Exhibit 99.1
UnionBanCal Corporation Reports Third
Quarter 2006 Earnings Per Share of $1.21
SAN FRANCISCO--(BUSINESS WIRE)--Oct. 19, 2006--UnionBanCal
Corporation (NYSE:UB):
Third Quarter 2006 Highlights:
- -- Strong year-over-year organic loan growth
-- Average total loans up 12 percent
-- Average commercial loans up 16 percent
-- Average residential mortgage loans up 11 percent
- -- Annualized average all-in cost of funds of 2.11 percent
- -- Average noninterest bearing deposits comprised 42 percent of
average total deposits
- -- Nonperforming assets were 0.09 percent of total assets at
quarter-end
UnionBanCal Corporation (NYSE:UB) today reported third quarter
2006 net income of $170.7 million, or $1.20 per diluted common share,
compared with $1.26 per diluted common share a year earlier. Income
from continuing operations was $171.9 million, or $1.21 per diluted
common share, compared with $1.36 per diluted common share a year
earlier. Income from continuing operations for third quarter 2005
included a $10 million, or $0.04 per diluted common share, negative
loan loss provision associated with the sale of the international
correspondent banking business and $9 million, or $0.06 per diluted
common share, in income tax adjustments. Adjusting for these two
items, income from continuing operations for third quarter 2005 was
$1.26 per diluted common share.
For the first nine months of 2006, net income was $527 million, or
$3.65 per diluted common share, compared with $3.74 per diluted common
share for the first nine months of 2005. Income from continuing
operations was $536 million, or $3.71 per diluted common share,
compared with $3.84 per diluted common share for the first nine months
of 2005. Income from continuing operations for the first nine months
of 2006 included stock option expense of $17.3 million, or $0.07 per
diluted common share, versus none in the comparable period in 2005.
"Third quarter results were generally in line with our
expectations," stated Takashi Morimura, President and Chief Executive
Officer. "We continued to generate strong loan growth, and credit
quality continued to be excellent. At the same time, we continued to
be adversely impacted by unfavorable deposit mix and deposit pricing
trends."
Added Chief Operating Officer Philip Flynn, "We are pleased with
the balanced growth we are generating in the loan portfolio. However,
excellent lending results for the quarter were offset by the effects
of a very competitive deposit market. Short-term profitability is
being negatively affected as customers shift deposit balances to
higher rate products, and as deposit rates continue to increase faster
than loan yields. Despite these current challenges, our deposit
franchise remains healthy and profitable, and well-positioned for the
long run. We continue to be among the industry leaders in noninterest
bearing deposit mix, core deposit mix, average all-in cost of funds,
and net interest margin. We believe our balanced business model will
continue to produce solid long-term results."
Summary of Third Quarter Results from Continuing Operations
For third quarter 2006, income from continuing operations was
$171.9 million, or $1.21 per diluted common share, compared with $1.36
per diluted common share a year earlier. Total revenue was flat,
compared with third quarter 2005. A 2.4 percent increase in
noninterest income was offset by a 1 percent decrease in net interest
income. The decrease in net interest income was primarily due to a
deposit mix shift reflecting customer decisions to shift balances from
noninterest bearing and low-cost deposits into higher-cost deposits.
The unfavorable deposit mix change offset strong loan growth. The
total provision for credit losses was zero, compared with negative $15
million in third quarter last year. Of the negative $15 million total
provision for credit losses recognized in third quarter 2005, negative
$10 million was related to the sale of the international correspondent
banking business, now a discontinued operation. For third quarter
2006, noninterest expense was up 5 percent from the same quarter a
year ago. Adjusting for the impact of stock option expense, which
commenced January 1, 2006, and a $3.2 million decline in foreclosed
asset income, noninterest expense increased 3 percent. The effective
tax rate was higher in third quarter 2006 due to $9 million in income
tax adjustments recorded in third quarter 2005.
Adjusting for the negative $10 million provision related to the
discontinued operation, $3.4 million in foreclosed asset income, and
the $9 million of tax adjustments, income from continuing operations
was $1.25 per diluted common share for third quarter 2005. Adjusting
for the $6 million of stock option expense and $0.2 million in
foreclosed asset income recorded in third quarter this year, income
from continuing operations was $1.23 per diluted common share for
third quarter 2006. Therefore, on an adjusted basis, income from
continuing operations for third quarter 2006 declined 2 cents, or 1.6
percent, compared with third quarter 2005.
Third Quarter Total Revenue From Continuing Operations
For third quarter 2006, total revenue (taxable-equivalent net
interest income plus noninterest income) was $678 million, flat
compared with third quarter 2005. Net interest income decreased 1.0
percent, and noninterest income increased 2.4 percent. Compared with
second quarter 2006, total revenue decreased 1.5 percent, with net
interest income decreasing 1.8 percent and noninterest income
decreasing 0.9 percent.
Third Quarter Net Interest Income (Taxable-equivalent) From
Continuing Operations
Net interest income was $461 million in third quarter 2006, down
$5 million, or 1.0 percent, from the same quarter a year ago,
primarily due to a deposit mix shift from noninterest bearing and
low-cost deposits into higher-cost deposits, partially offset by solid
growth in loans and higher yields on earning assets.
Average earning assets increased $2.5 billion, or 5.7 percent,
compared to last year, primarily due to a $3.8 billion, or 11.8
percent, increase in average loans. Average commercial loans increased
$1.8 billion, or 15.6 percent; average residential mortgages increased
$1.2 billion, or 11.2 percent; and average construction loans
increased $0.7 billion, or 53.3 percent. The increase in construction
loans is primarily related to income properties, where business
fundamentals continue to be very healthy. Average securities declined
$1.4 billion, or 14.2 percent.
Compared to third quarter 2005, average interest bearing deposits
increased $2.7 billion, or 12.8 percent, while average noninterest
bearing deposits decreased $2.4 billion, or 12.4 percent. The decline
in noninterest bearing deposits was primarily due to a $1.1 billion,
or 8.2 percent, decrease in average other commercial noninterest
bearing deposits and a $1.0 billion, or 29.8 percent, decrease in
average title and escrow deposits. Average other commercial
noninterest bearing deposits declined primarily due to changes in
customer behavior in response to rising short-term interest rates, and
average title and escrow deposits decreased due to lower residential
real estate activity. Average consumer noninterest bearing deposits
decreased $311 million, or 9.6 percent.
Average noninterest bearing deposits represented 41.9 percent of
average total deposits in third quarter 2006. The annualized average
all-in cost of funds was 2.11 percent, reflecting the Company's strong
average core deposit-to-loan ratio of 94 percent and the high
proportion of noninterest bearing deposits to total deposits.
