

June 30,
2010

June 30,
2010

 
Credit Data:
(Reversal of) provision for loan losses, excluding FDIC covered loans $ (194 ) $ 214 nm %
(Reversal of) provision for FDIC covered loan losses not subject to FDIC indemnification (2 ) - nm
(Reversal of) provision for losses on off-balance sheet commitments   (31 )   (4 ) nm
Total (reversal of) provision for credit losses $ (227 ) $ 210   nm
Net loans charged off $ 164 $ 213 (23 )
Nonperforming assets 865 1,561 (45 )
 
Credit Ratios:
Net loans charged off to average total loans held for investment (2) 0.68 % 0.91 %
Nonperforming assets to total assets 1.08 1.85
 
Excluding FDIC covered assets (12):
Net loans charged off to average total loans held for investment (2) 0.69 % 0.92 %
Nonperforming assets to total assets 0.86 1.68
 
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)

Exhibit 4

             
 
For the Three Months Ended
(Dollars in millions)

June 30,
2011

March 31,
2011

December 31,
2010

September 30,
2010

June 30,
2010

Interest Income
Loans $ 565 $ 559 $ 576 $ 582 $ 568
Securities 138 143 137 132 135
Other   2     1     1     2     5
Total interest income   705     703     714     716     708
 
Interest Expense
Deposits 53 53 56 70 78
Commercial paper and other short-term borrowings 2 1 - 1 2
Long-term debt   36     31     27     27     27
Total interest expense   91     85     83     98     107
 
Net Interest Income 614 618 631 618 601
(Reversal of) provision for loan losses   (94 )   (102 )   (40 )   8     44
Net interest income after (reversal of) provision for loan losses   708     720     671     610     557
 
Noninterest Income
Service charges on deposit accounts 56 57 58 62 64
Trust and investment management fees 34 34 34 33 35
Trading account activities 28 33 33 32 25
Merchant banking fees 29 19 28 19 22
Securities gains, net 29 28 33 11 27
Brokerage commissions and fees 12 13 10 11 10
Card processing fees, net 12 10 10 10 12
Other   40     46     45     40     49
Total noninterest income   240     240     251     218     244
 
Noninterest Expense
Salaries and employee benefits 346 344 338 293 319
Net occupancy and equipment 67 65 64 65 64
Professional and outside services 55 44 56 54 50
Intangible asset amortization 24 25 31 31 30
Regulatory assessments 19 21 26 30 30

(Reversal of) provision for losses on off-balance sheet commitments

(18 ) (13 ) (2 ) (8 ) 1
Other   85     129     188     97     90
Total noninterest expense   578     615     701     562     584
 

Income before income taxes and including noncontrolling interests

370 345 221 266 217
Income tax expense 131 114 58 99 67
         
Net Income including Noncontrolling Interests 239 231 163 167 150
 
Deduct: Net loss from noncontrolling interests   3     4     9     3     4
Net Income attributable to UNBC $ 242   $ 235   $ 172   $ 170   $ 154

 
UnionBanCal Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)

Exhibit 5

       
 
For the Six Months Ended
(Dollars in millions)

June 30,
2011

June 30,
2010

Interest Income
Loans $ 1,124 $ 1,108
Securities 281 278
Other   3     10  
Total interest income   1,408     1,396  
 
Interest Expense
Deposits 106 164
Commercial paper and other short-term borrowings 3 3
Long-term debt   67     54  
Total interest expense   176     221  
 
Net Interest Income 1,232 1,175
(Reversal of) provision for loan losses   (196 )   214  
Net interest income after (reversal of) provision for loan losses   1,428     961  
 
Noninterest Income
Service charges on deposit accounts 113 130
Trust and investment management fees 68 66
Trading account activities 61 46
Securities gains, net 57 61
Merchant banking fees 48 36
Brokerage commissions and fees 25 19
Card processing fees, net 22 21
Other   86     75  
Total noninterest income   480     454  
 
