Unionbancal (NYSE:UB)
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UnionBanCal Corporation (NYSE:UB)
2006 Highlights:
-- Record revenue from continuing operations of $2.7 billion
-- Income from continuing operations of $764 million
-- Strong year-end capital levels, with tangible equity ratio at
7.84 percent
-- Excellent asset quality metrics, including 31 percent reduction in
nonperforming assets and year-end nonperforming assets to total
assets ratio of 0.08 percent
Fourth Quarter 2006 Highlights:
-- Strong year-over-year organic loan growth
-- Average total loans up 13 percent
-- Average commercial loans up 18 percent
-- Average residential mortgage loans up 10 percent
-- Annualized average all-in cost of funds of 2.31 percent
-- Average noninterest bearing deposits comprised 39 percent of
average total deposits
UnionBanCal Corporation (NYSE:UB) today reported fourth quarter 2006 net
income of $226.4 million, or $1.61 per diluted common share. Income from
continuing operations was $227.7 million, or $1.61 per diluted common
share, including $72.8 million, or $0.51 per diluted common share, in
state income tax refunds, and $5.3 million, or $0.04 per diluted common
share in tax adjustments. Excluding these items, income from continuing
operations for fourth quarter was $149.6 million, or $1.06 per diluted
common share. Income from continuing operations for fourth quarter 2005
was $162.2 million, or $1.10 per diluted common share, including a $22.9
million, or $0.16 per diluted common share, after-tax loss on the sale
of securities related to the rebalancing of the Company’s
securities portfolio. Adjusting for this item, income from continuing
operations for fourth quarter 2005 was $1.26 per diluted common share.
For the full year 2006, the Company reported net income of $753 million,
or $5.24 per diluted common share, and income from continuing operations
of $764 million, or $5.31 per diluted common share. For the full year
2005, the Company reported net income of $863 million, or $5.84 per
diluted common share, and income from continuing operations of $731
million, or $4.94 per diluted common share. Income from continuing
operations for 2006 included stock option expense of $22.1 million, or
$0.10 per diluted common share, versus none in 2005, and $72.8 million,
or $0.51 per diluted common share, in state income tax refunds.
Adjusting for these items, income from continuing operations for the
full year 2006 was $4.90 per diluted common share, a decline of 0.8
percent versus prior year.
“While 2006 was a challenging year, we still
recorded record revenue from continuing operations of $2.7 billion, and
income from continuing operations of $764 million,”
stated Takashi Morimura, President and Chief Executive Officer. “Loan
growth was strong throughout the year and, despite a challenging
interest rate environment and competitive pressures, we successfully
defended our core deposit customer base.
“During 2006, we increased our common stock
dividend by 15 percent, and invested $452 million in the repurchase of
7.1 million shares. We returned $710 million to our shareholders in the
form of dividends and buybacks, representing 94 percent of our net
income.
“The Company is well-positioned competitively
and financially entering the new year. We begin 2007 with good momentum
in our lending businesses, excellent asset quality and strong capital
levels.”
Added Chief Operating Officer Philip Flynn, “Core
earnings per share declined from third quarter, but were consistent with
the forecast we provided in October. More importantly, we are seeing
signs that our deposit challenges are moderating. The migration out of
noninterest bearing into interest bearing deposit products has slowed,
and pricing on the interest bearing product line has moderated in our
markets. Sequential quarter loan growth was excellent, with average
commercial loans, excluding loans to title and escrow companies, up
almost 9 percent annualized, and average residential mortgages up more
than 8 percent annualized.”
Summary of Fourth Quarter Results from
Continuing Operations
Adjusting for the tax-related items more fully described in the Income
Tax Expense section, fourth quarter 2006 income from continuing
operations was $149.6 million, or $1.06 per diluted common share,
compared with $1.26 per diluted common share a year earlier, which
reflects an adjustment for the loss on the sale of securities, described
above. Total revenue increased 1 percent, compared with fourth quarter
2005. A 1.8 percent increase in noninterest income (adjusted for the
loss on the sale of securities in fourth quarter 2005) was offset by a
6.9 percent decrease in net interest income. The decrease in net
interest income was primarily due to a deposit mix shift, reflecting
customer decisions to shift balances from noninterest bearing and
low-cost deposits into higher-cost deposits. The unfavorable deposit mix
change offset strong loan growth. The total provision for credit losses
was $5 million, compared with negative $5 million in fourth quarter
2005. For fourth quarter 2006, noninterest expense was up 2.9 percent
from the same quarter a year earlier. Adjusting for the impact of stock
option expense, which commenced January 1, 2006, noninterest expense
increased 1.8 percent.
Fourth Quarter Total Revenue From
Continuing Operations
For fourth quarter 2006, total revenue (taxable-equivalent net interest
income plus noninterest income) was $673 million, up 1.1 percent
compared with fourth quarter 2005. Net interest income decreased 6.9
percent, and noninterest income increased 22.2 percent. Excluding a
$36.8 million loss on the sale of securities related to the rebalancing
of the securities portfolio executed in fourth quarter 2005, total
revenue was down 4.2 percent, with net interest income decreasing 6.9
percent, and noninterest income increasing 1.8 percent. Compared with
third quarter 2006, total revenue decreased 0.8 percent, with net
interest income decreasing 2.6 percent and noninterest income increasing
3.2 percent.
Fourth Quarter Net Interest Income
(Taxable-equivalent) From Continuing Operations
Net interest income was $449 million in fourth quarter 2006, down $33.2
million, or 6.9 percent, from the same quarter a year ago, primarily due
to a deposit mix shift from noninterest bearing and low-cost deposits
into higher-cost deposits, partially offset by solid growth in loans and
higher yields on earning assets.
Average earning assets increased $3.4 billion, or 7.8 percent, compared
to 2005, primarily due to a $4.2 billion, or 12.7 percent, increase in
average loans. Average commercial loans increased $2.2 billion, or 18.3
percent; average residential mortgages increased $1.1 billion, or 9.7
percent; and average construction loans increased $0.8 billion, or 54.4
percent. $746 million, or 34 percent, of the increase in average
commercial loans was attributable to title and escrow loans, which are
highly rate-advantaged loans and are more volatile than other commercial
loans. Excluding title and escrow loans, average commercial loans grew
12.8 percent, year over year. The increase in construction loans is
primarily related to income properties, where business fundamentals
continue to be healthy. Average securities declined $0.5 billion, or 5.5
percent.
Compared to fourth quarter 2005, average interest bearing deposits
increased $4.2 billion, or 20.0 percent, while average noninterest
bearing deposits decreased $3.1 billion, or 16.3 percent. The decline in
noninterest bearing deposits was primarily due to a $2.0 billion, or
15.8 percent, decrease in average other commercial noninterest bearing
deposits and a $0.7 billion, or 22.1 percent, decrease in average title
and escrow deposits. Average other commercial noninterest bearing
deposits declined primarily due to changes in customer behavior in
response to rising short-term interest rates, and average title and
escrow deposits decreased due to lower residential real estate activity.
Average consumer noninterest bearing deposits decreased $392 million, or
12.2 percent.
