UnionBanCal Corporation:
Highlights:
- Third quarter net loss was $17 million. Results included after-tax net expenses of $11 million related to the November 2008 privatization of UnionBanCal Corporation.
- Third quarter revenue was up 4 percent year-over-year and up 2 percent compared with second quarter 2009.
- Third quarter net interest income was up 8 percent year-over-year and up 2 percent compared with second quarter 2009.
- Third quarter average total loans increased 3 percent year-over-year and decreased 2 percent versus second quarter 2009.
- Third quarter average core deposits were up 64 percent year-over-year and 9 percent versus second quarter 2009.
- Third quarter net interest margin was 3.31 percent, down 36 basis points year-over-year and down 10 basis points versus second quarter 2009.
- Third quarter annualized average all-in cost of funds was 0.79 percent.
- Third quarter asset quality metrics:
- Total provision for credit losses was $320 million, while net loans charged-off were $136 million, or 1.11 percent annualized of average total loans.
- Net loans charged-off on the $16.4 billion residential mortgage portfolio were $14 million, or 0.34 percent annualized, in third quarter 2009.
- Nonperforming assets were $1.4 billion, or 1.75 percent of total assets, at quarter-end.
- Allowance for credit losses to nonaccrual loans was 108 percent at quarter-end. Allowance for credit losses to total loans was 2.97 percent at quarter-end.
- Total provision for credit losses was 240 percent of net loans charged-off during the first nine months of the year, resulting in an increase to the allowance for credit losses of $565 million.
- Capital:
- Total stockholder's equity was $9.5 billion at September 30, 2009.
- Tangible common equity ratio was 8.94 percent at September 30, 2009, versus 6.56 percent at June 30, 2009.
- Tier 1 common capital ratio was 11.58 percent at September 30, 2009, versus 8.66 percent at June 30, 2009.
- On September 29, 2009, the Company received a $2 billion capital contribution from its sole shareholder, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
UnionBanCal Corporation (the Company or UB) today reported third quarter 2009 net loss of $17 million, compared with net income of $105 million a year earlier, and net loss of $80 million in second quarter 2009. Total provision for credit losses was $320 million in third quarter 2009, compared with $125 million a year earlier, and $375 million in second quarter 2009. Third quarter 2009 net loss included after-tax net expenses of $11 million due to the privatization transaction. Second quarter 2009 net loss included after-tax net expenses of $13 million due to the privatization transaction and a one-time FDIC assessment of $21 million (after-tax). Mitsubishi UFJ Financial Group, Inc. (MUFG), through its wholly-owned subsidiary, The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), completed its acquisition of all of the outstanding shares of the Company's common stock (the “privatization transaction”), on November 4, 2008.
For the first nine months of 2009, net loss was $107 million, compared with net income of $355 million for the first nine months of 2008. Total provision for credit losses was $970 million for the first nine months of 2009, compared with $305 million for the first nine months of 2008. Net loss for the first nine months of 2009 included after-tax net expenses of $46 million due to the privatization transaction and a one-time FDIC assessment of $21 million (after-tax).
Summary of Third Quarter Results
Third Quarter Total Revenue
For third quarter 2009, total revenue (taxable-equivalent net interest income plus noninterest income) was $748 million, up 4 percent compared with third quarter 2008. Net interest income increased 8 percent and noninterest income decreased 7 percent. Third quarter 2009 net interest income included $23 million of accretion related to fair value adjustments due to the privatization transaction. Average total loans increased $1.6 billion, or 3 percent; average interest bearing deposits increased $15.7 billion, or 54 percent; and average noninterest bearing deposits increased $2.1 billion, or 17 percent. The strong growth in total deposits reflects successful deposit-gathering marketing initiatives in both the retail and commercial lines of business, as well as significant increases in money market account deposits from institutional escrow clients. The net interest margin in third quarter 2009 was 3.31 percent, a decrease of 36 basis points compared with third quarter 2008, primarily due to lower yields on earning assets.
Average noninterest bearing deposits represented 24.3 percent of average total deposits in third quarter 2009. The annualized average all-in cost of funds was 0.79 percent, compared with 1.60 percent in third quarter 2008. The Company's average core deposit-to-loan ratio was 106.7 percent in third quarter 2009.
Compared with second quarter 2009, total revenue increased 2 percent, with net interest income up 2 percent and noninterest income flat. Average total loans decreased $0.8 billion, or 2 percent; average interest bearing deposits increased $4.5 billion, or 11 percent; and average noninterest bearing deposits increased $0.6 billion, or 4 percent. The net interest margin decreased 10 basis points compared with second quarter 2009.
Third Quarter Noninterest Income and Noninterest Expense
For third quarter 2009, noninterest income was $184 million, down $15 million, or 7 percent, from the same quarter a year ago, primarily due to lower trust and investment management fees, lower gains on private capital investments, a write down of a loan held for sale recorded in third quarter 2009, and a gain on the sale of real estate recorded in third quarter 2008. These decreases were partially offset by a gain on the sale of U.S. Treasury securities in third quarter 2009.
Noninterest income was flat compared with second quarter 2009. A gain on the sale of U.S. Treasury securities was offset by lower merchant banking fees and lower trading account activities.
Noninterest expense for third quarter 2009 was $506 million, an increase of $62 million, or 14 percent, compared with third quarter 2008. The increase was primarily due to an increase in expenses related to the privatization transaction of $43 million, primarily classified in privatization-related expense and intangible asset amortization expense; and an increase in regulatory agencies expense of $22 million, primarily due to an industry-wide increase in the FDIC assessment rate, effective January 1, 2009. Excluding these two items, noninterest expense was flat.
Noninterest expense for third quarter 2009 decreased $26 million, or 5 percent, compared with second quarter 2009. Regulatory agencies expense decreased $22 million, primarily due to a one-time FDIC assessment of $34 million recorded in second quarter 2009. Expenses associated with the privatization transaction, primarily classified in privatization-related expense and intangible asset amortization expense, were flat. The provision for off-balance sheet losses decreased $9 million, compared with second quarter 2009.
Year-to-Date Results
For the first nine months of 2009, net loss was $107 million, compared with net income of $355 million for the first nine months of 2008. The decline in net income was primarily due to an increase in total provision for credit losses of $404 million after-tax, an increase in net expenses related to the privatization transaction of $39 million after-tax, and an increase in regulatory agencies expense of $52 million after-tax, which included a one-time FDIC assessment of $21 million after-tax.
Total revenue for the first nine months of 2009 was $2.2 billion, an increase of $130 million, or 6 percent, over the first nine months of 2008. Net interest income increased $182 million, or 12 percent, and noninterest income decreased $52 million, or 9 percent. Net interest income for the first nine months of 2009 included $85.6 million of accretion related to fair value adjustments due to the privatization transaction. Noninterest expense increased $293 million, or 23 percent, primarily due to $162 million increase in expense related to the privatization transaction, classified in privatization-related expense and intangible asset amortization expense. In addition, regulatory agencies expense increased $85 million, primarily due to a one-time FDIC assessment of $34 million, recorded in second quarter 2009, and an industry-wide increase in the FDIC assessment rate, effective January 1, 2009. The provision for off-balance sheet losses was $47 million for the first nine months of 2009, compared with $21 million for the first nine months of 2008.
Balance Sheet
At September 30, 2009, the Company had total assets of $78.2 billion, up $15.6 billion, or 25 percent, compared with September 30, 2008. Total loans were $48.2 billion, down $137 million, or 0.3 percent, compared with September 30, 2008. At September 30, 2009, the Company had goodwill and intangibles of $3.0 billion, up $2.6 billion compared with September 30, 2008, due to the privatization transaction, which closed during fourth quarter 2008.
At September 30, 2009, the Company had total liabilities of $68.7 billion, up $10.8 billion, or 19 percent, compared with September 30, 2008. Total deposits were $60.7 billion, up $18.3 billion, or 43 percent. Core deposits at period-end were $52.7 billion, resulting in a core deposit-to-loan ratio of 109 percent.
Credit Quality
Nonperforming assets at September 30, 2009, were $1.4 billion, or 1.75 percent of total assets. This compares with $1.1 billion, or 1.55 percent of total assets, at June 30, 2009, and $304 million, or 0.49 percent of total assets, at September 30, 2008. The increase in nonperforming assets compared with third quarter 2008 was primarily due to higher levels of nonaccrual loans in all categories, reflecting weak economic conditions, and a previously-disclosed change in accounting policy for residential and home equity loans 90 days or more past due, which accounted for $195 million of the increase. The increase in nonperforming assets compared with June 30, 2009, was primarily due to higher levels of nonaccrual loans in the commercial mortgage and construction categories, reflecting weak income property market conditions.
