EXHIBIT 99.1
UnionBanCal Corporation Reports Second Quarter EPS of $1.19;
Provides Regulatory Update
SAN FRANCISCO--(BUSINESS WIRE)--July 19, 2007--UnionBanCal
Corporation (NYSE:UB):
Second Quarter 2007 Highlights:
- -- Strong year-over-year organic loan growth
-- Average total loans up 11 percent
-- Average core commercial loans up 9 percent
-- Average residential mortgage loans up 7 percent
- -- Annualized average all-in cost of funds of 2.61 percent
- -- Average noninterest bearing deposits comprised over 35 percent of
average total deposits
- -- Nonperforming assets just 0.06 percent of total assets at
quarter-end
UnionBanCal Corporation (NYSE:UB) today reported second quarter
2007 net income of $165.4 million, or $1.19 per diluted common share.
Net income in the preceding quarter was $149.6 million, or $1.07 per
diluted common share, while net income a year earlier was $182.9
million, or $1.26 per diluted common share.
First half 2007 net income was $315.0 million, or $2.26 per
diluted common share, compared with income from continuing operations
for first half 2006 of $364.1 million, or $2.51 per diluted common
share.
Regulatory Matters
As previously reported in filings with the Securities & Exchange
Commission, the Company's principal subsidiary, Union Bank of
California N.A., entered into a Memorandum of Understanding (MOU) in
2005 with its principal regulator, the Office of the Comptroller of
the Currency (OCC). The MOU requires the Bank to strengthen its Bank
Secrecy Act/Anti-Money Laundering (BSA/AML) controls and processes.
In response to the MOU, the Bank has committed significant
resources to strengthen its BSA/AML controls and processes. During the
course of the Bank's efforts to resolve issues raised by its
regulators, additional BSA/AML compliance issues arose, which the Bank
discussed with the OCC.
Recently, the Bank has been advised by the OCC that the OCC will
institute a procedure for a cease and desist order against the Bank
with respect to its BSA/AML controls and processes and will assess
civil money penalties with respect to BSA/AML matters. The Bank also
has received notice from the Financial Crimes Enforcement Network
(FinCEN), a part of the U.S. Treasury Department, that it will assess
civil money penalties with respect to BSA/AML matters. The Bank cannot
be certain what final terms, conditions, or monetary penalties will be
imposed by the agencies. However, the Company believes these pending
regulatory actions will not have a material adverse effect on the
Company's business operations, earnings, capital or liquidity. Based
on preliminary discussions with the OCC and FinCEN, a reserve of $10
million has been established and is included in the Company's second
quarter financial results.
"These regulatory actions relate to compliance issues that
occurred in the past," said Masaaki Tanaka, President and Chief
Executive Officer. "We have taken significant steps to improve our
compliance program and continue to do so," he added.
"The board of directors, executive management and I take very
seriously our obligation to have an effective and comprehensive
BSA/AML compliance program," Tanaka stated. "We will continue to work
closely with our regulators to satisfy them as soon as possible that
our enhanced BSA/AML program is effective and sustainable," Tanaka
concluded.
Commenting on the second quarter results, Vice Chairman and Chief
Operating Officer Philip Flynn stated, "The net interest margin
declined only two basis points from first quarter, with core deposits
increasing 1.4 percent and noninterest bearing balances down only
slightly. Loan growth moderated, and asset quality continued to be
excellent. The average annualized all-in cost of funds increased six
basis points, but at 2.61 percent, remains among the lowest in the
industry. In May, we increased the quarterly dividend rate 10.6
percent, to $0.52 per share, reflecting solid core profitability and
strong capital. Our business outlook for the second half is unaffected
by the pending regulatory actions," Mr. Flynn concluded.
Summary of Second Quarter Results
Second quarter 2007 net income was $165.4 million, or $1.19 per
diluted common share, compared with net income of $1.26 per diluted
common share a year earlier. Total revenue compared with second
quarter 2006 decreased 4 percent, primarily due to an 8 percent
decrease in net interest income, which resulted from 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, with
average loans up 11 percent. Noninterest income grew 5 percent,
primarily due to higher gains on private capital investments. The
total provision for credit losses was $5 million, $10 million higher
than the negative $5 million provision recorded in second quarter
2006. For second quarter 2007, noninterest expense was flat compared
with the same quarter a year earlier.
Second quarter 2007 net income was $1.19 per diluted common share,
compared with net income of $1.07 per diluted common share in the
preceding quarter. Total revenue increased 1.2 percent in sequential
quarters, with net interest income flat and noninterest income
increasing 3.3 percent. The total provision for credit losses was $5
million in both quarters. Noninterest expense declined 2.4 percent in
sequential quarters, primarily due to annual seasonal factors that
result in lower payroll taxes and 401(k) matching contributions in the
second quarter, and lower compliance-related expense.
Second Quarter Total Revenue
For second quarter 2007, total revenue (taxable-equivalent net
interest income plus noninterest income) was $661 million, down 4
percent compared with second quarter 2006. Net interest income
decreased 8.1 percent, and noninterest income increased 4.8 percent.
Compared with first quarter 2007, total revenue increased 1.2 percent,
with net interest income flat and noninterest income increasing 3.3
percent.
Second Quarter Net Interest Income (Taxable-equivalent)
Net interest income was $431.1 million in second quarter 2007,
down $37.9 million, or 8.1 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
strong loan growth and higher yields on earning assets.
Average earning assets increased $4.1 billion, or 9.2 percent,
compared to 2006, primarily due to a $3.7 billion, or 10.5 percent,
increase in average loans. Average commercial loans increased $1.7
billion, or 12.8 percent, with $0.6 billion of the increase
attributable to title and escrow loans, which are highly
rate-advantaged loans and are more volatile than other commercial
loans. Average core commercial loans, which exclude title and escrow
loans, grew 8.9 percent, year over year. Average residential mortgage
loans increased $0.9 billion, or 7.3 percent; average construction
loans increased $0.6 billion, or 33.2 percent; and average commercial
mortgage loans increased $0.6 billion, or 9.7 percent, year over year.
Of the $0.6 billion increase in average construction loans, virtually
all of the increase year over year was in income properties.
Compared to second quarter 2006, average interest bearing deposits
increased $5.5 billion, or 25 percent, while average noninterest
bearing deposits decreased $2.6 billion, or 14.6 percent. The decline
in noninterest bearing deposits was primarily due to a $1.7 billion,
or 13.9 percent, decrease in average other commercial noninterest
bearing deposits and a $0.5 billion, or 19.1 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 $0.4 billion, or 13.4 percent.
Average noninterest bearing deposits represented 35.1 percent of
average total deposits in second quarter 2007. The annualized average
all-in cost of funds was 2.61 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 6.11
percent, up 16 basis points over second quarter 2006, with the average
loan yield increasing 13 basis points. The average rate on interest
bearing liabilities of $32.2 billion was 3.83 percent, up 88 basis
points compared with second quarter 2006, reflecting higher short-term
interest rates, an unfavorable change in deposit mix, and heightened
competition for deposits. The net interest margin in second quarter
2007 was 3.56 percent, compared with 4.23 percent in second quarter
2006.