The average yield on earning assets of $45.9 billion was 6.06
percent, up 85 basis points over third quarter 2005, with the average
loan yield increasing 66 basis points. The average rate on interest
bearing liabilities of $27.7 billion was 3.41 percent, up 165 basis
points compared with third quarter 2005, reflecting higher short-term
interest rates, an unfavorable change in deposit mix, and heightened
competition for deposits. Average interest bearing deposits were $23.6
billion and the weighted average rate was 3.07 percent. Average core
deposits funded 73.9 percent of average earning assets in the third
quarter. The net interest margin in third quarter 2006 was 4.00
percent, compared with 4.27 percent in third quarter 2005.
On a sequential quarter basis, net interest income decreased $8
million, or 1.8 percent. Average loans increased $0.8 billion, or 2.3
percent. Average commercial loans increased $282 million, or 2.2
percent; average residential mortgages increased $238 million, or 2.0
percent; and average construction loans increased $267 million, or
15.5 percent. Average noninterest bearing deposits decreased $553
million, or 3.2 percent, with commercial noninterest bearing deposits
decreasing $316 million, partially due to a $59 million decrease in
title and escrow deposits, and consumer noninterest bearing deposits
decreasing $237 million, or 7.5 percent. The average yield on earning
assets increased 11 basis points and the average rate on interest
bearing liabilities increased 46 basis points. The net interest margin
decreased 23 basis points to 4.00 percent.
Third Quarter Noninterest Income From Continuing Operations
In third quarter 2006, noninterest income was $217 million, up $5
million, or 2.4 percent, from the same quarter a year ago. Service
charges on deposit accounts decreased $6 million, or 6.8 percent,
primarily due to lower account analysis fees, stemming from an
increase in the earnings credit rate on deposit balances and lower
noninterest bearing deposit balances. Trust and investment management
fees increased $4 million, or 9.3 percent, primarily due to an
increase in trust assets.
Compared with the preceding quarter, third quarter 2006
noninterest income decreased $2 million, or 0.9 percent, primarily due
to declines in service charges on deposit accounts.
Third Quarter Noninterest Expense From Continuing Operations
Noninterest expense for third quarter 2006 was $417 million, an
increase of $20 million, or 5.1 percent, over third quarter 2005.
Salaries and employee benefits expense increased $8.5 million, or 3.6
percent, primarily due to higher stock option expense, annual merit
increases and higher employee count, partially offset by lower
incentive and bonus expense and lower accruals for workers'
compensation expense. Stock option expense was $5.7 million, compared
with none in third quarter 2005. Outside services expense increased
$3.4 million, or 11.8 percent, primarily due to higher trust
administration expenses. Advertising and public relations expense
increased $2.6 million, or 28.7 percent, primarily due to increased
advertising and marketing activity in response to the competitive
deposit market. Foreclosed asset income was $3.2 million lower than in
prior year. There was no provision for off-balance sheet commitments
in third quarter 2006 or third quarter 2005.
Excluding the effect of stock option expense and lower foreclosed
asset income, noninterest expense increased $11.4 million, or 2.9
percent, compared with prior year.
Compared with second quarter 2006, noninterest expense increased
$4 million, or 1.0 percent. Salaries and employee benefits expense
decreased $4.0 million, or 1.6 percent, primarily due to a $4.4
million decrease in incentive and bonus expense in the third quarter.
Professional services expense decreased $4.9 million, or 28.6 percent,
partially due to lower compliance-related expense. Foreclosed asset
income was $7.6 million lower than in second quarter 2006. There was
no provision for off-balance sheet commitments, compared with negative
$4 million in second quarter 2006.
Excluding the $7.6 million decrease in foreclosed asset income and
the $4 million negative off-balance sheet commitment provision in
second quarter, noninterest expense declined $7.6 million, or 1.8
percent, on a sequential quarter basis.
Income Tax Expense From Continuing Operations
The effective tax rate for third quarter 2006 was 33.6 percent,
compared with an effective tax rate of 31.7 percent for third quarter
2005. Third quarter 2005 income tax expense was reduced by
approximately $9 million, primarily as a result of the adjustment of
California state taxes to reflect tax returns filed on the worldwide
unitary method, and the recognition of California Enterprise Zone tax
credits for which the Company qualified during the quarter.
Year-to-Date Results From Continuing Operations
Total revenue was $2.1 billion in the first nine months of 2006,
an increase of $67 million, or 3.4 percent, compared with the same
period of 2005. Net interest income increased 2.5 percent, and
noninterest income increased 5.3 percent.
Net interest income was $1.4 billion in the first nine months of
2006, a $34 million, or 2.5 percent, increase from prior year,
primarily due to growth in earning assets. Average loans increased
$4.3 billion, or 13.8 percent, while the net interest margin decreased
8 basis points, to 4.19 percent. Average total deposits increased $0.4
billion, or 1.1 percent, primarily due to a $1.9 billion increase in
average interest bearing deposits, offset by a $1.4 billion, or 7.7
percent, decrease in average noninterest bearing deposits. This
deposit mix shift was due to changes in customer behavior in response
to rising short-term interest rates.
Noninterest income in the first nine months of 2006 was $654
million, an increase of $33 million, or 5.3 percent, over the same
period in 2005. Service charges on deposit accounts decreased $1
million, or 0.5 percent. Trust and investment management fees
increased $19 million, or 15.0 percent, primarily due to growth in
trust assets and a refinement in accrual methodology implemented in
first quarter 2006. Insurance commissions decreased $5 million, or 7.8
percent, partially due to lower contingent commissions. Merchant
banking fees decreased $7 million, or 20.6 percent, primarily due to a
lower volume of transactions completed in 2006. Securities gains
(losses), net, were $1.8 million, compared with $(13.3) million in the
same period in 2005.
For the first nine months of 2006, noninterest expense increased
$67 million, or 5.6 percent, over the first nine months of 2005.
Salaries and employee benefits expense increased $44 million, or 6.3
percent, primarily due to $17.3 million in stock option expense in the
current year, merit increases, higher employee count, and higher
contract labor expense, reflecting compliance-related initiatives.
Outside services expense increased $15 million, or 19.6 percent,
primarily due to higher trust administration expenses and higher cost
of services related to title and escrow balances, stemming from a
higher earnings credit rate in the first nine months of 2006.
Professional services expense increased $8 million, or 21.1 percent,
primarily due to higher compliance-related expense. The provision for
off-balance sheet commitments was negative $7 million, compared with
negative $1 million in the first nine months of 2005.
Credit Quality
Nonperforming assets at September 30, 2006, were $48 million, or
0.09 percent of total assets. This compares with $36 million, or 0.07
percent of total assets, at June 30, 2006, and $38 million, or 0.07
percent of total assets, at September 30, 2005.
In third quarter 2006, the total provision for credit losses was
zero. The total provision for credit losses was negative $5 million in
second quarter 2006 and negative $15 million in third quarter 2005. In
third quarter 2006, net charge-offs were $2 million, compared with net
charge-offs of $10 million in second quarter 2006, and net charge-offs
of $16 million in third quarter 2005.