For third quarter 2009, the total provision for credit losses was $320 million, down from $375 million for second quarter 2009. Net loans charged-off were $136 million, or 1.11 percent of average total loans annualized, down from $151 million, or 1.23 percent of average total loans annualized, for second quarter 2009. For third quarter 2008, the total provision for credit losses was $125 million and net loans charged-off were $63 million, or 0.53 percent of average total loans annualized. For the first nine months of 2009, the total provision for credit losses was $970 million and net loans charged-off were $405 million, or 1.10 percent of average total loans annualized.
For the first nine months of 2009, net loans charged-off on the commercial, financial and industrial portfolio were $252 million; net loans charged-off on the construction portfolio were $39 million; net loans charged-off on the commercial mortgage portfolio were $54 million; and net loans charged-off on the consumer portfolio were $31 million. Net loans charged-off on the residential mortgage portfolio, which averaged over $16 billion outstanding in the first nine months of 2009, were only $29 million.
The total provision for credit losses is comprised of the provision for loan losses and the provision for losses on off-balance sheet commitments, which is classified in noninterest expense. In third quarter 2009, the provision for loan losses was $314 million, the provision for losses on off-balance sheet commitments was $6 million, and the total provision for credit losses was $320 million.
At September 30, 2009, the allowance for credit losses as a percent of total loans and as a percent of nonaccrual loans was 2.97 percent and 108 percent, respectively. Since January 1, 2009, the allowance for credit losses has increased from $863 million to $1,433 million, as total provision for credit losses has exceeded net loans charged-off by $565 million during the first nine months of the year.
Capital
Total stockholder's equity was $9.5 billion at September 30, 2009, up $4.8 billion compared with September 30, 2008, primarily due to a $2 billion increase in goodwill related to the privatization transaction, a $1 billion capital contribution from BTMU in fourth quarter 2008, and a $2 billion capital contribution from BTMU in third quarter 2009. The Company's tangible common equity ratio was 8.94 percent at September 30, 2009, compared with 6.56 percent at June 30, 2009. The Tier 1 common capital ratio at September 30, 2009, was 11.58 percent, compared with 8.66 percent at June 30, 2009. The Company's Tier 1 and total risk-based capital ratios at September 30, 2009, were 11.60 percent and 14.42 percent, respectively.
Non-GAAP Financial Measures
This press release contains certain references to financial measures identified as excluding privatization transaction expenses and regulatory agencies expense, which are adjustments from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (GAAP). These financial measures, as used herein, differ from financial measures reported under GAAP in that they exclude unusual or non-recurring charges, losses, credits or gains. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Because these items are unusual and substantial costs, 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. 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.
Headquartered in San Francisco, UnionBanCal Corporation is a financial holding company with assets of $78.2 billion at September 30, 2009. Its primary subsidiary, Union Bank, N.A., is a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies, and major corporations. The bank has 337 banking offices in California, Oregon, Washington and Texas and two international offices. UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG, NYSE:MTU), one of the world's largest financial organizations. Visit www.unionbank.com for more information.
| UnionBanCal Corporation and Subsidiaries | ||||||||||||||||||
| Financial Highlights (Unaudited) | ||||||||||||||||||
Exhibit 1 | ||||||||||||||||||
| As of and for the Three Months Ended | Percent Change to September 30, 2009 from | |||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | June 30, | ||||||||||||||
| (Dollars in thousands) | 2008 | 2009 (1) | 2009 (1) | 2008 | 2009 | |||||||||||||
| Results of operations: | ||||||||||||||||||
| Net interest income (2) | $ | 522,296 | $ | 553,094 | $ | 564,296 | 8.04 | % | 2.03 | % | ||||||||
| Noninterest income | 198,721 | 183,213 | 183,929 | (7.44 | %) | 0.39 | % | |||||||||||
| Total revenue | 721,017 | 736,307 | 748,225 | 3.77 | % | 1.62 | % | |||||||||||
| Noninterest expense | 443,812 | 532,058 | 505,815 | 13.97 | % | (4.93 | %) | |||||||||||
| Provision for loan losses | 117,000 | 360,000 | 314,000 | nm | (12.78 | %) | ||||||||||||
Income (loss) from continuing operations before income taxes (2) | 160,205 | (155,751 | ) | (71,590 | ) | nm | 54.04 | % | ||||||||||
| Taxable-equivalent adjustment | 2,550 | 2,748 | 3,260 | 27.84 | % | 18.63 | % | |||||||||||
| Income tax expense (benefit) | 47,549 | (78,492 | ) | (57,821 | ) | nm | 26.34 | % | ||||||||||
| Income (loss) from continuing operations | 110,106 | (80,007 | ) | (17,029 | ) | nm | 78.72 | % | ||||||||||
| Loss from discontinued operations | (5,276 | ) | - | - | (100.00 | %) | - | |||||||||||
| Net income (loss) | $ | 104,830 | $ | (80,007 | ) | $ | (17,029 | ) | nm | 78.72 | % | |||||||
| Balance sheet (end of period): | ||||||||||||||||||
| Total assets (3) | $ | 62,599,753 | $ | 73,984,788 | $ | 78,153,207 | 24.85 | % | 5.63 | % | ||||||||
| Total loans | 48,306,118 | 48,896,520 | 48,169,508 | (0.28 | %) | (1.49 | %) | |||||||||||
| Nonperforming assets | 304,246 | 1,144,602 | 1,367,691 | nm | 19.49 | % | ||||||||||||
| Total deposits | 42,355,853 | 58,338,959 | 60,691,368 | 43.29 | % | 4.03 | % | |||||||||||
| Medium- and long-term debt | 3,827,164 | 5,131,068 | 5,121,553 | 33.82 | % | (0.19 | %) | |||||||||||
| Stockholder's equity | 4,692,648 | 7,429,500 | 9,475,004 | nm | 27.53 | % | ||||||||||||
| Balance sheet (period average): | ||||||||||||||||||
| Total assets | $ | 61,145,251 | $ | 71,495,226 | $ | 74,352,649 | 21.60 | % | 4.00 | % | ||||||||
| Total loans | 47,196,204 | 49,556,222 | 48,764,826 | 3.32 | % | (1.60 | %) | |||||||||||
| Earning assets | 56,920,548 | 65,008,223 | 68,235,083 | 19.88 | % | 4.96 | % | |||||||||||
| Total deposits | 41,661,224 | 54,352,412 | 59,453,936 | 42.71 | % | 9.39 | % | |||||||||||
| Stockholder's equity | 4,588,441 | 7,303,050 | 7,358,773 | 60.38 | % | 0.76 | % | |||||||||||
| Financial ratios (4): | ||||||||||||||||||
| Return on average assets (5): | ||||||||||||||||||
| From continuing operations | 0.72 | % | (0.45 | %) | (0.09 | %) | ||||||||||||
| Net income (loss) | 0.68 | % | (0.45 | %) | (0.09 | %) | ||||||||||||
| Return on average stockholder's equity (5): | ||||||||||||||||||
| From continuing operations | 9.55 | % | (4.39 | %) | (0.92 | %) | ||||||||||||
| Net income (loss) | 9.09 | % | (4.39 | %) | (0.92 | %) | ||||||||||||
| Efficiency ratio (6) | 58.76 | % | 68.28 | % | 65.07 | % | ||||||||||||
| Net interest margin (2) | 3.67 | % | 3.41 | % | 3.31 | % | ||||||||||||
| Tangible common equity ratio (7) | 6.96 | % | 6.56 | % | 8.94 | % | ||||||||||||
