Exhibit 99.1
UnionBanCal Corporation Reports Fourth
Quarter and Full Year 2006 Results
SAN FRANCISCO--(BUSINESS WIRE)--Jan. 18, 2007--UnionBanCal
Corporation (NYSE:UB)
2006 Highlights:
- ----------------------------------------------------------------------
- -- Record revenue from continuing operations of $2.7 billion
- -- Income from continuing operations of $764 million
- -- Strong year-end capital levels, with tangible equity ratio at
7.84 percent
- -- Excellent asset quality metrics, including 31 percent reduction in
nonperforming assets and year-end nonperforming assets to total
assets ratio of 0.08 percent
Fourth Quarter 2006 Highlights:
- ----------------------------------------------------------------------
- -- Strong year-over-year organic loan growth
-- Average total loans up 13 percent
-- Average commercial loans up 18 percent
-- Average residential mortgage loans up 10 percent
- -- Annualized average all-in cost of funds of 2.31 percent
- -- Average noninterest bearing deposits comprised 39 percent of
average total deposits
UnionBanCal Corporation (NYSE:UB) today reported fourth quarter
2006 net income of $226.4 million, or $1.61 per diluted common share.
Income from continuing operations was $227.7 million, or $1.61 per
diluted common share, including $72.8 million, or $0.51 per diluted
common share, in state income tax refunds, and $5.3 million, or $0.04
per diluted common share in tax adjustments. Excluding these items,
income from continuing operations for fourth quarter was $149.6
million, or $1.06 per diluted common share. Income from continuing
operations for fourth quarter 2005 was $162.2 million, or $1.10 per
diluted common share, including a $22.9 million, or $0.16 per diluted
common share, after-tax loss on the sale of securities related to the
rebalancing of the Company's securities portfolio. Adjusting for this
item, income from continuing operations for fourth quarter 2005 was
$1.26 per diluted common share.
For the full year 2006, the Company reported net income of $753
million, or $5.24 per diluted common share, and income from continuing
operations of $764 million, or $5.31 per diluted common share. For the
full year 2005, the Company reported net income of $863 million, or
$5.84 per diluted common share, and income from continuing operations
of $731 million, or $4.94 per diluted common share. Income from
continuing operations for 2006 included stock option expense of $22.1
million, or $0.10 per diluted common share, versus none in 2005, and
$72.8 million, or $0.51 per diluted common share, in state income tax
refunds. Adjusting for these items, income from continuing operations
for the full year 2006 was $4.90 per diluted common share, a decline
of 0.8 percent versus prior year.
"While 2006 was a challenging year, we still recorded record
revenue from continuing operations of $2.7 billion, and income from
continuing operations of $764 million," stated Takashi Morimura,
President and Chief Executive Officer. "Loan growth was strong
throughout the year and, despite a challenging interest rate
environment and competitive pressures, we successfully defended our
core deposit customer base.
"During 2006, we increased our common stock dividend by 15
percent, and invested $452 million in the repurchase of 7.1 million
shares. We returned $710 million to our shareholders in the form of
dividends and buybacks, representing 94 percent of our net income.
"The Company is well-positioned competitively and financially
entering the new year. We begin 2007 with good momentum in our lending
businesses, excellent asset quality and strong capital levels."
Added Chief Operating Officer Philip Flynn, "Core earnings per
share declined from third quarter, but were consistent with the
forecast we provided in October. More importantly, we are seeing signs
that our deposit challenges are moderating. The migration out of
noninterest bearing into interest bearing deposit products has slowed,
and pricing on the interest bearing product line has moderated in our
markets. Sequential quarter loan growth was excellent, with average
commercial loans, excluding loans to title and escrow companies, up
almost 9 percent annualized, and average residential mortgages up more
than 8 percent annualized."
Summary of Fourth Quarter Results from Continuing Operations
Adjusting for the tax-related items more fully described in the
Income Tax Expense section, fourth quarter 2006 income from continuing
operations was $149.6 million, or $1.06 per diluted common share,
compared with $1.26 per diluted common share a year earlier, which
reflects an adjustment for the loss on the sale of securities,
described above. Total revenue increased 1 percent, compared with
fourth quarter 2005. A 1.8 percent increase in noninterest income
(adjusted for the loss on the sale of securities in fourth quarter
2005) was offset by a 6.9 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 $5 million, compared with
negative $5 million in fourth quarter 2005. For fourth quarter 2006,
noninterest expense was up 2.9 percent from the same quarter a year
earlier. Adjusting for the impact of stock option expense, which
commenced January 1, 2006, noninterest expense increased 1.8 percent.
Fourth Quarter Total Revenue From Continuing Operations
For fourth quarter 2006, total revenue (taxable-equivalent net
interest income plus noninterest income) was $673 million, up 1.1
percent compared with fourth quarter 2005. Net interest income
decreased 6.9 percent, and noninterest income increased 22.2 percent.
Excluding a $36.8 million loss on the sale of securities related to
the rebalancing of the securities portfolio executed in fourth quarter
2005, total revenue was down 4.2 percent, with net interest income
decreasing 6.9 percent, and noninterest income increasing 1.8 percent.
Compared with third quarter 2006, total revenue decreased 0.8 percent,
with net interest income decreasing 2.6 percent and noninterest income
increasing 3.2 percent.
Fourth Quarter Net Interest Income (Taxable-equivalent) From
Continuing Operations
Net interest income was $449 million in fourth quarter 2006, down
$33.2 million, or 6.9 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 $3.4 billion, or 7.8 percent,
compared to 2005, primarily due to a $4.2 billion, or 12.7 percent,
increase in average loans. Average commercial loans increased $2.2
billion, or 18.3 percent; average residential mortgages increased $1.1
billion, or 9.7 percent; and average construction loans increased $0.8
billion, or 54.4 percent. $746 million, or 34 percent, of the increase
in average commercial loans was attributable to title and escrow
loans, which are highly rate-advantaged loans and are more volatile
than other commercial loans. Excluding title and escrow loans, average
commercial loans grew 12.8 percent, year over year. The increase in
construction loans is primarily related to income properties, where
business fundamentals continue to be healthy. Average securities
declined $0.5 billion, or 5.5 percent.
Compared to fourth quarter 2005, average interest bearing deposits
increased $4.2 billion, or 20.0 percent, while average noninterest
bearing deposits decreased $3.1 billion, or 16.3 percent. The decline
in noninterest bearing deposits was primarily due to a $2.0 billion,
or 15.8 percent, decrease in average other commercial noninterest
bearing deposits and a $0.7 billion, or 22.1 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 $392 million, or 12.2 percent.
Average noninterest bearing deposits represented 39.0 percent of
average total deposits in fourth quarter 2006. The annualized average
all-in cost of funds was 2.31 percent, reflecting the Company's strong
average core deposit-to-loan ratio of 91 percent and the high
proportion of noninterest bearing deposits to total deposits.
