Exhibit 99.1
UnionBanCal Corporation Reports First
Quarter Earnings Per Share of $1.07
SAN FRANCISCO--(BUSINESS WIRE)--April 19, 2007--UnionBanCal
Corporation (NYSE:UB):
First Quarter 2007 Highlights:
- -- Strong year-over-year organic loan growth
-- Average total loans up 13 percent
-- Average core commercial loans, which exclude loans to title
and escrow companies, up 14 percent
- -- Annualized average all-in cost of funds of 2.55 percent
- -- Average noninterest bearing deposits comprised 36.4 percent of
average total deposits
- -- Nonperforming assets just 0.08 percent of total assets at
quarter-end
UnionBanCal Corporation (NYSE:UB) today reported first quarter
2007 net income of $149.6 million, or $1.07 per diluted common share.
Income from continuing operations for first quarter 2006 was $181.5
million, or $1.24 per diluted common share.
Income from continuing operations for fourth quarter 2006 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 2006 was $149.6 million, or $1.06 per diluted
common share.
"The operating environment continues to be challenging for banks
with significant commercial deposit businesses," stated Takashi
Morimura, President and Chief Executive Officer. "However, our first
quarter results were in line with our expectations, as strong loan
growth, excellent asset quality, and good expense control offset the
expected deposit weakness.
"In February, we announced that Masaaki Tanaka will be assuming
the position of President and Chief Executive Officer in May, when I
take on a new role with our majority shareholder. I am privileged to
have served as President and Chief Executive Officer of UnionBanCal
Corporation, and I leave the Company in the capable hands of Mr.
Tanaka, our Chief Operating Officer Philip Flynn, and the rest of the
executive management team."
Commenting on the first quarter results, Mr. Flynn stated, "We
began 2007 with continued robust growth in loans, particularly in our
industry specialty businesses. We grew core commercial and industrial
loans 14 percent over last year, while we grew commercial mortgage and
construction loans 16 percent. We expanded our high-quality
residential mortgage portfolio by 8 percent year over year, while
maintaining our stringent underwriting standards. Overall, credit
quality continues to be excellent.
"Competition for deposits continues to be intense, which has
resulted in pressure on noninterest bearing deposit balances. However,
pricing on interest bearing core deposits appears to be stabilizing.
We continue to have confidence in the strategic positioning of our
commercial deposit businesses."
Summary of First Quarter Results
First quarter 2007 net income was $149.6 million, or $1.07 per
diluted common share, compared with income from continuing operations
of $1.24 per diluted common share a year earlier. Total revenue
compared with first quarter 2006 decreased 4.5 percent, due to a 2.1
percent increase in noninterest income and a 7.7 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, $15
million higher than the negative $10 million provision recorded in
first quarter 2006. For first quarter 2007, noninterest expense was up
1.8 percent from the same quarter a year earlier.
First quarter 2007 net income was $1.07 per diluted common share,
compared with adjusted income from continuing operations of $1.06 per
diluted common share last quarter. Adjusted income from continuing
operations for fourth quarter 2006 excludes $0.51 per diluted common
share in state income tax refunds and $0.04 per diluted common share
in tax adjustments. Total revenue decreased 2.9 percent in sequential
quarters, with net interest income decreasing 4.0 percent and
noninterest income decreasing 0.7 percent. The decrease in net
interest income was primarily due to lower noninterest bearing deposit
balances and two fewer days in first quarter 2007. The total provision
for credit losses was $5 million in both quarters. Noninterest expense
declined 4.4 percent in sequential quarters, primarily due to lower
cost of services related to title and escrow balances, lower
compliance-related expense and lower expense associated with low
income housing tax credit projects.
First Quarter Total Revenue
For first quarter 2007, total revenue (taxable-equivalent net
interest income plus noninterest income) was $653.2 million, down 4.5
percent compared with first quarter 2006. Net interest income
decreased 7.7 percent, and noninterest income increased 2.1 percent.
Compared with fourth quarter 2006, total revenue decreased 2.9
percent, with net interest income decreasing 4.0 percent and
noninterest income decreasing 0.7 percent.
First Quarter Net Interest Income (Taxable-equivalent)
Net interest income was $430.6 million in first quarter 2007, down
$35.7 million, or 7.7 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 $5.3 billion, or 12.2 percent,
compared to 2006, primarily due to a $4.4 billion, or 12.9 percent,
increase in average loans. Average commercial loans increased $2.3
billion, or 18.7 percent; and average residential mortgages increased
$0.9 billion, or 8.2 percent. $708 million, or 31 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 14.0 percent, year over year.
Compared to first quarter 2006, average interest bearing deposits
increased $5.0 billion, or 23.7 percent, while average noninterest
bearing deposits decreased $2.4 billion, or 13.8 percent. The decline
in noninterest bearing deposits was primarily due to a $1.7 billion,
or 14.8 percent, decrease in average other commercial noninterest
bearing deposits and a $0.3 billion, or 11.6 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 $0.4 billion, or 12.0 percent.