Tier 1 common capital ratio (8) (9) | 8.00 | % | 8.66 | % | 11.58 | % | ||||||||||||
| Tier 1 risk-based capital ratio (3) (9) | 8.02 | % | 8.68 | % | 11.60 | % | ||||||||||||
| Total risk-based capital ratio (3) (9) | 10.94 | % | 11.54 | % | 14.42 | % | ||||||||||||
| Leverage ratio (3) (9) | 7.97 | % | 7.89 | % | 10.40 | % | ||||||||||||
| Allowance for loan losses to: | ||||||||||||||||||
| Total loans | 1.20 | % | 2.21 | % | 2.62 | % | ||||||||||||
| Nonaccrual loans | 200.94 | % | 98.14 | % | 95.15 | % | ||||||||||||
| Allowances for credit losses to (10) : | ||||||||||||||||||
| Total loans | 1.43 | % | 2.55 | % | 2.97 | % | ||||||||||||
| Nonaccrual loans | 239.50 | % | 113.24 | % | 108.16 | % | ||||||||||||
Net loans charged off to average total loans (5) | 0.53 | % | 1.23 | % | 1.11 | % | ||||||||||||
Nonperforming assets to total loans, foreclosed assets and distressed loans held for sale | 0.63 | % | 2.34 | % | 2.84 | % | ||||||||||||
| Nonperforming assets to total assets (3) | 0.49 | % | 1.55 | % | 1.75 | % | ||||||||||||
Selected financial ratios excluding impact of privatization transaction (1) (4) (15): | ||||||||||||||||||
| From continuing operations: | ||||||||||||||||||
| Return on average assets (5) | 0.76 | % | (0.39 | %) | (0.03 | %) | ||||||||||||
| Return on average stockholder's equity (5) | 10.08 | % | (5.48 | %) | (0.45 | %) | ||||||||||||
| Efficiency ratio (6) | 57.90 | % | 63.97 | % | 60.36 | % | ||||||||||||
| Refer to Exhibit 12 for footnote explanations. | ||||||||||||||||||
| UnionBanCal Corporation and Subsidiaries | ||||||||||
| Financial Highlights (Unaudited) | ||||||||||
Exhibit 2 | ||||||||||
| As of and for the Nine Months Ended | Percent Change to September 30, 2009 from | |||||||||
| September 30, | September 30, | September 30, | ||||||||
| (Dollars in thousands, except per share data) | 2008 | 2009 (1) | 2008 | |||||||
| Results of operations: | ||||||||||
| Net interest income (2) | $ | 1,498,287 | $ | 1,680,010 | 12.13% | |||||
| Noninterest income | 593,743 | 541,858 | (8.74%) | |||||||
| Total revenue | 2,092,030 | 2,221,868 | 6.21% | |||||||
| Noninterest expense | 1,266,330 | 1,559,256 | 23.13% | |||||||
| Provision for loan losses | 284,000 | 923,000 | nm | |||||||
Income (loss) from continuing operations before income taxes (2) | 541,700 | (260,388 | ) | nm | ||||||
| Taxable-equivalent adjustment | 7,405 | 8,625 | 16.48% | |||||||
| Income tax expense (benefit) | 167,493 | (162,169 | ) | nm | ||||||
| Income (loss) from continuing operations | 366,802 | (106,844 | ) | nm | ||||||
| Loss from discontinued operations | (12,037 | ) | - | (100.00%) | ||||||
| Net income (loss) | $ | 354,765 | $ | (106,844 | ) | nm | ||||
| Balance sheet (end of period): | ||||||||||
| Total assets (3) | $ | 62,599,753 | $ | 78,153,207 | 24.85% | |||||
| Total loans | 48,306,118 | 48,169,508 | (0.28%) | |||||||
| Nonperforming assets | 304,246 | 1,367,691 | nm | |||||||
| Total deposits | 42,355,853 | 60,691,368 | 43.29% | |||||||
| Medium- and long-term debt | 3,827,164 | 5,121,553 | 33.82% | |||||||
| Stockholder's equity | 4,692,648 | 9,475,004 | nm | |||||||
| Balance sheet (period average): | ||||||||||
| Total assets | $ | 59,023,615 | $ | 71,000,250 | 20.29% | |||||
| Total loans | 45,138,144 | 49,366,280 | 9.37% | |||||||
| Earning assets | 54,689,402 | 64,593,827 | 18.11% | |||||||
| Total deposits | 42,821,802 | 53,526,802 | 25.00% | |||||||
| Stockholder's equity | 4,640,908 | 7,332,747 | 58.00% | |||||||
| Financial ratios (4): | ||||||||||
| Return on average assets (5): | ||||||||||
| From continuing operations | 0.83 | % | (0.20 | %) | ||||||
| Net income (loss) | 0.80 | % | (0.20 | %) | ||||||
| Return on average stockholder's equity (5): | ||||||||||
| From continuing operations | 10.56 | % | (1.95 | %) | ||||||
| Net income (loss) | 10.21 | % | (1.95 | %) | ||||||
| Efficiency ratio (6) | 58.10 | % | 66.34 | % | ||||||
| Net interest margin (2) | 3.65 | % | 3.47 | % | ||||||
| Tangible common capital ratio (7) | 6.96 | % | 8.94 | % | ||||||
Tier 1 common capital ratio (8) (9) | 8.00 | % | 11.58 | % | ||||||
| Tier 1 risk-based capital ratio (3) (9) | 8.02 | % | 11.60 | % | ||||||
| Total risk-based capital ratio (3) (9) | 10.94 | % | 14.42 | % | ||||||
| Leverage ratio (3) (9) | 7.97 | % | 10.40 | % | ||||||
| Allowance for loan losses to: | ||||||||||
| Total loans | 1.20 | % | 2.62 | % | ||||||
| Nonaccrual loans | 200.94 | % | 95.15 | % | ||||||
Allowances for credit losses to (10): | ||||||||||
| Total loans | 1.43 | % | 2.97 | % | ||||||
| Nonaccrual loans | 239.50 | % | 108.16 | % | ||||||
Net loans charged off to average total loans (5) | 0.31 | % | 1.10 | % | ||||||
Nonperforming assets to total loans, foreclosed assets and distressed loans held for sale | 0.63 | % | 2.84 | % | ||||||
| Nonperforming assets to total assets (3) | 0.49 | % | 1.75 | % | ||||||
Selected financial ratios excluding impact of privatization transaction (1) (4) (15): | ||||||||||
| From continuing operations: | ||||||||||
| Return on average assets (5) | 0.84 | % | (0.12 | %) | ||||||
| Return on average stockholder's equity (5) | 10.74 | % | (1.67 | %) | ||||||
| Efficiency ratio (6) | 57.80 | % | 61.14 | % | ||||||
| Refer to Exhibit 12 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 Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
| (Amounts in thousands) | 2008 | 2009 (1) | 2009 (1) | 2008 | 2009 (1) | |||||||||||||||
| Interest Income (2) | ||||||||||||||||||||
| Loans | $ | 638,862 | $ | 586,890 | $ | 578,514 | $ | 1,889,732 | $ | 1,769,471 | ||||||||||
| Securities | 100,659 | 98,754 | 110,170 | 305,042 | 312,205 | |||||||||||||||
| Interest bearing deposits in banks | 147 | 3,550 | 4,956 | 503 | 9,406 | |||||||||||||||
| Federal funds sold and securities purchased under resale agreements | 1,787 | 97 | 110 | 5,573 | 348 | |||||||||||||||
| Trading account assets | 1,364 | 231 | 271 | 5,287 | 660 | |||||||||||||||
| Total interest income | 742,819 | 689,522 | 694,021 | 2,206,137 | 2,092,090 | |||||||||||||||
| Interest Expense | ||||||||||||||||||||
| Deposits | 135,736 | 100,186 | 101,374 | 500,905 | 306,598 | |||||||||||||||
| Federal funds purchased and securities sold under repurchase agreements | 15,630 | 19 | 41 | 44,402 | 113 | |||||||||||||||
| Commercial paper | 8,056 | 954 | 355 | 26,127 | 2,901 | |||||||||||||||
| Medium- and long-term debt | 25,989 | 29,415 | 27,112 | 65,138 | 84,056 | |||||||||||||||
| Trust notes | 239 | 238 | 239 | 715 | 715 | |||||||||||||||
| Other borrowed funds | 34,873 | 5,616 | 604 | 70,563 | 17,697 | |||||||||||||||
| Total interest expense | 220,523 | 136,428 | 129,725 | 707,850 | 412,080 | |||||||||||||||
| Net Interest Income (2) | 522,296 | 553,094 | 564,296 | 1,498,287 | 1,680,010 | |||||||||||||||
| Provision for loan losses | 117,000 | 360,000 | 314,000 | 284,000 | 923,000 | |||||||||||||||
| Net interest income after provision for loan losses | 405,296 | 193,094 | 250,296 | 1,214,287 | 757,010 | |||||||||||||||
| Noninterest Income | ||||||||||||||||||||
| Service charges on deposit accounts | 77,079 | 71,843 | 74,888 | 229,521 | 218,053 | |||||||||||||||
| Trust and investment management fees | 40,638 | 34,130 | 34,506 | 127,828 | 102,543 | |||||||||||||||