Noninterest Expense
Salaries and employee benefits 690 599
Net occupancy and equipment 132 123
Professional and outside services 99 89
Intangible asset amortization 49 62
Regulatory assessments 40 60
(Reversal of) provision for losses on
off-balance sheet commitments
(31 ) (4 )
Other   214     180  
Total noninterest expense   1,193     1,109  
 
Income before income taxes and including
noncontrolling interests
715 306
Income tax expense 245 82
   
Net Income including Noncontrolling Interests 470 224
 
Deduct: Net loss from noncontrolling interests   7     7  
Net Income attributable to UNBC $ 477   $ 231  

 

UnionBanCal Corporation and Subsidiaries

Consolidated Balance Sheets

Exhibit 6

 
        (Unaudited)   (Unaudited)     (Unaudited)   (Unaudited)
(Dollars in millions)

June 30,
2011

March 31,
2011

December 31,
2010

September 30,
2010

June 30,
2010

Assets
Cash and due from banks $ 1,233 $ 1,247 $ 946 $ 1,172 $ 1,221

Interest bearing deposits in banks (includes $24 at June 30, 2011, $23 at March 31, 2011, $11 at December 31, 2010, $9 at September 30, 2010 and $13 at June 30, 2010 related to consolidated variable interest entities (VIEs))

2,477 1,912 217 2,419 2,873

Federal funds sold and securities purchased under resale agreements

  78     24     11     595     288  
Total cash and cash equivalents 3,788 3,183 1,174 4,186 4,382
Trading account assets:
Pledged as collateral 1 6 43 37 64
Held in portfolio 897 870 956 1,134 1,055
Securities available for sale:
Pledged as collateral 340 308 10 - -
Held in portfolio 17,758 20,026 20,781 18,327 21,789

Securities held to maturity (Fair value: June 30, 2011, $1,610; March 31, 2011, $1,646; December 31, 2010, $1,560; September 30, 2010, $1,481 and June 30, 2010, $1,434)

1,332 1,339 1,323 1,303 1,266
Loans held for investment:
Loans, excluding FDIC covered loans 47,718 46,715 46,584 46,214 46,496
FDIC covered loans   1,249     1,390     1,510     1,679     1,824  
Total loans held for investment 48,967 48,105 48,094 47,893 48,320
Allowance for loan losses   (826 )   (1,034 )   (1,191 )   (1,277 )   (1,358 )
Loans held for investment, net 48,141 47,071 46,903 46,616 46,962
Premises and equipment, net 686 694 712 674 671
Intangible assets, net 407 432 457 487 517
Goodwill 2,447 2,447 2,456 2,456 2,456
FDIC indemnification asset 650 699 783 824 907

Other assets (includes $272 at June 30, 2011, $277 at March 31, 2011, $283 at December 31, 2010, $291 at September 30, 2010 and $294 at June 30, 2010 related to consolidated VIEs)

  3,646     3,567     3,499     3,796     4,241  
Total assets $ 80,093   $ 80,642   $ 79,097   $ 79,840   $ 84,310  
 
Liabilities
Noninterest bearing $ 17,708 $ 18,062 $ 16,343 $ 15,426 $ 15,319

Interest bearing

  39,473     40,615     43,611     46,115     50,952  
Total deposits 57,181 58,677 59,954 61,541 66,271
Commercial paper and other short-term borrowings 2,838 3,260 1,356 977 999

Long-term debt (includes $8 at June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and June 30, 2010 related to consolidated VIEs)

7,069 6,078 5,598 4,458 4,716
Trading account liabilities 730 696 774 1,010 815

Other liabilities (includes $2 at June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and June 30, 2010 related to consolidated VIEs)

  1,338     1,303     1,024     1,447     1,289  
Total liabilities   69,156     70,014     68,706     69,433     74,090  
 
 

Equity

UNBC Stockholder's Equity:
Common stock, par value $1 per share:
Authorized 300,000,000 shares; 136,330,829 shares issued 136 136 136 136 136
Additional paid-in capital 5,199 5,201 5,198 5,195 5,195
Retained earnings 5,945 5,703 5,468 5,296 5,131
Accumulated other comprehensive loss   (613 )   (685 )   (677 )   (493 )   (520 )
Total UNBC stockholder's equity 10,667 10,355 10,125 10,134 9,942
Noncontrolling interests   270     273     266     273     278  
Total equity   10,937     10,628     10,391     10,407     10,220  
Total liabilities and equity $ 80,093   $ 80,642   $ 79,097   $ 79,840   $ 84,310  
 

Refer to Exhibit 13 for footnote explanations.