Average noninterest bearing deposits represented 36.4 percent of
average total deposits in first quarter 2007. The annualized average
all-in cost of funds was 2.55 percent, reflecting the Company's strong
average core deposit-to-loan ratio of 86 percent and the high
proportion of noninterest bearing deposits to total deposits.
The average yield on earning assets of $48.4 billion was 6.06
percent, up 29 basis points over first quarter 2006, with the average
loan yield increasing 25 basis points. The average rate on interest
bearing liabilities of $31.9 billion was 3.75 percent, up 126 basis
points compared with first quarter 2006, reflecting higher short-term
interest rates, an unfavorable change in deposit mix, and heightened
competition for deposits. The net interest margin in first quarter
2007 was 3.58 percent, compared with 4.36 percent in first quarter
2006.
First quarter 2007 net interest income decreased $18 million, or
4.0 percent, compared with fourth quarter 2006, with approximately
$3.8 million of the decline attributable to two fewer days in first
quarter 2007. Average loans increased $1.0 billion, or 2.6 percent.
Average commercial loans increased $511 million, or 3.6 percent,
average commercial mortgage loans increased $249 million, or 4.3
percent, and average residential mortgages increased $162 million, or
1.3 percent. Average interest bearing deposits increased $1.2 billion,
or 4.8 percent, while average noninterest bearing deposits decreased
$1.0 billion, or 6.4 percent. The decline in noninterest bearing
deposits was due to a $677 million, or 6.2 percent, decrease in
average other commercial noninterest bearing deposits and a $347
million, or 14.1 percent, decrease in average title and escrow
deposits. Average consumer noninterest bearing deposits decreased $10
million, or 0.4 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 23 basis points to
3.58 percent.
First Quarter Noninterest Income
In first quarter 2007, noninterest income was $222.6 million, up
$4.6 million, or 2.1 percent, from the same quarter a year ago.
Service charges on deposit accounts decreased $6.7 million, or 8.2
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. Gain on private capital
investments, net, was $9.1 million, compared with $2.8 million in the
same quarter a year ago.
First quarter 2007 noninterest income decreased $1.5 million, or
0.7 percent, compared with fourth quarter 2006. Service charges on
deposit accounts decreased $2.1 million, or 2.8 percent, primarily due
to lower noninterest bearing deposit balances. Insurance commissions
increased $2.3 million, or 12.7 percent, primarily due to normal
seasonal factors. Merchant banking fees decreased $4.8 million, or
34.7 percent, primarily due to a lower volume of syndications
completed in first quarter.
First Quarter Noninterest Expense
Noninterest expense for first quarter 2007 was $422.1 million, an
increase of $7.5 million, or 1.8 percent, over noninterest expense for
first quarter 2006. Salaries and employee benefits expense increased
$6.0 million, or 2.4 percent, primarily due to annual merit increases
and higher accruals for performance-related incentive expense,
partially offset by lower pension expense. Outside services expense
decreased $8.8 million, or 30.7 percent, primarily due to lower cost
of services related to title and escrow balances. Professional
services expense increased $2.5 million, or 17.5 percent, primarily
due to higher compliance-related expense compared with first quarter
last year. Advertising and public relations expense decreased $1.8
million, or 18.0 percent, primarily due to timing of marketing
promotions. Foreclosed asset expense (income) decreased $7.4 million,
reflecting a $7.4 million gain on the sale of property recorded in
first quarter 2006. Provision for losses on off-balance sheet
commitments in first quarter 2007 was $1.0 million, compared with
negative $3.0 million in first quarter 2006.
Noninterest expense decreased $19.6 million, or 4.4 percent,
compared with fourth quarter 2006. Salaries and employee benefits
expense increased $7.7 million, or 3.1 percent, primarily due to
annual seasonal factors that result in higher payroll taxes and 401(k)
matching contributions, and higher accruals for performance-related
incentive expense, partially offset by lower pension expense and lower
severance expense. Outside services expense declined $6.3 million, or
24.2 percent, primarily due to lower cost of services related to title
and escrow balances. Professional services expense decreased $2.8
million, or 14.0 percent, partially due to lower compliance-related
expense. Provision for losses on off-balance sheet commitments was
$1.0 million, compared with $2.0 million in the prior quarter.
Income Tax Expense
The effective tax rate for first quarter 2007 was 33.5 percent,
compared with an effective tax rate of 34.1 percent for first quarter
2006. The difference in rate was primarily due to higher tax credits
in 2007.
Significant Accounting Policies
On January 1, 2007, the Company adopted Staff Position (FSP) FAS
13-2, "Accounting for a Change or Projected Change in the Timing of
Cash Flows Related to Income Taxes Generated by a Leveraged Lease
Transaction", which resulted in a reduction to retained earnings of
$20.8 million.
On January 1, 2007, the Company adopted FIN No. 48, "Accounting
for Uncertainty in Income Taxes - An Interpretation of FASB Statement
No. 109". The cumulative effect of applying the provisions of this
interpretation was recognized as a reduction to retained earnings of
$49.3 million.