| Trading account activities | 12,397 | 16,251 | 10,513 | 40,096 | 49,456 | |||||||||||||||
| Merchant banking fees | 12,789 | 19,924 | 14,601 | 35,667 | 48,357 | |||||||||||||||
| Brokerage commissions and fees | 9,520 | 8,506 | 8,611 | 30,014 | 25,424 | |||||||||||||||
| Card processing fees, net | 8,129 | 8,124 | 8,559 | 24,060 | 24,219 | |||||||||||||||
| Securities gains (losses), net | 50 | (172 | ) | 12,694 | 48 | 12,522 | ||||||||||||||
| Other | 38,119 | 24,607 | 19,557 | 106,509 | 61,284 | |||||||||||||||
| Total noninterest income | 198,721 | 183,213 | 183,929 | 593,743 | 541,858 | |||||||||||||||
| Noninterest Expense | ||||||||||||||||||||
| Salaries and employee benefits | 238,129 | 233,057 | 233,981 | 723,098 | 710,601 | |||||||||||||||
| Net occupancy | 38,574 | 43,222 | 43,146 | 113,008 | 128,289 | |||||||||||||||
| Intangible asset amortization | 671 | 40,281 | 40,641 | 2,011 | 121,809 | |||||||||||||||
| Regulatory agencies | 8,572 | 52,836 | 30,739 | 16,078 | 101,513 | |||||||||||||||
| Outside services | 20,741 | 22,948 | 22,219 | 58,045 | 64,001 | |||||||||||||||
| Professional services | 17,236 | 19,489 | 17,647 | 47,764 | 53,074 | |||||||||||||||
| Equipment | 14,437 | 16,602 | 17,838 | 44,925 | 49,853 | |||||||||||||||
| Software | 14,812 | 14,205 | 16,502 | 44,016 | 45,745 | |||||||||||||||
| Foreclosed asset expense (income) | 524 | 3,282 | (144 | ) | 696 | 4,024 | ||||||||||||||
| Provision for losses on off-balance sheet commitments | 8,000 | 15,000 | 6,000 | 21,000 | 47,000 | |||||||||||||||
| Privatization-related expense | 6,193 | 7,433 | 6,649 | 6,193 | 40,901 | |||||||||||||||
| Other | 75,923 | 63,703 | 70,597 | 189,496 | 192,446 | |||||||||||||||
| Total noninterest expense | 443,812 | 532,058 | 505,815 | 1,266,330 | 1,559,256 | |||||||||||||||
| Income (loss) from continuing operations before income taxes (2) | 160,205 | (155,751 | ) | (71,590 | ) | 541,700 | (260,388 | ) | ||||||||||||
| Taxable-equivalent adjustment | 2,550 | 2,748 | 3,260 | 7,405 | 8,625 | |||||||||||||||
| Income tax expense (benefit) | 47,549 | (78,492 | ) | (57,821 | ) | 167,493 | (162,169 | ) | ||||||||||||
| Income (Loss) from Continuing Operations | 110,106 | (80,007 | ) | (17,029 | ) | 366,802 | (106,844 | ) | ||||||||||||
| Loss from discontinued operations before income taxes | (8,175 | ) | - | - | (22,692 | ) | - | |||||||||||||
| Income tax benefit | (2,899 | ) | - | - | (10,655 | ) | - | |||||||||||||
| Loss from Discontinued Operations | (5,276 | ) | - | - | (12,037 | ) | - | |||||||||||||
| Net Income (Loss) | $ | 104,830 | $ | (80,007 | ) | $ | (17,029 | ) | $ | 354,765 | $ | (106,844 | ) | |||||||
| Refer to Exhibit 12 for footnote explanations. | ||||||||||||||||||||
UnionBanCal Corporation and Subsidiaries | ||||||||||||
Consolidated Balance Sheets | ||||||||||||
Exhibit 4 | ||||||||||||
| (Unaudited) September 30, | December 31, | (Unaudited) September 30, | ||||||||||
| (Dollars in thousands) | 2008 | 2008 (1) | 2009 (1) | |||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 1,959,484 | $ | 1,568,578 | $ | 1,155,497 | ||||||
| Interest bearing deposits in banks | 16,029 | 2,872,698 | 2,659,460 | |||||||||
| Federal funds sold and securities purchased under resale agreements | 488,014 | 63,069 | 437,328 | |||||||||
| Total cash and cash equivalents | 2,463,527 | 4,504,345 | 4,252,285 | |||||||||
| Trading account assets: | ||||||||||||
| Pledged as collateral | 18,124 | 6,283 | 60,816 | |||||||||
| Held in portfolio | 711,293 | 1,210,496 | 879,734 | |||||||||
| Securities available for sale: | ||||||||||||
| Pledged as collateral | 1,404,463 | 54,525 | - | |||||||||
| Held in portfolio | 6,890,891 | 8,140,013 | 18,210,574 | |||||||||
| Securities held to maturity (Fair value: September 30, 2009, $1,269,934) | - | - | 1,193,337 | |||||||||
Loans (net of allowance for loan losses: September 30, 2008, $580,474; December 31, 2008, $737,767; September 30, 2009, $1,260,307) | 47,725,644 | 48,847,783 | 46,909,201 | |||||||||
| Due from customers on acceptances | 21,562 | 23,131 | 12,842 | |||||||||
| Premises and equipment, net | 474,519 | 680,004 | 667,005 | |||||||||
| Intangible assets, net | 4,447 | 713,485 | 601,140 | |||||||||
| Goodwill | 355,287 | 2,369,326 | 2,369,326 | |||||||||
| Other assets | 2,524,839 | 3,571,995 | 2,996,947 | |||||||||
| Assets of discontinued operations to be disposed or sold | 5,157 | 4 | - | |||||||||
| Total assets | $ | 62,599,753 | $ | 70,121,390 | $ | 78,153,207 | ||||||
| Liabilities | ||||||||||||
| Noninterest bearing | $ | 13,694,272 | $ | 13,566,873 | $ | 14,472,375 | ||||||
| Interest bearing | 28,661,581 | 32,482,896 | 46,218,993 | |||||||||
| Total deposits | 42,355,853 | 46,049,769 | 60,691,368 | |||||||||
| Federal funds purchased and securities sold under repurchase agreements | 1,760,442 | 172,758 | 229,268 | |||||||||
| Commercial paper | 1,659,935 | 1,164,327 | 423,499 | |||||||||
| Other borrowed funds | 6,718,935 | 8,196,597 | 164,861 | |||||||||
| Trading account liabilities | 506,890 | 1,034,663 | 715,075 | |||||||||
| Acceptances outstanding | 21,562 | 23,131 | 12,842 | |||||||||
| Other liabilities | 1,020,085 | 1,685,412 | 1,306,097 | |||||||||
| Medium- and long-term debt | 3,827,164 | 4,288,488 | 5,121,553 | |||||||||
| Junior subordinated debt payable to subsidiary grantor trust | 14,093 | 13,980 | 13,640 | |||||||||
| Liabilities of discontinued operations to be extinguished or assumed | 22,146 | 7,960 | - | |||||||||
| Total liabilities | 57,907,105 | 62,637,085 | 68,678,203 | |||||||||
| Stockholder's Equity | ||||||||||||
| Preferred stock: | ||||||||||||
Authorized 5,000,000 shares; no shares issued or outstanding as of September 30, 2008, December 31, 2007 and September 30, 2009 | - | - | - | |||||||||
| Common stock, par value $1 per share: | ||||||||||||
Authorized 300,000,000 shares; issued 159,834,897 shares as of September 30, 2008, 136,330,829 shares as of December 31, 2008 and September 30, 2009 | 159,835 | 136,331 | 136,331 | |||||||||
| Additional paid-in capital | 1,299,045 | 3,195,023 | 5,195,023 | |||||||||
Treasury stock - 18,748,501 shares as of September 30, 2008, no shares as of December 31, 2008 and September 30, 2009 | (1,204,759 | ) | - | - | ||||||||
| Retained earnings | 5,050,682 | 4,964,802 | 4,857,958 | |||||||||
| Accumulated other comprehensive loss | (612,155 | ) | (811,851 | ) | (714,308 | ) | ||||||
| Total stockholder's equity | 4,692,648 | 7,484,305 | 9,475,004 | |||||||||
| Total liabilities and stockholder's equity | $ | 62,599,753 | $ | 70,121,390 | $ | 78,153,207 | ||||||
| Refer to Exhibit 12 for footnote explanations. | ||||||||||||
| UnionBanCal Corporation and Subsidiaries | ||||||||||||||||
| Loans and Allowance for Credit Losses (Unaudited) | ||||||||||||||||
Exhibit 5 | ||||||||||||||||
| Three Months Ended | Percent Change to September 30, 2009 from | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | June 30, | ||||||||||||
| (Dollars in millions) | 2008 | 2009 (1) | 2009 (1) | 2008 | 2009 | |||||||||||
| Loans (period average) | ||||||||||||||||
| Commercial, financial and industrial | $ | 17,153 | $ | 17,917 | $ | 16,804 | (2.04%) | (6.21%) | ||||||||
| Construction | 2,613 | 2,789 | 2,773 | 6.12% | (0.58%) | |||||||||||
| Mortgage - Commercial | 8,009 | 8,255 | 8,261 | 3.15% | 0.07% | |||||||||||