 
UnionBanCal Corporation and Subsidiaries
Loans and Nonperforming Assets (Unaudited)

Exhibit 7

                       
 
(Dollars in millions)

June 30,
2011

March 31,
2011

December 31,
2010

September 30,
2010

June 30,
2010

 

Loans held for investment (period end)
Loans held for investment, excluding FDIC covered loans:
Commercial and industrial $ 15,854 $ 15,143 $ 15,162 $ 14,650 $ 14,675
Commercial mortgage 7,729 7,749 7,816 7,893 8,062
Construction 1,055 1,153 1,460 1,850 2,114
Lease financing   701   773   757   635   642
Total commercial portfolio 25,339 24,818 25,195 25,028 25,493
 
Residential mortgage

 

18,610 18,110 17,531 17,295 17,089
Home equity and other consumer loans   3,769   3,787   3,858   3,891   3,914
Total consumer portfolio   22,379   21,897   21,389   21,186   21,003

Total loans held for investment, excluding FDIC covered loans

47,718 46,715 46,584 46,214 46,496

FDIC covered loans:

Commercial and industrial 332 387 433 495 554
Commercial mortgage 662 707 733 796 818
Construction 155 184 222 251 273
Residential mortgage 70 77 81 88 117
Home equity and other consumer loans   30   35   41   49   62
Total FDIC covered loans   1,249   1,390   1,510   1,679   1,824
 

Total loans held for investment

$ 48,967 $ 48,105 $ 48,094 $ 47,893 $ 48,320
 
Nonperforming Assets (period end)
Nonaccrual loans:
Commercial and industrial $ 110 $ 113 $ 115 $ 167 $ 176
Commercial mortgage 230 265 329 481 510
Construction 47 71 140 244 373
Lease financing   -   71   -   -   -
 
Total commercial portfolio 387 520 584 892 1,059
 
Residential mortgage 242 241 243 237 245
Home equity and other consumer loans   23   22   22   27   25
Total consumer portfolio   265   263   265   264   270
 
Total nonaccrual loans, excluding FDIC covered loans 652 783 849 1,156 1,329
FDIC covered loans   72   90   116   142   24
Total nonaccrual loans 724 873 965 1,298 1,353
 
OREO 26 32 41 47 52
FDIC covered OREO   115   127   136   142   156
 
Total nonperforming assets $ 865 $ 1,032 $ 1,142 $ 1,487 $ 1,561
 
Total nonperforming assets, excluding FDIC covered assets $ 678 $ 815 $ 890 $ 1,203 $ 1,381
 

Loans 90 days or more past due and still accruing (13)

$ 2 $ 3 $ 2 $ 17 $ 6
Troubled debt restructured loans that are still accruing $ 82 $ 45 $ 22 $ 25 $ 9
Troubled debt restructured nonaccrual loans (included in total nonaccrual loans above) $ 184 $ 189 $ 198 $ 149 $ 88
               
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Allowances for Credit Losses (Unaudited)

Exhibit 8

                       
 
As of and for the Three Months Ended
(Dollars in millions)

June 30,
2011

March 31,
2011

December 31,
2010

September 30,
2010

June 30,
2010

 
Analysis of Allowances for Credit Losses
Balance, beginning of period $ 1,034 $ 1,191 $ 1,277 $ 1,358 $ 1,408
 
(Reversal of) provision for loan losses, excluding FDIC covered loans (92 ) (102 ) (48 ) 8 44
(Reversal of) provision for FDIC covered loan losses not subject to
FDIC indemnification
(2 ) - 8 - -
Increase (decrease) in allowance covered by FDIC indemnification (3 ) (2 ) 17 - -
Other - - 1 - -
 