Credit Quality
Nonperforming assets at March 31, 2007, were $42 million, or 0.08
percent of total assets. This compares with $42 million, or 0.08
percent of total assets, at December 31, 2006, and $42 million, or
0.09 percent of total assets, at March 31, 2006.
In first quarter 2007, the total provision for credit losses was
$5 million. The total provision for credit losses was $5 million in
fourth quarter 2006 and negative $10 million in first quarter 2006. In
first quarter 2007, net charge-offs were $2 million, compared with net
recoveries of $1 million in fourth quarter 2006, and net charge-offs
of $5 million in first quarter 2006.
At March 31, 2007, the allowance for credit losses as a percent of
total loans and as a percent of nonaccrual loans was 1.11 percent and
997 percent, respectively. These ratios were 1.12 percent and 987
percent, respectively, at December 31, 2006, and 1.26 percent and 1003
percent, respectively, at March 31, 2006.
Balance Sheet and Capital Ratios
At March 31, 2007, the Company had total assets of $54.6 billion.
Total loans were $37.3 billion and total deposits were $43.8 billion,
resulting in a period-end deposit-to-loan ratio of 118 percent. At
period-end, total stockholders' equity was $4.6 billion, the tangible
equity ratio was 7.53 percent, and the ratio of tangible common equity
to risk-weighted assets was 7.99 percent. Book value per share at
March 31, 2007, was $32.98, up 3.3 percent from a year earlier. The
Company's Tier I and total risk-based capital ratios at period-end
were 8.41 percent and 11.38 percent, respectively.
Stock Repurchases
During first quarter 2007, the Company repurchased 1.4 million
shares of common stock at a total price of $85.5 million, or an
average of $62.73 per repurchased share. At March 31, 2007, the
Company had remaining repurchase authority of $64 million.
Common shares outstanding at March 31, 2007, were 138.1 million, a
decrease of 5.3 million shares, or 3.7 percent, from one year earlier.
Common Stock Dividend
The next meeting of the Board of Directors of the Company is
scheduled for May 24, 2007. At this meeting, the Board will consider
and declare the second quarter 2007 common stock dividend.
Second Quarter and Full Year 2007 Earnings Per Share Forecast
The Company currently estimates that second quarter 2007 fully
diluted earnings per share will be in the range of $1.07 to $1.12,
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 $35 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, 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," "continue," "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 first quarter
2007 results at 8:30 AM Pacific Time (11:30 AM Eastern Time) on April
20, 2007. Interested parties calling from locations within the United
States should call 800-230-1951 (612-332-0107 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.unionbank.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), April
20, through 11:59 PM Pacific Time, April 27 (2:59 AM Eastern Time,
April 28). The reservation number for this playback is 868035.
Based in San Francisco, UnionBanCal Corporation is a bank holding
company with assets of $54.6 billion at March 31, 2007. Its primary
subsidiary, Union Bank of California, N.A., had 321 banking offices in
California, Oregon and Washington, and 2 international offices at
March 31, 2007.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 1
Percent Change to
As of and for the Three Months Ended March 31, 2007
from
--------------------------------------------------------
March 31, Dec. 31, March 31, March 31, Dec. 31,
(Dollars in
thousands,
except per
share data) 2006 2006 2007 2006 2006
- ------------- ------------ ------------ ------------------------------
Results of
operations:
Net interest
income (1) $466,341 $448,619 $430,627 (7.66%) (4.01%)
Noninterest
income 217,910 224,106 222,558 2.13% (0.69%)
------------ ------------ ------------
Total revenue 684,251 672,725 653,185 (4.54%) (2.90%)
Noninterest
expense 414,544 441,693 422,091 1.82% (4.44%)
(Reversal of)
provision
for loan
losses (7,000) 3,000 4,000 nm 33.33%
------------ ------------ ------------
Income from
continuing
operations
before
income taxes
(1) 276,707 228,032 227,094 (17.93%) (0.41%)
Taxable-
equivalent
adjustment 1,248 1,923 2,115 69.47% 9.98%
Income tax
expense
(benefit) 94,004 (1,632) 75,368 (19.82%) nm
------------ ------------ ------------
Income from
continuing
operations $181,455 $227,741 $149,611 (17.55%) (34.31%)
Loss from
discontinued
operations (8,510) (1,307) - 100.00% 100.00%
------------ ------------ ------------
Net income $172,945 $226,434 $149,611 (13.49%) (33.93%)