At September 30, 2006, the allowance for credit losses as a
percent of total loans and as a percent of nonaccrual loans was 1.14
percent and 850 percent, respectively. These ratios were 1.17 percent
and 1130 percent, respectively, at June 30, 2006, and 1.39 percent and
1272 percent, respectively, at September 30, 2005.
Balance Sheet and Capital Ratios
At September 30, 2006, the Company had total assets of $52
billion. Total loans were $35.7 billion and total deposits were $41.8
billion, resulting in a period-end deposit-to-loan ratio of 117
percent. Core deposits totaled $34.6 billion at quarter-end,
representing 97 percent of total loans. At period-end, total
stockholders' equity was $4.7 billion, the tangible equity ratio was
8.09 percent, and the ratio of tangible common equity to risk-weighted
assets was 8.50 percent. Book value per share at September 30, 2006,
was $33.17, up 10.3 percent from a year earlier. The Company's Tier I
and total risk-based capital ratios at period-end were 8.69 percent
and 11.75 percent, respectively.
Stock Repurchases
During third quarter 2006, the Company repurchased 2.3 million
shares of common stock at a total price of $143 million, or an average
of $61.04 per repurchased share. For the first nine months of 2006,
the Company repurchased 5.3 million shares of common stock at a total
price of $344 million, or an average of $65.29 per repurchased share.
At September 30, 2006, the Company had remaining repurchase authority
of $259 million.
Common shares outstanding at September 30, 2006, were 140.3
million, a decrease of 4.3 million shares, or 2.9 percent, from one
year earlier.
Discontinued Operations
On September 22, 2005, the Company announced the signing of a
definitive agreement to sell its international correspondent banking
business to Wachovia Bank, N.A. Commencing in third quarter 2005, all
results of the international correspondent banking business have been
reported 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 4) and the
average net assets or liabilities of the discontinued operations are
reflected in the analysis of net interest margin (see Exhibits 6, 7
and 8).
In the third quarter of 2006, the Company recorded a net loss from
discontinued operations of $1.2 million, or $0.01 per diluted common
share.
Fourth Quarter 2006 Earnings Per Share Forecast
The Company currently estimates that fourth quarter 2006 fully
diluted earnings per share from continuing operations will be in the
range of $1.03 to $1.08, including estimated stock option expense of
$0.02 per share and a total provision for credit losses of $5 million,
or $0.02 per share. The Company currently estimates income from
discontinued operations of $0.01 per fully diluted share in the fourth
quarter of 2006. Therefore, net income per diluted common share is
expected to be in the range of $1.04 to $1.09.
Non-GAAP Financial Measures
This press release contains certain references to financial
measures identified as being stated on an "adjusted basis" or that
adjust for or exclude stock option expense, foreclosed asset income,
negative off-balance sheet commitment provision, negative loan loss
provision associated with the sale of the international correspondent
banking business, a discontinued operation, and tax adjustments, 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, 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.
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 forecasts, trends
in deposit rates and balances and their impact on the Company, and the
Company's loan portfolio, business model, competitive positioning and
earnings power.
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; 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;
deposit pricing pressures; adverse effects of current and future
banking laws, rules and regulations and their enforcement, or
governmental fiscal or monetary policies; legal or regulatory
proceedings; 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; 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 third quarter
results at 8:30 AM Pacific Time (11:30 AM Eastern Time) on October 20,
2006. Interested parties calling from locations within the United
States should call 800-230-1059 (612-332-0530 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. You may access the Investor Relations section of
the website via the "About Union Bank" link from the homepage. 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),
October 20, through 11:59 PM Pacific Time, October 27 (2:59 AM Eastern
Time, October 28). The reservation number for this playback is 843391.
Based in San Francisco, UnionBanCal Corporation is a bank holding
company with assets of $52 billion at September 30, 2006. Its primary
subsidiary, Union Bank of California, N.A., had 320 banking offices in
California, Oregon and Washington, and 2 international offices at
September 30, 2006.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited) (1)
Exhibit 1
Percent Change to
As of and for the Three Months Ended September 30, 2006
from
-------------------------------------- -------------------
Sept. 30, June 30, Sept. 30, Sept. 30, June 30,
(Dollars in
thousands,
except per
share
data) 2005 2006 2006 2005 2006
- ----------- ------------ ------------ ------------ --------- ---------
Results
of oper-
ations:
Net
interest
income (2) $465,193 $469,000 $460,596 (0.99%) (1.79%)
Noninterest
income 212,188 219,228 217,255 2.39% (0.90%)
------------ ------------ ------------
Total
revenue 677,381 688,228 677,851 0.07% (1.51%)
Noninterest
expense 396,696 413,030 417,021 5.12% 0.97%
Reversal of
allowance
for loan
losses (15,000) (1,000) - (100.00%) (100.00%)
------------ ------------ ------------
Income from
continuing
operations
before
income
taxes (2) 295,685 276,198 260,830 (11.79%) (5.56%)
Taxable-
equivalent
adjustment 1,051 1,358 1,872 78.12% 37.85%
Income tax
expense 93,388 92,203 87,048 (6.79%) (5.59%)
------------ ------------ ------------
Income from
continuing
operations $201,246 $182,637 $171,910 (14.58%) (5.87%)
Income/
(loss) from
dis-
continued
operations (15,961) 274 (1,204) 92.46% nm
------------ ------------ ------------
Net income $185,285 $182,911 $170,706 (7.87%) (6.67%)
============ ============ ============
Per common
share:
Basic
earnings:
From
continuing
operations $1.39 $1.28 $1.22 (12.23%) (4.69%)
Net
income 1.28 1.28 1.21 (5.47%) (5.47%)
Diluted
earnings:
From
continuing
operations 1.36 1.26 1.21 (11.03%) (3.97%)
Net
income 1.26 1.26 1.20 (4.76%) (4.76%)
Dividends
(3) 0.41 0.47 0.47 14.63% 0.00%
Book value
(end of
period) 30.07 32.34 33.17 10.31% 2.57%
Common
shares
out-
standing
(end of
period) 144,584,972 142,533,794 140,326,737 (2.95%) (1.55%)