Average noninterest bearing deposits represented 39.0 percent of average
total deposits in fourth quarter 2006. The annualized average all-in
cost of funds was 2.31 percent, reflecting the Company’s
strong average core deposit-to-loan ratio of 91 percent and the high
proportion of noninterest bearing deposits to total deposits.
The average yield on earning assets of $46.9 billion was 6.06 percent,
up 55 basis points over fourth quarter 2005, with the average loan yield
increasing 37 basis points. The average rate on interest bearing
liabilities of $29.4 billion was 3.58 percent, up 153 basis points
compared with fourth quarter 2005, reflecting higher short-term interest
rates, an unfavorable change in deposit mix, and heightened competition
for deposits. The net interest margin in fourth quarter 2006 was 3.81
percent, compared with 4.42 percent in fourth quarter 2005.
On a sequential quarter basis, net interest income decreased $12
million, or 2.6 percent. Average loans increased $1.5 billion, or 4.3
percent. Average commercial loans increased $931 million, or 7.0
percent, with average loans to title and escrow companies increasing
$655 million, or 80.5 percent. Average residential mortgages increased
$251 million, or 2.1 percent, and average construction loans increased
$192 million, or 9.6 percent. Average noninterest bearing deposits
decreased $858 million, or 5.0 percent, with commercial noninterest
bearing deposits decreasing $751 million, or 5.3 percent, and consumer
noninterest bearing deposits decreasing $107 million, or 3.7 percent.
Average title and escrow deposits decreased $11 million, or 0.5 percent.
The average yield on earning assets was flat and the average rate on
interest bearing liabilities increased 17 basis points. The net interest
margin decreased 19 basis points to 3.81 percent.
Fourth Quarter Noninterest Income From
Continuing Operations
In fourth quarter 2006, noninterest income was $224 million, up $41
million, or 22.2 percent, from the same quarter a year ago. Excluding a
$36.8 million loss on the sale of securities in fourth quarter 2005,
noninterest income increased 1.8 percent from the same quarter a year
ago. Service charges on deposit accounts decreased $2.9 million, or 3.7
percent, primarily due to lower account analysis fees, stemming from an
increase in the earnings credit rate on deposit balances and lower
noninterest bearing deposit balances. Trust and investment management
fees increased $2.6 million, or 5.5 percent, primarily due to an
increase in trust assets. Merchant banking fees increased $5.6 million,
or 68.3 percent, primarily due to a higher volume of syndications
completed in fourth quarter 2006. Brokerage commissions and fees
increased $2.0 million, or 27.7 percent, primarily due to higher
business volumes. Securities gains (losses), net, for fourth quarter
2005 reflected a $36.8 million loss on the sale of $1 billion of agency
debentures associated with the rebalancing of the Company’s
securities portfolio.
Compared with the preceding quarter, fourth quarter 2006 noninterest
income increased $6.9 million, or 3.2 percent. Service charges on
deposit accounts decreased $2.0 million, or 2.5 percent, primarily due
to lower noninterest bearing deposit balances. Trust and investment
management fees increased $1.5 million, or 3.1 percent, primarily due to
an increase in trust assets. Merchant banking fees increased $2.3
million, or 19.3 percent, primarily due to a higher volume of
syndications completed in fourth quarter.
Fourth Quarter Noninterest Expense From
Continuing Operations
Noninterest expense for fourth quarter 2006 was $442 million, an
increase of $12.5 million, or 2.9 percent, over fourth quarter 2005.
Salaries and employee benefits expense increased $18.3 million, or 7.9
percent, primarily due to higher severance expense, annual merit
increases, higher employee count and higher stock option expense,
partially offset by lower accruals for incentive and bonus expense.
Stock option expense was $4.8 million, compared with none in fourth
quarter 2005. Net occupancy expense decreased $2.4 million, or 5.8
percent, primarily due to charges associated with the consolidation of
offices in San Francisco incurred in fourth quarter 2005. Outside
services expense decreased $14.8 million, or 36.0 percent, primarily due
to lower cost of services related to title and escrow balances.
Professional services expense increased $10.5 million, primarily due to
higher compliance-related expense in fourth quarter 2006. There was a
$2.0 million provision for losses on off-balance sheet commitments in
fourth quarter 2006, compared with $5.0 million in fourth quarter 2005.
Other noninterest expense increased $5.0 million, or 15.6 percent,
primarily due to expense associated with low income housing tax credit
projects.
Excluding the effect of stock option expense, noninterest expense
increased $7.7 million, or 1.8 percent, compared with prior year.
Compared with third quarter 2006, noninterest expense increased $24.7
million, or 5.9 percent, which was largely due to higher expenses for
severance, compliance activities, low income housing tax credit projects
and off-balance sheet commitments. Severance expense was $7.9 million,
up $5.5 million compared with prior quarter, due to workforce reductions
implemented in the fourth quarter. Compliance-related professional
services expense was $6.3 million, up $2.9 million compared with prior
quarter. Expense associated with low income housing tax credit projects
was $8.4 million, up $4.3 million compared with prior quarter, primarily
due to the completion of a historic building preservation project. The
provision for losses on off-balance sheet commitments was $2.0 million,
compared with none in the prior quarter.
Salaries and employee benefits expense increased $6.2 million, or 2.5
percent, primarily due to higher severance expense. Outside services
expense decreased $5.7 million, or 17.9 percent, primarily due to lower
cost of services related to title and escrow balances. Professional
services expense increased $7.7 million, or 63.2 percent, primarily due
to higher compliance-related expense.
Income Tax Expense From Continuing
Operations
The effective tax rate for the fourth quarter 2006 was (0.7) percent,
compared with an effective tax rate of 33.8 percent for fourth quarter
2005. Fourth quarter 2006 tax expense included a credit of $72.8
million, or $0.51 per diluted common share, to reflect a refund of
California franchise taxes received as a result of the settlement of
refund claims filed for the years 1989 through 1995. Fourth quarter 2006
tax expense also included a positive adjustment of $5.3 million, or
$0.04 per diluted common share, relating to a change in the estimated
current year California tax rate on the worldwide unitary method.
Adjusting for these two items, the effective tax rate for fourth quarter
2006 was 33.8 percent.
The effective tax rate for the full year 2006 was 26.2 percent (33.3
percent before adjusting for the California refund), compared with an
effective tax rate of 32.8 percent for 2005.
Full Year Results From Continuing
Operations
Total revenue for 2006 was a record $2.7 billion, up $75 million, or 2.8
percent, compared with 2005. Net interest income was flat, and
noninterest income increased 9.2 percent.
Net interest income was $1.8 billion in 2006, flat with prior year.
Average loans increased $4.3 billion, or 13.5 percent, while average
total deposits increased $0.6 billion, or 1.5 percent. A $2.4 billion
increase in average interest bearing deposits was offset by a $1.9
billion, or 9.9 percent, decrease in average noninterest bearing
deposits. This deposit mix shift was due to changes in customer behavior
in response to rising short-term interest rates. The net interest margin
was 4.09 percent, down 22 basis points.