============ ============ ============
Per common
share:
Basic
earnings:
From
continuing
operations $1.26 $1.63 $1.08 (14.29%) (33.74%)
Net income 1.20 1.62 1.08 (10.00%) (33.33%)
Diluted
earnings:
From
continuing
operations 1.24 1.61 1.07 (13.71%) (33.54%)
Net income 1.18 1.61 1.07 (9.32%) (33.54%)
Dividends (2) 0.41 0.47 0.47 14.63% 0.00%
Book value
(end of
period) 31.94 32.86 32.98 3.26% 0.37%
Common shares
outstanding
(end of
period) (3)
(4) 143,402,332 139,107,254 138,117,370 (3.69%) (0.71%)
Weighted
average
common
shares
outstanding
- basic (3)
(4) 143,878,106 139,390,487 137,942,320 (4.13%) (1.04%)
Weighted
average
common
shares
outstanding
- diluted
(3) (4) 146,026,188 141,025,758 139,729,681 (4.31%) (0.92%)
Balance sheet
(end of
period):
Total assets
(5) $48,800,945 $52,619,576 $54,616,849 11.92% 3.80%
Total loans 33,528,868 36,671,723 37,251,950 11.10% 1.58%
Nonperforming
assets 42,392 42,365 41,744 (1.53%) (1.47%)
Total
deposits 39,155,904 41,969,368 43,797,924 11.86% 4.36%
Stockholders'
equity 4,579,878 4,571,401 4,555,439 (0.53%) (0.35%)
Balance sheet
(period
average):
Total assets $48,016,643 $51,671,465 $52,973,203 10.32% 2.52%
Total loans 34,052,067 37,495,315 38,458,014 12.94% 2.57%
Earning
assets 43,084,349 46,860,166 48,354,950 12.23% 3.19%
Total
deposits 38,856,033 41,320,468 41,483,062 6.76% 0.39%
Stockholders'
equity 4,538,679 4,638,801 4,510,205 (0.63%) (2.77%)
Financial
ratios (6):
Return on
average
assets (7) :
From
continuing
operations 1.53% 1.75% 1.15%
Net income 1.46% 1.74% 1.15%
Return on
average
stock-
holders'
equity (7) :
From
continuing
operations 16.21% 19.48% 13.45%
Net income 15.45% 19.37% 13.45%
Efficiency
ratio (8) 62.10% 65.36% 64.47%
Net interest
margin (1) 4.36% 3.81% 3.58%
Dividend
payout ratio 32.54% 28.83% 43.52%
Tangible
equity ratio 8.46% 7.84% 7.53%
Tier 1 risk-
based
capital
ratio (5)
(9) 9.09% 8.68% 8.41%
Total risk-
based
capital
ratio (5)
(9) 10.94% 11.71% 11.38%
Leverage
ratio (5)
(9) 8.80% 8.44% 8.12%
Allowances
for credit
losses to
total loans
(10) 1.26% 1.12% 1.11%
Allowances
for credit
losses to
nonaccrual
loans (10) 1003.48% 987.06% 997.48%
Net loans
charged off
(recovered)
to average
total loans
(7) 0.06% (0.01%) 0.03%
Nonperforming
assets to
total loans
and
foreclosed
assets 0.13% 0.12% 0.11%
Nonperforming
assets to
total assets
(5) 0.09% 0.08% 0.08%
- -------------
Refer to Exhibit 8 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(Taxable-Equivalent Basis)
Exhibit 2
For the Three Months Ended
-----------------------------
March 31, Dec. 31, March 31,
(Dollars in thousands, except per share
data) 2006 2006 2007
- ---------------------------------------- --------- --------- ---------
Interest Income (1)
Loans $512,988 $595,225 $603,502
Securities 97,351 110,916 108,422
Interest bearing deposits in banks 736 1,047 1,109
Federal funds sold and securities
purchased under resale agreements 3,845 4,924 11,152
Trading account assets 1,530 1,791 1,701
--------- --------- ---------
Total interest income 616,450 713,903 725,886
--------- --------- ---------
Interest Expense
Deposits 115,309 208,423 222,257
Federal funds purchased and securities
sold under repurchase agreements 8,802 9,716 13,524
Commercial paper 12,448 22,595 22,264
Medium and long-term debt 10,397 21,193 19,695
Trust notes 238 238 238
Other borrowed funds 2,915 3,119 17,281
--------- --------- ---------
Total interest expense 150,109 265,284 295,259
--------- --------- ---------
Net Interest Income (1) 466,341 448,619 430,627
(Reversal of) provision for loan losses (7,000) 3,000 4,000
--------- --------- ---------
Net interest income after (reversal
of) provision for loan losses 473,341 445,619 426,627
--------- --------- ---------
Noninterest Income
Service charges on deposit accounts 81,635 77,092 74,945
Trust and investment management fees 50,115 49,036 48,560
Insurance commissions 19,518 17,976 20,250
Brokerage commissions and fees 7,795 9,155 9,660
Merchant banking fees 8,229 13,905 9,077
Foreign exchange gains, net 7,818 7,916 7,594
Card processing fees, net 6,697 7,256 7,127
Securities gains (losses), net (214) 420 1,220
Other 36,317 41,350 44,125
--------- --------- ---------
Total noninterest income 217,910 224,106 222,558
--------- --------- ---------
Noninterest Expense
Salaries and employee benefits 252,495 250,791 258,515
Net occupancy 32,837 38,662 35,137
Outside services 28,609 26,184 19,836
Professional services 14,547 19,862 17,087
Equipment 17,922 17,678 16,554
Software 16,344 16,978 14,196
Communications 10,552 9,876 9,791
Foreclosed asset expense (income) (7,367) 10 9
(Reversal of) provision for losses on
off-balance sheet commitments (3,000) 2,000 1,000
Other 51,605 59,652 49,966