Weighted
average
common
shares
out-
standing -
basic 144,459,465 142,723,271 140,941,823 (2.44%) (1.25%)
Weighted
average
common
shares
outstanding
- diluted 147,613,377 144,878,447 142,568,400 (3.42%) (1.59%)
Balance
sheet (end
of
period):
Total
assets (4) $51,298,842 $50,800,136 $52,013,256 1.39% 2.39%
Total loans 32,004,747 34,747,833 35,673,469 11.46% 2.66%
Non-
performing
assets 37,507 36,351 47,803 27.45% 31.50%
Total
deposits 41,648,355 40,544,251 41,820,206 0.41% 3.15%
Stock-
holders'
equity 4,346,956 4,608,908 4,654,789 7.08% 1.00%
Balance
sheet
(period
average):
Total
assets $48,212,029 $49,329,374 $50,777,419 5.32% 2.94%
Total loans 32,177,816 35,146,976 35,965,823 11.77% 2.33%
Earning
assets 43,371,177 44,358,594 45,854,645 5.73% 3.37%
Total
deposits 40,293,528 39,692,052 40,582,139 0.72% 2.24%
Stock-
holders'
equity 4,275,122 4,539,476 4,578,635 7.10% 0.86%
Financial
ratios
(5):
Return on
average
assets
(6):
From
continuing
operations 1.66% 1.49% 1.34%
Net
income 1.52% 1.49% 1.33%
Return on
average
stock-
holders'
equity
(6):
From
continuing
operations 18.68% 16.14% 14.90%
Net
income 17.19% 16.16% 14.79%
Efficiency
ratio (7) 59.07% 61.73% 61.55%
Net
interest
margin (2) 4.27% 4.23% 4.00%
Dividend
payout
ratio 29.50% 36.72% 38.52%
Tangible
equity
ratio 7.57% 8.19% 8.09%
Tier 1
risk-based
capital
ratio (4)
(8) 8.88% 8.92% 8.69%
Total risk-
based
capital
ratio (4)
(8) 10.86% 12.05% 11.75%
Leverage
ratio (4)
(8) 7.96% 8.74% 8.47%
Allowances
for credit
losses to
total
loans (9) 1.39% 1.17% 1.14%
Allowances
for credit
losses
to
nonaccrual
loans (9) 1272.29% 1130.05% 850.01%
Net loans
charged
off to
average
total loans
(6) 0.20% 0.12% 0.02%
Non-
performing
assets to
total
loans and
foreclosed
assets 0.12% 0.10% 0.13%
Non-
performing
assets to
total
assets (4) 0.07% 0.07% 0.09%
- -----------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited) (1)
Exhibit 2
Percent
Change
to
As of and for the Nine September
Months Ended 30, 2006
from
------------------------- ---------
September September September
30, 30, 30,
(Dollars in thousands, except per
share data) 2005 2006 2005
- ---------------------------------- ------------ ------------ ---------
Results of operations:
Net interest income (2) $1,361,638 $1,395,937 2.52%
Noninterest income 621,367 654,393 5.32%
------------ ------------
Total revenue 1,983,005 2,050,330 3.40%
Noninterest expense 1,178,048 1,244,595 5.65%
Reversal of allowance for loan
losses (40,683) (8,000) (80.34%)
------------ ------------
Income from continuing operations
before income taxes (2) 845,640 813,735 (3.77%)
Taxable-equivalent adjustment 3,124 4,478 43.34%
Income tax expense 274,041 273,255 (0.29%)
------------ ------------
Income from continuing operations $568,475 $536,002 (5.71%)
Income/(loss) from discontinued
operations (14,031) (9,440) 32.72%
------------ ------------
Net income $554,444 $526,562 (5.03%)
============ ============
Per common share:
Basic earnings:
From continuing operations $3.91 $3.76 (3.84%)
Net income 3.82 3.70 (3.14%)
Diluted earnings:
From continuing operations 3.84 3.71 (3.39%)
Net income 3.74 3.65 (2.41%)
Dividends (3) 1.18 1.35 14.41%
Book value (end of period) 30.07 33.17 10.31%
Common shares outstanding (end of
period) 144,584,972 140,326,737 (2.95%)
Weighted average common shares
outstanding - basic 145,325,640 142,371,445 (2.03%)
Weighted average common shares
outstanding - diluted 148,062,139 144,451,516 (2.44%)
Balance sheet (end of period):
Total assets (4) $51,298,842 $52,013,256 1.39%
Total loans 32,004,747 35,673,469 11.46%
Nonperforming assets 37,507 47,803 27.45%
Total deposits 41,648,355 41,820,206 0.41%
Stockholders' equity 4,346,956 4,654,789 7.08%
Balance sheet (period average):
Total assets $47,342,684 $49,426,668 4.40%
Total loans 30,843,202 35,100,506 13.80%
Earning assets 42,575,954 44,481,217 4.48%
Total deposits 39,304,760 39,716,972 1.05%
Stockholders' equity 4,209,884 4,552,410 8.14%
Financial ratios (5):
Return on average assets (6):
From continuing operations 1.61% 1.45%
Net income 1.57% 1.42%
Return on average stockholders'
equity (6):
From continuing operations 18.05% 15.74%
Net income 17.61% 15.46%
Efficiency ratio (7) 59.74% 61.79%
Net interest margin (2) 4.27% 4.19%
Dividend payout ratio 30.18% 35.90%
Tangible equity ratio 7.57% 8.09%
Tier 1 risk-based capital ratio
(4) (8) 8.88% 8.69%
Total risk-based capital ratio (4)
(8) 10.86% 11.75%
Leverage ratio (4) (8) 7.96% 8.47%
Allowance for credit losses to
total loans (9) 1.39% 1.14%
Allowance for credit losses to
nonaccrual loans (9) 1272.29% 850.01%
Net loans charged off (recovered)
to average total loans (6) (0.02%) 0.06%
Nonperforming assets to total
loans and
foreclosed assets 0.12% 0.13%
Nonperforming assets to total
assets (4) 0.07% 0.09%
- ----------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited) (1)
(Taxable-Equivalent Basis)
Exhibit 3
For the Three Months Ended For the Nine Months
Ended
----------------------------- -----------------------
Sept. 30, June 30, Sept. 30, September 30,
(Dollars in
thousands,
except per
share data) 2005 2006 2006 2005 2006
- ---------------- --------- --------- --------- ----------- -----------
Interest Income
(2)
Loans $461,892 $548,017 $575,799 $1,305,807 $1,636,804
Securities 98,056 104,008 108,609 302,339 309,968
Interest
bearing
deposits in
banks 303 423 411 1,432 1,570
Federal funds
sold and
securities
purchased
under resale
agreements 6,777 4,725 12,024 14,406 20,594
Trading
account
assets 1,115 1,685 1,832 3,072 5,047
--------- --------- --------- ----------- -----------
Total
interest
income 568,143 658,858 698,675 1,627,056 1,973,983
--------- --------- --------- ----------- -----------
Interest Expense
Deposits 82,796 143,677 182,298 206,048 441,284
Federal funds
purchased and
securities
sold under
repurchase
agreements 294 8,455 4,891 9,330 22,148
Commercial
paper 9,394 19,137 20,835 21,761 52,420
Medium and
long-term
debt 8,520 16,875 21,974 22,511 49,246
Trust notes 239 238 239 715 715
Other borrowed
funds 1,707 1,476 7,842 5,053 12,233
--------- --------- --------- ----------- -----------
Total
interest
expense 102,950 189,858 238,079 265,418 578,046
--------- --------- --------- ----------- -----------
Net Interest
Income (2) 465,193 469,000 460,596 1,361,638 1,395,937
Reversal of
allowance for
loan losses (15,000) (1,000) - (40,683) (8,000)
--------- --------- --------- ----------- -----------
Net interest
income
after
reversal of
allowance
for loan
losses 480,193 470,000 460,596 1,402,321 1,403,937
--------- --------- --------- ----------- -----------
Noninterest
Income
Service
charges on
deposit
accounts 84,822 81,837 79,083 243,835 242,555