The average yield on earning assets of $46.9 billion was 6.06
percent, up 55 basis points over fourth quarter 2005, with the average
loan yield increasing 37 basis points. The average rate on interest
bearing liabilities of $29.4 billion was 3.58 percent, up 153 basis
points compared with fourth quarter 2005, reflecting higher short-term
interest rates, an unfavorable change in deposit mix, and heightened
competition for deposits. The net interest margin in fourth quarter
2006 was 3.81 percent, compared with 4.42 percent in fourth quarter
2005.
On a sequential quarter basis, net interest income decreased $12
million, or 2.6 percent. Average loans increased $1.5 billion, or 4.3
percent. Average commercial loans increased $931 million, or 7.0
percent, with average loans to title and escrow companies increasing
$655 million, or 80.5 percent. Average residential mortgages increased
$251 million, or 2.1 percent, and average construction loans increased
$192 million, or 9.6 percent. Average noninterest bearing deposits
decreased $858 million, or 5.0 percent, with commercial noninterest
bearing deposits decreasing $751 million, or 5.3 percent, and consumer
noninterest bearing deposits decreasing $107 million, or 3.7 percent.
Average title and escrow deposits decreased $11 million, or 0.5
percent. The average yield on earning assets was flat and the average
rate on interest bearing liabilities increased 17 basis points. The
net interest margin decreased 19 basis points to 3.81 percent.
Fourth Quarter Noninterest Income From Continuing Operations
In fourth quarter 2006, noninterest income was $224 million, up
$41 million, or 22.2 percent, from the same quarter a year ago.
Excluding a $36.8 million loss on the sale of securities in fourth
quarter 2005, noninterest income increased 1.8 percent from the same
quarter a year ago. Service charges on deposit accounts decreased $2.9
million, or 3.7 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 $2.6 million, or 5.5 percent,
primarily due to an increase in trust assets. Merchant banking fees
increased $5.6 million, or 68.3 percent, primarily due to a higher
volume of syndications completed in fourth quarter 2006. Brokerage
commissions and fees increased $2.0 million, or 27.7 percent,
primarily due to higher business volumes. Securities gains (losses),
net, for fourth quarter 2005 reflected a $36.8 million loss on the
sale of $1 billion of agency debentures associated with the
rebalancing of the Company's securities portfolio.
Compared with the preceding quarter, fourth quarter 2006
noninterest income increased $6.9 million, or 3.2 percent. Service
charges on deposit accounts decreased $2.0 million, or 2.5 percent,
primarily due to lower noninterest bearing deposit balances. Trust and
investment management fees increased $1.5 million, or 3.1 percent,
primarily due to an increase in trust assets. Merchant banking fees
increased $2.3 million, or 19.3 percent, primarily due to a higher
volume of syndications completed in fourth quarter.
Fourth Quarter Noninterest Expense From Continuing Operations
Noninterest expense for fourth quarter 2006 was $442 million, an
increase of $12.5 million, or 2.9 percent, over fourth quarter 2005.
Salaries and employee benefits expense increased $18.3 million, or 7.9
percent, primarily due to higher severance expense, annual merit
increases, higher employee count and higher stock option expense,
partially offset by lower accruals for incentive and bonus expense.
Stock option expense was $4.8 million, compared with none in fourth
quarter 2005. Net occupancy expense decreased $2.4 million, or 5.8
percent, primarily due to charges associated with the consolidation of
offices in San Francisco incurred in fourth quarter 2005. Outside
services expense decreased $14.8 million, or 36.0 percent, primarily
due to lower cost of services related to title and escrow balances.
Professional services expense increased $10.5 million, primarily due
to higher compliance-related expense in fourth quarter 2006. There was
a $2.0 million provision for losses on off-balance sheet commitments
in fourth quarter 2006, compared with $5.0 million in fourth quarter
2005. Other noninterest expense increased $5.0 million, or 15.6
percent, primarily due to expense associated with low income housing
tax credit projects.
Excluding the effect of stock option expense, noninterest expense
increased $7.7 million, or 1.8 percent, compared with prior year.
Compared with third quarter 2006, noninterest expense increased
$24.7 million, or 5.9 percent, which was largely due to higher
expenses for severance, compliance activities, low income housing tax
credit projects and off-balance sheet commitments. Severance expense
was $7.9 million, up $5.5 million compared with prior quarter, due to
workforce reductions implemented in the fourth quarter.
Compliance-related professional services expense was $6.3 million, up
$2.9 million compared with prior quarter. Expense associated with low
income housing tax credit projects was $8.4 million, up $4.3 million
compared with prior quarter, primarily due to the completion of a
historic building preservation project. The provision for losses on
off-balance sheet commitments was $2.0 million, compared with none in
the prior quarter.
Salaries and employee benefits expense increased $6.2 million, or
2.5 percent, primarily due to higher severance expense. Outside
services expense decreased $5.7 million, or 17.9 percent, primarily
due to lower cost of services related to title and escrow balances.
Professional services expense increased $7.7 million, or 63.2 percent,
primarily due to higher compliance-related expense.
Income Tax Expense From Continuing Operations
The effective tax rate for the fourth quarter 2006 was (0.7)
percent, compared with an effective tax rate of 33.8 percent for
fourth quarter 2005. Fourth quarter 2006 tax expense included a credit
of $72.8 million, or $0.51 per diluted common share, to reflect a
refund of California franchise taxes received as a result of the
settlement of refund claims filed for the years 1989 through 1995.
Fourth quarter 2006 tax expense also included a positive adjustment of
$5.3 million, or $0.04 per diluted common share, relating to a change
in the estimated current year California tax rate on the worldwide
unitary method. Adjusting for these two items, the effective tax rate
for fourth quarter 2006 was 33.8 percent.
The effective tax rate for the full year 2006 was 26.2 percent
(33.3 percent before adjusting for the California refund), compared
with an effective tax rate of 32.8 percent for 2005.
Full Year Results From Continuing Operations
Total revenue for 2006 was a record $2.7 billion, up $75 million,
or 2.8 percent, compared with 2005. Net interest income was flat, and
noninterest income increased 9.2 percent.
Net interest income was $1.8 billion in 2006, flat with prior
year. Average loans increased $4.3 billion, or 13.5 percent, while
average total deposits increased $0.6 billion, or 1.5 percent. A $2.4
billion increase in average interest bearing deposits was offset by a
$1.9 billion, or 9.9 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. The net
interest margin was 4.09 percent, down 22 basis points.
Noninterest income in 2006 was $878 million, an increase of $74
million, or 9.2 percent, over 2005. Service charges on deposit
accounts decreased $4.2 million, or 1.3 percent. Trust and investment
management fees increased $21.6 million, or 12.4 percent, primarily
due to growth in trust assets. Securities gains (losses), net, were
$2.2 million, compared with $(50.0) million in 2005.