--------- --------- ---------
Total noninterest expense 414,544 441,693 422,091
--------- --------- ---------
Income from continuing operations
before income taxes (1) 276,707 228,032 227,094
Taxable-equivalent adjustment 1,248 1,923 2,115
Income tax expense (benefit) 94,004 (1,632) 75,368
--------- --------- ---------
Income from Continuing Operations 181,455 227,741 149,611
--------- --------- ---------
Loss from discontinued operations
before income taxes (13,603) (1,824) -
Income tax benefit (5,093) (517) -
--------- --------- ---------
Loss from Discontinued Operations (8,510) (1,307) -
--------- --------- ---------
Net Income $172,945 $226,434 $149,611
========= ========= =========
Income from continuing operations per
common share - basic $1.26 $1.63 $1.08
========= ========= =========
Net income per common share - basic $1.20 $1.62 $1.08
========= ========= =========
Income from continuing operations per
common share - diluted $1.24 $1.61 $1.07
========= ========= =========
Net income per common share - diluted $1.18 $1.61 $1.07
========= ========= =========
Weighted average common shares
outstanding - basic 143,878 139,390 137,942
========= ========= =========
Weighted average common shares
outstanding - diluted 146,026 141,026 139,730
========= ========= =========
- ----------------------------------------
Refer to Exhibit 8 for footnote explanations.
UnionBanCal Corporation and Subsidiares
Consolidated Balance Sheets
Exhibit 3
(Unaudited) (Unaudited)
March 31, December 31, March 31,
(Dollars in thousands) 2006 2006 2007
- ------------------------------- ------------ ------------ ------------
Assets
Cash and due from banks $2,035,544 $2,213,782 $1,913,937
Interest bearing deposits in
banks 170,187 824,456 1,008,327
Federal funds sold and
securities purchased under
resale agreements 513,777 943,200 2,747,300
------------ ------------ ------------
Total cash and cash
equivalents 2,719,508 3,981,438 5,669,564
Trading account assets 329,703 376,321 297,998
Securities available for sale:
Securities pledged as
collateral 88,152 89,184 62,026
Held in portfolio 8,394,318 8,667,038 8,524,615
Loans (net of allowance for
loan losses: March 31, 2006,
$339,443; December 31, 2006,
$331,077; March 31, 2007,
$332,679) 33,189,425 36,340,646 36,919,271
Due from customers on
acceptances 20,541 17,834 18,099
Premises and equipment, net 511,095 495,302 491,088
Intangible assets 39,186 28,930 26,687
Goodwill 453,489 453,489 453,489
Other assets 2,814,603 2,148,954 2,154,012
Assets of discontinued
operations to be disposed or
sold 240,925 20,440 -
------------ ------------ ------------
Total assets $48,800,945 $52,619,576 $54,616,849
============ ============ ============
Liabilities
Noninterest bearing $18,118,506 $17,113,890 $16,175,362
Interest bearing 21,037,398 24,855,478 27,622,562
------------ ------------ ------------
Total deposits 39,155,904 41,969,368 43,797,924
Federal funds purchased and
securities sold under
repurchase agreements 292,758 1,083,927 549,545
Commercial paper 1,420,276 1,661,163 1,424,401
Other borrowed funds 66,472 432,401 892,852
Acceptances outstanding 20,541 17,834 18,099
Other liabilities 2,259,464 1,545,165 1,292,554
Medium and long-term debt 788,763 1,318,847 2,071,263
Junior subordinated debt
payable to subsidiary grantor
trust 15,225 14,885 14,772
Liabilities of discontinued
operations to be extinguished
or assumed 201,664 4,585 -
------------ ------------ ------------
Total liabilities 44,221,067 48,048,175 50,061,410
------------ ------------ ------------
Stockholders' Equity
Preferred stock:
Authorized 5,000,000 shares;
no shares issued or
outstanding as of March 31,
2006, December 31, 2006 and
March 31, 2007 - - -
Common stock, par value $1 per
share:
Authorized 300,000,000 shares;
issued 154,832,175 shares as
of March 31, 2006,
156,460,057 shares as of
December 31, 2006 and
156,832,956 shares as of
March 31, 2007 154,832 156,460 156,833
Additional paid-in capital 1,018,943 1,083,649 1,109,817
Treasury stock - 11,429,843
shares as of March 31, 2006,
17,352,803 shares as of
December 31, 2006 and
18,715,586 shares as of March
31, 2007 (692,783) (1,064,606) (1,150,090)
Retained earnings 4,258,533 4,655,272 4,669,590
Accumulated other comprehensive
loss (159,647) (259,374) (230,711)
------------ ------------ ------------
Total stockholders' equity 4,579,878 4,571,401 4,555,439
------------ ------------ ------------
Total liabilities and
stockholders' equity $48,800,945 $52,619,576 $54,616,849
============ ============ ============
UnionBanCal Corporation and Subsidiaries
Loans (Unaudited)
Exhibit 4
Percent Change to
Three Months Ended March 31, 2007
from