Trust and
investment
management
fees 43,500 48,380 47,555 127,053 146,050
Insurance
commissions 17,819 17,752 17,301 59,176 54,571
Merchant
banking fees 11,257 8,396 11,655 35,637 28,280
Brokerage
commissions
and fees 5,290 10,330 8,531 22,867 26,656
Foreign
exchange
gains, net 8,849 8,307 8,179 25,570 24,304
Card
processing
fees, net 6,597 7,206 7,241 18,668 21,144
Securities
gains
(losses), net (320) 1,993 43 (13,289) 1,822
Other 34,374 35,027 37,667 101,850 109,011
--------- --------- --------- ----------- -----------
Total
noninterest
income 212,188 219,228 217,255 621,367 654,393
--------- --------- --------- ----------- -----------
Noninterest
Expense
Salaries and
employee
benefits 236,124 248,637 244,613 701,858 745,745
Net occupancy 34,336 34,519 35,753 100,251 103,109
Outside
services 28,533 30,704 31,890 76,248 91,203
Equipment 15,828 16,846 17,387 50,164 52,155
Software 14,378 15,323 15,334 43,084 47,001
Professional
services 11,240 17,038 12,169 36,131 43,754
Communications 10,808 10,061 9,942 30,950 30,555
Foreclosed
asset income (3,435) (7,782) (183) (5,606) (15,332)
Reversal of
allowance for
losses on
off-balance
sheet
commitments - (4,000) - (1,000) (7,000)
Other 48,884 51,684 50,116 145,968 153,405
--------- --------- --------- ----------- -----------
Total
noninterest
expense 396,696 413,030 417,021 1,178,048 1,244,595
--------- --------- --------- ----------- -----------
Income from
continuing
operations
before income
taxes (2) 295,685 276,198 260,830 845,640 813,735
Taxable-
equivalent
adjustment 1,051 1,358 1,872 3,124 4,478
Income tax
expense 93,388 92,203 87,048 274,041 273,255
--------- --------- --------- ----------- -----------
Income from
Continuing
Operations 201,246 182,637 171,910 568,475 536,002
--------- --------- --------- ----------- -----------
Income (loss)
from
discontinued
operations
before income
taxes (25,612) 431 (2,061) (22,385) (15,233)
Income tax
expense
(benefit) (9,651) 157 (857) (8,354) (5,793)
--------- --------- --------- ----------- -----------
Income (Loss)
from
Discontinued
Operations (15,961) 274 (1,204) (14,031) (9,440)
--------- --------- --------- ----------- -----------
Net Income $185,285 $182,911 $170,706 $554,444 $526,562
========= ========= ========= =========== ===========
Income from
continuing
operations per
common share -
basic $1.39 $1.28 $1.22 $3.91 $3.76
Net income per
common share -
basic $1.28 $1.28 $1.21 $3.82 $3.70
========= ========= ========= =========== ===========
Income from
continuing
operations per
common share -
diluted $1.36 $1.26 $1.21 $3.84 $3.71
Net income per
common share -
diluted $1.26 $1.26 $1.20 $3.74 $3.65
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
basic 144,459 142,723 140,942 145,326 142,371
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
diluted 147,613 144,878 142,568 148,062 144,452
========= ========= ========= =========== ===========
- ----------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Consolidated Balance Sheets (1)
Exhibit 4
(Unaudited) (Unaudited)
September December 31, September
30, 30,
(Dollars in thousands) 2005 2005 2006
- ------------------------------- ------------ ------------ ------------
Assets
Cash and due from banks $2,163,149 $2,402,212 $2,168,245
Interest bearing deposits in
banks 471,340 771,164 26,700
Federal funds sold and
securities purchased under
resale agreements 1,454,193 796,500 1,827,000
------------ ------------ ------------
Total cash and cash
equivalents 4,088,682 3,969,876 4,021,945
Trading account assets 371,551 312,655 360,267
Securities available for sale:
Securities pledged as
collateral 158,878 96,994 58,877
Held in portfolio 9,647,093 8,072,286 8,582,667
Loans (net of allowance for
loan losses: September 30,
2005, $363,671; December 31,
2005, $351,532; September 30,
2006, $326,955) 31,641,076 32,744,063 35,346,514
Due from customers on
acceptances 47,167 19,252 25,851
Premises and equipment, net 509,922 536,074 499,702
Intangible assets 46,781 42,616 32,331
Goodwill 452,617 454,015 453,489
Other assets 2,318,507 2,113,577 2,594,084
Assets of discontinued
operations to be disposed or
sold 2,016,568 1,054,594 37,529
------------ ------------ ------------
Total assets $51,298,842 $49,416,002 $52,013,256
============ ============ ============
Liabilities
Noninterest bearing $20,541,706 $19,489,377 $17,446,321
Interest bearing 21,106,649 20,592,862 24,373,885
------------ ------------ ------------
Total deposits 41,648,355 40,082,239 41,820,206
Federal funds purchased and
securities sold under
repurchase agreements 357,725 651,529 265,596
Commercial paper 859,515 680,027 1,859,747
Other borrowed funds 114,324 134,485 308,080
Acceptances outstanding 47,167 19,252 25,851
Other liabilities 1,616,174 1,466,478 1,542,719
Medium and long-term debt 806,353 801,095 1,517,977
Junior subordinated debt
payable to subsidiary grantor
trust 15,451 15,338 14,998
Liabilities of discontinued
operations to be extinguished
or assumed 1,486,822 1,005,859 3,293
------------ ------------ ------------
Total liabilities 46,951,886 44,856,302 47,358,467
------------ ------------ ------------
Commitments and contingencies
Stockholders' Equity
Preferred stock:
Authorized 5,000,000 shares;
no shares issued or
outstanding as of September
30, 2005, December 31, 2005
and September 30, 2006 - - -
Common stock, par value $1 per
share at September 30, 2005,
December 31, 2005 and
September 30, 2006:
Authorized 300,000,000 shares;
issued 153,960,915 shares as
of September 30, 2005,
154,469,215 shares as of
December 31, 2005 and
155,854,756 shares as of
September 30, 2006 153,961 154,469 155,855
Additional paid-in capital 967,242 994,956 1,064,993
Treasury stock - 9,375,943
shares as of September 30,
2005, 10,262,143 shares as of
December 31, 2005 and
15,528,019 shares as of
September 30, 2006 (552,786) (612,732) (956,545)
Retained earnings 3,901,625 4,141,400 4,494,698
Accumulated other comprehensive
loss (123,086) (118,393) (104,212)
------------ ------------ ------------
Total stockholders' equity 4,346,956 4,559,700 4,654,789
------------ ------------ ------------
Total liabilities and
stockholders' equity $51,298,842 $49,416,002 $52,013,256
============ ============ ============
- -------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Loans (Unaudited) (1)
Exhibit 5
Percent Change
to
Three Months Ended September 30,
2006 from
---------------------------- ----------------
September June 30, September September June
30, 30, 30, 30,
(Dollars in millions) 2005 2006 2006 2005 2006
- ------------------------ --------- -------- --------- --------- ------
Loans (period average)
Commercial, financial
and industrial $11,453 $12,955 $13,237 15.58% 2.18%