Second quarter 2007 net interest income was flat compared with
first quarter 2007. Average loans increased $382 million, or 1.0
percent. Average commercial loans decreased $71 million, or 0.5
percent, which was comprised of a decrease in core commercial loans of
$122 million, offset by an increase in title and escrow loans of $51
million. Average residential mortgage loans increased $207 million, or
1.7 percent, and average commercial mortgage loans increased $149
million, or 2.5 percent. Average interest bearing deposits increased
$1.3 billion, or 5.0 percent, while average noninterest bearing
deposits decreased $0.1 billion, or 0.7 percent. The average yield on
earning assets increased 5 basis points and the average rate on
interest bearing liabilities increased 8 basis points. The net
interest margin decreased 2 basis points to 3.56 percent.
Second Quarter Noninterest Income
In second quarter 2007, noninterest income was $229.8 million, up
$10.6 million, or 4.8 percent, from the same quarter a year ago.
Service charges on deposit accounts decreased $4.6 million, or 5.6
percent, primarily due to lower account analysis fees, caused by lower
noninterest bearing deposit balances. Trust and investment management
fees increased $3.2 million, or 6.6 percent, primarily due to an
increase in trust assets. Gain on private capital investments, net,
was $20.2 million, compared with $3.7 million in the same quarter a
year ago.
Second quarter 2007 noninterest income increased $7.3 million, or
3.3 percent, compared with first quarter 2007. Service charges on
deposit accounts increased $2.3 million, or 3.0 percent, primarily due
to two additional processing days in second quarter. Trust and
investment management fees increased $3.0 million, or 6.2 percent,
primarily due to an increase in trust assets. Insurance commissions
decreased $3.7 million, or 18.5 percent, primarily due to normal
seasonal factors. Gain on private capital investments, net, was $20.2
million, compared with $9.1 million in the preceding quarter. Other
noninterest income decreased $6.3 million, or 18.1 percent, primarily
due to a gain on the sale of property recorded in first quarter 2007.
Second Quarter Noninterest Expense
Noninterest expense for second quarter 2007 was $411.9 million, a
decrease of $1.2 million, or 0.3 percent, compared with second quarter
2006. Salaries and employee benefits expense increased $2.8 million,
or 1.1 percent, primarily due to annual merit increases, partially
offset by lower pension expense. Outside services expense decreased
$11.9 million, or 38.6 percent, primarily due to lower cost of
services related to title and escrow balances. Professional services
expense decreased $5.1 million, or 29.8 percent, primarily due to
lower compliance-related expense. Foreclosed asset expense was zero,
compared with income of $7.8 million a year earlier, due to a $7.8
million gain on the sale of property. The provision for losses on
off-balance sheet commitments in second quarter 2007 was zero,
compared with negative $4.0 million in second quarter 2006. Other
noninterest expense increased $3.5 million, or 12.1 percent, primarily
due to a reserve of $10.0 million for pending regulatory actions,
partially offset by a $7.8 million reserve reversal, reflecting a
favorable outcome in a legal dispute.
Noninterest expense decreased $10.2 million, or 2.4 percent,
compared with first quarter 2007. Salaries and employee benefits
expense decreased $7.1 million, or 2.7 percent, primarily due to
annual seasonal factors that result in lower payroll taxes and 401(k)
matching contributions. Professional services expense decreased $5.1
million, or 30.0 percent, primarily due to lower compliance-related
expense. The provision for losses on off-balance sheet commitments was
zero, compared with $1.0 million in the prior quarter.
Income Tax Expense
The effective tax rate for second quarter 2007 was 31.6 percent,
compared with an effective tax rate of 33.5 percent for second quarter
2006. The difference in rate was primarily due to the recognition of
$8.4 million of tax benefits during second quarter, partially offset
by $3.8 million in additional taxes due to the non-deductibility of
the reserve for pending regulatory actions. Excluding these
adjustments, the second quarter tax rate would have been 33.5 percent.
The effective tax rate for the first half of 2007 was 32.5
percent. Excluding the adjustments discussed above, the tax rate would
have been 33.5 percent, compared with an effective tax rate of 33.8
percent for the first half of 2006.
Year-to-Date Results
Total revenue for the first half of 2007 was $1.31 billion, a
decrease of $58 million, or 4.2 percent, compared with total revenue
of $1.37 billion in the same period of 2006. Net interest income
decreased $74 million, or 7.9 percent, and noninterest income
increased $15 million, or 3.5 percent.
Net interest income was $862 million in the first half of 2007, a
$74 million decrease from prior year, primarily due to a deposit mix
shift from noninterest bearing and low-cost deposits into higher-cost
deposits, partially offset by strong loan growth and higher yields on
earning assets. Average loans increased $4.0 billion, or 11.7 percent,
while average total deposits increased $2.8 billion, or 7.2 percent. A
$5.3 billion, or 24.4 percent, increase in average interest bearing
deposits was partially offset by a $2.5 billion, or 14.2 percent,
decrease in average noninterest bearing deposits. The net interest
margin was 3.57 percent, down 72 basis points.
Noninterest income in the first half of 2007 was $452 million, an
increase of $15 million, or 3.5 percent, over the same period in 2006.
Service charges on deposit accounts decreased $11 million, or 6.9
percent, primarily due to lower account analysis fees, caused by lower
noninterest bearing deposit balances. Gain on private capital
investments, net, was $29.3 million, compared with $6.5 million in the
same period last year.
For the first half of 2007, noninterest expense increased $6.4
million, or 0.8 percent, over the first half of 2006. Salaries and
employee benefits expense increased $8.8 million, or 1.8 percent,
primarily due to annual merit increases, partially offset by lower
pension expense. Outside services expense decreased $21 million, or
34.8 percent, primarily due to lower cost of services related to title
and escrow balances. Foreclosed asset expense was zero, compared with
income of $15 million last year, due to gains on the sale of other
real estate owned. The provision for off-balance sheet commitments was
$1 million in the first half of 2007, compared with negative $7
million in the first half of 2006.
Credit Quality
Nonperforming assets at June 30, 2007, were $30 million, or 0.06
percent of total assets. This compares with $42 million, or 0.08
percent of total assets, at March 31, 2007, and $36 million, or 0.07
percent of total assets, at June 30, 2006.
In second quarter 2007, the total provision for credit losses was
$5 million. The total provision for credit losses was $5 million in
first quarter 2007, and negative $5 million in second quarter 2006. In
second quarter 2007, net charge-offs were $2 million, compared with
net charge-offs of $2 million in first quarter 2007, and net
charge-offs of $10 million in second quarter 2006.