For the full year 2006, noninterest expense increased $79 million,
or 4.9 percent. Salaries and employee benefits expense increased $62.2
million, or 6.7 percent, primarily due to $22.1 million in stock
option expense in 2006, merit increases, higher employee count, higher
severance expense and higher contract labor expense, reflecting
compliance-related initiatives, partially offset by lower accruals for
incentive and bonus expense. Professional services expense increased
$18.1 million, or 39.8 percent, primarily due to higher
compliance-related expense. Advertising and public relations expense
increased $7.2 million, or 19.6 percent, primarily due to increased
advertising and marketing activity in response to the competitive
deposit market. Foreclosed asset income was $9.7 million higher in the
full year 2006 compared with the full year 2005. The provision for
losses on off-balance sheet commitments was negative $5 million in the
full year 2006, compared with $4 million in the full year 2005.
Credit Quality
Nonperforming assets at December 31, 2006, were $42 million, or
0.08 percent of total assets. This compares with $48 million, or 0.09
percent of total assets, at September 30, 2006, and $62 million, or
0.12 percent of total assets, at December 31, 2005.
In fourth quarter 2006, the total provision for credit losses was
$5 million. The total provision for credit losses was zero in third
quarter 2006 and negative $5 million in fourth quarter 2005. In fourth
quarter 2006, net recoveries were $1 million, compared with net
charge-offs of $2 million in third quarter 2006, and net charge-offs
of $2 million in fourth quarter 2005.
At December 31, 2006, the allowance for credit losses as a percent
of total loans and as a percent of nonaccrual loans was 1.12 percent
and 987 percent, respectively. These ratios were 1.14 percent and 850
percent, respectively, at September 30, 2006, and 1.32 percent and 744
percent, respectively, at December 31, 2005.
Balance Sheet and Capital Ratios
At December 31, 2006, the Company had total assets of $52.6
billion. Total loans were $36.7 billion and total deposits were $42.0
billion, resulting in a period-end deposit-to-loan ratio of 114
percent. Core deposits totaled $34.6 billion at quarter-end,
representing 94 percent of total loans. At period-end, total
stockholders' equity was $4.6 billion, the tangible equity ratio was
7.84 percent, and the ratio of tangible common equity to risk-weighted
assets was 8.19 percent. Book value per share at December 31, 2006,
was $32.86, up 3.9 percent from a year earlier. The Company's Tier I
and total risk-based capital ratios at period-end were 8.68 percent
and 11.71 percent, respectively.
As of December 31, 2006, the Company adopted SFAS No. 158,
Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans. The adoption resulted in a non-cash charge to
shareholders' equity in the amount of $161 million, to record an
unrealized loss associated with pension and other post-retirement
benefits. The effect of this non-cash charge was a reduction in
shareholders' equity of 3.4 percent, a reduction in book value per
share of $1.16, and a reduction in the tangible equity ratio of 31
basis points. Per bank regulatory guidance, the SFAS 158 unrecognized
loss had no impact on regulatory capital ratios at December 31, 2006.
Stock Repurchases
During fourth quarter 2006, the Company repurchased 1.8 million
shares of common stock at a total price of $108 million, or an average
of $59.22 per repurchased share. For the full year 2006, the Company
repurchased 7.1 million shares of common stock at a total price of
$452 million, or an average of $63.73 per repurchased share. At
December 31, 2006, the Company had remaining repurchase authority of
$150 million.
Common shares outstanding at December 31, 2006, were 139.1
million, a decrease of 5.1 million shares, or 3.5 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 fourth quarter of 2006, the Company recorded a net loss
from discontinued operations of $1.3 million, or less than $0.01 per
diluted common share.
First Quarter and Full Year 2007 Earnings Per Share Forecast
The Company currently estimates that first quarter 2007 fully
diluted earnings per share will be in the range of $1.02 to $1.07,
including a total provision for credit losses of approximately $5
million.
For the year, the Company currently estimates that fully diluted
earnings per share will be in the range of $4.50 to $4.75, including a
total provision for credit losses of approximately $40 million.
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 tax refunds and adjustments, after-tax loss on
the sale of securities, and stock option expense, 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,
provision for credit losses, trends in deposit rates and balances and
competition for deposits 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; the levels of commercial and residential
real estate activity in our market; 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 fourth
quarter and full year 2006 results at 8:30 AM Pacific Time (11:30 AM
Eastern Time) on January 19, 2007. Interested parties calling from
locations within the United States should call 888-428-4480
(612-234-9960 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),
January 19, through 11:59 PM Pacific Time, January 26 (2:59 AM Eastern
Time, January 27). The reservation number for this playback is 852813.
Based in San Francisco, UnionBanCal Corporation is a bank holding
company with assets of $52.6 billion at December 31, 2006. Its primary
subsidiary, Union Bank of California, N.A., had 321 banking offices in
California, Oregon and Washington, and 2 international offices at
December 31, 2006.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 1
Percent
Change to
As of and for the Dec. 31, 2006
Three Months Ended from
-------------------------------------- ----------------
Dec. Sept. Dec. Dec. Sept.
31, 30, 31, 31, 30,
(Dollars in
thousands,
except per
share data) 2005 2006 2006 2005 2006
- -------------- ------------ ------------ ------------ ----------------
Results of
operations:
Net interest
income (1) $481,828 $460,596 $448,619 (6.89%) (2.60%)
Noninterest
income 183,420 217,255 224,106 22.18% 3.15%
------------ ------------ ------------
Total revenue 665,248 677,851 672,725 1.12% (0.76%)
Noninterest
expense 429,198 417,021 441,693 2.91% 5.92%
(Reversal of)
provision for
loan losses (10,000) - 3,000 nm nm
------------ ------------ ------------
Income from
continuing
operations
before
income
taxes (1) 246,050 260,830 228,032 (7.32%)(12.57%)