Construction 1,299 1,724 1,991 53.27% 15.49%
Mortgage - Commercial 5,589 5,662 5,681 1.65% 0.34%
Mortgage -
Residential 10,763 11,733 11,971 11.22% 2.03%
Consumer 2,478 2,505 2,507 1.17% 0.08%
Lease financing 593 564 570 (3.88%) 1.06%
--------- -------- ---------
Total loans held to
maturity $32,175 $35,143 $35,957 11.75% 2.32%
Total loans held for
sale 3 4 9 nm nm
--------- -------- ---------
Total loans $32,178 $35,147 $35,966 11.77% 2.33%
========= ======== =========
Nonperforming assets
(period end)
Nonaccrual loans:
Commercial, financial
and industrial $25 $4 $14 (44.00%) nm
Mortgage - Commercial 10 17 19 90.00% 11.76%
Lease - 15 15 nm 0.00%
--------- -------- ---------
Total
nonaccrual
loans 35 36 48 37.14% 33.33%
Foreclosed assets 3 - - (100.00%) -
--------- -------- ---------
Total
nonperforming
assets $38 $36 $48 26.32% 33.33%
========= ======== =========
Loans 90 days or more
past due and
still accruing $5 $3 $4 (20.00%) 33.33%
Analysis of Allowances
for Credit Losses
Beginning balance $395 $340 $329
Reversal of allowance
for loan losses (15) (1) -
Loans charged off:
Commercial, financial
and industrial (9) (18) (4)
Consumer (1) (1) (1)
Lease financing (19) - -
--------- -------- ---------
Total loans charged
off (29) (19) (5)
--------- -------- ---------
Loans recovered:
Commercial, financial
and industrial 13 9 3
--------- -------- ---------
Total loans
recovered 13 9 3
--------- -------- ---------
Net loans
charged off (16) (10) (2)
--------- -------- ---------
Ending balance of
allowance for loan
losses $364 $329 $327
Allowance for off-
balance sheet
commitment losses 82 79 79
--------- -------- ---------
$-
Allowances for credit
losses $446 $408 $406
========= ======== =========
- ------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited) (1)
Exhibit 6
For the Three Months Ended
--------------------------------
September 30, 2005
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ------------------------------------- ------------ -------------------
Assets
Loans (11) $32,177,816 $461,892 5.71 %
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 (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
Deposits:
Interest bearing $13,157,103 44,318 1.34
Savings and consumer time 4,642,782 15,668 1.34
Large time 3,105,857 22,810 2.91
------------ ---------
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 (12) (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 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
=========
-----------------------------------------------------------------
For the Three Months Ended
-------------------------------
September 30, 2006
-------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ----------------------------------------------------------------------
Assets
Loans (11) $35,965,823 $575,799 6.37 %
Securities - taxable 8,548,420 107,378 5.02
Securities - tax-exempt 59,644 1,231 8.26
Interest bearing deposits in banks 37,351 411 4.37
Federal funds sold and securities
purchased under resale agreements 894,039 12,024 5.34
Trading account assets 349,368 1,832 2.08
----------------------
Total earning assets 45,854,645 698,675 6.06
----------
Allowance for loan losses (328,399)
Cash and due from banks 2,063,653
Premises and equipment, net 497,957
Other assets 2,689,563
------------
Total assets $50,777,419
============
Liabilities
Deposits:
Interest bearing $12,405,367 73,826 2.36
Savings and consumer time 4,493,082 25,682 2.27
Large time 6,692,874 82,790 4.91
----------------------
Total interest bearing deposits 23,591,323 182,298 3.07
----------------------
Federal funds purchased and securities
sold under repurchase agreements 419,665 5,345 5.05
Net funding allocated from (to)
discontinued operations (12) (34,738) (454) 5.18
Commercial paper 1,645,428 20,835 5.02
Other borrowed funds 577,533 7,842 5.39
Medium and long-term debt 1,496,207 21,974 5.83
Trust notes 15,054 239 6.33
----------------------
Total borrowed funds 4,119,149 55,781 5.37
----------------------
Total interest bearing liabilities 27,710,472 238,079 3.41
----------
Noninterest bearing deposits 16,990,816
Other liabilities 1,497,496
------------
Total liabilities 46,198,784
Stockholders' Equity
Common equity 4,578,635
------------
Total stockholders' equity 4,578,635
------------
Total liabilities and stockholders'
equity $50,777,419
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 460,596 4.00 %
Less: taxable-equivalent adjustment 1,872
----------
Net interest income $458,724
==========
------------------------------------------------------------------
Average Assets and Liabilities of Discontinued
Operations for Period Ended:
September September
30, 2005 30, 2006
------------ -----------
Assets $1,978,255 $41,135
Liabilities $1,384,523 $6,397
Net Asset $593,732 $34,738
--------------------------------------------------------------------
- ---------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited) (1)
Exhibit 7
For the Three Months Ended
------------------------------
June 30, 2006
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ----------------------------------------------------------------------
Assets
Loans: (11) $35,146,976 $548,017 6.25 %
Securities - taxable 8,349,759 102,733 4.92
Securities - tax-exempt 63,222 1,275 8.06
Interest bearing deposits in banks 34,462 423 4.92
Federal funds sold and securities
purchased under resale agreements 379,412 4,725 4.99
Trading account assets 384,763 1,685 1.76
---------------------
Total earning assets 44,358,594 658,858 5.95
---------
Allowance for loan losses (334,556)
Cash and due from banks 2,107,846
Premises and equipment, net 506,607
Other assets 2,690,883
------------
Total assets $49,329,374
============
Liabilities
Deposits:
Interest bearing $12,614,869 65,457 2.08
Savings and consumer time 4,470,764 21,502 1.93
Large time 5,062,473 56,718 4.49
---------------------
Total interest bearing deposits 22,148,106 143,677 2.60
---------------------
Federal funds purchased and securities
sold under repurchase agreements 748,050 8,902 4.77
Net funding allocated from (to)
discontinued operations (12) (36,123) (447) 4.97
Commercial paper 1,650,266 19,137 4.65
Other borrowed funds 108,095 1,476 5.47
Medium and long-term debt 1,179,432 16,875 5.74
Trust notes 15,167 238 6.28
---------------------
Total borrowed funds 3,664,887 46,181 5.05
---------------------
Total interest bearing liabilities 25,812,993 189,858 2.95
---------
Noninterest bearing deposits 17,543,946
Other liabilities 1,432,959
------------
Total liabilities 44,789,898
Stockholders' Equity
Common equity 4,539,476
------------
Total stockholders' equity 4,539,476
------------
Total liabilities and stockholders'