Loans charged off:
Commercial and industrial (11 ) (23 ) (18 ) (37 ) (30 )
Commercial mortgage (14 ) (24 ) (51 ) (27 ) (51 )
Construction (3 ) (1 ) (4 ) (2 ) (10 )
Lease financing   (71 )   -     -     -     -  
Total commercial portfolio (99 ) (48 ) (73 ) (66 ) (91 )
 
Residential mortgage (13 ) (14 ) (8 ) (25 ) (12 )
Home equity and other consumer loans   (10 )   (11 )   (15 )   (11 )   (9 )
Total consumer portfolio (23 ) (25 ) (23 ) (36 ) (21 )
 
FDIC covered loans   (1 )   -     -     -     -  
Total loans charged off (123 ) (73 ) (96 ) (102 ) (112 )
 
Recoveries of loans previously charged off:
Commercial and industrial 8 7 19 5 8
Commercial mortgage 2 8 8 1 2
Construction   2     4     3     7     8  
Total commercial portfolio 12 19 30 13 18
 
Residential mortgage - - 1 - -
Home equity and other consumer loans   -     1     1     -     -  
Total consumer portfolio   -     1     2     -     -  
 
Total recoveries of loans previously charged off   12     20     32     13     18  
Net loans charged off   (111 )   (53 )   (64 )   (89 )   (94 )
 
Ending balance of allowance for loan losses 826 1,034 1,191 1,277 1,358
Allowance for losses on off-balance sheet commitments   131     150     162     164     172  
Allowances for credit losses $ 957   $ 1,184   $ 1,353   $ 1,441   $ 1,530  
 
Components of allowance for loan losses:
Allowance for loan losses, excluding allowance on FDIC covered loans $ 809 $ 1,011 $ 1,166 $ 1,277 $ 1,358
Allowance for loan losses on FDIC covered loans   17     23     25     -     -  
Total allowance for loan losses $ 826   $ 1,034   $ 1,191   $ 1,277   $ 1,358  
               
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)

Exhibit 9

               
For the Three Months Ended
June 30, 2011 June 30, 2010  
(Dollars in millions)

Average
Balance

Interest
Income/
Expense (1)

Average
Yield/
Rate (1)(2)

 

Average
Balance

Interest
Income/
Expense (1)

Average
Yield/
Rate (1)(2)

Assets
Loans held for investment: (9)
Commercial and industrial $ 15,814 $ 159 4.05 % $ 14,586 $ 168 4.61 %
Commercial mortgage 7,726 84 4.31 8,180 86 4.20
Construction 1,116 11 4.03 2,145 15 2.91
Lease financing 775 8 3.99 641 6 3.88
Residential mortgage 18,324 221 4.83 16,984 226 5.34
Home equity and other consumer loans   3,782     40 4.23   3,919     43 4.41
Total loans, excluding FDIC covered loans 47,537 523 4.41 46,455 544 4.70
FDIC covered loans   1,312     44 13.33   1,372     26 7.54
Total loans held for investment 48,849 567 4.65 47,827 570 4.78
Securities 20,543 139 2.72 23,089 135 2.34
Interest bearing deposits in banks 2,086 1 0.24 5,920 4 0.25

Federal funds sold and securities purchased under resale agreements

71 - 0.10 392 - 0.15
Trading account assets 137 1 0.65 184 1 1.33
Other earning assets   23     - 2.18   -     - -
Total earning assets 71,709   708 3.95 77,412   710 3.67
Allowance for loan losses (992 ) (1,459 )
Cash and due from banks 1,208 1,202
Premises and equipment, net 692 672
Other assets   7,717     7,684  
Total assets $ 80,334   $ 85,511  
Liabilities
Deposits:
Transaction and money market accounts $ 23,667 14 0.24 $ 37,608 48 0.51
Savings and consumer time 7,898 14 0.71 7,421 15 0.83
Large time   8,811     25 1.16   8,265     15 0.73
Total interest bearing deposits   40,376     53 0.53   53,294     78 0.59
Commercial paper and other short-term borrowings (10) 3,113 2 0.23 1,394 2 0.43
Long-term debt   6,349     36 2.22   4,732     27 2.33
Total borrowed funds   9,462     38 1.57   6,126     29 1.90
Total interest bearing liabilities 49,838   91 0.73 59,420   107 0.73
Noninterest bearing deposits 17,957 14,810
Other liabilities   1,900     1,368  
Total liabilities 69,695 75,598
Equity
UNBC Stockholder's equity 10,366 9,631
Noncontrolling interests   273     282  
Total equity   10,639     9,913  
Total liabilities and equity $ 80,334   $ 85,511  
 