At June 30, 2007, the allowance for credit losses as a percent of
total loans and as a percent of nonaccrual loans was 1.11 percent and
1,457 percent, respectively. These ratios were 1.11 percent and 997
percent, respectively, at March 31, 2007, and 1.17 percent and 1,130
percent, respectively, at June 30, 2006.
Balance Sheet and Capital Ratios
At June 30, 2007, the Company had total assets of $53.2 billion.
Total loans were $37.7 billion and total deposits were $42.1 billion,
resulting in a period-end deposit-to-loan ratio of 112 percent. At
period-end, total stockholders' equity was $4.6 billion, the tangible
common equity ratio was 7.87 percent, and the ratio of tangible common
equity to risk-weighted assets was 8.09 percent. Book value per share
at June 30, 2007, was $33.45, up 3.4 percent from a year earlier. The
Company's Tier I and total risk-based capital ratios at period-end
were 8.58 percent and 11.54 percent, respectively.
Stock Repurchases
During second quarter 2007, the Company repurchased 30,000 shares
of common stock at a total price of $2 million, or an average of
$63.26 per repurchased share. During the first half of 2007, the
Company repurchased 1.4 million shares of common stock at a total
price of $87 million, or an average of $62.74 per repurchased share.
At June 30, 2007, the Company had remaining repurchase authority of
$62 million.
Common shares outstanding at June 30, 2007, were 138.3 million, a
decrease of 4.2 million shares, or 3.0 percent, from one year earlier.
Third Quarter and Full Year 2007 Earnings Per Share Forecast
The Company currently estimates that third quarter 2007 fully
diluted earnings per share will be in the range of $1.12 to $1.17,
including a total provision for credit losses of approximately $5
million.
For the year, the Company estimates that fully diluted earnings
per share will be in the range of $4.50 to $4.60, including a total
provision for credit losses of approximately $25 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 certain tax items, 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,
the Company's loan portfolio, business model, competitive positioning
and earnings power, and certain regulatory matters relating to the
Company.
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 or investigations; 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 second
quarter 2007 results at 8:30 AM Pacific Time (11:30 AM Eastern Time)
on July 20, 2007. Interested parties calling from locations within the
United States should call 800-230-1093 (612-234-9959 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), July
20, through 11:59 PM Pacific Time, July 27 (2:59 AM Eastern Time, July
28). The reservation number for this playback is 879044.
Based in San Francisco, UnionBanCal Corporation is a bank holding
company with assets of $53.2 billion at June 30, 2007. Its primary
subsidiary, Union Bank of California, N.A., had 327 banking offices in
California, Oregon and Washington, and 2 international offices at June
30, 2007.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 1
Percent Change to
As of and for the Three Months June 30, 2007
Ended from
----------------------------------- ------------------
June 30, March 31, June 30, June 30, March
31,
(Dollars in
thousands,
except per
share data) 2006 2007 2007 2006 2007
- --------------- ----------- ----------- ----------- ------------------
Results of
operations:
Net interest
income (1) $469,000 $430,627 $431,124 (8.08%) 0.12%
Noninterest
income 219,228 222,558 229,845 4.84% 3.27%
----------- ----------- -----------
Total revenue 688,228 653,185 660,969 (3.96%) 1.19%
Noninterest
expense 413,030 422,091 411,865 (0.28%) (2.42%)
(Reversal of)
provision for
loan losses (1,000) 4,000 5,000 nm 25.00%
----------- ----------- -----------
Income from
continuing
operations
before income
taxes (1) 276,198 227,094 244,104 (11.62%) 7.49%
Taxable-
equivalent
adjustment 1,358 2,115 2,251 65.76% 6.43%
Income tax
expense 92,203 75,368 76,499 (17.03%) 1.50%
----------- ----------- -----------
Income from
continuing
operations $182,637 $149,611 $165,354 (9.46%) 10.52%
Income from
discontinued
operations 274 - - (100.00%) -
----------- ----------- -----------
Net income $182,911 $149,611 $165,354 (9.60%) 10.52%
=========== =========== ===========
Per common
share:
Basic earnings:
From
continuing
operations $1.28 $1.08 $1.20 (6.25%) 11.11%
Net income 1.28 1.08 1.20 (6.25%) 11.11%
Diluted
earnings:
From
continuing
operations 1.26 1.07 1.19 (5.56%) 11.21%
Net income 1.26 1.07 1.19 (5.56%) 11.21%
Dividends (2) 0.47 0.47 0.52 10.64% 10.64%
Book value (end
of period) 32.34 32.98 33.45 3.43% 1.43%
Common shares
outstanding
(end of
period) (3) 142,533,794 138,117,370 138,314,564 (2.96%) 0.14%
Weighted
average common
shares
outstanding -
basic (3) 142,723,271 137,942,320 137,476,765 (3.68%) (0.34%)
Weighted
average common
shares
outstanding -
diluted (3) 144,878,447 139,729,681 139,137,955 (3.96%) (0.42%)
Balance sheet
(end of
period):
Total assets
(4) $50,800,136 $54,616,849 $53,173,833 4.67% (2.64%)
Total loans 34,747,833 37,251,950 37,743,222 8.62% 1.32%
Nonperforming
assets 36,351 41,744 29,826 (17.95%) (28.55%)
Total deposits 40,544,251 43,797,924 42,090,306 3.81% (3.90%)
Stockholders'
equity 4,608,908 4,555,439 4,627,147 0.40% 1.57%
Balance sheet
(period
average):
Total assets $49,329,374 $52,973,203 $53,116,454 7.68% 0.27%
Total loans 35,146,976 38,458,014 38,839,769 10.51% 0.99%
Earning assets 44,358,594 48,354,950 48,443,246 9.21% 0.18%
Total deposits 39,692,052 41,483,062 42,684,022 7.54% 2.90%
Stockholders'
equity 4,539,476 4,510,205 4,588,061 1.07% 1.73%
Financial
ratios (5):
Return on
average assets
(6) :
From
continuing
operations 1.49% 1.15% 1.25%
Net income 1.49% 1.15% 1.25%
Return on
average
stockholders'
equity (6) :
From
continuing
operations 16.14% 13.45% 14.46%
Net income 16.16% 13.45% 14.46%
Efficiency
ratio (7) 61.73% 64.47% 62.31%
Net interest
margin (1) 4.23% 3.58% 3.56%
Dividend payout
ratio 36.72% 43.52% 43.33%
Tangible common
equity ratio 8.19% 7.53% 7.87%
Tier 1 risk-
based capital
ratio (4) (8) 8.92% 8.42% 8.58%
Total risk-
based capital
ratio (4) (8) 12.05% 11.38% 11.54%
Leverage ratio
(4) (8) 8.74% 8.12% 8.30%
Allowances for
credit losses
to total loans
(9) 1.17% 1.11% 1.11%
Allowances for
credit losses
to nonaccrual
loans (9) 1,130.05% 997.48% 1,456.97%
Net loans