equity $49,329,374
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 469,000 4.23 %
Less: taxable-equivalent adjustment 1,358
---------
Net interest income $467,642
=========
- ----------------------------------------------------------------------
For the Three Months Ended
-----------------------------
September 30, 2006
-----------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ----------------------------------------------------------------------
Assets
Loans: (11) $35,965,823 $575,799 6.37 %
Securities - taxable 8,548,420 107,378 5.02
Securities - tax-exempt 59,644 1,231 8.26
Interest bearing deposits in banks 37,351 411 4.37
Federal funds sold and securities
purchased under resale agreements 894,039 12,024 5.34
Trading account assets 349,368 1,832 2.08
---------------------
Total earning assets 45,854,645 698,675 6.06
---------
Allowance for loan losses (328,399)
Cash and due from banks 2,063,653
Premises and equipment, net 497,957
Other assets 2,689,563
------------
Total assets $50,777,419
============
Liabilities
Deposits:
Interest bearing $12,405,367 73,826 2.36
Savings and consumer time 4,493,082 25,682 2.27
Large time 6,692,874 82,790 4.91
---------------------
Total interest bearing deposits 23,591,323 182,298 3.07
---------------------
Federal funds purchased and securities
sold under repurchase agreements 419,665 5,345 5.05
Net funding allocated from (to)
discontinued operations (12) (34,738) (454) 5.18
Commercial paper 1,645,428 20,835 5.02
Other borrowed funds 577,533 7,842 5.39
Medium and long-term debt 1,496,207 21,974 5.83
Trust notes 15,054 239 6.33
---------------------
Total borrowed funds 4,119,149 55,781 5.37
---------------------
Total interest bearing liabilities 27,710,472 238,079 3.41
---------
Noninterest bearing deposits 16,990,816
Other liabilities 1,497,496
------------
Total liabilities 46,198,784
Stockholders' Equity
Common equity 4,578,635
------------
Total stockholders' equity 4,578,635
------------
Total liabilities and stockholders'
equity $50,777,419
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 460,596 4.00 %
Less: taxable-equivalent adjustment 1,872
---------
Net interest income $458,724
=========
- ---------------------------------------------------------------------
Average Assets and Liabilities of Discontinued
Operations for Period Ended:
June 30, Sept. 30,
2006 2006
-------- ---------
Assets $79,188 $41,135
Liabilities $43,065 $6,397
Net Asset $36,123 $34,738
- ---------------------------------------------------------------------
- ----------------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited) (1)
Exhibit 8
For the Nine Months Ended
-----------------------------------
September 30, 2005
-----------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense (10)Rate (6)
(10)
- ----------------------------------------------------------------------
Assets
Loans: (11) $30,843,202 $1,305,807 5.66 %
Securities - taxable 10,678,358 298,317 3.72
Securities - tax-exempt 66,379 4,022 8.08
Interest bearing deposits in banks 96,961 1,432 1.97
Federal funds sold and securities
purchased under resale agreements 615,967 14,406 3.13
Trading account assets 275,087 3,072 1.49
-------------------------
Total earning assets 42,575,954 1,627,056 5.10
------------
Allowance for loan losses (398,404)
Cash and due from banks 2,240,948
Premises and equipment, net 519,915
Other assets 2,404,271
-------------
Total assets $47,342,684
=============
Liabilities
Deposits:
Interest bearing $12,614,932 101,752 1.08
Savings and consumer time 4,707,515 42,841 1.22
Large time 3,190,094 61,455 2.58
-------------------------
Total interest bearing deposits 20,512,541 206,048 1.34
-------------------------
Federal funds purchased and
securities sold under repurchase
agreements 1,021,123 20,829 2.73
Net funding allocated from (to)
discontinued operations (12) (535,998) (11,499) 2.87
Commercial paper 1,078,558 21,761 2.70
Other borrowed funds 183,997 5,053 3.67
Medium and long-term debt 808,686 22,511 3.72
Trust notes 15,618 715 6.10
-------------------------
Total borrowed funds 2,571,984 59,370 3.09
-------------------------
Total interest bearing liabilities 23,084,525 265,418 1.54
------------
Noninterest bearing deposits 18,792,219
Other liabilities 1,256,056
-------------
Total liabilities 43,132,800
Stockholders' Equity
Common equity 4,209,884
-------------
Total stockholders' equity 4,209,884
-------------
Total liabilities and stockholders'
equity $47,342,684
=============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 1,361,638 4.27 %
Less: taxable-equivalent adjustment 3,124
------------
Net interest income $1,358,514
============
- ----------------------------------------------------------------------
For the Nine Months Ended
---------------------------------
September 30, 2006
---------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense (10)Rate (6)
(10)
- ----------------------------------------------------------------------
Assets
Loans: (11) $35,100,506 $1,636,804 6.23 %
Securities - taxable 8,378,496 306,164 4.87
Securities - tax-exempt 62,670 3,804 8.09
Interest bearing deposits in banks 43,804 1,570 4.79
Federal funds sold and securities
purchased under resale agreements 541,607 20,594 5.08
Trading account assets 354,134 5,047 1.91
------------------------
Total earning assets 44,481,217 1,973,983 5.93
------------
Allowance for loan losses (337,145)
Cash and due from banks 2,096,935
Premises and equipment, net 510,416
Other assets 2,675,245
------------
Total assets $49,426,668
============
Liabilities
Deposits:
Interest bearing $12,757,571 201,641 2.11
Savings and consumer time 4,477,251 65,672 1.96
Large time 5,133,186 173,971 4.53
------------------------
Total interest bearing deposits 22,368,008 441,284 2.64
------------------------
Federal funds purchased and
securities sold under repurchase
agreements 678,926 23,657 4.66
Net funding allocated from (to)
discontinued operations (12) (42,570) (1,509) 4.74
Commercial paper 1,514,196 52,420 4.63
Other borrowed funds 319,096 12,233 5.13
Medium and long-term debt 1,164,090 49,246 5.66
Trust notes 15,166 715 6.28
------------------------
Total borrowed funds 3,648,904 136,762 5.01
------------------------
Total interest bearing liabilities 26,016,912 578,046 2.97
------------
Noninterest bearing deposits 17,348,964
Other liabilities 1,508,382
------------
Total liabilities 44,874,258
Stockholders' Equity
Common equity 4,552,410
------------
Total stockholders' equity 4,552,410
------------
Total liabilities and stockholders'
equity $49,426,668
============
Reported Net Interest Income/Margin
Net interest income/margin (taxable-
equivalent basis) 1,395,937 4.19 %