Net interest income/spread (taxable-equivalent basis)

617 3.22 % 603 2.94 %
Impact of noninterest bearing deposits 0.19 0.15
Impact of other noninterest bearing sources 0.03 0.02
Net interest margin 3.44 3.11
Less: taxable-equivalent adjustment   3   2
Net interest income $ 614 $ 601
 
       
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)

Exhibit 10

               
For the Three Months Ended
June 30, 2011 March 31, 2011
(Dollars in millions)

Average
Balance

Interest
Income/
Expense (1)

Average
Yield/
Rate (1)(2)

Average
Balance

Interest
Income/
Expense (1)

Average
Yield/
Rate (1)(2)

Assets
Loans held for investment: (9)
Commercial and industrial $ 15,814 $ 159 4.05 % $ 15,325 $ 157 4.13 %
Commercial mortgage 7,726 84 4.31 7,778 85 4.38
Construction 1,116 11 4.03 1,341 12 3.48
Lease financing 775 8 3.99 776 8 4.33
Residential mortgage 18,324 221 4.83 17,794 220 4.94
Home equity and other consumer loans   3,782     40 4.23   3,823     40 4.29
Total loans, excluding FDIC covered loans 47,537 523 4.41 46,837 522 4.48
FDIC covered loans   1,312     44 13.33   1,446     39 10.89
Total loans held for investment 48,849 567 4.65 48,283 561 4.67
Securities 20,543 139 2.72 21,601 143 2.64
Interest bearing deposits in banks 2,086 1 0.24 1,200 1 0.25

Federal funds sold and securities purchased under resale agreements

71 - 0.10

96

- 0.18
Trading account assets 137 1 0.65 150 - 1.19
Other earning assets   23     - 2.18   21     - 3.49
Total earning assets 71,709   708 3.95 71,351   705 3.97
Allowance for loan losses (992 ) (1,182 )
Cash and due from banks 1,208 1,246
Premises and equipment, net 692 712
Other assets   7,717     7,929  
Total assets $ 80,334   $ 80,056  
Liabilities
Deposits:
Transaction and money market accounts $ 23,667 14 0.24 $ 25,489 15 0.25
Savings and consumer time 7,898 14 0.71 7,857 14 0.71
Large time   8,811     25 1.16   8,987     24 1.03
Total interest bearing deposits   40,376     53 0.53   42,333     53 0.50
Commercial paper and other short-term borrowings (10) 3,113 2 0.23 2,435 1 0.27
Long-term debt   6,349     36 2.22   5,902     31 2.16
Total borrowed funds   9,462     38 1.57   8,337     32 1.61
Total interest bearing liabilities 49,838   91 0.73 50,670   85 0.68
Noninterest bearing deposits 17,957 17,138
Other liabilities   1,900     1,815  
Total liabilities 69,695 69,623
Equity
UNBC Stockholder's equity 10,366 10,167
Noncontrolling interests   273     266  
Total equity   10,639     10,433  
Total liabilities and equity $ 80,334   $ 80,056  
 

Net interest income/spread (taxable-equivalent basis)

617 3.22 % 620 3.29 %
Impact of noninterest bearing deposits 0.19 0.17
Impact of other noninterest bearing sources 0.03 0.03
Net interest margin 3.44 3.49
Less: taxable-equivalent adjustment   3   2
Net interest income $ 614 $ 618
 
       
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)

Exhibit 11

               
For the Six Months Ended

June 30, 2011

June 30, 2010

(Dollars in millions)