| Mortgage - Residential | 15,281 | 16,083 | 16,372 | 7.14% | 1.80% | |||||||||||
| Consumer | 3,421 | 3,841 | 3,883 | 13.50% | 1.09% | |||||||||||
| Lease financing | 639 | 661 | 662 | 3.67% | 0.22% | |||||||||||
| Total loans held to maturity | 47,116 | 49,546 | 48,755 | 3.48% | (1.60%) | |||||||||||
| Total loans held for sale | 80 | 10 | 10 | (87.68%) | - | |||||||||||
| Total loans | $ | 47,196 | $ | 49,556 | $ | 48,765 | 3.32% | (1.60%) | ||||||||
| Nonperforming Assets (period end) | ||||||||||||||||
| Nonaccrual loans: | ||||||||||||||||
| Commercial, financial and industrial | $ | 162 | $ | 370 | $ | 380 | nm | 2.70% | ||||||||
| Construction | 93 | 314 | 388 | nm | 23.57% | |||||||||||
| Mortgage - Commercial | 34 | 265 | 355 | nm | 33.96% | |||||||||||
| Mortgage - Residential (11) | - | 133 | 165 | nm | 24.06% | |||||||||||
| Consumer (11) | - | 20 | 21 | nm | 5.00% | |||||||||||
| Restructured - nonaccrual (11) | - | - | 16 | nm | nm | |||||||||||
| Total nonaccrual loans | 289 | 1,102 | 1,325 | nm | 20.24% | |||||||||||
| Restructured loans - nonperforming | 1 | 10 | - | (100.00%) | (100.00%) | |||||||||||
| Distressed loans held for sale | - | - | 9 | nm | nm | |||||||||||
| Foreclosed assets | 14 | 33 | 34 | nm | 3.03% | |||||||||||
| Total nonperforming assets | $ | 304 | $ | 1,145 | $ | 1,368 | nm | 19.48% | ||||||||
Loans 90 days or more past due and still accruing | $ | 50 | $ | 4 | $ | 5 | (90.00%) | 25.00% | ||||||||
| Restructured loans that are still accruing | $ | - | $ | 1 | $ | 2 | nm | 100.00% | ||||||||
| Analysis of Allowances for Credit Losses | ||||||||||||||||
| Beginning balance | $ | 527 | $ | 870 | $ | 1,082 | ||||||||||
| Provision for loan losses | 117 | 360 | 314 | |||||||||||||
| Loans charged off: | ||||||||||||||||
| Commercial, financial and industrial | (42 | ) | (86 | ) | (78 | ) | ||||||||||
| Construction | (16 | ) | (23 | ) | (14 | ) | ||||||||||
| Mortgage - Commercial | - | (23 | ) | (26 | ) | |||||||||||
| Mortgage - Residential | (3 | ) | (9 | ) | (14 | ) | ||||||||||
| Consumer | (4 | ) | (12 | ) | (11 | ) | ||||||||||
| Total loans charged off | (65 | ) | (153 | ) | (143 | ) | ||||||||||
| Loans recovered: | ||||||||||||||||
| Commercial, financial and industrial | 2 | 1 | 6 | |||||||||||||
| Consumer | - | 1 | 1 | |||||||||||||
| Total loans recovered | 2 | 2 | 7 | |||||||||||||
| Net loans recovered (charged off) | (63 | ) | (151 | ) | (136 | ) | ||||||||||
| Adjustment for impaired loans related to privatization | - | 2 | - | |||||||||||||
| Foreign translation adjustment | - | 1 | 1 | |||||||||||||
| Ending balance of allowance for loan losses | 581 | 1,082 | 1,261 | |||||||||||||
| Allowance for off-balance sheet | ||||||||||||||||
| commitment losses | 111 | 166 | 172 | |||||||||||||
| $ | - | |||||||||||||||
| Allowances for credit losses | $ | 692 | $ | 1,248 | $ | 1,433 | ||||||||||
| Refer to Exhibit 12 for footnote explanations. | ||||||||||||||||
| UnionBanCal Corporation and Subsidiaries | |||||||||||||||||||||
| Net Interest Income (Unaudited) | |||||||||||||||||||||
Exhibit 6 | |||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||
| September 30, 2008 | September 30, 2009 (1) | ||||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest Income/ Expense (2) | Average Yield/ Rate (2)(5) | Average Balance | Interest Income/ Expense (2) | Average Yield/ Rate (2)(5) | |||||||||||||||
| Assets | |||||||||||||||||||||
| Loans: (12) | |||||||||||||||||||||
| Commercial, financial and industrial | $ | 17,262,407 | $ | 229,377 | 5.29 | % | $ | 16,805,449 | $ | 188,974 | 4.46 | % | |||||||||
| Construction | 2,579,582 | 30,352 | 4.68 | 2,772,804 | 20,828 | 2.98 | |||||||||||||||
| Mortgage - Residential | 15,285,171 | 211,965 | 5.55 | 16,380,014 | 230,210 | 5.62 | |||||||||||||||
| Mortgage - Commercial | 8,008,618 | 111,816 | 5.58 | 8,261,161 | 88,998 | 4.31 | |||||||||||||||
| Consumer | 3,421,338 | 49,286 | 5.73 | 3,882,929 | 44,042 | 4.50 | |||||||||||||||
| Lease financing | 639,088 | 6,066 | 3.80 | 662,469 | 5,462 | 3.30 | |||||||||||||||
| Total loans | 47,196,204 | 638,862 | 5.40 | 48,764,826 | 578,514 | 4.73 | |||||||||||||||
| Securities - taxable | 8,348,785 | 99,614 | 4.77 | 10,590,200 | 107,171 | 4.05 | |||||||||||||||
| Securities - tax-exempt | 51,831 | 1,045 | 8.06 | 184,772 | 2,999 | 6.49 | |||||||||||||||
| Interest bearing deposits in banks | 13,642 | 147 | 4.27 | 7,496,380 | 4,956 | 0.26 | |||||||||||||||
Federal funds sold and securities purchased under resale agreements | 361,361 | 1,787 | 1.97 | 282,457 | 110 | 0.15 | |||||||||||||||
| Trading account assets | 948,725 | 1,364 | 0.57 | 916,448 | 271 | 0.12 | |||||||||||||||
| Total earning assets | 56,920,548 | 742,819 | 5.21 | 68,235,083 | 694,021 | 4.06 | |||||||||||||||
| Allowance for loan losses | (506,452 | ) | (1,044,533 | ) | |||||||||||||||||
| Cash and due from banks | 1,606,632 | 1,135,794 | |||||||||||||||||||
| Premises and equipment, net | 475,408 | 668,699 | |||||||||||||||||||
| Other assets | 2,649,115 | 5,357,606 | |||||||||||||||||||
| Total assets | $ | 61,145,251 | $ | 74,352,649 | |||||||||||||||||
| Liabilities | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Transaction accounts | $ | 15,552,783 | 61,636 | 1.58 | $ | 33,064,944 | 72,837 | 0.87 | |||||||||||||
| Savings and consumer time | 3,899,687 | 13,237 | 1.35 | 4,486,545 | 12,572 | 1.11 | |||||||||||||||
| Large time | 9,847,584 | 60,863 | 2.46 | 7,430,960 | 15,965 | 0.85 | |||||||||||||||
| Total interest bearing deposits | 29,300,054 | 135,736 | 1.84 | 44,982,449 | 101,374 | 0.89 | |||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | 3,496,184 | 15,365 | 1.75 | 169,267 | 41 | 0.09 | |||||||||||||||
Net funding allocated from (to) discontinued operations (13) | 55,121 | 265 | 1.91 | - | - | - | |||||||||||||||
| Commercial paper | 1,432,207 | 8,056 | 2.24 | 472,246 | 355 | 0.30 | |||||||||||||||
| Other borrowed funds (14) | 4,886,263 | 34,873 | 2.84 | 262,441 | 604 | 0.91 | |||||||||||||||
| Medium- and long-term debt | 3,300,675 | 25,989 | 3.13 | 5,098,821 | 27,112 | 2.11 | |||||||||||||||
| Trust notes | 14,148 | 239 | 6.73 | 13,696 | 239 | 6.96 | |||||||||||||||
| Total borrowed funds | 13,184,598 | 84,787 | 2.56 | 6,016,471 | 28,351 | 1.87 | |||||||||||||||
| Total interest bearing liabilities | 42,484,652 | 220,523 | 2.06 | 50,998,920 | 129,725 | 1.01 | |||||||||||||||
| Noninterest bearing deposits | 12,361,170 | 14,471,487 | |||||||||||||||||||
| Other liabilities | 1,710,988 | 1,523,469 | |||||||||||||||||||
| Total liabilities | 56,556,810 | 66,993,876 | |||||||||||||||||||
| Stockholder's Equity | |||||||||||||||||||||
| Common equity | 4,588,441 | 7,358,773 | |||||||||||||||||||
| Total stockholder's equity | 4,588,441 | 7,358,773 | |||||||||||||||||||
Total liabilities and stockholder's equity | $ | 61,145,251 | $ | 74,352,649 | |||||||||||||||||
| Reported Net Interest Income/Margin | |||||||||||||||||||||
Net interest income/margin (taxable-equivalent basis) | 522,296 | 3.67 | % | 564,296 | 3.31 | % | |||||||||||||||
| Less: taxable-equivalent adjustment | 2,550 | 3,260 | |||||||||||||||||||
| Net interest income | $ | 519,746 | $ | 561,036 | |||||||||||||||||