Less: taxable-equivalent adjustment 4,478
------------
Net interest income $1,391,459
============
- ---------------------------------------------------------------------
Average Assets and Liabilities of
Discontinued Operations for Period Ended:
September September
30, 2005 30, 2006
----------- ---------
Assets $1,974,884 $244,210
Liabilities $1,438,886 $201,640
Net Asset $535,998 $42,570
-------------------------
Refer to Exhibit 11 for footnote
explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited) (1)
Exhibit 9
Percentage Change
to
For the Three Months Ended September 30, 2006
From
---------------------------- -------------------
Sept. 30,June 30, Sept. 30, Sept. 30, June 30,
(Dollars in
thousands) 2005 2006 2006 2005 2006
--------------------------------------- --------- -------------------
Service charges on
deposit accounts $84,822 $81,837 $79,083 (6.77)% (3.37)%
Trust and investment
management fees 43,500 48,380 47,555 9.32 (1.71)
Insurance commissions 17,819 17,752 17,301 (2.91) (2.54)
Merchant banking fees 11,257 8,396 11,655 3.54 38.82
Brokerage commissions
and fees 5,290 10,330 8,531 61.27 (17.42)
Foreign exchange
gains, net 8,849 8,307 8,179 (7.57) (1.54)
Card processing fees,
net 6,597 7,206 7,241 9.76 0.49
Securities gains
(losses), net (320) 1,993 43 nm (97.84)
Gain on private
capital investments,
net 5,692 3,702 7,681 34.94 107.48
Other 28,682 31,325 29,986 4.55 (4.27)
------------------ ---------
Total noninterest
income $212,188 $219,228 $217,255 2.39 % (0.90)%
================== =========
Noninterest expense (Unaudited) (1)
Percentage Change
to
September 30, 2006
For the Three Months Ended From
---------------------------- -------------------
Sept. 30,June 30, Sept. 30, Sept. 30, June 30,
(Dollars in
thousands) 2005 2006 2006 2005 2006
--------------------------------------- --------- -------------------
Salaries and other
compensation $190,293 $201,689 $200,591 5.41 % (0.54)%
Employee benefits 45,831 46,948 44,022 (3.95) (6.23)
------------------ ---------
Salaries and employee
benefits 236,124 248,637 244,613 3.60 (1.62)
Net occupancy 34,336 34,519 35,753 4.13 3.57
Outside services 28,533 30,704 31,890 11.77 3.86
Equipment 15,828 16,846 17,387 9.85 3.21
Software 14,378 15,323 15,334 6.65 0.07
Professional services 11,240 17,038 12,169 8.27 (28.58)
Advertising and
public relations 9,114 11,270 11,726 28.66 4.05
Communications 10,808 10,061 9,942 (8.01) (1.18)
Data processing 7,406 7,845 7,933 7.12 1.12
Intangible asset
amortization 4,985 3,427 3,427 (31.25) 0.00
Foreclosed asset
income (3,435) (7,782) (183) (94.67) (97.65)
Reversal of allowance
for losses on
off-balance sheet
commitments - (4,000) - 0.00 (100.00)
Other 27,379 29,142 27,030 (1.27) (7.25)
------------------ ---------
Total noninterest
expense $396,696 $413,030 $417,021 5.12 % 0.97 %
================== =========
- ----------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited) (1)
Exhibit 10
Percentage
Change to
For the Nine Months September
Ended 30, 2006
From
------------------- -----------
September September September
30, 30, 30,
(Dollars in thousands) 2005 2006 2005
------------------------------------ --------- --------- ----------
Service charges on deposit accounts $243,835 $242,555 (0.52)%
Trust and investment management fees 127,053 146,050 14.95
Insurance commissions 59,176 54,571 (7.78)
Merchant banking fees 35,637 28,280 (20.64)
Brokerage commissions and fees 22,867 26,656 16.57
Foreign exchange gains, net 25,570 24,304 (4.95)
Card processing fees, net 18,668 21,144 13.26
Securities gains (losses), net (13,289) 1,822 nm
Gain on private capital investments,
net 18,888 14,210 (24.77)
Other 82,962 94,801 14.27
--------- ---------
Total noninterest income $621,367 $654,393 5.32 %
========= =========
Noninterest expense (Unaudited) (1)
Percentage
Change to
September
30, 2006
For the Nine Months Ended From
------------------------- ----------
September 30, September September
30, 30,
(Dollars in thousands) 2005 2006 2005
------------------------------ ------------- ----------- ----------
Salaries and other
compensation $556,249 $596,539 7.24 %
Employee benefits 145,609 149,206 2.47
------------- -----------
Salaries and employee
benefits 701,858 745,745 6.25
Net occupancy 100,251 103,109 2.85
Outside services 76,248 91,203 19.61
Equipment 50,164 52,155 3.97
Software 43,084 47,001 9.09
Professional services 36,131 43,754 21.10
Advertising and public
relations 25,657 33,228 29.51
Communications 30,950 30,555 (1.28)
Data processing 24,703 23,175 (6.19)
Intangible asset amortization 14,956 10,284 (31.24)
Foreclosed asset income (5,606) (15,332) nm
Reversal of allowance for
losses on
off-balance sheet nm
commitments (1,000) (7,000)
Other 80,652 86,718 7.52
------------- -----------
Total noninterest expense $1,178,048 $1,244,595 5.65 %
============= ===========
- --------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Footnotes
Exhibit 11
- ----------------------------------------------------------------------
(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 reflect the discontinued operations.
(2) Taxable-equivalent basis.
(3) Dividends per share reflect dividends declared on UnionBanCal
Corporation's common stock outstanding as of the declaration date.
(4) End of period total assets and assets used in calculating these
ratios include those of discontinued operations.
(5) Average balances used to calculate our financial ratios are based
on continuing operations data only, unless otherwise indicated.
(6) Annualized.
(7) 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.
(8) Estimated as of September 30, 2006. The regulatory capital and
leverage ratios were not restated and therefore include discontinued
operations.
(9) The allowance for credit losses ratios include the allowances for
loan losses and losses on off-balance sheet commitments. These ratios
relate to continuing operations only.
(10) Yields and interest income are presented on a taxable-equivalent
basis using the federal statutory tax rate of 35 percent.
(11) 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.
(12) Net funding allocated from (to) discontinued operations
represents the shortage (excess) of assets over liabilities of
discontinued operations. The expense (earning) on funds allocated
from (to) discontinued operations is calculated by taking the net
balance and applying an earnings rate or a cost of funds equivalent
to the corresponding period's Federal funds purchased rate.
nm = not meaningful
CONTACT: UnionBanCal Corporation
John A. Rice, Jr., 415-765-2998 (Investor Relations)
Stephen L. Johnson, 415-765-3252 (Public Relations)
Michelle R. Crandall, 415-765-2780 (Investor Relations)