Noninterest income in 2006 was $878 million, an increase of $74 million,
or 9.2 percent, over 2005. Service charges on deposit accounts decreased
$4.2 million, or 1.3 percent. Trust and investment management fees
increased $21.6 million, or 12.4 percent, primarily due to growth in
trust assets. Securities gains (losses), net, were $2.2 million,
compared with $(50.0) million in 2005.
For the full year 2006, noninterest expense increased $79 million, or
4.9 percent. Salaries and employee benefits expense increased $62.2
million, or 6.7 percent, primarily due to $22.1 million in stock option
expense in 2006, merit increases, higher employee count, higher
severance expense and higher contract labor expense, reflecting
compliance-related initiatives, partially offset by lower accruals for
incentive and bonus expense. Professional services expense increased
$18.1 million, or 39.8 percent, primarily due to higher
compliance-related expense. Advertising and public relations expense
increased $7.2 million, or 19.6 percent, primarily due to increased
advertising and marketing activity in response to the competitive
deposit market. Foreclosed asset income was $9.7 million higher in the
full year 2006 compared with the full year 2005. The provision for
losses on off-balance sheet commitments was negative $5 million in the
full year 2006, compared with $4 million in the full year 2005.
Credit Quality
Nonperforming assets at December 31, 2006, were $42 million, or 0.08
percent of total assets. This compares with $48 million, or 0.09 percent
of total assets, at September 30, 2006, and $62 million, or 0.12 percent
of total assets, at December 31, 2005.
In fourth quarter 2006, the total provision for credit losses was $5
million. The total provision for credit losses was zero in third quarter
2006 and negative $5 million in fourth quarter 2005. In fourth quarter
2006, net recoveries were $1 million, compared with net charge-offs of
$2 million in third quarter 2006, and net charge-offs of $2 million in
fourth quarter 2005.
At December 31, 2006, the allowance for credit losses as a percent of
total loans and as a percent of nonaccrual loans was 1.12 percent and
987 percent, respectively. These ratios were 1.14 percent and 850
percent, respectively, at September 30, 2006, and 1.32 percent and 744
percent, respectively, at December 31, 2005.
Balance Sheet and Capital Ratios
At December 31, 2006, the Company had total assets of $52.6 billion.
Total loans were $36.7 billion and total deposits were $42.0 billion,
resulting in a period-end deposit-to-loan ratio of 114 percent. Core
deposits totaled $34.6 billion at quarter-end, representing 94 percent
of total loans. At period-end, total stockholders’
equity was $4.6 billion, the tangible equity ratio was 7.84 percent, and
the ratio of tangible common equity to risk-weighted assets was 8.19
percent. Book value per share at December 31, 2006, was $32.86, up 3.9
percent from a year earlier. The Company’s
Tier I and total risk-based capital ratios at period-end were 8.68
percent and 11.71 percent, respectively.
As of December 31, 2006, the Company adopted SFAS No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans.
The adoption resulted in a non-cash charge to shareholders’
equity in the amount of $161 million, to record an unrealized loss
associated with pension and other post-retirement benefits. The effect
of this non-cash charge was a reduction in shareholders’
equity of 3.4 percent, a reduction in book value per share of $1.16, and
a reduction in the tangible equity ratio of 31 basis points. Per bank
regulatory guidance, the SFAS 158 unrecognized loss had no impact on
regulatory capital ratios at December 31, 2006.
Stock Repurchases
During fourth quarter 2006, the Company repurchased 1.8 million shares
of common stock at a total price of $108 million, or an average of
$59.22 per repurchased share. For the full year 2006, the Company
repurchased 7.1 million shares of common stock at a total price of $452
million, or an average of $63.73 per repurchased share. At December 31,
2006, the Company had remaining repurchase authority of $150 million.
Common shares outstanding at December 31, 2006, were 139.1 million, a
decrease of 5.1 million shares, or 3.5 percent, from one year earlier.
Discontinued Operations
On September 22, 2005, the Company announced the signing of a definitive
agreement to sell its international correspondent banking business to
Wachovia Bank, N.A. Commencing in third quarter 2005, all results of the
international correspondent banking business have been reported as a
discontinued operation and all prior periods have been restated to
reflect this accounting treatment. All of the assets and liabilities of
the discontinued operations have been separately identified on the
consolidated balance sheets (see Exhibit 4) and the average net assets
or liabilities of the discontinued operations are reflected in the
analysis of net interest margin (see Exhibits 6, 7 and 8).
In the fourth quarter of 2006, the Company recorded a net loss from
discontinued operations of $1.3 million, or less than $0.01 per diluted
common share.
First Quarter and Full Year 2007 Earnings
Per Share Forecast
The Company currently estimates that first quarter 2007 fully diluted
earnings per share will be in the range of $1.02 to $1.07, including a
total provision for credit losses of approximately $5 million.
For the year, the Company currently estimates that fully diluted
earnings per share will be in the range of $4.50 to $4.75, including a
total provision for credit losses of approximately $40 million.
Non-GAAP Financial Measures
This press release contains certain references to financial measures
identified as being stated on an “adjusted
basis” or that adjust for or exclude tax
refunds and adjustments, after-tax loss on the sale of securities, and
stock option expense, which are adjustments from comparable measures
calculated and presented in accordance with accounting principles
generally accepted in the United States of America (GAAP). These
financial measures, as used herein, differ from financial measures
reported under GAAP in that they exclude unusual or non-recurring
charges, losses, credits or gains. This press release identifies the
specific items excluded from the comparable GAAP financial measure in
the calculation of each non-GAAP financial measure. Because these items
and their impact on the Company’s performance
are difficult to predict, management believes that financial
presentations excluding the impact of these items provide useful
supplemental information which is important to a proper understanding of
the Company’s core business results by
investors. These presentations should not be viewed as a substitute for
results determined in accordance with GAAP, nor are they necessarily
comparable to non-GAAP financial measures presented by other companies.
Forward-Looking Statements
The following appears in accordance with the Private Securities
Litigation Reform Act. This press release includes forward-looking
statements that involve risks and uncertainties. Forward-looking
statements can be identified by the fact that they do not relate
strictly to historical or current facts. Often, they include the words “believe,”
“expect,” “target,”
“anticipate,” “intend,”
“plan,” “estimate,”
“potential,” “project,”
or words of similar meaning, or future or conditional verbs such as “will,”
“would,” “should,”
“could,” or “may.”
They may also consist of annualized amounts based on historical interim
period results. Forward-looking statements in this press release include
those related to earnings forecasts, provision for credit losses, trends
in deposit rates and balances and competition for deposits and their
impact on the Company, and the Company’s loan
portfolio, business model, competitive positioning and earnings power.