| Average Assets and Liabilities of Discontinued Operations for Period Ended: | |||||||||||||||||||||
| September 30, 2008 | September 30, 2009 | ||||||||||||||||||||
| Assets | $ | 5,738 | $ | - | |||||||||||||||||
| Liabilities | $ | 60,859 | $ | - | |||||||||||||||||
| Net Liabilities | $ | (55,121 | ) | $ | - | ||||||||||||||||
| Refer to Exhibit 12 for footnote explanations. | |||||||||||||||||||||
| UnionBanCal Corporation and Subsidiaries | ||||||||||||||||||||
| Net Interest Income (Unaudited) | ||||||||||||||||||||
Exhibit 7 | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| June 30, 2009 (1) | September 30, 2009 (1) | |||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest Income/ Expense (2) | Average Yield/ Rate (2)(5) | Average Balance | Interest Income/ Expense (2) | Average Yield/ Rate (2)(5) | ||||||||||||||
| Assets | ||||||||||||||||||||
| Loans: (12) | ||||||||||||||||||||
| Commercial, financial and industrial | $ | 17,920,408 | $ | 194,560 | 4.35 | % | $ | 16,805,449 | $ | 188,974 | 4.46 | % | ||||||||
| Construction | 2,788,671 | 20,658 | 2.97 | 2,772,804 | 20,828 | 2.98 | ||||||||||||||
| Mortgage - Residential | 16,089,739 | 230,269 | 5.72 | 16,380,014 | 230,210 | 5.62 | ||||||||||||||
| Mortgage - Commercial | 8,254,595 | 91,689 | 4.44 | 8,261,161 | 88,998 | 4.31 | ||||||||||||||
| Consumer | 3,841,202 | 44,116 | 4.61 | 3,882,929 | 44,042 | 4.50 | ||||||||||||||
| Lease financing | 661,607 | 5,598 | 3.38 | 662,469 | 5,462 | 3.30 | ||||||||||||||
| Total loans | 49,556,222 | 586,890 | 4.74 | 48,764,826 | 578,514 | 4.73 | ||||||||||||||
| Securities - taxable | 8,564,355 | 97,738 | 4.56 | 10,590,200 | 107,171 | 4.05 | ||||||||||||||
| Securities - tax-exempt | 48,176 | 1,016 | 8.44 | 184,772 | 2,999 | 6.49 | ||||||||||||||
| Interest bearing deposits in banks | 5,594,318 | 3,550 | 0.25 | 7,496,380 | 4,956 | 0.26 | ||||||||||||||
Federal funds sold and securities purchased under resale agreements | 203,529 | 97 | 0.19 | 282,457 | 110 | 0.15 | ||||||||||||||
| Trading account assets | 1,041,623 | 231 | 0.09 | 916,448 | 271 | 0.12 | ||||||||||||||
| Total earning assets | 65,008,223 | 689,522 | 4.25 | 68,235,083 | 694,021 | 4.06 | ||||||||||||||
| Allowance for loan losses | (839,115 | ) | (1,044,533 | ) | ||||||||||||||||
| Cash and due from banks | 1,285,449 | 1,135,794 | ||||||||||||||||||
| Premises and equipment, net | 669,993 | 668,699 | ||||||||||||||||||
| Other assets | 5,370,676 | 5,357,606 | ||||||||||||||||||
| Total assets | $ | 71,495,226 | $ | 74,352,649 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Transaction accounts | $ | 29,514,913 | 66,549 | 0.90 | $ | 33,064,944 | 72,837 | 0.87 | ||||||||||||
| Savings and consumer time | 4,328,326 | 13,546 | 1.26 | 4,486,545 | 12,572 | 1.11 | ||||||||||||||
| Large time | 6,604,845 | 20,091 | 1.22 | 7,430,960 | 15,965 | 0.85 | ||||||||||||||
| Total interest bearing deposits | 40,448,084 | 100,186 | 0.99 | 44,982,449 | 101,374 | 0.89 | ||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | 163,381 | 19 | 0.05 | 169,267 | 41 | 0.09 | ||||||||||||||
| Commercial paper | 569,337 | 954 | 0.67 | 472,246 | 355 | 0.30 | ||||||||||||||
| Other borrowed funds (14) | 2,124,419 | 5,616 | 1.06 | 262,441 | 604 | 0.91 | ||||||||||||||
| Medium- and long-term debt | 5,137,901 | 29,415 | 2.30 | 5,098,821 | 27,112 | 2.11 | ||||||||||||||
| Trust notes | 13,809 | 238 | 6.90 | 13,696 | 239 | 6.96 | ||||||||||||||
| Total borrowed funds | 8,008,847 | 36,242 | 1.82 | 6,016,471 | 28,351 | 1.87 | ||||||||||||||
| Total interest bearing liabilities | 48,456,931 | 136,428 | 1.13 | 50,998,920 | 129,725 | 1.01 | ||||||||||||||
| Noninterest bearing deposits | 13,904,328 | 14,471,487 | ||||||||||||||||||
| Other liabilities | 1,830,917 | 1,523,469 | ||||||||||||||||||
| Total liabilities | 64,192,176 | 66,993,876 | ||||||||||||||||||
| Stockholder's Equity | ||||||||||||||||||||
| Common equity | 7,303,050 | 7,358,773 | ||||||||||||||||||
| Total stockholder's equity | 7,303,050 | 7,358,773 | ||||||||||||||||||
Total liabilities and stockholder's equity | $ | 71,495,226 | $ | 74,352,649 | ||||||||||||||||
| Reported Net Interest Income/Margin | ||||||||||||||||||||
Net interest income/margin (taxable-equivalent basis) | 553,094 | 3.41 | % | 564,296 | 3.31 | % | ||||||||||||||
| Less: taxable-equivalent adjustment | 2,748 | 3,260 | ||||||||||||||||||
| Net interest income | $ | 550,346 | $ | 561,036 | ||||||||||||||||
| Refer to Exhibit 12 for footnote explanations. | ||||||||||||||||||||
| UnionBanCal Corporation and Subsidiaries | |||||||||||||||||||||
| Net Interest Income (Unaudited) | |||||||||||||||||||||
Exhibit 8 | |||||||||||||||||||||
| For the Nine Months Ended | |||||||||||||||||||||
| September 30, 2008 | September 30, 2009 (1) | ||||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest Income/ Expense (2) | Average Yield/ Rate (2)(5) | Average Balance | Interest Income/ Expense (2) | Average Yield/ Rate (2)(5) | |||||||||||||||
| Assets | |||||||||||||||||||||
| Loans: (12) | |||||||||||||||||||||
| Commercial, financial and industrial | $ | 16,623,490 | $ | 697,292 | 5.60 | % | $ | 17,737,052 | $ | 577,321 | 4.35 | % | |||||||||
| Construction | 2,551,348 | 97,763 | 5.12 | 2,765,178 | 60,747 | 2.94 | |||||||||||||||
| Residential mortgage | 14,593,755 | 604,506 | 5.52 | 16,132,655 | 694,917 | 5.74 | |||||||||||||||
| Commercial mortgage | 7,694,956 | 336,508 | 5.83 | 8,256,389 | 283,076 | 4.57 | |||||||||||||||
| Consumer | 3,030,042 | 140,129 | 6.18 | 3,816,050 | 134,697 | 4.72 | |||||||||||||||
| Lease financing | 644,553 | 13,534 | 2.80 | 658,956 | 18,713 | 3.79 | |||||||||||||||
| Total loans | 45,138,144 | 1,889,732 | 5.59 | 49,366,280 | 1,769,471 | 4.78 | |||||||||||||||
| Securities - taxable | 8,332,647 | 301,810 | 4.83 | 9,166,395 | 307,165 | 4.47 | |||||||||||||||
| Securities - tax-exempt | 52,641 | 3,232 | 8.19 | 94,947 | 5,040 | 7.08 | |||||||||||||||
| Interest bearing deposits in banks | 36,936 | 503 | 1.82 | 4,664,896 | 9,406 | 0.27 | |||||||||||||||
Federal funds sold and securities purchased under resale agreements | 301,153 | 5,573 | 2.47 | 227,832 | 348 | 0.20 | |||||||||||||||
| Trading account assets | 827,881 | 5,287 | 0.85 | 1,073,477 | 660 | 0.08 | |||||||||||||||
| Total earning assets | 54,689,402 | 2,206,137 | 5.38 | 64,593,827 | 2,092,090 | 4.32 | |||||||||||||||
| Allowance for loan losses | (454,191 | ) | (865,208 | ) | |||||||||||||||||
| Cash and due from banks | 1,675,293 | 1,244,981 | |||||||||||||||||||
| Premises and equipment, net | 480,705 | 670,884 | |||||||||||||||||||
| Other assets | 2,632,406 | 5,355,766 | |||||||||||||||||||
| Total assets | $ | 59,023,615 | $ | 71,000,250 | |||||||||||||||||
| Liabilities | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||
| Transaction accounts | $ | 15,323,611 | 204,064 | 1.78 | $ | 28,397,683 | 200,483 | 0.94 | |||||||||||||
| Savings and consumer time | 3,974,976 | 50,684 | 1.70 | 4,394,706 | 42,057 | 1.28 | |||||||||||||||
| Large time | 10,909,525 | 246,157 | 3.01 | 7,090,250 | 64,058 | 1.21 | |||||||||||||||
| Total interest bearing deposits | 30,208,112 | 500,905 | 2.21 | 39,882,639 | 306,598 | 1.03 | |||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | 2,628,257 | 43,628 | 2.22 | 194,562 | 113 | 0.08 | |||||||||||||||