Average
Balance

Interest
Income/
Expense (1)

Average
Yield/
Rate (1) (2)

Average
Balance

Interest
Income/
Expense (1)

Average
Yield/
Rate (1) (2)

Assets
Loans held for investment: (9)
Commercial and industrial $ 15,571 $ 316 4.09 % $ 14,770 $ 330 4.50 %
Commercial mortgage 7,752 169 4.35 8,207 172 4.20
Construction 1,228 23 3.73 2,226 32 2.94
Lease financing 775 16 4.16 645 12 3.84
Residential mortgage 18,061 441 4.88 16,885 454 5.38
Home equity and other consumer loans   3,802     80 4.26   3,917     86 4.42
Total loans, excluding FDIC covered loans 47,189 1,045 4.44 46,650 1,086 4.67
FDIC covered loans   1,379     83 12.06   690     26 7.52
Total loans held for investment 48,568 1,128 4.66 47,340 1,112 4.72
Securities 21,069 282 2.68 23,316 279 2.39
Interest bearing deposits in banks 1,645 2 0.24 6,257 8 0.25

Federal funds sold and securities purchased under resale agreements

83 - 0.15 426 - 0.13
Trading account assets 144 1 0.93 196 2 1.52
Other earning assets   22     - 2.81   -     - -
Total earning assets 71,531   1,413 3.96 77,535 1,401 3.62
Allowance for loan losses (1,087 ) (1,433 )
Cash and due from banks 1,226 1,204
Premises and equipment, net 702 673
Other assets   7,823     7,183  
Total assets $ 80,195   $ 85,162  
Liabilities
Deposits:
Transaction and money market accounts $ 24,573 29 0.24 $ 38,729 111 0.58
Savings and consumer time 7,878 28 0.71 6,700 27 0.82
Large time   8,898     49 1.10   7,945     26 0.65
Total interest bearing deposits   41,349     106 0.52   53,374     164 0.62
Commercial paper and other short-term borrowings (10) 2,776 3 0.25 1,445 3 0.42
Long-term debt   6,127     67 2.19   4,653     54 2.34
Total borrowed funds   8,903     70 1.59   6,098     57 1.88
Total interest bearing liabilities 50,252   176 0.70 59,472   221 0.75
Noninterest bearing deposits 17,550 14,598
Other liabilities   1,855     1,322  
Total liabilities 69,657 75,392
Equity
UNBC Stockholder's equity 10,268 9,582
Noncontrolling interests   270     188  
Total equity   10,538     9,770  
Total liabilities and equity $ 80,195   $ 85,162  
 

Net interest income/spread (taxable-equivalent basis)

1,237 3.26 % 1,180 2.87 %
Impact of noninterest bearing deposits 0.18 0.15
Impact of other noninterest bearing sources 0.02 0.03
Net interest margin 3.46 3.05
Less: taxable-equivalent adjustment   5   5
Net interest income $ 1,232 $ 1,175
 
       
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
Reconciliation of Non-GAAP Measures (Unaudited)

Exhibit 12

                 

The following table presents a reconciliation between certain Generally Accepted Accounting Principles (GAAP) amounts and specific non-GAAP measures as used to compute selected non-GAAP financial ratios.

 

 

As of and for the Three Months Ended

 

For the Six Months Ended

(Dollars in millions)

June 30,
2011

March 31,
2011

December 31,
2010

September 30,
2010

June 30,
2010

June 30,
2011

June 30,
2010

 
Net income attributable to UNBC $ 242 $ 235 $ 172 $ 170 $ 154 $ 477 $ 231
Net adjustments related to privatization transaction, net of tax   6     3     7     8     9     9     21  

Net income attributable to UNBC, excluding impact of privatization transaction

$ 248   $ 238   $ 179   $ 178   $ 163   $ 486   $ 252  
 
Average total assets $ 80,334 $ 80,056 $ 80,182 $ 82,265 $ 85,511 $ 80,195 $ 85,162
Net adjustments related to privatization transaction   2,459     2,473     2,488     2,509     2,529     2,466     2,538  
Average total assets, excluding impact of privatization transaction $ 77,875   $ 77,583   $ 77,694   $ 79,756   $ 82,982   $ 77,729   $ 82,624  
Return on average assets (2) 1.21 % 1.19 % 0.85 % 0.82 % 0.72 % 1.20 % 0.55 %
Return on average assets, excluding impact of privatization transaction (2) (11) 1.28 1.24 0.92 0.89 0.78 1.26 0.61
 