charged off to
average total
loans (6) 0.12% 0.03% 0.02%
Nonperforming
assets to
total loans
and foreclosed
assets 0.10% 0.11% 0.08%
Nonperforming
assets to
total assets
(4) 0.07% 0.08% 0.06%
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 2
Percent
Change
to
June 30,
As of and for the Six 2007
Months Ended from
--------------------------- --------
June 30, June 30, June 30,
(Dollars in thousands, except per
share data) 2006 2007 2006
- --------------------------------- ------------- ------------- --------
Results of operations:
Net interest income (1) $ 935,341 $ 861,751 (7.87%)
Noninterest income 437,138 452,403 3.49%
------------- -------------
Total revenue 1,372,479 1,314,154 (4.25%)
Noninterest expense 827,574 833,956 0.77%
(Reversal of) provision for loan
losses (8,000) 9,000 nm
------------- -------------
Income from continuing operations
before income taxes (1) 552,905 471,198 (14.78%)
Taxable-equivalent adjustment 2,606 4,366 67.54%
Income tax expense 186,207 151,867 (18.44%)
------------- -------------
Income from continuing operations $ 364,092 $ 314,965 (13.49%)
Loss from discontinued operations (8,236) - 100.00%
------------- -------------
Net income $ 355,856 $ 314,965 (11.49%)
============= =============
Per common share:
Basic earnings:
From continuing operations $ 2.54 $ 2.29 (9.84%)
Net income 2.49 2.29 (8.03%)
Diluted earnings:
From continuing operations 2.51 2.26 (9.96%)
Net income 2.45 2.26 (7.76%)
Dividends (2) 0.88 0.99 12.50%
Book value (end of period) 32.34 33.45 3.43%
Common shares outstanding (end of
period) (3) 142,533,794 138,314,564 (2.96%)
Weighted average common shares
outstanding - basic (3) 143,098,104 137,708,257 (3.77%)
Weighted average common shares
outstanding - diluted (3) 145,293,781 139,360,012 (4.08%)
Balance sheet (end of period):
Total assets (4) $ 50,800,136 $ 53,173,833 4.67%
Total loans 34,747,833 37,743,222 8.62%
Nonperforming assets 36,351 29,826 (17.95%)
Total deposits 40,544,251 42,090,306 3.81%
Stockholders' equity 4,608,908 4,627,147 0.40%
Balance sheet (period average):
Total assets $ 48,676,618 $ 53,045,236 8.97%
Total loans 34,602,546 38,649,947 11.70%
Earning assets 43,724,990 48,399,343 10.69%
Total deposits 39,276,352 42,086,858 7.16%
Stockholders' equity 4,539,080 4,549,348 0.23%
Financial ratios (5):
Return on average assets (6) :
From continuing operations 1.51% 1.20%
Net income 1.47% 1.20%
Return on average stockholders'
equity (6) :
From continuing operations 16.18% 13.96%
Net income 15.81% 13.96%
Efficiency ratio (7) 61.91% 63.38%
Net interest margin (1) 4.29% 3.57%
Dividend payout ratio 34.65% 43.23%
Tangible common equity ratio 8.19% 7.87%
Tier 1 risk-based capital ratio
(4) (8) 8.92% 8.58%
Total risk-based capital ratio
(4) (8) 12.05% 11.54%
Leverage ratio (4) (8) 8.74% 8.30%
Allowance for credit losses to
total loans (9) 1.17% 1.11%
Allowance for credit losses to
nonaccrual loans (9) 1,130.05% 1,456.97%
Net loans charged off to average
total loans (6) 0.09% 0.02%
Nonperforming assets to total
loans and foreclosed assets 0.10% 0.08%
Nonperforming assets to total
assets (4) 0.07% 0.06%
- ---------------------------------
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 Six Months
Ended
-------------------------- ---------------------
June 30, March June 30, June 30,
31,
(Dollars in
thousands, except
per share data) 2006 2007 2007 2006 2007
- --------------------- -------- -------- -------- ---------- ----------
Interest Income (1)
Loans $548,017 $603,502 $618,204 $1,061,005 $1,221,706
Securities 104,008 108,422 109,839 201,359 218,261
Interest bearing
deposits in banks 423 1,109 1,295 1,159 2,404
Federal funds sold
and securities
purchased under
resale agreements 4,725 11,152 7,809 8,570 18,961
Trading account
assets 1,685 1,701 1,601 3,215 3,302
-------- -------- -------- ---------- ----------
Total interest
income 658,858 725,886 738,748 1,275,308 1,464,634
-------- -------- -------- ---------- ----------
Interest Expense
Deposits 143,677 222,257 246,175 258,986 468,432
Federal funds
purchased and
securities sold
under repurchase
agreements 8,455 13,524 10,120 17,257 23,644
Commercial paper 19,137 22,264 17,429 31,585 39,693
Medium and long-term
debt 16,875 19,695 28,973 27,272 48,668
Trust notes 238 238 238 476 476
Other borrowed funds 1,476 17,281 4,689 4,391 21,970
-------- -------- -------- ---------- ----------
Total interest
expense 189,858 295,259 307,624 339,967 602,883
-------- -------- -------- ---------- ----------
Net Interest Income
(1) 469,000 430,627 431,124 935,341 861,751
(Reversal of)
provision for loan
losses (1,000) 4,000 5,000 (8,000) 9,000
-------- -------- -------- ---------- ----------
Net interest income
after (reversal
of) provision for
loan losses 470,000 426,627 426,124 943,341 852,751
-------- -------- -------- ---------- ----------
Noninterest Income
Service charges on
deposit accounts 81,837 74,945 77,218 163,472 152,163
Trust and investment
management fees 48,380 48,560 51,585 98,495 100,145
Insurance
commissions 17,752 20,250 16,501 37,270 36,751
Brokerage
commissions and
fees 10,330 9,660 9,533 18,125 19,193
Merchant banking
fees 8,396 9,077 8,809 16,625 17,886
Foreign exchange
gains, net 8,307 7,594 9,288 16,125 16,882
Card processing
fees, net 7,206 7,127 7,824 13,903 14,951
Securities gains,
net 1,993 1,220 230 1,779 1,450
Other 35,027 44,125 48,857 71,344 92,982
-------- -------- -------- ---------- ----------
Total noninterest
income 219,228 222,558 229,845 437,138 452,403
-------- -------- -------- ---------- ----------
Noninterest Expense
Salaries and
employee benefits 248,637 258,515 251,430 501,132 509,945
Net occupancy 34,519 35,137 35,244 67,356 70,381
Outside services 30,704 19,836 18,851 59,313 38,687
Equipment 16,846 16,554 16,367 34,768 32,921
Software 15,323 14,196 15,136 31,667 29,332
Professional
services 17,038 17,087 11,970 31,585 29,057
Communications 10,061 9,791 8,855 20,613 18,646
Foreclosed asset
expense (income) (7,782) 9 9 (15,149) 18
(Reversal of)
provision for losses
on off-balance sheet
commitments (4,000) 1,000 - (7,000) 1,000
Other 51,684 49,966 54,003 103,289 103,969
-------- -------- -------- ---------- ----------
Total noninterest
expense 413,030 422,091 411,865 827,574 833,956
-------- -------- -------- ---------- ----------
Income from
continuing
operations before
income taxes (1) 276,198 227,094 244,104 552,905 471,198
