Business Segments

12 Months Ended

Dec. 31, 2011

Business Segments [Abstract]

Business Segments

Note 22—Business Segments

The Company has three operating segments: Retail Banking Group, Corporate Banking Group and Pacific Rim Corporate Group. The Pacific Rim Corporate Group is included in “Other.” The Company has two reportable business segments: Retail Banking and Corporate Banking.

• Retail Banking offers a range of banking products and services, primarily to individuals and small businesses, delivered generally through a network of branches and ATMs located in the western U.S. and telephone and internet access 24-hours-a-day. These products offered include mortgages, home equity lines of credit, consumer and commercial loans, and deposit accounts.

• Corporate Banking provides credit, depository and cash management services, investment and risk management products to businesses, individuals and target specialty niches. Services include commercial and project finance loans, real estate financing, asset-based financing, trade finance and letters of credit, lease financing, customized cash management services and capital markets products, as well as trust, private banking, investment and asset management services for individuals and institutions.

“Other” is comprised of certain subsidiaries of UnionBanCal Corporation; the transfer pricing center; the amount of the provision for credit losses over/(under) the expected loss for the period; the residual costs of support groups; goodwill, intangible assets, and the related amortization/accretion associated with the Company’s privatization transaction; the elimination of the fully taxable-equivalent basis amount; and the difference between the marginal tax rate and the consolidated effective tax rate. In addition, “Other” includes Pacific Rim Corporate Group, which offers a range of credit, deposit, and investment management products and services to companies headquartered in either Japan or the U.S., Corporate Treasury, which is responsible for Asset-Liability Management (ALM), wholesale funding, and the ALM investment securities and derivatives hedging portfolios, and the FDIC covered assets.

The information, set forth in the tables that follow, is prepared using various management accounting methodologies to measure the performance of the individual segments. Unlike financial accounting, there is no authoritative body of guidance for management accounting equivalent to US GAAP. Consequently, reported results are not necessarily comparable with those presented by other companies, and they are not necessarily indicative of the results that would be reported by our business units if they were unique economic entities. The management reporting accounting methodologies, which are enhanced from time to time, measure segment profitability by assigning balance sheet and income statement items to each operating segment. Methodologies that are applied to the measurement of segment profitability include:

• A funds transfer pricing system, which assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics. During 2011, we refined our transfer pricing methodology for non-maturity deposits to reflect expected balance run-off and average life assumptions as well as for rate repricing expectations.

• An activity-based costing methodology, in which certain indirect costs, such as operations and technology expense, are allocated to the segments based on studies of billable unit costs for product or data processing. Other indirect costs, such as corporate overhead, are allocated to the segments based on internal surveys and metrics that serve as proxies for estimated usage. Prior to the fourth quarter of 2011, such indirect costs were allocated based on each segment’s proportionate share of direct costs.

• An expected credit loss allocation methodology, in which credit expense is charged to an operating segment based upon expected losses arising from credit risk. As a result of the methodology used in this model, differences between the provision for credit losses and credit expense in any one period could be significant. However, over an economic cycle, the cumulative provision for credit losses and credit expense for expected losses should be substantially the same.

The Company reflects a “market view” perspective in measuring the business segments. The market view is a measurement of customer markets aggregated to show all revenues generated and expenses incurred from all products and services sold to those customers regardless of where product areas organizationally report. Therefore, revenues and expenses are included in both the business segment that provides the service and the business segment that manages the customer relationship. The duplicative results from this internal management accounting view are eliminated in “Reconciling Items.”

The reportable business segment results for prior periods have been adjusted to reflect changes in the transfer pricing and overhead methodologies that have occurred.

	Retail Banking									Corporate Banking
	As of and for the Years Ended December 31,									As of and for the Years Ended December 31,
	2011			2010			2009			2011			2010			2009
Results of operations (dollars in millions):
Net interest income (expense)	$	1,092		$	990		$	815		$	1,273		$	1,244		$	1,130
Noninterest income (expense)		258			273			283			544			531			464
Total revenue		1,350			1,263			1,098			1,817			1,775			1,594
Noninterest expense (income)		1,070			955			844			967			971			859
Credit expense (income)		26			27			28			184			272			333
Income (loss) before income taxes and including noncontrolling interests		254			281			226			666			532			402
Income tax expense (benefit)		99			110			88			155			114			71
Net income (loss) including noncontrolling interest		155			171			138			511			418			331
Less: Net loss from noncontrolling interests		—			—			—			—			—			—
Net income (loss) attributable to UNBC	$	155		$	171		$	138		$	511		$	418		$	331
Total assets, end of period (dollars in millions):	$	25,459		$	23,230		$	22,442		$	35,247		$	30,283		$	30,819
	Other									Reconciling Items
	As of and for the Years Ended December 31,									As of and for the Years Ended December 31,
	2011			2010			2009			2011			2010			2009
Results of operations (dollars in millions):
Net interest income (expense)	$	189		$	255		$	365		$	(76	)	$	(65	)	$	(61	)
Noninterest income (expense)		85			185			40			(71	)		(66	)		(60	)
Total revenue		274			440			405			(147	)		(131	)		(121	)
Noninterest expense (income)		433			497			425			(55	)		(51	)		(40	)
Credit expense (income)		(411	)		(116	)		754			(1	)		(1	)		(1	)
Income (loss) before income taxes and including noncontrolling interests		252			59			(774	)		(91	)		(79	)		(80	)
Income tax expense (benefit)		99			46			(289	)		(35	)		(31	)		(31	)
Net income (loss) including noncontrolling interest		153			13			(485	)		(56	)		(48	)		(49	)
Less: Net loss from noncontrolling interests		15			19			—			—			—			—
Net income (loss) attributable to UNBC	$	168		$	32		$	(485	)	$	(56	)	$	(48	)	$	(49	)
Total assets, end of period (dollars in millions):	$	31,192		$	27,623		$	34,243		$	(2,222	)	$	(2,039	)	$	(1,906	)

	UnionBanCal Corporation
	As of and for the Years End December 31,
	2011			2010		2009
Results of operations (dollars in millions):
Net interest income (expense)	$	2,478		$	2,424	$	2,249
Noninterest income (expense)		816			923		727
Total revenue		3,294			3,347		2,976
Noninterest expense (income)		2,415			2,372		2,088
Credit expense (income)		(202	)		182		1,114
Income (loss) before income taxes and including noncontrolling interests		1,081			793		(226	)
Income tax expense (benefit)		318			239		(161	)
Net income (loss) including noncontrolling interest		763			554		(65	)
Less: Net loss from noncontrolling interests		15			19		—
Net income (loss) attributable to UNBC	$	778		$	573	$	(65	)
Total assets, end of period (dollars in millions):	$	89,676		$	79,097	$	85,598