Net funding allocated from (to) discontinued operations (13) | 45,520 | 774 | 2.27 | - | - | - | |||||||||||||||
| Commercial paper | 1,375,789 | 26,127 | 2.54 | 586,754 | 2,901 | 0.66 | |||||||||||||||
| Other borrowed funds (14) | 3,224,146 | 70,563 | 2.92 | 2,472,324 | 17,697 | 0.96 | |||||||||||||||
| Medium- and long-term debt | 2,594,875 | 65,138 | 3.35 | 4,994,660 | 84,056 | 2.25 | |||||||||||||||
| Trust notes | 14,261 | 715 | 6.68 | 13,808 | 715 | 6.90 | |||||||||||||||
| Total borrowed funds | 9,882,848 | 206,945 | 2.80 | 8,262,108 | 105,482 | 1.71 | |||||||||||||||
| Total interest bearing liabilities | 40,090,960 | 707,850 | 2.36 | 48,144,747 | 412,080 | 1.14 | |||||||||||||||
| Noninterest bearing deposits | 12,613,690 | 13,644,163 | |||||||||||||||||||
| Other liabilities | 1,678,057 | 1,878,593 | |||||||||||||||||||
| Total liabilities | 54,382,707 | 63,667,503 | |||||||||||||||||||
| Stockholder's Equity | |||||||||||||||||||||
| Common equity | 4,640,908 | 7,332,747 | |||||||||||||||||||
| Total stockholder's equity | 4,640,908 | 7,332,747 | |||||||||||||||||||
Total liabilities and stockholder's equity | $ | 59,023,615 | $ | 71,000,250 | |||||||||||||||||
| Reported Net Interest Income/Margin | |||||||||||||||||||||
Net interest income/margin (taxable-equivalent basis) | 1,498,287 | 3.65 | % | 1,680,010 | 3.47 | % | |||||||||||||||
| Less: taxable-equivalent adjustment | 7,405 | 8,625 | |||||||||||||||||||
| Net interest income | $ | 1,490,882 | $ | 1,671,385 | |||||||||||||||||
| Average Assets and Liabilities of Discontinued Operations for Period Ended: | |||||||||||||||||||||
| September 30, 2008 | September 30, 2009 | ||||||||||||||||||||
| Assets | $ | 74,723 | $ | - | |||||||||||||||||
| Liabilities | $ | 120,243 | $ | - | |||||||||||||||||
| Net Liabilities | $ | (45,520 | ) | $ | - | ||||||||||||||||
| Refer to Exhibit 12 for footnote explanations. | |||||||||||||||||||||
| UnionBanCal Corporation and Subsidiaries | |||||||||||||||||||
| Noninterest income (Unaudited) | |||||||||||||||||||
Exhibit 9 | |||||||||||||||||||
| For the Three Months Ended | Percentage Change to September 30, 2009 from | ||||||||||||||||||
| (Dollars in thousands) | September 30, 2008 | June 30, 2009 (1) | September 30, 2009 (1) | September 30, 2008 | June 30, 2009 | ||||||||||||||
| Service charges on deposit accounts | $ | 77,079 | $ | 71,843 | $ | 74,888 | (2.84 | ) | % | 4.24 | % | ||||||||
| Trust and investment management fees | 40,638 | 34,130 | 34,506 | (15.09 | ) | 1.10 | |||||||||||||
| Merchant banking fees | 12,789 | 19,924 | 14,601 | 14.17 | (26.72 | ) | |||||||||||||
| Securities gains (losses), net | 50 | (172 | ) | 12,694 | nm | nm | |||||||||||||
| Trading account activities | 12,397 | 16,251 | 10,513 | (15.20 | ) | (35.31 | ) | ||||||||||||
| Brokerage commissions and fees | 9,520 | 8,506 | 8,611 | (9.55 | ) | 1.23 | |||||||||||||
| Card processing fees, net | 8,129 | 8,124 | 8,559 | 5.29 | 5.35 | ||||||||||||||
| Gains (losses) on private capital investments, net | 5,597 | (1,123 | ) | (18 | ) | nm | (98.40 | ) | |||||||||||
| Other | 32,522 | 25,730 | 19,575 | (39.81 | ) | (23.92 | ) | ||||||||||||
| Total noninterest income | $ | 198,721 | $ | 183,213 | $ | 183,929 | (7.44 | ) | % | 0.39 | % | ||||||||
| Noninterest expense (Unaudited) | |||||||||||||||||||
| For the Three Months Ended | Percentage Change to September 30, 2009 from | ||||||||||||||||||
| (Dollars in thousands) | September 30, 2008 | June 30, 2009 (1) | September 30, 2009 (1) | September 30, 2008 | June 30, 2009 | ||||||||||||||
| Salaries and other compensation | $ | 204,389 | $ | 191,104 | $ | 198,768 | (2.75 | ) | % | 4.01 | % | ||||||||
| Employee benefits | 33,740 | 41,953 | 35,213 | 4.37 | (16.07 | ) | |||||||||||||
| Salaries and employee benefits | 238,129 | 233,057 | 233,981 | (1.74 | ) | 0.40 | |||||||||||||
| Net occupancy | 38,574 | 43,222 | 43,146 | 11.85 | (0.18 | ) | |||||||||||||
| Intangible asset amortization | 671 | 40,281 | 40,641 | nm | 0.89 | ||||||||||||||
| Regulatory agencies | 8,572 | 52,836 | 30,739 | nm | (41.82 | ) | |||||||||||||
| Outside services | 20,741 | 22,948 | 22,219 | 7.13 | (3.18 | ) | |||||||||||||
| Equipment | 14,437 | 16,602 | 17,838 | 23.56 | 7.44 | ||||||||||||||
| Professional services | 17,236 | 19,489 | 17,647 | 2.38 | (9.45 | ) | |||||||||||||
| Software | 14,812 | 14,205 | 16,502 | 11.41 | 16.17 | ||||||||||||||
| Advertising and public relations | 12,624 | 11,349 | 14,562 | 15.35 | 28.31 | ||||||||||||||
| Low income housing credit investment amortization | 11,616 | 11,026 | 13,064 | 12.47 | 18.48 | ||||||||||||||
| Communications | 9,204 | 9,192 | 9,494 | 3.15 | 3.29 | ||||||||||||||
| Data processing | 8,945 | 8,042 | 7,975 | (10.84 | ) | (0.83 | ) | ||||||||||||
| Foreclosed asset expense (income) | 524 | 3,282 | (144 | ) | nm | nm | |||||||||||||
Provision for losses on off-balance sheet commitments | 8,000 | 15,000 | 6,000 | (25.00 | ) | (60.00 | ) | ||||||||||||
| Privatization-related expense | 6,193 | 7,433 | 6,649 | 7.36 | (10.55 | ) | |||||||||||||
| Other | 33,534 | 24,094 | 25,502 | (23.95 | ) | 5.84 | |||||||||||||
| Total noninterest expense | $ | 443,812 | $ | 532,058 | $ | 505,815 | 13.97 | % | (4.93 | ) | % | ||||||||
| Refer to Exhibit 12 for footnote explanations. | |||||||||||||||||||
| UnionBanCal Corporation and Subsidiaries | |||||||
| Noninterest income (Unaudited) | |||||||
Exhibit 10 | |||||||
| For the Nine Months Ended | Percentage Change to September 30, 2009 from | ||||||
| (Dollars in thousands) | September 30, 2008 | September 30, 2009 (1) | September 30, 2008 | ||||
| Service charges on deposit accounts | $ 229,521 | $ 218,053 | (5.00) | % | |||
| Trust and investment management fees | 127,828 | 102,543 | (19.78) | ||||
| Trading account activities | 40,096 | 49,456 | 23.34 | ||||
| Merchant banking fees | 35,667 | 48,357 | 35.58 | ||||
| Brokerage commissions and fees | 30,014 | 25,424 | (15.29) | ||||
| Card processing fees, net | 24,060 | 24,219 | 0.66 | ||||
| Securities losses, net | 48 | 12,522 | nm | ||||
| Gains (losses) on private capital investments, net | 7,949 | (3,262) | nm | ||||
| Gains on the VISA IPO redemption | 14,211 | - | (100.00) | ||||
| Other | 84,349 | 64,546 | (23.48) | ||||
| Total noninterest income | $ 593,743 | $ 541,858 | (8.74) | % | |||
| Noninterest expense (Unaudited) | |||||||
For the Nine Months Ended | Percentage Change to September 30, 2009 from | ||||||
| (Dollars in thousands) | September 30, 2008 | September 30, 2009 (1) | September 30, 2008 | ||||
| Salaries and other compensation | $ 600,477 | $ 578,095 | (3.73) | % | |||
| Employee benefits | 122,621 | 132,506 | 8.06 | ||||
| Salaries and employee benefits | 723,098 | 710,601 | (1.73) | ||||
| Net occupancy | 113,008 | 128,289 | 13.52 | ||||
| Intangible asset amortization | 2,011 | 121,809 | nm | ||||
| Regulatory agencies | 16,078 | 101,513 | nm | ||||
| Outside services | 58,045 | 64,001 | 10.26 | ||||
| Professional services | 47,764 | 53,074 | 11.12 | ||||
| Equipment | 44,925 | 49,853 | 10.97 | ||||
| Software | 44,016 | 45,745 | 3.93 | ||||
| Advertising and public relations | 33,579 | 36,532 | 8.79 | ||||
| Low income housing credit investment amortization | 29,248 | 34,256 | 17.12 | ||||
| Communications | 27,690 | 27,404 | (1.03) | ||||