Average UNBC stockholder's equity $ 10,366 $ 10,167 $ 10,034 $ 9,913 $ 9,631 $ 10,268 $ 9,582
Net adjustments related to privatization transaction   2,390     2,396     2,401     2,405     2,409     2,393     2,411  

Average UNBC stockholder's equity, excluding impact of privatization transaction

$ 7,976   $ 7,771   $ 7,633   $ 7,508   $ 7,222   $ 7,875   $ 7,171  
Return on average UNBC stockholder's equity (2) 9.36 % 9.38 % 6.81 % 6.80 % 6.40 % 9.37 % 4.86 %

Return on average UNBC stockholder's equity, excluding impact of privatization transaction (2) (11)

12.45 12.41 9.32 9.43 9.01 12.43 7.08
 
Noninterest expense $ 578 $ 615 $ 701 $ 562 $ 584 $ 1,193 $ 1,109
Less: Foreclosed asset expense 2 3 4 6 1 5 1
Less: (Reversal of) provision for losses on off-balance sheet commitments (18 ) (13 ) (2 ) (8 ) 1 (31 ) (4 )
Less: Low income housing credit investment amortization expense 18 13 19 13 14 31 28
Less: Expenses of the consolidated VIEs 6 6 15 6 6 12 11
Less: Merger costs related to acquisitions 10 13 9 11 13 23 13
Less: Asset impairment charge   -     -     30     -     -     -     -  
Net noninterest expense before privatization adjustments (a) $ 560   $ 593   $ 626   $ 534   $ 549   $ 1,153   $ 1,060  
Net adjustments related to privatization transaction   25     26     32     33     33     51     72  
Net noninterest expense, excluding impact of privatization transaction (b) $ 535   $ 567   $ 594   $ 501   $ 516   $ 1,102   $ 988  
 
Total revenue $ 854 $ 858 $ 882 $ 836 $ 845 $ 1,712 $ 1,629
Add: Net interest income taxable-equivalent adjustment   3     2     3     2     2     5     5  
Total revenue, including taxable-equivalent adjustment (c) 857 860 885 838 847 1,717 1,634
Accretion related to privatization-related fair value adjustments   16     21     21     18     19     37     38  
Total revenue, excluding impact of privatization transaction (d) $ 841   $ 839   $ 864   $ 820   $ 828   $ 1,680   $ 1,596  
Core efficiency ratio (a)/(c) (4) 65.53 % 68.80 % 70.88 % 63.69 % 64.86 % 67.17 % 64.92 %
Core efficiency ratio, excluding impact of privatization transaction (b)/(d) (11) 63.74 67.47 68.83 61.13 62.39 65.60 61.97
 
Total UNBC stockholder's equity $ 10,667 $ 10,355 $ 10,125 $ 10,134 $ 9,942
Less: Goodwill 2,447 2,447 2,456 2,456 2,456
Less: Intangible assets 407 432 457 487 517
Less: Deferred tax liabilities related to goodwill and intangible assets   (149 )   (159 )   (168 )   (180 )   (192 )
Tangible common equity (e) $ 7,962   $ 7,635   $ 7,380   $ 7,371   $ 7,161  
Tier 1 capital, determined in accordance with regulatory requirements $ 8,535 $ 8,280 $ 8,029 $ 7,861 $ 7,682
Less: Trust preferred securities   -     -     13     13     13  
Tier 1 common equity (f) $ 8,535   $ 8,280   $ 8,016   $ 7,848   $ 7,669  
Total assets $ 80,093 $ 80,642 $ 79,097 $ 79,840 $ 84,310
Less: Goodwill 2,447 2,447 2,456 2,456 2,456
Less: Intangible assets 407 432 457 487 517
Less: Deferred tax liabilities related to goodwill and intangible assets   (149 )   (159 )   (168 )   (180 )   (159 )
Tangible assets (g) $ 77,388   $ 77,922   $ 76,352   $ 77,077   $ 81,496  
Risk-weighted assets, determined in accordance with regulatory requirements (h) (7) $ 65,274   $ 64,467   $ 64,516   $ 64,080   $ 64,301  
Tangible common equity ratio (e)/(g) (5) 10.29 % 9.80 % 9.67 % 9.56 % 8.79 %
Tier 1 common capital ratio (f)/(h) (6) 13.08 12.84 12.42 12.25 11.93
     