-------------------------- ------------------
March December March March December
31, 31, 31, 31, 31,
(Dollars in millions) 2006 2006 2007 2006 2006
- ------------------------ -------- -------- -------- -------- ---------
Loans (period average)
Commercial, financial
and industrial $12,370 $14,168 $14,681 18.68% 3.62%
Construction 1,523 2,183 2,233 46.62% 2.29%
Mortgage - Commercial 5,652 5,815 6,064 7.29% 4.28%
Mortgage -
Residential 11,444 12,222 12,384 8.21% 1.33%
Consumer 2,489 2,520 2,542 2.13% 0.87%
Lease financing 569 580 548 (3.69%) (5.52%)
-------- -------- --------
Total loans held to
maturity $34,047 $37,488 $38,452 12.94% 2.57%
Total loans held for
sale 5 7 6 20.00% (14.29%)
-------- -------- --------
Total loans $34,052 $37,495 $38,458 12.94% 2.57%
======== ======== ========
Nonperforming assets
(period end)
Nonaccrual loans:
Commercial, financial
and industrial $19 $7 $5 (73.68%) (28.57%)
Mortgage - Commercial 8 19 22 nm 15.79%
Lease 15 15 15 0.00% 0.00%
-------- -------- --------
Total nonaccrual loans 42 41 42 0.00% 2.44%
Foreclosed assets - 1 - - (100.00%)
-------- -------- --------
Total nonperforming
assets $42 $42 $42 0.00% 0.00%
======== ======== ========
Loans 90 days or more
past due and still
accruing $5 $9 $6 20.00% (33.33%)
======== ======== ========
Analysis of Allowances
for Credit Losses
Beginning balance $352 $327 $331
(Reversal of) provision
for loan losses (7) 3 4
Loans charged off:
Commercial, financial
and industrial (11) (3) (3)
Consumer (1) (1) (1)
-------- -------- --------
Total loans charged
off (12) (4) (4)
-------- -------- --------
Loans recovered:
Commercial, financial
and industrial 2 5 2
Consumer 1 - -
Lease financing 4 - -
-------- -------- --------
Total loans
recovered 7 5 2
-------- -------- --------
Net loans (charged
off) recovered (5) 1 (2)
-------- -------- --------
Ending balance of
allowance for loan
losses $340 $331 $333
Allowance for off-
balance sheet
commitment losses 83 81 82
-------- -------- --------
$-
Allowances for credit
losses $423 $412 $415
======== ======== ========
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 5
For the Three Months Ended
--------------------------------
March 31, 2006
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (7)
(11) (11)
- ------------------------------------- ------------ --------- ---------
Assets
Loans (12)
Commercial, financial and
industrial $12,371,594 $195,952 6.42 %
Construction 1,523,270 26,958 7.18
Residential mortgage 11,446,831 143,340 5.01
Commercial mortgage 5,652,445 97,301 6.98
Consumer 2,489,296 45,095 7.35
Lease financing 568,631 4,342 3.05
------------ ---------
Total loans 34,052,067 512,988 6.09
Securities - taxable 8,233,854 96,053 4.67
Securities - tax-exempt 65,204 1,298 7.96
Interest bearing deposits in banks 59,847 736 4.99
Federal funds sold and securities
purchased under resale agreements 345,342 3,845 4.52
Trading account assets 328,035 1,530 1.89
------------ ---------
Total earning assets 43,084,349 616,450 5.77
---------
Allowance for loan losses (348,626)
Cash and due from banks 2,119,926
Premises and equipment, net 527,001
Other assets 2,633,993
------------
Total assets $48,016,643
============
Liabilities
Deposits:
Transaction accounts $13,261,888 62,358 1.91
Savings and consumer time 4,467,627 18,487 1.68
Large time 3,608,597 34,464 3.87
------------ ---------
Total interest bearing deposits 21,338,112 115,309 2.19
------------ ---------
Federal funds purchased and securities
sold under repurchase agreements 874,055 9,410 4.37
Net funding allocated from (to)
discontinued operations (13) (57,088) (608) 4.32
Commercial paper 1,242,465 12,448 4.06
Other borrowed funds 268,262 2,915 4.41
Medium and long-term debt 800,014 10,397 5.27
Trust notes 15,280 238 6.24
------------ ---------
Total borrowed funds 3,142,988 34,800 4.49
------------ ---------
Total interest bearing
liabilities 24,481,100 150,109 2.49
---------
Noninterest bearing deposits 17,517,921
Other liabilities 1,478,943
------------
Total liabilities 43,477,964
Stockholders' Equity
Common equity 4,538,679
------------
Total stockholders' equity 4,538,679
------------
Total liabilities and
stockholders'equity $48,016,643
============
Reported Net Interest Income/Margin
Net interest income/margin (taxable-
equivalent basis) 466,341 4.36 %
Less: taxable-equivalent adjustment 1,248
---------
Net interest income $465,093
=========
--------------------------------------------------------------------
For the Three Months Ended
-------------------------------
March 31, 2007
-------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (7)
(11) (11)
- -------------------------------------- ------------ --------- --------