Taxable-equivalent
adjustment 1,358 2,115 2,251 2,606 4,366
Income tax expense 92,203 75,368 76,499 186,207 151,867
-------- -------- -------- ---------- ----------
Income from
Continuing
Operations 182,637 149,611 165,354 364,092 314,965
-------- -------- -------- ---------- ----------
Income (loss) from
discontinued
operations before
income taxes 431 - - (13,172) -
Income tax expense
(benefit) 157 - - (4,936) -
-------- -------- -------- ---------- ----------
Income (loss) from
Discontinued
Operations 274 - - (8,236) -
-------- -------- -------- ---------- ----------
Net Income $182,911 $149,611 $165,354 $ 355,856 $ 314,965
======== ======== ======== ========== ==========
Income from
continuing
operations per
common share - basic $ 1.28 $ 1.08 $ 1.20 $ 2.54 $ 2.29
======== ======== ======== ========== ==========
Net income per common
share - basic $ 1.28 $ 1.08 $ 1.20 $ 2.49 $ 2.29
======== ======== ======== ========== ==========
Income from continuing
operations per common
share - diluted $ 1.26 $ 1.07 $ 1.19 $ 2.51 $ 2.26
======== ======== ======== ========== ==========
Net income per common
share - diluted $ 1.26 $ 1.07 $ 1.19 $ 2.45 $ 2.26
======== ======== ======== ========== ==========
Weighted average
common shares
outstanding - basic 142,723 137,942 137,477 143,098 137,708
======== ======== ======== ========== ==========
Weighted average
common shares
outstanding -
diluted 144,878 139,730 139,138 145,294 139,360
======== ======== ======== ========== ==========
- ---------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Consolidated Balance Sheets
Exhibit 4
(Unaudited) (Unaudited)
June 30, December 31, June 30,
(Dollars in thousands) 2006 2006 2007
- -------------------------------- ----------- ------------ ------------
Assets
Cash and due from banks $ 2,192,483 $ 2,213,782 $ 1,863,482
Interest bearing deposits in
banks 31,691 824,456 100,800
Federal funds sold and
securities purchased under
resale agreements 1,252,514 943,200 1,400,875
----------- ------------ ------------
Total cash and cash
equivalents 3,476,688 3,981,438 3,365,157
Trading account assets 405,728 376,321 307,012
Securities available for sale:
Securities pledged as
collateral 83,229 89,184 112,974
Held in portfolio 8,573,909 8,667,038 8,742,740
Loans (net of allowance for loan
losses: June 30, 2006,
$328,338; December 31, 2006,
$331,077; June 30, 2007,
$335,952) 34,419,495 36,340,646 37,407,270
Due from customers on
acceptances 21,850 17,834 18,969
Premises and equipment, net 498,555 495,302 488,719
Intangible assets 35,759 28,930 24,444
Goodwill 453,489 453,489 453,489
Other assets 2,787,288 2,148,954 2,253,059
Assets of discontinued
operations to be disposed or
sold 44,146 20,440 -
----------- ------------ ------------
Total assets $50,800,136 $ 52,619,576 $ 53,173,833
=========== ============ ============
Liabilities
Noninterest bearing $18,154,751 $ 17,113,890 $ 14,938,233
Interest bearing 22,389,500 24,855,478 27,152,073
----------- ------------ ------------
Total deposits 40,544,251 41,969,368 42,090,306
Federal funds purchased and
securities sold under
repurchase agreements 281,593 1,083,927 1,281,162
Commercial paper 1,645,107 1,661,163 1,167,437
Other borrowed funds 320,837 432,401 606,896
Acceptances outstanding 21,850 17,834 18,969
Other liabilities 1,876,307 1,545,165 1,531,762
Medium and long-term debt 1,473,924 1,318,847 1,835,495
Junior subordinated debt payable
to subsidiary grantor trust 15,111 14,885 14,659
Liabilities of discontinued
operations to be extinguished
or assumed 12,248 4,585 -
----------- ------------ ------------
Total liabilities 46,191,228 48,048,175 48,546,686
----------- ------------ ------------
Stockholders' Equity
Preferred stock:
Authorized 5,000,000 shares; no
shares issued or outstanding
as of June 30, 2006, December
31, 2006 and June 30, 2007 - - -
Common stock, par value $1 per
share:
Authorized 300,000,000 shares;
issued 155,719,517 shares as
of June 30, 2006, 156,460,057
shares as of December 31, 2006
and 157,060,102 shares as of
June 30, 2007
155,720 156,460 157,060
Additional paid-in capital 1,048,419 1,083,649 1,127,607
Treasury stock - 13,185,723
shares as of June 30, 2006,
17,352,803 shares
as of December 31, 2006 and
18,745,538 shares as of June
30, 2007 (813,571) (1,064,606) (1,151,985)
Retained earnings 4,390,188 4,655,272 4,763,031
Accumulated other comprehensive
loss (171,848) (259,374) (268,566)
----------- ------------ ------------
Total stockholders' equity 4,608,908 4,571,401 4,627,147
----------- ------------ ------------
Total liabilities and
stockholders' equity $50,800,136 $ 52,619,576 $ 53,173,833
=========== ============ ============
UnionBanCal Corporation and Subsidiaries
Loans (Unaudited)
Exhibit 5
Percent Change to
Three Months Ended June 30, 2007 from
-------------------------- -------------------
June 30, March June 30, June 30, March 31,
31,
(Dollars in
millions) 2006 2007 2007 2006 2007
- ----------------------- -------- -------- -------- --------- ---------
Loans (period
average)
Commercial, financial
and industrial $12,955 $14,681 $14,610 12.77% (0.48%)
Construction 1,724 2,233 2,296 33.18 % 2.82%
Mortgage -
Commercial 5,662 6,064 6,213 9.73% 2.46%
Mortgage -
Residential 11,733 12,384 12,591 7.31% 1.67%
Consumer 2,505 2,542 2,557 2.08% 0.59%
Lease
financing 564 548 569 0.89% 3.83%
-------- -------- --------
Total loans held to
maturity $35,143 $38,452 $38,836 10.51% 1.00%
Total loans
held for sale 4 6 4 0.00% (33.33%)
-------- -------- --------
Total loans $35,147 $38,458 $38,840 10.51% 0.99%
======== ======== ========
Nonperforming
Assets (period
end)
Nonaccrual
loans:
Commercial, financial
and industrial $ 4 $ 5 $ 19 nm nm
Mortgage -
Commercial 17 22 10 (41.18%) (54.55%)
Lease
financing 15 15 - (100.00%) (100.00%)
-------- -------- --------
Total
nonaccrual
loans 36 42 29 (19.44%) (30.95%)
Foreclosed
assets - - 1 nm nm
-------- -------- --------
Total
nonperforming
assets $ 36 $ 42 $ 30 (16.67%) (28.57%)
======== ======== ========
Loans 90 days or more
past due and still
accruing $ 3 $ 6 $ 10 nm 66.67%
======== ======== ========
Analysis of Allowances
for Credit Losses
Beginning
balance $ 340 $ 331 $ 333
(Reversal of)
provision for loan
losses (1) 4 5
Loans charged
off:
Commercial, financial
and industrial (18) (3) (3)
Consumer (1) (1) (1)
-------- -------- --------
Total loans
charged off (19) (4) (4)
-------- -------- --------