There are numerous risks and uncertainties that could and will cause
actual results to differ materially from those discussed in the Company’s
forward-looking statements. Many of these factors are beyond the Company’s
ability to control or predict and could have a material adverse effect
on the Company’s stock price, financial
condition, and results of operations or prospects. Such risks and
uncertainties include, but are not limited to, adverse economic and
fiscal conditions in California; increased energy costs; global
political and general economic conditions related to the war on
terrorism and other hostilities; fluctuations in interest rates; the
controlling interest in UnionBanCal Corporation of The Bank of
Tokyo-Mitsubishi UFJ, Ltd., which is a wholly-owned subsidiary of
Mitsubishi UFJ Financial Group, Inc.; competition in the banking and
financial services industries; deposit pricing pressures; the levels of
commercial and residential real estate activity in our market; adverse
effects of current and future banking laws, rules and regulations and
their enforcement, or governmental fiscal or monetary policies; legal or
regulatory proceedings; declines or disruptions in the stock or bond
markets which may adversely affect the Company or the Company’s
borrowers or other customers; changes in accounting practices or
requirements; and risks associated with various strategies the Company
may pursue, including potential acquisitions, divestitures and
restructurings.
A complete description of the Company, including related risk factors,
is discussed in the Company’s public filings
with the Securities and Exchange Commission, which are available by
calling (415) 765-2969 or online at http://www.sec.gov.
All forward-looking statements included in this press release are based
on information available at the time of the release, and the Company
assumes no obligation to update any forward-looking statement.
Conference Call and Webcast
The Company will conduct a conference call to review fourth quarter and
full year 2006 results at 8:30 AM Pacific Time (11:30 AM Eastern Time)
on January 19, 2007. Interested parties calling from locations within
the United States should call 888-428-4480 (612-234-9960 from outside
the United States) 10 minutes prior to the beginning of the conference.
A live webcast of the call will be available at http://www.uboc.com.
You may access the Investor Relations section of the website via the “About
Union Bank” link from the homepage. The
webcast replay will be available on the website within 24 hours after
the conclusion of the call, and will remain on the website for a period
of one year.
A recorded playback of the conference call will be available by calling
800-475-6701, (320-365-3844 from outside the United States) from
approximately 12:00 PM Pacific Time (3:00 PM Eastern Time), January 19,
through 11:59 PM Pacific Time, January 26 (2:59 AM Eastern Time, January
27). The reservation number for this playback is 852813.
Based in San Francisco, UnionBanCal Corporation is a bank holding
company with assets of $52.6 billion at December 31, 2006. Its primary
subsidiary, Union Bank of California, N.A., had 321 banking offices in
California, Oregon and Washington, and 2 international offices at
December 31, 2006.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 1
PercentChange to
As of and for theThree Months Ended
Dec. 31, 2006 from
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
Sept.30,
(Dollars in thousands, except per share data)
2005
2006
2006
2005
2006
Results of operations:
Net interest income (1)
$ 481,828
$ 460,596
$ 448,619
(6.89%)
(2.60%)
Noninterest income
183,420
217,255
224,106
22.18%
3.15%
Total revenue
665,248
677,851
672,725
1.12%
(0.76%)
Noninterest expense
429,198
417,021
441,693
2.91%
5.92%
(Reversal of) provision for loan losses
(10,000)
-
3,000
nm
nm
Income from continuing operations
before income taxes (1)
246,050
260,830
228,032
(7.32%)
(12.57%)
Taxable-equivalent adjustment
1,228
1,872
1,923
56.60%
2.72%
Income tax expense (benefit)
82,657
87,048
(1,632)
nm
nm
Income from continuing operations
$ 162,165
$ 171,910
$ 227,741
40.44%
32.48%
Income (loss) from discontinued operations
146,324
(1,204)
(1,307)
nm
(8.55%)
Net income
$ 308,489
$ 170,706
$ 226,434
(26.60%)
32.65%
Per common share:
Basic earnings:
From continuing operations
$ 1.12
$ 1.22
$ 1.63
45.54%
33.61%
Net income
2.14
1.21
1.62
(24.30%)
33.88%
Diluted earnings:
From continuing operations
1.10
1.21
1.61
46.36%
33.06%
Net income
2.09
1.20
1.61
(22.97%)
34.17%
Dividends (2)
0.41
0.47
0.47
14.63%
0.00%
Book value (end of period)
31.62
33.17
32.86
3.92%
(0.93%)
Common shares outstanding (end of period)
144,207,072
140,326,737
139,107,254
(3.54%)
(0.87%)
Weighted average common shares
outstanding - basic
144,466,374
140,941,823
139,390,487
(3.51%)
(1.10%)
Weighted average common shares
outstanding - diluted
147,385,734
142,566,089
141,025,758
(4.32%)
(1.08%)
Balance sheet (end of period):
Total assets (3)
$ 49,416,002
$ 52,013,256
$ 52,619,576
6.48%
1.17%
Total loans
33,095,595
35,673,469
36,671,723
10.81%
2.80%
Nonperforming assets
61,645
47,803
42,365
(31.28%)
(11.38%)
Total deposits
40,082,239
41,820,206
41,969,368
4.71%
0.36%
Stockholders' equity
4,559,700
4,654,789
4,571,401
0.26%
(1.79%)
Balance sheet (period average):
Total assets
$ 48,406,487
$ 50,777,419
$ 51,671,465
6.74%
1.76%
Total loans
33,260,944
35,965,823
37,495,315
12.73%
4.25%
Earning assets
43,451,686
45,854,645
46,860,166
7.84%
2.19%
Total deposits
40,253,861
40,582,139
41,320,468
2.65%
1.82%
Stockholders' equity
4,488,396
4,578,635
4,638,801
3.35%
1.31%
Financial ratios (4):
Return on average assets (5) :
From continuing operations
1.33%
1.34%
1.75%
Net income
2.53%
1.33%
1.74%
Return on average stockholders' equity (5) :
From continuing operations
14.33%
14.90%
19.48%
Net income
27.27%
14.79%
19.37%
Efficiency ratio (6)
63.77%
61.55%
65.36%
Net interest margin (1)
4.42%
4.00%
3.81%
Dividend payout ratio
36.61%