Assets
Loans (12)
Commercial, financial and
industrial $14,684,098 $237,278 6.55 %
Construction 2,233,131 42,775 7.77
Residential mortgage 12,386,306 163,766 5.29
Commercial mortgage 6,064,169 106,966 7.15
Consumer 2,542,507 48,979 7.81
Lease financing 547,803 3,738 2.73
------------ ---------
Total loans 38,458,014 603,502 6.34
Securities - taxable 8,580,315 107,268 5.00
Securities - tax-exempt 57,654 1,154 8.01
Interest bearing deposits in banks 79,562 1,109 5.65
Federal funds sold and securities
purchased under resale agreements 846,042 11,152 5.35
Trading account assets 333,363 1,701 2.07
------------ ---------
Total earning assets 48,354,950 725,886 6.06
---------
Allowance for loan losses (330,277)
Cash and due from banks 1,949,232
Premises and equipment, net 493,055
Other assets 2,506,243
------------
Total assets $52,973,203
============
Liabilities
Deposits:
Transaction accounts $13,534,373 91,505 2.74
Savings and consumer time 4,415,261 26,957 2.48
Large time 8,435,137 103,795 4.99
------------ ---------
Total interest bearing deposits 26,384,771 222,257 3.42
------------ ---------
Federal funds purchased and securities
sold under repurchase agreements 1,046,439 13,524 5.24
Net funding allocated from (to)
discontinued operations (13) - - -
Commercial paper 1,783,758 22,264 5.06
Other borrowed funds 1,309,102 17,281 5.35
Medium and long-term debt 1,371,446 19,695 5.82
Trust notes 14,827 238 6.43
------------ ---------
Total borrowed funds 5,525,572 73,002 5.36
------------ ---------
Total interest bearing liabilities 31,910,343 295,259 3.75
---------
Noninterest bearing deposits 15,098,291
Other liabilities 1,454,364
------------
Total liabilities 48,462,998
Stockholders' Equity
Common equity 4,510,205
------------
Total stockholders' equity 4,510,205
------------
Total liabilities and
stockholders'equity $52,973,203
============
Reported Net Interest Income/Margin
Net interest income/margin (taxable-
equivalent basis) 430,627 3.58 %
Less: taxable-equivalent adjustment 2,115
---------
Net interest income $428,512
=========
-------------------------------------------------------------------
Average Assets and Liabilities of Discontinued Operations for Period
Ended:
March 31, 2006 March 31, 2007
--------------------- ----------------------
Assets $618,653 $7
Liabilities $561,565 $7
Net Asset $57,088 $-
--------------------------------------------------------------------
- -----------------
Refer to Exhibit 8 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 6
For the Three Months Ended
--------------------------------
December 31, 2006
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (7)
(11) (11)
- ------------------------------------- ------------ --------- ---------
Assets
Loans: (12)
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 (13) (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
=========
--------------------------------------------------------------------
For the Three Months Ended
------------------------------
March 31, 2007
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (7)
(11) (11)
- --------------------------------------------------- --------- --------
Assets
Loans: (12)
Commercial, financial and industrial $14,684,098 $237,278 6.55 %
Construction 2,233,131 42,775 7.77
Residential mortgage 12,386,306 163,766 5.29
Commercial mortgage 6,064,169 106,966 7.15
Consumer 2,542,507 48,979 7.81
Lease financing 547,803 3,738 2.73
------------ ---------
Total loans 38,458,014 603,502 6.34
Securities - taxable 8,580,315 107,268 5.00
Securities - tax-exempt 57,654 1,154 8.01
Interest bearing deposits in banks 79,562 1,109 5.65
Federal funds sold and securities
purchased under resale agreements 846,042 11,152 5.35
Trading account assets 333,363 1,701 2.07
------------ ---------
Total earning assets 48,354,950 725,886 6.06
---------
Allowance for loan losses (330,277)
Cash and due from banks 1,949,232
Premises and equipment, net 493,055
Other assets 2,506,243
------------
Total assets $52,973,203
============
Liabilities
Deposits:
Transaction accounts $13,534,373 91,505 2.74
Savings and consumer time 4,415,261 26,957 2.48
Large time 8,435,137 103,795 4.99
------------ ---------
Total interest bearing deposits 26,384,771 222,257 3.42
------------ ---------
Federal funds purchased and securities
sold under repurchase agreements 1,046,439 13,524 5.24
Net funding allocated from (to)
discontinued operations (13) - - -
Commercial paper 1,783,758 22,264 5.06
Other borrowed funds 1,309,102 17,281 5.35
Medium and long-term debt 1,371,446 19,695 5.82
Trust notes 14,827 238 6.43
------------ ---------
Total borrowed funds 5,525,572 73,002 5.36
------------ ---------