Taxable-
equivalent
adjustment 1,228 1,872 1,923 56.60% 2.72%
Income tax
expense
(benefit) 82,657 87,048 (1,632) nm nm
------------ ------------ ------------
Income from
continuing
operations $162,165 $171,910 $227,741 40.44% 32.48%
Income (loss)
from
discontinued
operations 146,324 (1,204) (1,307) nm (8.55%)
------------ ------------ ------------
Net income $308,489 $170,706 $226,434 (26.60%) 32.65%
============ ============ ============
Per common
share:
Basic
earnings:
From
continuing
operations $1.12 $1.22 $1.63 45.54% 33.61%
Net income 2.14 1.21 1.62 (24.30%) 33.88%
Diluted
earnings:
From
continuing
operations 1.10 1.21 1.61 46.36% 33.06%
Net income 2.09 1.20 1.61 (22.97%) 34.17%
Dividends (2) 0.41 0.47 0.47 14.63% 0.00%
Book value
(end of
period) 31.62 33.17 32.86 3.92% (0.93%)
Common shares
outstanding
(end of
period) 144,207,072 140,326,737 139,107,254 (3.54%) (0.87%)
Weighted
average
common shares
outstanding
- basic 144,466,374 140,941,823 139,390,487 (3.51%) (1.10%)
Weighted
average
common shares
outstanding
- diluted 147,385,734 142,566,089 141,025,758 (4.32%) (1.08%)
Balance sheet
(end of
period):
Total assets
(3) $49,416,002 $52,013,256 $52,619,576 6.48% 1.17%
Total loans 33,095,595 35,673,469 36,671,723 10.81% 2.80%
Nonperforming
assets 61,645 47,803 42,365 (31.28%)(11.38%)
Total deposits 40,082,239 41,820,206 41,969,368 4.71% 0.36%
Stockholders'
equity 4,559,700 4,654,789 4,571,401 0.26% (1.79%)
Balance sheet
(period
average):
Total assets $48,406,487 $50,777,419 $51,671,465 6.74% 1.76%
Total loans 33,260,944 35,965,823 37,495,315 12.73% 4.25%
Earning assets 43,451,686 45,854,645 46,860,166 7.84% 2.19%
Total deposits 40,253,861 40,582,139 41,320,468 2.65% 1.82%
Stockholders'
equity 4,488,396 4,578,635 4,638,801 3.35% 1.31%
Financial
ratios (4):
Return on
average
assets (5) :
From
continuing
operations 1.33% 1.34% 1.75%
Net income 2.53% 1.33% 1.74%
Return on
average
stockholders'
equity (5) :
From
continuing
operations 14.33% 14.90% 19.48%
Net income 27.27% 14.79% 19.37%
Efficiency
ratio (6) 63.77% 61.55% 65.36%
Net interest
margin (1) 4.42% 4.00% 3.81%
Dividend
payout ratio 36.61% 38.52% 28.83%
Tangible
equity ratio 8.31% 8.09% 7.84%
Tier 1 risk-
based capital
ratio (3) (7) 9.17% 8.68% 8.68%
Total risk-
based capital
ratio (3) (7) 11.10% 11.74% 11.71%
Leverage ratio
(3) (7) 8.39% 8.47% 8.44%
Allowances for
credit losses
to total
loans (8) 1.32% 1.14% 1.12%
Allowances for
credit losses
to nonaccrual
loans (8) 743.58% 850.01% 987.06%
Net loans
charged off
(recovered)
to average
total loans
(5) 0.03% 0.02% (0.01%)
Nonperforming
assets to
total loans
and
foreclosed
assets 0.19% 0.13% 0.12%
Nonperforming
assets to
total assets
(3) 0.12% 0.09% 0.08%
- --------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 2
Percent
Change
to
As of and for the Twelve December
Months Ended 31,
2006
from
------------------------- --------
December 31, December 31, December
31,
(Dollars in thousands, except per
share data) 2005 2006 2005
- ----------------------------------- ------------ ------------ --------
Results of operations:
Net interest income (1) $1,843,466 $1,844,556 0.06%
Noninterest income 804,787 878,499 9.16%
------------ ------------
Total revenue 2,648,253 2,723,055 2.82%
Noninterest expense 1,607,246 1,686,288 4.92%
Reversal of allowance for loan
losses (50,683) (5,000) (90.13%)
------------ ------------
Income from continuing operations
before income taxes (1) 1,091,690 1,041,767 (4.57%)
Taxable-equivalent adjustment 4,352 6,401 47.08%
Income tax expense 356,698 271,623 (23.85%)
------------ ------------
Income from continuing operations $730,640 $763,743 4.53%
Income (loss) from discontinued
operations 132,293 (10,747) nm
------------ ------------
Net income $862,933 $752,996 (12.74%)
============ ============
Per common share:
Basic earnings:
From continuing operations $5.04 $5.39 6.94%
Net income 5.95 5.32 (10.59%)
Diluted earnings:
From continuing operations 4.94 5.31 7.49%
Net income 5.84 5.24 (10.27%)
Dividends (2) 1.59 1.82 14.47%
Book value (end of period) 31.62 32.86 3.92%
Common shares outstanding (end of
period) 144,207,072 139,107,254 (3.54%)
Weighted average common shares
outstanding - basic 145,109,058 141,620,081 (2.40%)
Weighted average common shares
outstanding - diluted 147,791,565 143,754,865 (2.73%)
Balance sheet (end of period):
Total assets (3) $49,416,002 $52,619,576 6.48%
Total loans 33,095,595 36,671,723 10.81%
Nonperforming assets 61,645 42,365 (31.28%)
Total deposits 40,082,239 41,969,368 4.71%
Stockholders' equity 4,559,700 4,571,401 0.26%
Balance sheet (period average):
Total assets $47,610,818 $49,992,481 5.00%
Total loans 31,452,606 35,704,129 13.52%
Earning assets 42,796,688 45,080,843 5.34%
Total deposits 39,543,986 40,121,139 1.46%
Stockholders' equity 4,280,085 4,574,185 6.87%
Financial ratios (4):
Return on average assets:
From continuing operations 1.53% 1.53%
Net income 1.81% 1.51%
Return on average stockholders'
equity:
From continuing operations 17.07% 16.70%
Net income 20.16% 16.46%
Efficiency ratio (6) 60.75% 62.67%
Net interest margin (1) 4.31% 4.09%
Dividend payout ratio 31.55% 33.77%
Tangible equity ratio 8.31% 7.84%
Tier 1 risk-based capital ratio (3)
(7) 9.17% 8.68%
Total risk-based capital ratio (3)
(7) 11.10% 11.71%
Leverage ratio (3) (7) 8.39% 8.44%
Allowance for credit losses to
total loans (8) 1.32% 1.12%
Allowance for credit losses to
nonaccrual loans (8) 743.58% 987.06%
Net loans charged off (recovered)
to average total loans (0.01%) 0.04%
Nonperforming assets to total loans
and foreclosed assets 0.19% 0.12%
Nonperforming assets to total
assets (3) 0.12% 0.08%
- -----------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(Taxable-Equivalent Basis)
Exhibit 3
For the Three Months Ended For the Twelve Months
Ended
----------------------------- -----------------------
Dec. 31, Sept. 30, Dec. 31, December 31,
(Dollars in
thousands,
except per
share data) 2005 2006 2006 2005 2006
- ---------------- --------- --------- --------- ----------- -----------
Interest Income
(1)
Loans $497,046 $575,799 $595,225 $1,802,853 $2,232,029
Securities 95,436 108,609 110,916 397,775 420,884
Interest
bearing
deposits in
banks 1,244 411 1,047 2,676 2,617
Federal funds
sold and
securities
purchased
under resale
agreements 6,129 12,024 4,924 20,535 25,518
Trading account
assets 1,422 1,832 1,791 4,494 6,838
--------- --------- --------- ----------- -----------
Total interest
income 601,277 698,675 713,903 2,228,333 2,687,886
--------- --------- --------- ----------- -----------
Interest Expense
Deposits 97,303 182,298 208,423 303,351 649,707