38.52%
28.83%
Tangible equity ratio
8.31%
8.09%
7.84%
Tier 1 risk-based capital ratio (3) (7)
9.17%
8.68%
8.68%
Total risk-based capital ratio (3) (7)
11.10%
11.74%
11.71%
Leverage ratio (3) (7)
8.39%
8.47%
8.44%
Allowances for credit losses to total loans (8)
1.32%
1.14%
1.12%
Allowances for credit losses to nonaccrual loans (8)
743.58%
850.01%
987.06%
Net loans charged off (recovered)
to average total loans (5)
0.03%
0.02%
(0.01%)
Nonperforming assets to total loans and foreclosed assets
0.19%
0.13%
0.12%
Nonperforming assets to total assets (3)
0.12%
0.09%
0.08%
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Financial Highlights (Unaudited)
Exhibit 2
Percent Change to
As of and for the Twelve Months Ended
December 31, 2006 from
December 31,
December 31,
December 31,
(Dollars in thousands, except per share data)
2005
2006
2005
Results of operations:
Net interest income (1)
$ 1,843,466
$ 1,844,556
0.06%
Noninterest income
804,787
878,499
9.16%
Total revenue
2,648,253
2,723,055
2.82%
Noninterest expense
1,607,246
1,686,288
4.92%
Reversal of allowance for loan losses
(50,683)
(5,000)
(90.13%)
Income from continuing operationsbefore income taxes (1)
1,091,690
1,041,767
(4.57%)
Taxable-equivalent adjustment
4,352
6,401
47.08%
Income tax expense
356,698
271,623
(23.85%)
Income from continuing operations
$ 730,640
$ 763,743
4.53%
Income (loss) from discontinued operations
132,293
(10,747)
nm
Net income
$ 862,933
$ 752,996
(12.74%)
Per common share:
Basic earnings:
From continuing operations
$ 5.04
$ 5.39
6.94%
Net income
5.95
5.32
(10.59%)
Diluted earnings:
From continuing operations
4.94
5.31
7.49%
Net income
5.84
5.24
(10.27%)
Dividends (2)
1.59
1.82
14.47%
Book value (end of period)
31.62
32.86
3.92%
Common shares outstanding (end of period)
144,207,072
139,107,254
(3.54%)
Weighted average common sharesoutstanding - basic
145,109,058
141,620,081
(2.40%)
Weighted average common sharesoutstanding - diluted
147,791,565
143,754,865
(2.73%)
Balance sheet (end of period):
Total assets (3)
$ 49,416,002
$ 52,619,576
6.48%
Total loans
33,095,595
36,671,723
10.81%
Nonperforming assets
61,645
42,365
(31.28%)
Total deposits
40,082,239
41,969,368
4.71%
Stockholders' equity
4,559,700
4,571,401
0.26%
Balance sheet (period average):
Total assets
$ 47,610,818
$ 49,992,481
5.00%
Total loans
31,452,606
35,704,129
13.52%
Earning assets
42,796,688
45,080,843
5.34%
Total deposits
39,543,986
40,121,139
1.46%
Stockholders' equity
4,280,085
4,574,185
6.87%
Financial ratios (4):
Return on average assets:
From continuing operations
1.53%
1.53%
Net income
1.81%
1.51%
Return on average stockholders' equity:
From continuing operations
17.07%
16.70%
Net income
20.16%
16.46%
Efficiency ratio (6)
60.75%
62.67%
Net interest margin (1)
4.31%
4.09%
Dividend payout ratio
31.55%
33.77%
Tangible equity ratio
8.31%
7.84%
Tier 1 risk-based capital ratio (3) (7)
9.17%
8.68%
Total risk-based capital ratio (3) (7)
11.10%
11.71%
Leverage ratio (3) (7)
8.39%
8.44%
Allowance for credit losses to total loans (8)
1.32%
1.12%
Allowance for credit losses to nonaccrual loans (8)
743.58%
987.06%
Net loans charged off (recovered)to average total loans
(0.01%)
0.04%
Nonperforming assets to total loans and foreclosed assets
0.19%
0.12%
Nonperforming assets to total assets (3)
0.12%
0.08%
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(Taxable-Equivalent Basis)
Exhibit 3
For the Three Months Ended
For the Twelve Months Ended
Dec. 31,
Sept. 30,
Dec. 31,
December 31,
(Dollars in thousands, except per share data)
2005
2006
2006
2005
2006
Interest Income (1)
Loans
$ 497,046
$ 575,799
$ 595,225
$ 1,802,853
$ 2,232,029
Securities
95,436
108,609
110,916
397,775
420,884
Interest bearing deposits in banks
1,244
411
1,047
2,676
2,617
Federal funds sold and securities purchased under resale agreements
6,129
12,024
4,924
20,535
25,518
Trading account assets
1,422
1,832
1,791
4,494
6,838
Total interest income
601,277
698,675
713,903
2,228,333
2,687,886
Interest Expense
Deposits
97,303
182,298
208,423
303,351
649,707
Federal funds purchased and securities sold under repurchase
agreements
1,042
4,891
9,716
10,372
31,864
Commercial paper
9,911
20,835
22,595
31,672
75,015
Medium and long-term debt
9,695
21,974
21,193
32,206
70,439
Trust notes
238
239
238
953
953
Other borrowed funds
1,260
7,842
3,119
6,313
15,352
Total interest expense
119,449
238,079
265,284
384,867
843,330
Net Interest Income (1)
481,828
460,596
448,619
1,843,466
1,844,556
(Reversal of) provision for loan losses
(10,000)
-
3,000
(50,683)
(5,000)
Net interest income after (reversal of) provision for loan losses
491,828
460,596
445,619
1,894,149
1,849,556
Noninterest Income
Service charges on deposit accounts
80,030
79,083
77,092
323,865
319,647
Trust and investment management fees
46,465
47,555
49,036
173,518
195,086
Insurance commissions
19,739
17,301
17,976
78,915
72,547
Merchant banking fees
8,261
11,655
13,905
43,898
42,185
Brokerage commissions and fees
7,171
8,531
9,155
30,038
35,811
Foreign exchange gains, net
8,332
8,179
7,916
33,902
32,220
Card processing fees, net
6,437
7,241
7,256
25,105
28,400
Securities gains (losses), net
(36,750)
43
420
(50,039)
2,242
Other
43,735
37,667
41,350
145,585
150,361
Total noninterest income
183,420
217,255
224,106
804,787
878,499
Noninterest Expense
Salaries and employee benefits
232,496
244,613
250,791
934,354
996,536
Net occupancy
41,048
35,753
38,662
141,299
141,771
Outside services
40,942
31,890
26,184
117,190
117,387
Equipment
18,042
17,387
17,678
68,206
69,833
Software
15,427
15,334
16,978
58,511
63,979
Professional services
9,369
12,169
19,862
45,500
63,616
Communications
10,959
9,942
9,876
41,909
40,431
Foreclosed asset expense (income)
(29)
(183)
10
(5,635)
(15,322)
(Reversal of) provision for losses on off-balance sheet commitments
5,000
-
2,000
4,000
(5,000)
Other
55,944
50,116
59,652
201,912
213,057
Total noninterest expense
429,198
417,021
441,693
1,607,246
1,686,288
Income from continuing operations before income taxes (1)
246,050