Loans
recovered:
Commercial, financial
and industrial 9 2 2
-------- -------- --------
Total loans
recovered 9 2 2
-------- -------- --------
Net loans
charged off (10) (2) (2)
-------- -------- --------
Ending balance of
allowance for loan
losses $ 329 $ 333 $ 336
Allowance for off-
balance sheet
commitment losses 79 82 82
-------- -------- --------
Allowances for
credit losses $ 408 $ 415 $ 418
======== ======== ========
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 6
For the Three Months Ended
-------------------------------
June 30, 2006
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- -------------------------------------------------- ------------------
Assets
Loans (11)
Commercial, financial and industrial $12,957,301 $214,068 6.63%
Construction 1,723,868 33,061 7.69
Residential mortgage 11,734,930 149,869 5.11
Commercial mortgage 5,661,541 100,238 7.10
Consumer 2,505,651 47,576 7.62
Lease financing 563,685 3,205 2.27
------------ ---------
Total loans 35,146,976 548,017 6.25
Securities - taxable 8,349,759 102,733 4.92
Securities - tax-exempt 63,222 1,275 8.06
Interest bearing deposits in banks 34,462 423 4.92
Federal funds sold and securities
purchased under resale agreements 379,412 4,725 4.99
Trading account assets 384,763 1,685 1.76
------------ ---------
Total earning assets 44,358,594 658,858 5.95
---------
Allowance for loan losses (334,556)
Cash and due from banks 2,107,846
Premises and equipment, net 506,607
Other assets 2,690,883
------------
Total assets $49,329,374
============
Liabilities
Deposits:
Transaction accounts $12,614,869 65,457 2.08
Savings and consumer time 4,470,764 21,502 1.93
Large time 5,062,473 56,718 4.49
------------ ---------
Total interest bearing deposits 22,148,106 143,677 2.60
------------ ---------
Federal funds purchased and securities
sold under repurchase agreements 748,050 8,902 4.77
Net funding allocated from (to)
discontinued operations (12) (36,123) (447) 4.97
Commercial paper 1,650,266 19,137 4.65
Other borrowed funds 108,095 1,476 5.47
Medium and long-term debt 1,179,432 16,875 5.74
Trust notes 15,167 238 6.28
------------ ---------
Total borrowed funds 3,664,887 46,181 5.05
------------ ---------
Total interest bearing liabilities 25,812,993 189,858 2.95
---------
Noninterest bearing deposits 17,543,946
Other liabilities 1,432,959
------------
Total liabilities 44,789,898
Stockholders' Equity
Common equity 4,539,476
------------
Total stockholders' equity 4,539,476
------------
Total liabilities and stockholders'
equity $49,329,374
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 469,000 4.23%
Less: taxable-equivalent adjustment 1,358
---------
Net interest income $467,642
=========
For the Three Months Ended
------------------------------
June 30, 2007
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ---------------------------------------------------- -----------------
Assets
Loans (11)
Commercial, financial and industrial $14,610,728 $238,175 6.54%
Construction 2,296,098 44,047 7.69
Residential mortgage 12,594,065 167,342 5.31
Commercial mortgage 6,213,092 111,720 7.21
Consumer 2,557,085 49,579 7.78
Lease financing 568,701 7,341 5.16
------------ --------
Total loans 38,839,769 618,204 6.38
Securities - taxable 8,548,063 108,675 5.09
Securities - tax-exempt 56,084 1,164 8.30
Interest bearing deposits in banks 88,592 1,295 5.86
Federal funds sold and securities
purchased under resale agreements 593,718 7,809 5.28
Trading account assets 317,020 1,601 2.03
------------ --------
Total earning assets 48,443,246 738,748 6.11
--------
Allowance for loan losses (331,820)
Cash and due from banks 2,000,691
Premises and equipment, net 486,776
Other assets 2,517,561
------------
Total assets $53,116,454
============
Liabilities
Deposits:
Transaction accounts $14,075,542 102,833 2.93
Savings and consumer time 4,445,326 28,962 2.61
Large time 9,173,928 114,380 5.00
------------ --------
Total interest bearing deposits 27,694,796 246,175 3.57
------------ --------
Federal funds purchased and securities
sold under repurchase agreements 782,000 10,120 5.19
Net funding allocated from (to)
discontinued operations (12) - - -
Commercial paper 1,389,847 17,429 5.03
Other borrowed funds 333,252 4,689 5.64
Medium and long-term debt 2,033,377 28,973 5.72
Trust notes 14,714 238 6.48
------------ --------
Total borrowed funds 4,553,190 61,449 5.41
------------ --------
Total interest bearing liabilities 32,247,986 307,624 3.83
--------
Noninterest bearing deposits 14,989,226
Other liabilities 1,291,181
------------
Total liabilities 48,528,393
Stockholders' Equity
Common equity 4,588,061
------------
Total stockholders' equity 4,588,061
------------
Total liabilities and stockholders'
equity $53,116,454
============
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis) 431,124 3.56%
Less: taxable-equivalent adjustment 2,251
--------
Net interest income $428,873
========
- ----------------------------------------------------------------------
Average Assets and Liabilities of Discontinued Operations for
Period Ended:
June 30,
2006
--------
Assets $79,188
Liabilities $43,065
Net Asset $36,123
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 7
For the Three Months Ended
--------------------------------
March 31, 2007
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ------------------------------------- ------------ -------- ----------
Assets
Loans: (11)
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 (12) - - -
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
========
- --------------------------------------
For the Three Months Ended
------------------------------
June 30, 2007
------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- --------------------------------------------------- -------- ---------
Assets
Loans: (11)
Commercial, financial and industrial $14,610,728 $238,175 6.54%
Construction 2,296,098 44,047 7.69
Residential mortgage 12,594,065 167,342 5.31
Commercial mortgage 6,213,092 111,720 7.21
Consumer 2,557,085 49,579 7.78
Lease financing 568,701 7,341 5.16
------------ --------
Total loans 38,839,769 618,204 6.38
Securities - taxable 8,548,063 108,675 5.09
Securities - tax-exempt 56,084 1,164 8.30
Interest bearing deposits in banks 88,592 1,295 5.86
Federal funds sold and securities
purchased under resale agreements 593,718 7,809 5.28
Trading account assets 317,020 1,601 2.03