Federal funds
purchased and
securities sold
under
repurchase
agreements 1,042 4,891 9,716 10,372 31,864
Commercial
paper 9,911 20,835 22,595 31,672 75,015
Medium and
long-term debt 9,695 21,974 21,193 32,206 70,439
Trust notes 238 239 238 953 953
Other borrowed
funds 1,260 7,842 3,119 6,313 15,352
--------- --------- --------- ----------- -----------
Total interest
expense 119,449 238,079 265,284 384,867 843,330
--------- --------- --------- ----------- -----------
Net Interest
Income (1) 481,828 460,596 448,619 1,843,466 1,844,556
(Reversal of)
provision for
loan losses (10,000) - 3,000 (50,683) (5,000)
--------- --------- --------- ----------- -----------
Net interest
income after
(reversal of)
provision for
loan losses 491,828 460,596 445,619 1,894,149 1,849,556
--------- --------- --------- ----------- -----------
Noninterest
Income
Service charges
on deposit
accounts 80,030 79,083 77,092 323,865 319,647
Trust and
investment
management
fees 46,465 47,555 49,036 173,518 195,086
Insurance
commissions 19,739 17,301 17,976 78,915 72,547
Merchant
banking fees 8,261 11,655 13,905 43,898 42,185
Brokerage
commissions
and fees 7,171 8,531 9,155 30,038 35,811
Foreign
exchange
gains, net 8,332 8,179 7,916 33,902 32,220
Card processing
fees, net 6,437 7,241 7,256 25,105 28,400
Securities
gains
(losses), net (36,750) 43 420 (50,039) 2,242
Other 43,735 37,667 41,350 145,585 150,361
--------- --------- --------- ----------- -----------
Total
noninterest
income 183,420 217,255 224,106 804,787 878,499
--------- --------- --------- ----------- -----------
Noninterest
Expense
Salaries and
employee
benefits 232,496 244,613 250,791 934,354 996,536
Net occupancy 41,048 35,753 38,662 141,299 141,771
Outside
services 40,942 31,890 26,184 117,190 117,387
Equipment 18,042 17,387 17,678 68,206 69,833
Software 15,427 15,334 16,978 58,511 63,979
Professional
services 9,369 12,169 19,862 45,500 63,616
Communications 10,959 9,942 9,876 41,909 40,431
Foreclosed
asset expense
(income) (29) (183) 10 (5,635) (15,322)
(Reversal of)
provision for
losses on off-
balance sheet
commitments 5,000 - 2,000 4,000 (5,000)
Other 55,944 50,116 59,652 201,912 213,057
--------- --------- --------- ----------- -----------
Total
noninterest
expense 429,198 417,021 441,693 1,607,246 1,686,288
--------- --------- --------- ----------- -----------
Income from
continuing
operations
before income
taxes (1) 246,050 260,830 228,032 1,091,690 1,041,767
Taxable-
equivalent
adjustment 1,228 1,872 1,923 4,352 6,401
Income tax
expense
(benefit) 82,657 87,048 (1,632) 356,698 271,623
--------- --------- --------- ----------- -----------
Income from
Continuing
Operations 162,165 171,910 227,741 730,640 763,743
--------- --------- --------- ----------- -----------
Income (loss)
from
discontinued
operations
before income
taxes 227,967 (2,061) (1,824) 205,582 (17,057)
Income tax
expense
(benefit) 81,643 (857) (517) 73,289 (6,310)
--------- --------- --------- ----------- -----------
Income (Loss)
from
Discontinued
Operations 146,324 (1,204) (1,307) 132,293 (10,747)
--------- --------- --------- ----------- -----------
Net Income $308,489 $170,706 $226,434 $862,933 $752,996
========= ========= ========= =========== ===========
Income from
continuing
operations per
common share -
basic $1.12 $1.22 $1.63 $5.04 $5.39
Net income per
common share -
basic $2.14 $1.21 $1.62 $5.95 $5.32
========= ========= ========= =========== ===========
Income from
continuing
operations per
common share -
diluted $1.10 $1.21 $1.61 $4.94 $5.31
Net income per
common share -
diluted $2.09 $1.20 $1.61 $5.84 $5.24
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
basic 144,466 140,942 139,390 145,109 141,620
========= ========= ========= =========== ===========
Weighted average
common shares
outstanding -
diluted 147,386 142,566 141,026 147,792 143,755
========= ========= ========= =========== ===========
- ----------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Exhibit 4
December 31,
-------------------------
(Dollars in thousands) 2005 2006
- -------------------------------------------- ------------ ------------
Assets
Cash and due from banks $2,402,212 $2,213,782
Interest bearing deposits in banks 771,164 824,456
Federal funds sold and securities purchased
under resale agreements 796,500 943,200
------------ ------------
Total cash and cash equivalents 3,969,876 3,981,438
Trading account assets 312,655 376,321
Securities available for sale:
Securities pledged as collateral 96,994 89,184
Held in portfolio 8,072,286 8,667,038
Loans (net of allowance for loan losses:
2005, $351,532; 2006, $331,077) 32,744,063 36,340,646
Due from customers on acceptances 19,252 17,834
Premises and equipment, net 536,074 495,302
Intangible assets 42,616 28,930
Goodwill 454,015 453,489
Other assets 2,113,577 2,148,954
Assets of discontinued operations to be
disposed or sold 1,054,594 20,440
------------ ------------
Total assets $49,416,002 $52,619,576
============ ============
Liabilities
Noninterest bearing $19,489,377 $17,078,332
Interest bearing 20,592,862 24,891,036
------------ ------------
Total deposits 40,082,239 41,969,368
Federal funds purchased and securities sold
under repurchase agreements 651,529 1,083,927
Commercial paper 680,027 1,661,163
Other borrowed funds 134,485 432,401
Acceptances outstanding 19,252 17,834
Other liabilities 1,466,478 1,545,165
Medium and long-term debt 801,095 1,318,847
Junior subordinated debt payable to
subsidiary grantor trust 15,338 14,885
Liabilities of discontinued operations to be
extinguished or assumed 1,005,859 4,585
------------ ------------
Total liabilities 44,856,302 48,048,175
------------ ------------
Stockholders' Equity
Preferred stock:
Authorized 5,000,000 shares; no shares
issued or outstanding as of December 31,
2005 or 2006 - -
Common stock, par value $1 per share:
Authorized 300,000,000 shares; issued
154,469,215 shares in 2005 and 156,460,057
shares in 2006 154,469 156,460
Additional paid-in capital 994,956 1,083,649
Treasury stock - 10,262,143 shares in 2005
and 17,352,803 in 2006 (612,732) (1,064,606)
Retained earnings 4,141,400 4,655,272
Accumulated other comprehensive loss (118,393) (259,374)
------------ ------------
Total stockholders' equity 4,559,700 4,571,401
------------ ------------
Total liabilities and stockholders' equity $49,416,002 $52,619,576
============ ============
- --------------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Loans (Unaudited)
Exhibit 5
Percent Change to
Three Months Ended December 31, 2006
from
-------------------------- -----------------
Dec. Sept. Dec. Dec. Sept.