260,830
228,032
1,091,690
1,041,767
Taxable-equivalent adjustment
1,228
1,872
1,923
4,352
6,401
Income tax expense (benefit)
82,657
87,048
(1,632)
356,698
271,623
Income from Continuing Operations
162,165
171,910
227,741
730,640
763,743
Income (loss) from discontinued operations before income taxes
227,967
(2,061)
(1,824)
205,582
(17,057)
Income tax expense (benefit)
81,643
(857)
(517)
73,289
(6,310)
Income (Loss) from Discontinued Operations
146,324
(1,204)
(1,307)
132,293
(10,747)
Net Income
$ 308,489
$ 170,706
$ 226,434
$ 862,933
$ 752,996
Income from continuing operations per common share - basic
$ 1.12
$ 1.22
$ 1.63
$ 5.04
$ 5.39
Net income per common share - basic
$ 2.14
$ 1.21
$ 1.62
$ 5.95
$ 5.32
Income from continuing operations per common share - diluted
$ 1.10
$ 1.21
$ 1.61
$ 4.94
$ 5.31
Net income per common share - diluted
$ 2.09
$ 1.20
$ 1.61
$ 5.84
$ 5.24
Weighted average common shares outstanding - basic
144,466
140,942
139,390
145,109
141,620
Weighted average common shares outstanding - diluted
147,386
142,566
141,026
147,792
143,755
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
Exhibit 4
December 31,
(Dollars in thousands)
2005
2006
Assets
Cash and due from banks
$ 2,402,212
$ 2,213,782
Interest bearing deposits in banks
771,164
824,456
Federal funds sold and securities purchased under resale agreements
796,500
943,200
Total cash and cash equivalents
3,969,876
3,981,438
Trading account assets
312,655
376,321
Securities available for sale:
Securities pledged as collateral
96,994
89,184
Held in portfolio
8,072,286
8,667,038
Loans (net of allowance for loan losses: 2005, $351,532; 2006,
$331,077)
32,744,063
36,340,646
Due from customers on acceptances
19,252
17,834
Premises and equipment, net
536,074
495,302
Intangible assets
42,616
28,930
Goodwill
454,015
453,489
Other assets
2,113,577
2,148,954
Assets of discontinued operations to be disposed or sold
1,054,594
20,440
Total assets
$ 49,416,002
$ 52,619,576
Liabilities
Noninterest bearing
$ 19,489,377
$ 17,078,332
Interest bearing
20,592,862
24,891,036
Total deposits
40,082,239
41,969,368
Federal funds purchased and securities sold under repurchase
agreements
651,529
1,083,927
Commercial paper
680,027
1,661,163
Other borrowed funds
134,485
432,401
Acceptances outstanding
19,252
17,834
Other liabilities
1,466,478
1,545,165
Medium and long-term debt
801,095
1,318,847
Junior subordinated debt payable to subsidiary grantor trust
15,338
14,885
Liabilities of discontinued operations to be extinguished or assumed
1,005,859
4,585
Total liabilities
44,856,302
48,048,175
Stockholders' Equity
Preferred stock:
Authorized 5,000,000 shares; no shares issued or outstanding as of
December 31, 2005 or 2006
-
-
Common stock, par value $1 per share:
Authorized 300,000,000 shares; issued 154,469,215 shares in 2005
and 156,460,057 shares in 2006
154,469
156,460
Additional paid-in capital
994,956
1,083,649
Treasury stock - 10,262,143 shares in 2005 and 17,352,803 in 2006
(612,732)
(1,064,606)
Retained earnings
4,141,400
4,655,272
Accumulated other comprehensive loss
(118,393)
(259,374)
Total stockholders' equity
4,559,700
4,571,401
Total liabilities and stockholders' equity
$ 49,416,002
$ 52,619,576
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Loans (Unaudited)
Exhibit 5
Percent Change to
Three Months Ended
December 31, 2006 from
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
Sept. 30,
(Dollars in millions)
2005
2006
2006
2005
2006
Loans (period average)
Commercial, financial and industrial
$ 11,981
$ 13,237
$ 14,168
18.25%
7.03%
Construction
1,414
1,991
2,183
54.38%
9.64%
Mortgage - Commercial
5,653
5,681
5,815
2.87%
2.36%
Mortgage - Residential
11,143
11,971
12,222
9.68%
2.10%
Consumer
2,490
2,507
2,520
1.20%
0.52%
Lease financing
576
570
580
0.69%
1.75%
Total loans held to maturity
$ 33,257
$ 35,957
$ 37,488
12.72%
4.26%
Total loans held for sale
4
9
7
75.00%
(22.22%)
Total loans
$ 33,261
$ 35,966
$ 37,495
12.73%
4.25%
Nonperforming assets (period end)
Nonaccrual loans:
Commercial, financial and industrial
$ 50
$ 14
$ 7
(86.00%)
(50.00%)
Mortgage - Commercial
9
19
19
nm
0.00%
Lease
-
15
15
nm
0.00%
Total nonaccrual loans
59
48
41
(30.51%)
(14.58%)
Foreclosed assets
3
-
1
(66.67%)
nm
Total nonperforming assets
$ 62
$ 48
$ 42
(32.26%)
(12.50%)
Loans 90 days or more past due and still accruing
$ 5
$ 4
$ 9
80.00%
nm
Analysis of Allowances for Credit Losses
Beginning balance
$ 364
$ 329
$ 327
(Reversal of) provision for loan losses
(10)
-
3
Loans charged off:
Commercial, financial and industrial
(4)
(4)
(3)
Real estate
(1)
-
-
Consumer
(1)
(1)
(1)
Total loans charged off
(6)
(5)
(4)
Loans recovered:
Commercial, financial and industrial
3
3
5
Consumer
1
-
-
Total loans recovered
4
3
5
Net loans (charged off) recovered
(2)
(2)
1
Ending balance of allowance for loan losses
$ 352
$ 327
$ 331
Allowance for off-balance sheet commitment losses
86
79
81
Allowances for credit losses
$ 438
$ 406
$ 412
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 6
For the Three Months Ended
For the Three Months Ended
December 31, 2005
December 31, 2006
Interest
Average
Interest
Average
Average
Income/
Yield/
Average
Income/
Yield/
(Dollars in thousands)
Balance
Expense (9)
Rate (5) (9)
Balance
Expense (9)
Rate (5) (9)
Assets
Loans (10)
Commercial, financial and industrial
$ 11,981,953
$ 189,085
6.26
%
$ 14,173,007
$ 234,687
6.57
%
Construction
1,413,658
24,249
6.81
2,183,227
42,865
7.79
Residential mortgage
11,145,906
139,513
5.01
12,223,931
159,785
5.23
Commercial mortgage
5,653,091
94,632
6.64
5,815,299
104,633
7.14
Consumer
2,490,315
44,064
7.02
2,520,250
49,813
7.84
Lease financing
576,021
5,503
3.82
579,601
3,442
2.38
Total loans
33,260,944
497,046
5.94
37,495,315
595,225
6.31
Securities - taxable
9,027,589
94,135
4.17
8,535,024
109,738
5.14
Securities - tax-exempt
65,582
1,301
7.93
58,938
1,178
8.00
Interest bearing deposits in banks
157,604
1,244
3.13
74,471
1,047
5.58
Federal funds sold and securities purchased under resale agreements
595,208