Refer to Exhibit 13 for footnote explanations.

 
UnionBanCal Corporation and Subsidiaries
 
Footnotes

Exhibit 13

     
 
(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 35 percent.
(2) Annualized.
(3) Core deposits consist of total deposits, excluding brokered deposits and time deposits of $100,000 and over.
(4) The core efficiency ratio, a non-GAAP financial measure, is net noninterest expense (noninterest expense excluding foreclosed asset expense, (reversal of) provision for losses on off-balance sheet commitments, low income housing credit investment amortization expense, expenses of the consolidated VIEs, merger costs related to the acquisitions of certain assets and assumption of certain liabilities of Frontier Bank and Tamalpais Bank and asset impairment charges) as a percentage of total revenue (net interest income (taxable-equivalent basis) and noninterest income). Management discloses the core efficiency ratio as a measure of the efficiency of our operations, focusing on those costs most relevant to our core activities. Please refer to Exhibit 12 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(5) The tangible common equity ratio, a non-GAAP financial measure, is calculated as tangible common equity divided by tangible assets. The methodology of determining tangible common equity may differ among companies. The tangible common equity ratio has been included to facilitate the understanding of the Company's capital structure and for use in assessing and comparing the quality and composition of UnionBanCal's capital structure to other financial institutions. Please refer to Exhibit 12 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(6) The Tier 1 common capital ratio is the ratio of Tier 1 capital, less qualifying trust preferred securities, to risk-weighted assets. All of the trust preferred securities were paid off during the quarter ended March 31, 2011. The Tier 1 common capital ratio, a non-GAAP financial measure, has been included to facilitate the understanding of the Company's capital structure and for use in assessing and comparing the quality and composition of UnionBanCal's capital structure to other financial institutions. Please refer to Exhibit 12 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(7) Estimated as of June 30, 2011.
(8) The allowance for credit losses ratios include the allowances for loan losses and losses on off-balance sheet commitments.
(9) 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.
(10) Includes interest bearing trading liabilities.
(11) These ratios exclude the impact of the privatization transaction. Management believes that these ratios, which exclude the push-down accounting effects of the privatization transaction, provide useful supplemental information, which is important to a proper understanding of the Company's core business results. Please refer to Exhibit 12 for a reconciliation between certain GAAP amounts and these non-GAAP measures.
(12) These ratios exclude the impact of the FDIC covered loans, the related allowance for loan losses and FDIC covered OREO, which are covered under loss share agreements between Union Bank, N.A. and the Federal Deposit Insurance Corporation. Such agreements are related to the April 2010 acquisitions of certain assets and assumption of certain liabilities of Frontier Bank and Tamalpais Bank. Management believes the exclusion of FDIC covered loans and FDIC covered OREO in certain asset quality ratios that include nonperforming loans, nonperforming assets, total loans held for investment and the allowance for loan losses or credit losses in the numerator or denominator provides a better perspective into underlying asset quality trends.
(13) Excludes loans totaling $251 million, $279 million, $312 million, $297 million and $255 million that are 90 days or more past due and still accruing at June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and June 30, 2010, respectively, which consisted of FDIC covered loans accounted for in accordance with the accounting standards for purchased credit impaired loans.

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CONTACT:
UnionBanCal Corporation
Thomas Taggart, 415-765-2249
Corporate Communications
Michelle Crandall, 415-765-2780
Investor Relations