31, 30, 31, 31, 30,
(Dollars in millions) 2005 2006 2006 2005 2006
- ------------------------- -------- -------- -------- -------- --------
Loans (period average)
Commercial, financial
and industrial $11,981 $13,237 $14,168 18.25% 7.03%
Construction 1,414 1,991 2,183 54.38% 9.64%
Mortgage - Commercial 5,653 5,681 5,815 2.87% 2.36%
Mortgage - Residential 11,143 11,971 12,222 9.68% 2.10%
Consumer 2,490 2,507 2,520 1.20% 0.52%
Lease financing 576 570 580 0.69% 1.75%
-------- -------- --------
Total loans held to
maturity $33,257 $35,957 $37,488 12.72% 4.26%
Total loans held for
sale 4 9 7 75.00% (22.22%)
-------- -------- --------
Total loans $33,261 $35,966 $37,495 12.73% 4.25%
======== ======== ========
Nonperforming assets
(period end)
Nonaccrual loans:
Commercial, financial
and industrial $50 $14 $7 (86.00%) (50.00%)
Mortgage - Commercial 9 19 19 nm 0.00%
Lease - 15 15 nm 0.00%
-------- -------- --------
Total nonaccrual loans 59 48 41 (30.51%) (14.58%)
Foreclosed assets 3 - 1 (66.67%) nm
-------- -------- --------
Total nonperforming
assets $62 $48 $42 (32.26%) (12.50%)
======== ======== ========
Loans 90 days or more
past due and still
accruing $5 $4 $9 80.00% nm
Analysis of Allowances
for Credit Losses
Beginning balance $364 $329 $327
(Reversal of) provision
for loan losses (10) - 3
Loans charged off:
Commercial, financial
and industrial (4) (4) (3)
Real estate (1) - -
Consumer (1) (1) (1)
-------- -------- --------
Total loans charged
off (6) (5) (4)
-------- -------- --------
Loans recovered:
Commercial, financial
and industrial 3 3 5
Consumer 1 - -
-------- -------- --------
Total loans recovered 4 3 5
-------- -------- --------
Net loans (charged
off) recovered (2) (2) 1
-------- -------- --------
Ending balance of
allowance for loan
losses $352 $327 $331
Allowance for off-
balance sheet
commitment losses 86 79 81
Allowances for credit
losses $438 $406 $412
======== ======== ========
- -------------------------
Refer to Exhibit 11 for footnote
explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 6
For the Three Months Ended
----------------------------------
December 31, 2005
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (5)
(9) (9)
- ------------------------------------------------- --------------------
Assets
Loans (10)
Commercial, financial and industrial $11,981,953 $189,085 6.26 %
Construction 1,413,658 24,249 6.81
Residential mortgage 11,145,906 139,513 5.01
Commercial mortgage 5,653,091 94,632 6.64
Consumer 2,490,315 44,064 7.02
Lease financing 576,021 5,503 3.82
------------- ---------
Total loans 33,260,944 497,046 5.94
Securities - taxable 9,027,589 94,135 4.17
Securities - tax-exempt 65,582 1,301 7.93
Interest bearing deposits in banks 157,604 1,244 3.13
Federal funds sold and securities
purchased under resale agreements 595,208 6,129 4.09
Trading account assets 344,759 1,422 1.64
------------- ---------
Total earning assets 43,451,686 601,277 5.51
---------
Allowance for loan losses (362,676)
Cash and due from banks 2,268,566
Premises and equipment, net 520,586
Other assets 2,528,325
-------------
Total assets $48,406,487
=============
Liabilities
Deposits:
Transaction accounts $13,523,357 57,469 1.69
Savings and consumer time 4,550,219 17,407 1.52
Large time 2,916,187 22,427 3.05
------------- ---------
Total interest bearing deposits 20,989,763 97,303 1.84
------------- ---------
Federal funds purchased and
securities sold under repurchase
agreements 533,068 5,025 3.74
Net funding allocated from (to)
discontinued operations (11) (422,508) (3,983) 3.74
Commercial paper 1,108,434 9,911 3.55
Other borrowed funds 121,401 1,260 4.12
Medium and long-term debt 804,346 9,695 4.78
Trust notes 15,393 238 6.19
------------- ---------
Total borrowed funds 2,160,134 22,146 4.07
------------- ---------
Total interest bearing
liabilities 23,149,897 119,449 2.05
---------
Noninterest bearing deposits 19,264,098
Other liabilities 1,504,096
-------------
Total liabilities 43,918,091
Stockholders' Equity
Common equity 4,488,396
-------------
Total stockholders' equity 4,488,396
-------------
Total liabilities and
stockholders' equity $48,406,487
=============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 481,828 4.42 %
Less: taxable-equivalent adjustment 1,228
---------
Net interest income $480,600
=========
- ----------------------------------------------------------------------
For the Three Months Ended
------------------------------
December 31, 2006
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (5)
(9) (9)
- ----------------------------------------------------------------------
Assets
Loans (10)
Commercial, financial and industrial $14,173,007 $234,687 6.57 %
Construction 2,183,227 42,865 7.79
Residential mortgage 12,223,931 159,785 5.23
Commercial mortgage 5,815,299 104,633 7.14
Consumer 2,520,250 49,813 7.84
Lease financing 579,601 3,442 2.38
---------------------
Total loans 37,495,315 595,225 6.31
Securities - taxable 8,535,024 109,738 5.14
Securities - tax-exempt 58,938 1,178 8.00
Interest bearing deposits in banks 74,471 1,047 5.58
Federal funds sold and securities
purchased under resale agreements 365,894 4,924 5.34
Trading account assets 330,524 1,791 2.15
---------------------
Total earning assets 46,860,166 713,903 6.06
---------
Allowance for loan losses (327,525)
Cash and due from banks 1,963,658
Premises and equipment, net 504,358
Other assets 2,670,808
------------
Total assets $51,671,465
============
Liabilities
Deposits:
Transaction accounts $13,475,864 91,258 2.69
Savings and consumer time 4,502,954 27,910 2.46
Large time 7,208,863 89,255 4.91
---------------------
Total interest bearing deposits 25,187,681 208,423 3.28
---------------------
Federal funds purchased and securities
sold under repurchase agreements 768,941 10,054 5.19
Net funding allocated from (to)
discontinued operations (11) (22,913) (338) 5.85
Commercial paper 1,784,097 22,595 5.02
Other borrowed funds 223,406 3,119 5.54
Medium and long-term debt 1,428,937 21,193 5.88
Trust notes 14,940 238 6.38
---------------------
Total borrowed funds 4,197,408 56,861 5.37
---------------------
Total interest bearing liabilities 29,385,089 265,284 3.58
---------
Noninterest bearing deposits 16,132,787
Other liabilities 1,514,788
------------
Total liabilities 47,032,664
Stockholders' Equity
Common equity 4,638,801
------------
Total stockholders' equity 4,638,801
------------
Total liabilities and stockholders'
equity $51,671,465
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 448,619 3.81 %
Less: taxable-equivalent adjustment 1,923
---------
Net interest income $446,696
=========
- ---------------------------------------------------------------------
Average Assets and Liabilities of Discontinued
Operations for Period Ended:
Dec. 31, Dec. 31,
2005 2006
----------- ---------
Assets $1,668,335 $26,664
Liabilities $1,245,827 $3,751
Net Asset $422,508 $22,913
- ---------------------------------------------------------------------
- ---------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 7
For the Three Months Ended
-------------------------------
September 30, 2006