Total interest bearing liabilities 31,910,343 295,259 3.75
---------
Noninterest bearing deposits 15,098,291
Other liabilities 1,454,364
------------
Total liabilities 48,462,998
Stockholders' Equity
Common equity 4,510,205
------------
Total stockholders' equity 4,510,205
------------
Total liabilities and
stockholders' equity $52,973,203
============
Reported Net Interest Income/Margin
Net interest income/margin (taxable-
equivalent basis) 430,627 3.58 %
Less: taxable-equivalent adjustment 2,115
---------
Net interest income $428,512
=========
-------------------------------------------------------------------
Average Assets and Liabilities of Discontinued Operations for
Period Ended:
December 31, 2006 March 31, 2007
------------------- --------------------
Assets $26,664 $7
Liabilities $3,751 $7
Net Asset $22,913 $-
--------------------------------------------------------------------
- ---------------
Refer to Exhibit 8 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited)
Exhibit 7
Percentage Change
to
For the Three Months Ended March 31, 2007
From
----------------------------- ------------------
March 31, Dec. 31, March 31, March 31, Dec. 31,
(Dollars in
thousands) 2006 2006 2007 2006 2006
-------------------- --------- --------- --------- ------------------
Service charges on
deposit accounts $81,635 $77,092 $74,945 (8.20)% (2.79)%
Trust and investment
management fees 50,115 49,036 48,560 (3.10) (0.97)
Insurance
commissions 19,518 17,976 20,250 3.75 12.65
Brokerage
commissions and
fees 7,795 9,155 9,660 23.93 5.52
Merchant banking
fees 8,229 13,905 9,077 10.31 (34.72)
Foreign exchange
gains, net 7,818 7,916 7,594 (2.87) (4.07)
Card processing
fees, net 6,697 7,256 7,127 6.42 (1.78)
Securities gains
(losses), net (214) 420 1,220 nm nm
Gain on private
capital investments,
net 2,827 8,902 9,095 nm 2.17
Other 33,490 32,448 35,030 4.60 7.96
--------- --------- ---------
Total noninterest
income $217,910 $224,106 $222,558 2.13 % (0.69)%
========= ========= =========
Noninterest expense (Unaudited)
Percentage Change
to
March 31, 2007
For the Three Months Ended From
----------------------------- ------------------
March 31, Dec. 31, March 31, March 31, Dec. 31,
(Dollars in
thousands) 2006 2006 2007 2006 2006
-------------------- --------- --------- --------- ------------------
Salaries and other
compensation $194,259 $202,511 $207,657 6.90 % 2.54 %
Employee benefits 58,236 48,280 50,858 (12.67) 5.34
--------- --------- ---------
Salaries and
employee benefits 252,495 250,791 258,515 2.38 3.08
Net occupancy 32,837 38,662 35,137 7.00 (9.12)
Outside services 28,609 26,184 19,836 (30.67) (24.24)
Professional
services 14,547 19,862 17,087 17.46 (13.97)
Equipment 17,922 17,678 16,554 (7.63) (6.36)
Software 16,344 16,978 14,196 (13.14) (16.39)
Communications 10,552 9,876 9,791 (7.21) (0.86)
Advertising and
public relations 10,231 10,780 8,389 (18.00) (22.18)
Data processing 7,398 8,668 8,241 11.40 (4.93)
Intangible asset
amortization 3,430 3,402 2,243 (34.61) (34.07)
Foreclosed asset
expense (income) (7,367) 10 9 nm (10.00)
(Reversal of)
provision for
losses on
off-balance sheet
commitments (3,000) 2,000 1,000 nm (50.00)
Other 30,546 36,802 31,093 1.79 (15.51)
--------- --------- ---------
Total noninterest
expense $414,544 $441,693 $422,091 1.82 % (4.44)%
========= ========= =========
UnionBanCal Corporation and Subsidiaries
Footnotes
Exhibit 8
(1) Taxable-equivalent basis.
(2) Dividends per share reflect dividends declared on
UnionBanCal Corporation's common stock outstanding as of the
declaration date.
(3) Common shares outstanding reflect common shares issued less
treasury shares.
(4) For the periods ended December 31, 2006 and March 31, 2007,
weighted average common shares outstanding (basic) excludes
nonvested restricted shares but includes the impact of those
shares in the calculation of diluted shares. The impact of
this change on the previous period was not material.
(5) End of period total assets and assets used in calculating
these ratios include those of discontinued operations.
(6) Average balances used to calculate our financial ratios are
based on continuing operations data only, unless otherwise
indicated.
(7) Annualized.
(8) 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.
(9) Estimated as of March 31, 2007. The regulatory capital and
leverage ratios include discontinued operations.
(10) 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.
(11) Yields and interest income are presented on a
taxable-equivalent basis using the federal statutory tax
rate of 35 percent.
(12) 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.
(13) 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)