| Data processing | 23,805 | 24,592 | 3.31 | ||||
| Foreclosed asset expense (income) | 696 | 4,024 | nm | ||||
| Provision for losses on off-balance sheet commitments | 21,000 | 47,000 | nm | ||||
| Privatization-related expense | 6,193 | 40,901 | nm | ||||
| Other | 75,174 | 69,662 | (7.33) | ||||
| Total noninterest expense | $ 1,266,330 | $ 1,559,256 | 23.13 | % | |||
| Refer to Exhibit 12 for footnote explanations. | |||||||
| UnionBanCal Corporation and Subsidiaries | ||||||||||||||||||||
| Reconciliation of Non-GAAP Measures (Unaudited) | ||||||||||||||||||||
Exhibit 11 | ||||||||||||||||||||
The following table presents a reconciliation between certain Generally Accepted Accounting Principles (GAAP) amounts and specific non-GAAP measures as used to complete selected non-GAAP financial ratios. | ||||||||||||||||||||
| For the three months ended | For the nine months ended | |||||||||||||||||||
| (Dollars in thousands) | September 30, 2008 | June 30, 2009 | September 30, 2009 | September 30, 2008 | September 30, 2009 | |||||||||||||||
| Income (loss) from continuing operations | $ | 110,106 | $ | (80,007 | ) | $ | (17,029 | ) | $ | 366,802 | $ | (106,844 | ) | |||||||
| Privatization-related expense, net of tax | 6,193 | 4,514 | (460 | ) | 6,193 | 20,414 | ||||||||||||||
| Net accretion and amortization related to fair value adjustments, net of tax | - | 8,765 | 11,832 | - | 25,115 | |||||||||||||||
Income (loss) from continuing operations, excluding impact of privatization transaction | $ | 116,299 | $ | (66,728 | ) | $ | (5,657 | ) | $ | 372,995 | $ | (61,315 | ) | |||||||
| Average total assets | $ | 61,145,251 | $ | 71,495,226 | $ | 74,352,649 | $ | 59,023,615 | $ | 71,000,250 | ||||||||||
| Net adjustments related to privatization transaction | (329 | ) | 2,610,303 | 2,590,543 | (111 | ) | 2,607,236 | |||||||||||||
| Average total assets, excluding impact of privatization transaction | $ | 61,145,580 | $ | 68,884,923 | $ | 71,762,106 | $ | 59,023,726 | $ | 68,393,014 | ||||||||||
| Return on average assets from continuing operations | 0.72 | % | (0.45 | %) | (0.09 | %) | 0.83 | % | (0.20 | %) | ||||||||||
| Effect of privatization transaction | 0.04 | % | 0.06 | % | 0.06 | % | 0.01 | % | 0.08 | % | ||||||||||
Return on average assets from continuing operations, excluding impact of privatization transaction | 0.76 | % | (0.39 | %) | (0.03 | %) | 0.84 | % | (0.12 | %) | ||||||||||
| Average stockholder's equity | $ | 4,588,441 | $ | 7,303,050 | $ | 7,358,773 | $ | 4,640,908 | $ | 7,332,747 | ||||||||||
| Net adjustments related to privatization transaction | - | 2,423,392 | 2,418,824 | - | 2,410,287 | |||||||||||||||
| Average stockholder's equity, excluding impact of privatization transaction | $ | 4,588,441 | $ | 4,879,658 | $ | 4,939,949 | $ | 4,640,908 | $ | 4,922,460 | ||||||||||
| Return on stockholder's equity from continuing operations | 9.55 | % | (4.39 | %) | (0.92 | %) | 10.56 | % | (1.95 | %) | ||||||||||
| Effect of privatization transaction | 0.53 | % | (1.09 | %) | 0.47 | % | 0.18 | % | 0.28 | % | ||||||||||
| Return on stockholder's equity, excluding impact of privatization transaction | 10.08 | % | (5.48 | %) | (0.45 | %) | 10.74 | % | (1.67 | %) | ||||||||||
| Noninterest expense | $ | 443,812 | $ | 532,058 | $ | 505,815 | $ | 1,266,330 | $ | 1,559,256 | ||||||||||
| Privatization-related expense | 6,193 | 7,433 | 6,649 | 6,193 | 40,901 | |||||||||||||||
| Amortization related to fair value adjustments | - | 41,894 | 42,548 | - | 126,985 | |||||||||||||||
| Noninterest expense, excluding impact of privatization transaction | $ | 437,619 | $ | 482,731 | $ | 456,618 | $ | 1,260,137 | $ | 1,391,370 | ||||||||||
| Total revenue | $ | 721,017 | $ | 736,307 | $ | 748,225 | $ | 2,092,030 | $ | 2,221,868 | ||||||||||
| Accretion related to fair value adjustments | - | 27,455 | 23,060 | - | 85,616 | |||||||||||||||
| Total revenue, excluding impact of privatization transaction | $ | 721,017 | $ | 708,852 | $ | 725,165 | $ | 2,092,030 | $ | 2,136,252 | ||||||||||
| Efficiency ratio | 58.76 | % | 68.28 | % | 65.07 | % | 58.10 | % | 66.34 | % | ||||||||||
| Effect of privatization transaction | (0.86 | %) | (4.31 | %) | (4.71 | %) | (0.30 | %) | (5.20 | %) | ||||||||||
| Efficiency ratio, excluding impact of privatization transaction | 57.90 | % | 63.97 | % | 60.36 | % | 57.80 | % | 61.14 | % | ||||||||||
| UnionBanCal Corporation and Subsidiaries | |||
| Footnotes | |||
Exhibit 12 | |||
| (1) | On November 4, 2008, Mitsubishi UFJ Financial Group, Inc. (MUFG), through its wholly-owned subsidiary, The Bank of Tokyo - Mitsubishi UFJ, Ltd. (BTMU), completed its acquisition of all of the remaining outstanding shares of UnionBanCal Corporation (the Company) common stock (the “privatization transaction”). The Company estimated the fair value of its tangible assets and liabilities as of October 1, 2008 and recorded fair value adjustments to its tangible assets and liabilities equivalent to the proportionate incremental percentage ownership acquired by BTMU in the privatization transaction. In addition, the Company recorded goodwill and other intangible assets. The Company's financial condition as of December 31, 2008 and subsequent periods reflect the impact of these fair value adjustments and other amounts recorded. The Company's results of operations for the nine months ended September 30, 2009 include accretion and amortization related to the fair value adjustments. | ||
| (2) | Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 35 percent. | ||
| (3) | End of period total assets and assets used in calculating these ratios include those of discontinued operations. | ||
| (4) | Average balances used to calculate our financial ratios are based on continuing operations data only, unless otherwise indicated. | ||
| (5) | Annualized. | ||
| (6) | The efficiency ratio is noninterest expense, excluding foreclosed asset expense (income), the provision for losses on off-balance sheet commitments and low income housing credit (LIHC) investment amortization expense, as a percentage of net interest income (taxable-equivalent basis) and noninterest income, and is calculated for continuing operations only. | ||
| (7) | The tangible common equity ratio is the ratio of total equity less intangibles (net of the corresponding deferred tax liability), as a percentage of total assets, less intangibles. | ||
| (8) | The Tier 1 common capital ratio is the ratio of Tier 1 common capital to risk weighted assets. | ||
| (9) | Estimated as of September 30, 2009. 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) | Reflects previously disclosed change in accounting policy for residential and home equity loans 90 days or more past due, which was effective January 1, 2009. | ||
| (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. | ||
| (14) | Includes interest bearing trading liabilities. | ||
| (15) | These ratios exclude the impact of the privatization transaction. Please refer to Exhibit 11 for a reconciliation between certain Generally Accepted Accounting Principles (GAAP) amounts and these non-GAAP measures. | ||
| nm = not meaningful | |||
Contacts:
UnionBanCal Corporation
Stephen L. Johnson, 415-765-3252
Public
Relations
Michelle R. Crandall, 415-765-2780
Investor Relations