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (5)
(9) (9)
- -------------------------------------- --------------------- ---------
Assets
Loans: (10)
Commercial, financial and industrial $13,244,947 $225,177 6.74 %
Construction 1,990,535 39,147 7.80
Residential mortgage 11,972,024 154,983 5.18
Commercial mortgage 5,680,603 102,577 7.16
Consumer 2,507,524 49,672 7.86
Lease financing 570,190 4,243 2.98
---------------------
Total loans 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:
Transaction accounts $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 (11) (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
=========
- ----------------------------------------------------------------------
For the Three Months Ended
------------------------------
December 31, 2006
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (5)
(9) (9)
- ------------------------------------------------------------ ---------
Assets
Loans: (10)
Commercial, financial and industrial $14,173,007 $234,687 6.57 %
Construction 2,183,227 42,865 7.79
Residential mortgage 12,223,931 159,785 5.23
Commercial mortgage 5,815,299 104,633 7.14
Consumer 2,520,250 49,813 7.84
Lease financing 579,601 3,442 2.38
---------------------
Total loans 37,495,315 595,225 6.31
Securities - taxable 8,535,024 109,738 5.14
Securities - tax-exempt 58,938 1,178 8.00
Interest bearing deposits in banks 74,471 1,047 5.58
Federal funds sold and securities
purchased under resale agreements 365,894 4,924 5.34
Trading account assets 330,524 1,791 2.15
---------------------
Total earning assets 46,860,166 713,903 6.06
---------
Allowance for loan losses (327,525)
Cash and due from banks 1,963,658
Premises and equipment, net 504,358
Other assets 2,670,808
------------
Total assets $51,671,465
============
Liabilities
Deposits:
Transaction accounts $13,475,864 91,258 2.69
Savings and consumer time 4,502,954 27,910 2.46
Large time 7,208,863 89,255 4.91
---------------------
Total interest bearing deposits 25,187,681 208,423 3.28
---------------------
Federal funds purchased and securities
sold under repurchase agreements 768,941 10,054 5.19
Net funding allocated from (to)
discontinued operations (11) (22,913) (338) 5.85
Commercial paper 1,784,097 22,595 5.02
Other borrowed funds 223,406 3,119 5.54
Medium and long-term debt 1,428,937 21,193 5.88
Trust notes 14,940 238 6.38
---------------------
Total borrowed funds 4,197,408 56,861 5.37
---------------------
Total interest bearing liabilities 29,385,089 265,284 3.58
---------
Noninterest bearing deposits 16,132,787
Other liabilities 1,514,788
------------
Total liabilities 47,032,664
Stockholders' Equity
Common equity 4,638,801
------------
Total stockholders' equity 4,638,801
------------
Total liabilities and
stockholders' equity $51,671,465
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 448,619 3.81 %
Less: taxable-equivalent adjustment 1,923
---------
Net interest income $446,696
=========
- ---------------------------------------------------------------------
Average Assets and Liabilities of Discontinued Operations for Period
Ended:
Sept. 30, Dec. 31,
2006 2006
---------- ---------
Assets $41,135 $26,664
Liabilities $6,397 $3,751
Net Asset $34,738 $22,913
- ---------------------------------------------------------------------
- -----------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 8
For the Twelve Months Ended
----------------------------------
December 31, 2005
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense (9)Rate (9)
- ----------------------------------- ------------ --------------------
Assets
Loans: (10)
Commercial, financial and
industrial $11,105,948 $677,590 6.10 %
Construction 1,268,448 77,844 6.14
Residential mortgage 10,513,671 515,485 4.90
Commercial mortgage 5,529,222 348,788 6.31
Consumer 2,444,011 159,493 6.53
Lease financing 591,306 23,653 4.00
------------ -----------
Total loans 31,452,606 1,802,853 5.73
Securities - taxable 10,262,274 392,452 3.82
Securities - tax-exempt 66,178 5,323 8.04
Interest bearing deposits in banks 112,247 2,676 2.38
Federal funds sold and securities
purchased under resale agreements 610,735 20,535 3.36
Trading account assets 292,648 4,494 1.54
------------ -----------
Total earning assets 42,796,688 2,228,333 5.21
-----------
Allowance for loan losses (389,398)
Cash and due from banks 2,247,905
Premises and equipment, net 520,084
Other assets 2,435,539
------------
Total assets $47,610,818
============
Liabilities
Deposits:
Transaction accounts $12,843,905 159,221 1.24
Savings and consumer time 4,667,868 60,248 1.29
Large time 3,121,055 83,882 2.69
------------ -----------
Total interest bearing deposits 20,632,828 303,351 1.47
------------ -----------
Federal funds purchased and
securities sold under repurchase
agreements 898,107 25,854 2.88
Net funding allocated from (to)
discontinued operations (11) (507,397) (15,482) 3.05
Commercial paper 1,086,088 31,672 2.92
Other borrowed funds 168,220 6,313 3.75
Medium and long-term debt 807,592 32,206 3.99
Trust notes 15,562 953 6.12
------------ -----------
Total borrowed funds 2,468,172 81,516 3.30
------------ -----------
Total interest bearing liabilities 23,101,000 384,867 1.67
-----------
Noninterest bearing deposits 18,911,158
Other liabilities 1,318,575
------------
Total liabilities 43,330,733
Stockholders' Equity
Common equity 4,280,085
------------
Total stockholders' equity 4,280,085
------------
Total liabilities and stockholders'
equity $47,610,818
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 1,843,466 4.31 %
Less: taxable-equivalent adjustment 4,352
-----------
Net interest income $1,839,114
===========
- ----------------------------------------------------------------------
For the Twelve Months Ended
--------------------------------
December 31, 2006
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense (9) Rate (9)
- ------------------------------------------------------------ ---------
Assets
Loans: (10)
Commercial, financial and industrial $13,220,633 $869,884 6.58 %
Construction 1,857,404 142,031 7.65
Residential mortgage 11,846,908 607,977 5.13
Commercial mortgage 5,702,858 404,749 7.10
Consumer 2,505,770 192,156 7.67
Lease financing 570,556 15,232 2.67
-----------------------
Total loans 35,704,129 2,232,029 6.25
Securities - taxable 8,417,950 415,902 4.94
Securities - tax-exempt 61,729 4,982 8.07
Interest bearing deposits in banks 51,534 2,617 5.08
Federal funds sold and securities
purchased under resale agreements 497,318 25,518 5.13
Trading account assets 348,183 6,838 1.96
-----------------------
Total earning assets 45,080,843 2,687,886 5.96
-----------
Allowance for loan losses (334,720)
Cash and due from banks 2,063,342
Premises and equipment, net 508,889
Other assets 2,674,127
------------
Total assets $49,992,481
============
Liabilities
Deposits:
Transaction accounts $12,938,620 292,899 2.26
Savings and consumer time 4,483,729 93,582 2.09
Large time 5,656,370 263,226 4.65
-----------------------
Total interest bearing deposits 23,078,719 649,707 2.82
-----------------------
Federal funds purchased and