------------ --------
Total earning assets 48,443,246 738,748 6.11
--------
Allowance for loan losses (331,820)
Cash and due from banks 2,000,691
Premises and equipment, net 486,776
Other assets 2,517,561
------------
Total assets $53,116,454
============
Liabilities
Deposits:
Transaction accounts $14,075,542 102,833 2.93
Savings and consumer time 4,445,326 28,962 2.61
Large time 9,173,928 114,380 5.00
------------ --------
Total interest bearing deposits 27,694,796 246,175 3.57
------------ --------
Federal funds purchased and securities
sold under repurchase agreements 782,000 10,120 5.19
Net funding allocated from (to)
discontinued operations (12) - - -
Commercial paper 1,389,847 17,429 5.03
Other borrowed funds 333,252 4,689 5.64
Medium and long-term debt 2,033,377 28,973 5.72
Trust notes 14,714 238 6.48
------------ --------
Total borrowed funds 4,553,190 61,449 5.41
------------ --------
Total interest bearing liabilities 32,247,986 307,624 3.83
--------
Noninterest bearing deposits 14,989,226
Other liabilities 1,291,181
------------
Total liabilities 48,528,393
Stockholders' Equity
Common equity 4,588,061
------------
Total stockholders' equity 4,588,061
------------
Total liabilities and stockholders'
equity $53,116,454
============
Reported Net Interest Income/Margin
Net interest income/margin (taxable-
equivalent basis) 431,124 3.56%
Less: taxable-equivalent adjustment 2,251
--------
Net interest income $428,873
========
- ---------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 8
For the Six Months Ended
---------------------------------
June 30, 2006
---------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ---------------------------------- ------------ ----------- --------
Assets
Loans: (11)
Commercial, financial and
industrial $12,666,066 $ 410,020 6.53%
Construction 1,624,123 60,019 7.45
Residential mortgage 11,591,676 293,209 5.06
Commercial mortgage 5,657,018 197,539 7.04
Consumer 2,497,519 92,671 7.48
Lease financing 566,144 7,547 2.67
------------ -----------
Total loans 34,602,546 1,061,005 6.17
Securities - taxable 8,292,126 198,787 4.79
Securities - tax-exempt 64,207 2,572 8.01
Interest bearing deposits in banks 47,084 1,159 4.96
Federal funds sold and securities
purchased under resale agreements 362,471 8,570 4.77
Trading account assets 356,556 3,215 1.82
------------ -----------
Total earning assets 43,724,990 1,275,308 5.86
-----------
Allowance for loan losses (341,568)
Cash and due from banks 2,113,853
Premises and equipment, net 516,748
Other assets 2,662,595
------------
Total assets $48,676,618
============
Liabilities
Deposits:
Transaction accounts $12,936,591 127,815 1.99
Savings and consumer time 4,469,204 39,990 1.80
Large time 4,339,551 91,181 4.24
------------ -----------
Total interest bearing deposits 21,745,346 258,986 2.40
------------ -----------
Federal funds purchased and
securities sold under repurchase
agreements 810,704 18,312 4.55
Net funding allocated from (to)
discontinued operations (12) (46,548) (1,055) 4.57
Commercial paper 1,447,492 31,585 4.40
Other borrowed funds 187,736 4,391 4.72
Medium and long-term debt 990,771 27,272 5.55
Trust notes 15,223 476 6.26
------------ -----------
Total borrowed funds 3,405,378 80,981 4.80
------------ -----------
Total interest bearing liabilities 25,150,724 339,967 2.73
-----------
Noninterest bearing deposits 17,531,006
Other liabilities 1,455,808
------------
Total liabilities 44,137,538
Stockholders' Equity
Common equity 4,539,080
------------
Total stockholders' equity 4,539,080
------------
Total liabilities and
stockholders' equity $48,676,618
============
Reported Net Interest
Income/Margin
Net interest income/margin
(taxable-equivalent basis) 935,341 4.29%
Less: taxable-equivalent
adjustment 2,606
-----------
Net interest income $ 932,735
===========
For the Six Months Ended
--------------------------------
June 30, 2007
--------------------------------
Interest Average
Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate (6)
(10) (10)
- ------------------------------------------------- ---------- ---------
Assets
Loans: (11)
Commercial, financial and industrial $14,647,210 $ 475,453 6.55%
Construction 2,264,789 86,822 7.73
Residential mortgage 12,490,760 331,108 5.30
Commercial mortgage 6,139,042 218,686 7.18
Consumer 2,549,836 98,558 7.79
Lease financing 558,310 11,079 3.97
------------ ----------
Total loans 38,649,947 1,221,706 6.36
Securities - taxable 8,564,100 215,943 5.04
Securities - tax-exempt 56,865 2,318 8.15
Interest bearing deposits in banks 84,102 2,404 5.76
Federal funds sold and securities
purchased under resale agreements 719,183 18,961 5.32
Trading account assets 325,146 3,302 2.05
------------ ----------
Total earning assets 48,399,343 1,464,634 6.08
----------
Allowance for loan losses (331,042)
Cash and due from banks 1,975,104
Premises and equipment, net 489,898
Other assets 2,511,933
------------
Total assets $53,045,236
============
Liabilities
Deposits:
Transaction accounts $13,806,452 194,338 2.84
Savings and consumer time 4,430,376 55,919 2.55
Large time 8,806,573 218,175 5.00
------------ ----------
Total interest bearing deposits 27,043,401 468,432 3.49
------------ ----------
Federal funds purchased and
securities sold under repurchase
agreements 913,489 23,644 5.22
Net funding allocated from (to)
discontinued operations (12) - - -
Commercial paper 1,585,714 39,693 5.05
Other borrowed funds 818,481 21,970 5.41
Medium and long-term debt 1,704,240 48,668 5.76
Trust notes 14,770 476 6.45
------------ ----------
Total borrowed funds 5,036,694 134,451 5.38
------------ ----------
Total interest bearing liabilities 32,080,095 602,883 3.79
----------
Noninterest bearing deposits 15,043,457
Other liabilities 1,372,336
------------
Total liabilities 48,495,888
Stockholders' Equity
Common equity 4,549,348
------------
Total stockholders' equity 4,549,348
------------
Total liabilities and stockholders'
equity $53,045,236
============
Reported Net Interest Income/Margin
Net interest income/margin (taxable-
equivalent basis) 861,751 3.57%
Less: taxable-equivalent adjustment 4,366
----------
Net interest income $ 857,385
==========
- ---------------------------------------------------------------------
Average Assets and Liabilities of Discontinued Operations for Period
Ended:
June 30, 2006
--------------
Assets $347,431
Liabilities $300,883
Net Asset $46,548