6,129
4.09
365,894
4,924
5.34
Trading account assets
344,759
1,422
1.64
330,524
1,791
2.15
Total earning assets
43,451,686
601,277
5.51
46,860,166
713,903
6.06
Allowance for loan losses
(362,676)
(327,525)
Cash and due from banks
2,268,566
1,963,658
Premises and equipment, net
520,586
504,358
Other assets
2,528,325
2,670,808
Total assets
$ 48,406,487
$ 51,671,465
Liabilities
Deposits:
Transaction accounts
$ 13,523,357
57,469
1.69
$ 13,475,864
91,258
2.69
Savings and consumer time
4,550,219
17,407
1.52
4,502,954
27,910
2.46
Large time
2,916,187
22,427
3.05
7,208,863
89,255
4.91
Total interest bearing deposits
20,989,763
97,303
1.84
25,187,681
208,423
3.28
Federal funds purchased and securities sold under repurchase
agreements
533,068
5,025
3.74
768,941
10,054
5.19
Net funding allocated from (to) discontinued operations (11)
(422,508)
(3,983)
3.74
(22,913)
(338)
5.85
Commercial paper
1,108,434
9,911
3.55
1,784,097
22,595
5.02
Other borrowed funds
121,401
1,260
4.12
223,406
3,119
5.54
Medium and long-term debt
804,346
9,695
4.78
1,428,937
21,193
5.88
Trust notes
15,393
238
6.19
14,940
238
6.38
Total borrowed funds
2,160,134
22,146
4.07
4,197,408
56,861
5.37
Total interest bearing liabilities
23,149,897
119,449
2.05
29,385,089
265,284
3.58
Noninterest bearing deposits
19,264,098
16,132,787
Other liabilities
1,504,096
1,514,788
Total liabilities
43,918,091
47,032,664
Stockholders' Equity
Common equity
4,488,396
4,638,801
Total stockholders' equity
4,488,396
4,638,801
Total liabilities and stockholders' equity
$ 48,406,487
$ 51,671,465
Reported Net Interest Income/Margin
Net interest income/margin
(taxable-equivalent basis)
481,828
4.42
%
448,619
3.81
%
Less: taxable-equivalent adjustment
1,228
1,923
Net interest income
$ 480,600
$ 446,696
Average Assets and Liabilities of Discontinued Operations for Period
Ended:
Dec. 31, 2005
Dec. 31, 2006
Assets
$ 1,668,335
$ 26,664
Liabilities
$ 1,245,827
$ 3,751
Net Asset
$ 422,508
$ 22,913
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 7
For the Three Months Ended
For the Three Months Ended
September 30, 2006
December 31, 2006
Interest
Average
Interest
Average
Average
Income/
Yield/
Average
Income/
Yield/
(Dollars in thousands)
Balance
Expense (9)
Rate (5) (9)
Balance
Expense (9)
Rate (5) (9)
Assets
Loans: (10)
Commercial, financial and industrial
$ 13,244,947
$ 225,177
6.74
%
$ 14,173,007
$ 234,687
6.57
%
Construction
1,990,535
39,147
7.80
2,183,227
42,865
7.79
Residential mortgage
11,972,024
154,983
5.18
12,223,931
159,785
5.23
Commercial mortgage
5,680,603
102,577
7.16
5,815,299
104,633
7.14
Consumer
2,507,524
49,672
7.86
2,520,250
49,813
7.84
Lease financing
570,190
4,243
2.98
579,601
3,442
2.38
Total loans
35,965,823
575,799
6.37
37,495,315
595,225
6.31
Securities - taxable
8,548,420
107,378
5.02
8,535,024
109,738
5.14
Securities - tax-exempt
59,644
1,231
8.26
58,938
1,178
8.00
Interest bearing deposits in banks
37,351
411
4.37
74,471
1,047
5.58
Federal funds sold and securities purchased under resale agreements
894,039
12,024
5.34
365,894
4,924
5.34
Trading account assets
349,368
1,832
2.08
330,524
1,791
2.15
Total earning assets
45,854,645
698,675
6.06
46,860,166
713,903
6.06
Allowance for loan losses
(328,399)
(327,525)
Cash and due from banks
2,063,653
1,963,658
Premises and equipment, net
497,957
504,358
Other assets
2,689,563
2,670,808
Total assets
$ 50,777,419
$ 51,671,465
Liabilities
Deposits:
Transaction accounts
$ 12,405,367
73,826
2.36
$ 13,475,864
91,258
2.69
Savings and consumer time
4,493,082
25,682
2.27
4,502,954
27,910
2.46
Large time
6,692,874
82,790
4.91
7,208,863
89,255
4.91
Total interest bearing deposits
23,591,323
182,298
3.07
25,187,681
208,423
3.28
Federal funds purchased and securities sold under repurchase
agreements
419,665
5,345
5.05
768,941
10,054
5.19
Net funding allocated from (to) discontinued operations (11)
(34,738)
(454)
5.18
(22,913)
(338)
5.85
Commercial paper
1,645,428
20,835
5.02
1,784,097
22,595
5.02
Other borrowed funds
577,533
7,842
5.39
223,406
3,119
5.54
Medium and long-term debt
1,496,207
21,974
5.83
1,428,937
21,193
5.88
Trust notes
15,054
239
6.33
14,940
238
6.38
Total borrowed funds
4,119,149
55,781
5.37
4,197,408
56,861
5.37
Total interest bearing liabilities
27,710,472
238,079
3.41
29,385,089
265,284
3.58
Noninterest bearing deposits
16,990,816
16,132,787
Other liabilities
1,497,496
1,514,788
Total liabilities
46,198,784
47,032,664
Stockholders' Equity
Common equity
4,578,635
4,638,801
Total stockholders' equity
4,578,635
4,638,801
Total liabilities and stockholders' equity
$ 50,777,419
$ 51,671,465
Reported Net Interest Income/Margin
Net interest income/margin(taxable-equivalent basis)
460,596
4.00
%
448,619
3.81
%
Less: taxable-equivalent adjustment
1,872
1,923
Net interest income
$ 458,724
$ 446,696
Average Assets and Liabilities of Discontinued Operations for Period
Ended:
Sept. 30, 2006
Dec. 31, 2006
Assets
$ 41,135
$ 26,664
Liabilities
$ 6,397
$ 3,751
Net Asset
$ 34,738
$ 22,913
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Net Interest Income (Unaudited)
Exhibit 8
For the Twelve Months Ended
For the Twelve Months Ended
December 31, 2005
December 31, 2006
Interest
Average
Interest
Average
Average
Income/
Yield/
Average
Income/
Yield/
(Dollars in thousands)
Balance
Expense (9)
Rate (9)
Balance
Expense (9)
Rate (9)
Assets
Loans: (10)
Commercial, financial and industrial
$ 11,105,948
$ 677,590
6.10
%
$ 13,220,633
$ 869,884
6.58
%
Construction
1,268,448
77,844
6.14
1,857,404
142,031
7.65
Residential mortgage
10,513,671
515,485
4.90
11,846,908
607,977
5.13
Commercial mortgage
5,529,222
348,788
6.31
5,702,858
404,749
7.10
Consumer
2,444,011
159,493
6.53
2,505,770
192,156
7.67
Lease financing
591,306
23,653
4.00
570,556
15,232
2.67
Total loans
31,452,606
1,802,853
5.73
35,704,129
2,232,029
6.25
Securities - taxable
10,262,274
392,452
3.82
8,417,950
415,902
4.94
Securities - tax-exempt
66,178
5,323
8.04
61,729
4,982
8.07
Interest bearing deposits in banks
112,247
2,676
2.38
51,534
2,617
5.08