securities sold under repurchase
agreements 701,614 33,711 4.80
Net funding allocated from (to)
discontinued operations (11) (37,770) (1,847) 4.89
Commercial paper 1,582,226 75,015 4.74
Other borrowed funds 294,977 15,352 5.20
Medium and long-term debt 1,230,846 70,439 5.72
Trust notes 15,109 953 6.31
-----------------------
Total borrowed funds 3,787,002 193,623 5.11
-----------------------
Total interest bearing liabilities 26,865,721 843,330 3.14
-----------
Noninterest bearing deposits 17,042,420
Other liabilities 1,510,155
------------
Total liabilities 45,418,296
Stockholders' Equity
Common equity 4,574,185
------------
Total stockholders' equity 4,574,185
------------
Total liabilities and stockholders'
equity $49,992,481
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 1,844,556 4.09 %
Less: taxable-equivalent adjustment 6,401
-----------
Net interest income $1,838,155
===========
- ---------------------------------------------------------------------
Average Assets and Liabilities of Discontinued Operations for Period
Ended:
Dec. 31, Dec. 31,
2005 2006
----------- ----------
Assets $1,897,622 $189,376
Liabilities $1,390,225 $151,606
Net Asset $507,397 $37,770
- ---------------------------------------------------------------------
- --------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited)
Exhibit 9
Percentage Change
to
For the Three Months Ended December 31, 2006
From
----------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Sept. 30,
(Dollars in
thousands) 2005 2006 2006 2005 2006
-------------------- --------- --------- --------- ------------------
Service charges on
deposit accounts $80,030 $79,083 $77,092 (3.67)% (2.52)%
Trust and investment
management fees 46,465 47,555 49,036 5.53 3.11
Insurance
commissions 19,739 17,301 17,976 (8.93) 3.90
Merchant banking
fees 8,261 11,655 13,905 68.32 19.31
Brokerage
commissions and
fees 7,171 8,531 9,155 27.67 7.31
Foreign exchange
gains, net 8,332 8,179 7,916 (4.99) (3.22)
Card processing
fees, net 6,437 7,241 7,256 12.72 0.21
Securities gains
(losses), net (36,750) 43 420 nm nm
Gain on private
capital investments,
net 8,299 7,681 8,902 7.27 15.90
Other 35,436 29,986 32,448 (8.43) 8.21
--------- --------- ---------
Total noninterest
income $183,420 $217,255 $224,106 22.18 % 3.15 %
========= ========= =========
Noninterest expense (Unaudited)
Percentage Change
to
December 31, 2006
For the Three Months Ended From
----------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Sept. 30,
(Dollars in
thousands) 2005 2006 2006 2005 2006
-------------------- --------- --------- --------- ------------------
Salaries and other
compensation $191,797 $200,591 $202,511 5.59 % 0.96 %
Employee benefits 40,699 44,022 48,280 18.63 9.67
--------- --------- ---------
Salaries and
employee benefits 232,496 244,613 250,791 7.87 2.53
Net occupancy 41,048 35,753 38,662 (5.81) 8.14
Outside services 40,942 31,890 26,184 (36.05) (17.89)
Professional
services 9,369 12,169 19,862 nm 63.22
Equipment 18,042 17,387 17,678 (2.02) 1.67
Software 15,427 15,334 16,978 10.05 10.72
Advertising and
public relations 11,145 11,726 10,780 (3.28) (8.07)
Communications 10,959 9,942 9,876 (9.88) (0.66)
Data processing 7,985 7,933 8,668 8.55 9.27
Intangible asset
amortization 4,965 3,427 3,401 (31.50) (0.76)
Foreclosed asset
expense (income) (29) (183) 10 nm nm
Provision for losses
on
off-balance sheet
commitments 5,000 - 2,000 (60.00) nm
Other 31,849 27,030 36,803 15.55 36.16
--------- --------- ---------
Total noninterest
expense $429,198 $417,021 $441,693 2.91 % 5.92 %
========= ========= =========
- ---------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited)
Exhibit 10
Percentage
Change to
For the Twelve Months December
Ended 31, 2006
From
----------------------------------
Dec. 31, Dec. 31, Dec. 31,
(Dollars in thousands) 2005 2006 2005
---------------------------------- ----------- ----------- ----------
Service charges on deposit
accounts $323,865 $319,647 (1.30)%
Trust and investment management
fees 173,518 195,086 12.43
Insurance commissions 78,915 72,547 (8.07)
Merchant banking fees 43,898 42,185 (3.90)
Brokerage commissions and fees 30,038 35,811 19.22
Foreign exchange gains, net 33,902 32,220 (4.96)
Card processing fees, net 25,105 28,400 13.12
Securities gains (losses), net (50,039) 2,242 nm
Gain on private capital
investments, net 27,187 23,112 (14.99)
Other 118,398 127,249 7.48
----------- -----------
Total noninterest income $804,787 $878,499 9.16 %
=========== ===========
Noninterest expense (Unaudited)
Percentage
Change to
December
For the Twelve Months 31, 2006
Ended From
----------------------- ----------
Dec. 31, Dec. 31, Dec. 31,
(Dollars in thousands) 2005 2006 2005
---------------------------------- ----------- ----------- ----------
Salaries and other compensation $748,046 $799,050 6.82 %
Employee benefits 186,308 197,486 6.00
----------- -----------
Salaries and employee benefits 934,354 996,536 6.66
Net occupancy 141,299 141,771 0.33
Outside services 117,190 117,387 0.17
Equipment 68,206 69,833 2.39
Software 58,511 63,979 9.35
Professional services 45,500 63,616 39.82
Advertising and public relations 36,803 44,007 19.57
Communications 41,909 40,431 (3.53)
Data processing 32,687 31,844 (2.58)
Intangible asset amortization 19,921 13,685 (31.30)
Foreclosed asset income (5,635) (15,322) nm
(Reversal of) provision for
allowance for
losses on off-balance sheet
commitments 4,000 (5,000) nm
Other 112,501 123,521 9.80
----------- -----------
Total noninterest expense $1,607,246 $1,686,288 4.92 %
=========== ===========
- -----------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Footnotes
Exhibit 11
- ----------------------------------------------------------------------
(1) Taxable-equivalent basis.
(2) Dividends per share reflect dividends declared on UnionBanCal
Corporation's common stock outstanding as of the declaration
date.
(3) End of period total assets and assets used in calculating these
ratios include those of discontinued operations.
(4) Average balances used to calculate our financial ratios are based
on continuing operations data only, unless otherwise indicated.
(5) Annualized.
(6) The efficiency ratio is noninterest expense, excluding foreclosed
asset expense (income) and the (reversal of) provision for
losses on off-balance sheet commitments, as a percentage of net
interest income (taxable-equivalent basis) and noninterest
income, and is calculated for continuing operations only.
(7) Estimated as of December 31, 2006. The regulatory capital and
leverage ratios were not restated and therefore include
discontinued operations.
(8) 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.
(9) Yields and interest income are presented on a taxable-equivalent
basis using the federal statutory tax rate of 35 percent.
(10) Average balances on loans outstanding include all nonperforming
loans and loans held for sale. The amortized portion of net loan
origination fees (costs) is included in interest income on
loans, representing an adjustment to the yield.
(11) 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)