- ---------------------------------------------------------------------
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited)
Exhibit 9
Percentage Change
For the Three Months Ended to June 30, 2007
from
--------------------------- ------------------
June 30, March June 30, June March
31, 30, 31,
(Dollars in thousands) 2006 2007 2007 2006 2007
---------------------- --------- -------- -------- ------------------
Service charges on
deposit accounts $81,837 $74,945 $77,218 (5.64)% 3.03 %
Trust and investment
management fees 48,380 48,560 51,585 6.62 6.23
Insurance commissions 17,752 20,250 16,501 (7.05) (18.51)
Brokerage commissions
and fees 10,330 9,660 9,533 (7.72) (1.31)
Foreign exchange
gains, net 8,307 7,594 9,288 11.81 22.31
Merchant banking fees 8,396 9,077 8,809 4.92 (2.95)
Card processing fees,
net 7,206 7,127 7,824 8.58 9.78
Securities gains, net 1,993 1,220 230 (88.46) (81.15)
Gain on private capital
investments, net 3,702 9,095 20,171 nm nm
Other 31,325 35,030 28,686 (8.42) (18.11)
--------- -------- --------
Total noninterest
income $219,228 $222,558 $229,845 4.84 % 3.27 %
========= ======== ========
Noninterest expense (Unaudited)
Percentage Change
to June 30, 2007
For the Three Months Ended from
--------------------------- ------------------
June 30, March June 30, June March
31, 30, 31,
(Dollars in thousands) 2006 2007 2007 2006 2007
---------------------- --------- -------- -------- ------------------
Salaries and other
compensation $201,689 $207,657 $206,110 2.19 % (0.75)%
Employee benefits 46,948 50,858 45,320 (3.47) (10.89)
--------- -------- --------
Salaries and employee
benefits 248,637 258,515 251,430 1.12 (2.74)
Net occupancy 34,519 35,137 35,244 2.10 0.30
Outside services 30,704 19,836 18,851 (38.60) (4.97)
Equipment 16,846 16,554 16,367 (2.84) (1.13)
Software 15,323 14,196 15,136 (1.22) 6.62
Professional services 17,038 17,087 11,970 (29.75) (29.95)
Advertising and public
relations 11,270 8,389 10,476 (7.05) 24.88
Communications 10,061 9,791 8,855 (11.99) (9.56)
Data processing 7,845 8,241 8,626 9.96 4.67
Intangible asset
amortization 3,427 2,243 2,243 (34.55) 0.00
Foreclosed asset
expense (income) (7,782) 9 9 nm 0.00
(Reversal of)
provision for losses
on off-balance sheet
commitments (4,000) 1,000 - 100.00 (100.00)
Other 29,142 31,093 32,658 12.07 5.03
--------- -------- --------
Total noninterest
expense $413,030 $422,091 $411,865 (0.28)% (2.42)%
========= ======== ========
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited)
Exhibit 10
Percentage
Change to
For the Six Months June 30,
Ended 2007 from
--------------------- -----------
June 30, June 30, June 30,
(Dollars in thousands) 2006 2007 2006
---------------------------------- ------------ -------- -----------
Service charges on deposit
accounts $163,472 $152,163 (6.92)%
Trust and investment management
fees 98,495 100,145 1.68
Insurance commissions 37,270 36,751 (1.39)
Brokerage commissions and fees 18,125 19,193 5.89
Merchant banking fees 16,625 17,886 7.59
Foreign exchange gains, net 16,125 16,882 4.69
Card processing fees, net 13,903 14,951 7.54
Securities gains, net 1,779 1,450 (18.49)
Gain on private capital
investments, net 6,529 29,266 nm
Other 64,815 63,716 (1.70)
------------ --------
Total noninterest income $437,138 $452,403 3.49 %
============ ========
Noninterest expense (Unaudited)
Percentage
Change to
For the Six Months June 30,
Ended 2007 from
--------------------- -----------
June 30, June 30, June 30,
(Dollars in thousands) 2006 2007 2006
---------------------------------- ------------ -------- -----------
Salaries and other compensation $395,948 $413,767 4.50 %
Employee benefits 105,184 96,178 (8.56)
------------ --------
Salaries and employee benefits 501,132 509,945 1.76
Net occupancy 67,356 70,381 4.49
Outside services 59,313 38,687 (34.77)
Equipment 34,768 32,921 (5.31)
Software 31,667 29,332 (7.37)
Professional services 31,585 29,057 (8.00)
Advertising and public relations 21,501 18,865 (12.26)
Communications 20,613 18,646 (9.54)
Data processing 15,243 16,867 10.65
Intangible asset amortization 6,857 4,486 (34.58)
Foreclosed asset expense (income) (15,149) 18 nm
(Reversal of) provision for
allowance for losses on off-
balance sheet commitments (7,000) 1,000 nm
Other 59,688 63,751 6.81
------------ --------
Total noninterest expense $827,574 $833,956 0.77 %
============ ========
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) Common shares outstanding reflect common shares issued less
treasury shares. Weighted average common shares outstanding
(basic) excludes nonvested restricted shares but includes the
impact of those shares in the calculation of diluted shares.
(4) End of period total assets and assets used in calculating these
ratios include those of discontinued operations.
(5) Average balances used to calculate our financial ratios are based
on continuing operations data only, unless otherwise indicated.
(6) Annualized.
(7) The efficiency ratio is noninterest expense, excluding foreclosed
asset expense (income) and the (reversal of) provision for
losses on off-balance sheet commitments, as a percentage of net
interest income (taxable-equivalent basis) and noninterest
income, and is calculated for continuing operations only.
(8) Estimated as of June 30, 2007. The regulatory capital and
leverage ratios include discontinued operations.
(9) The allowance for credit losses ratios include the allowances for
loan losses and losses on off-balance sheet commitments. These
ratios relate to continuing operations only.
(10) Yields and interest income are presented on a taxable-equivalent
basis using the federal statutory tax rate of 35 percent.
(11) Average balances on loans outstanding include all nonperforming
loans 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.
(12) Net funding allocated from (to) discontinued operations
represents the shortage (excess) of assets over liabilities of
discontinued operations. The expense (earning) on funds
allocated from (to) discontinued operations is calculated by
taking the net balance and applying an earnings rate or a cost
of funds equivalent to the corresponding period's Federal funds
purchased rate.
nm = not meaningful
CONTACT: UnionBanCal Corporation
John A. Rice, Jr., 415-765-2998 (Investor Relations)
Stephen L. Johnson, 415-765-3252 (Public Relations)
Michelle R. Crandall, 415-765-2780 (Investor Relations)