Federal funds sold and securities purchased under resale agreements
610,735
20,535
3.36
497,318
25,518
5.13
Trading account assets
292,648
4,494
1.54
348,183
6,838
1.96
Total earning assets
42,796,688
2,228,333
5.21
45,080,843
2,687,886
5.96
Allowance for loan losses
(389,398)
(334,720)
Cash and due from banks
2,247,905
2,063,342
Premises and equipment, net
520,084
508,889
Other assets
2,435,539
2,674,127
Total assets
$ 47,610,818
$ 49,992,481
Liabilities
Deposits:
Transaction accounts
$ 12,843,905
159,221
1.24
$ 12,938,620
292,899
2.26
Savings and consumer time
4,667,868
60,248
1.29
4,483,729
93,582
2.09
Large time
3,121,055
83,882
2.69
5,656,370
263,226
4.65
Total interest bearing deposits
20,632,828
303,351
1.47
23,078,719
649,707
2.82
Federal funds purchased and securities sold under repurchase
agreements
898,107
25,854
2.88
701,614
33,711
4.80
Net funding allocated from (to) discontinued operations (11)
(507,397)
(15,482)
3.05
(37,770)
(1,847)
4.89
Commercial paper
1,086,088
31,672
2.92
1,582,226
75,015
4.74
Other borrowed funds
168,220
6,313
3.75
294,977
15,352
5.20
Medium and long-term debt
807,592
32,206
3.99
1,230,846
70,439
5.72
Trust notes
15,562
953
6.12
15,109
953
6.31
Total borrowed funds
2,468,172
81,516
3.30
3,787,002
193,623
5.11
Total interest bearing liabilities
23,101,000
384,867
1.67
26,865,721
843,330
3.14
Noninterest bearing deposits
18,911,158
17,042,420
Other liabilities
1,318,575
1,510,155
Total liabilities
43,330,733
45,418,296
Stockholders' Equity
Common equity
4,280,085
4,574,185
Total stockholders' equity
4,280,085
4,574,185
Total liabilities and stockholders' equity
$ 47,610,818
$ 49,992,481
Reported Net Interest Income/Margin
Net interest income/margin(taxable-equivalent basis)
1,843,466
4.31
%
1,844,556
4.09
%
Less: taxable-equivalent adjustment
4,352
6,401
Net interest income
$ 1,839,114
$ 1,838,155
Average Assets and Liabilities of Discontinued Operations for Period
Ended:
Dec. 31, 2005
Dec. 31, 2006
Assets
$ 1,897,622
$ 189,376
Liabilities
$ 1,390,225
$ 151,606
Net Asset
$ 507,397
$ 37,770
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited)
Exhibit 9
Percentage Change to
For the Three Months Ended
December 31, 2006 From
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2005
2006
2006
2005
2006
Service charges on deposit accounts
$ 80,030
$ 79,083
$ 77,092
(3.67)
%
(2.52)
%
Trust and investment management fees
46,465
47,555
49,036
5.53
3.11
Insurance commissions
19,739
17,301
17,976
(8.93)
3.90
Merchant banking fees
8,261
11,655
13,905
68.32
19.31
Brokerage commissions and fees
7,171
8,531
9,155
27.67
7.31
Foreign exchange gains, net
8,332
8,179
7,916
(4.99)
(3.22)
Card processing fees, net
6,437
7,241
7,256
12.72
0.21
Securities gains (losses), net
(36,750)
43
420
nm
nm
Gain on private capital investments, net
8,299
7,681
8,902
7.27
15.90
Other
35,436
29,986
32,448
(8.43)
8.21
Total noninterest income
$ 183,420
$ 217,255
$ 224,106
22.18
%
3.15
%
Noninterest expense (Unaudited)
Percentage Change to
For the Three Months Ended
December 31, 2006 From
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
Sept. 30,
(Dollars in thousands)
2005
2006
2006
2005
2006
Salaries and other compensation
$ 191,797
$ 200,591
$ 202,511
5.59
%
0.96
%
Employee benefits
40,699
44,022
48,280
18.63
9.67
Salaries and employee benefits
232,496
244,613
250,791
7.87
2.53
Net occupancy
41,048
35,753
38,662
(5.81)
8.14
Outside services
40,942
31,890
26,184
(36.05)
(17.89)
Professional services
9,369
12,169
19,862
nm
63.22
Equipment
18,042
17,387
17,678
(2.02)
1.67
Software
15,427
15,334
16,978
10.05
10.72
Advertising and public relations
11,145
11,726
10,780
(3.28)
(8.07)
Communications
10,959
9,942
9,876
(9.88)
(0.66)
Data processing
7,985
7,933
8,668
8.55
9.27
Intangible asset amortization
4,965
3,427
3,401
(31.50)
(0.76)
Foreclosed asset expense (income)
(29)
(183)
10
nm
nm
Provision for losses on
off-balance sheet commitments
5,000
-
2,000
(60.00)
nm
Other
31,849
27,030
36,803
15.55
36.16
Total noninterest expense
$ 429,198
$ 417,021
$ 441,693
2.91
%
5.92
%
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Noninterest income (Unaudited)
Exhibit 10
Percentage Change to
For the Twelve Months Ended
December 31, 2006 From
Dec. 31,
Dec. 31,
Dec. 31,
(Dollars in thousands)
2005
2006
2005
Service charges on deposit accounts
$ 323,865
$ 319,647
(1.30)
%
Trust and investment management fees
173,518
195,086
12.43
Insurance commissions
78,915
72,547
(8.07)
Merchant banking fees
43,898
42,185
(3.90)
Brokerage commissions and fees
30,038
35,811
19.22
Foreign exchange gains, net
33,902
32,220
(4.96)
Card processing fees, net
25,105
28,400
13.12
Securities gains (losses), net
(50,039)
2,242
nm
Gain on private capital investments, net
27,187
23,112
(14.99)
Other
118,398
127,249
7.48
Total noninterest income
$ 804,787
$ 878,499
9.16
%
Noninterest expense (Unaudited)
Percentage Change to
For the Twelve Months Ended
December 31, 2006 From
Dec. 31,
Dec. 31,
Dec. 31,
(Dollars in thousands)
2005
2006
2005
Salaries and other compensation
$ 748,046
$ 799,050
6.82
%
Employee benefits
186,308
197,486
6.00
Salaries and employee benefits
934,354
996,536
6.66
Net occupancy
141,299
141,771
0.33
Outside services
117,190
117,387
0.17
Equipment
68,206
69,833
2.39
Software
58,511
63,979
9.35
Professional services
45,500
63,616
39.82
Advertising and public relations
36,803
44,007
19.57
Communications
41,909
40,431
(3.53)
Data processing
32,687
31,844
(2.58)
Intangible asset amortization
19,921
13,685
(31.30)
Foreclosed asset income
(5,635)
(15,322)
nm
(Reversal of) provision for allowance for
losses on off-balance sheet commitments
4,000
(5,000)
nm
Other
112,501
123,521
9.80
Total noninterest expense
$ 1,607,246
$ 1,686,288
4.92
%
Refer to Exhibit 11 for footnote explanations.
UnionBanCal Corporation and Subsidiaries
Footnotes
Exhibit 11
(1)
Taxable-equivalent basis.
(2)
Dividends per share reflect dividends declared on UnionBanCal
Corporation's common stock outstanding as of the declaration date.
(3)
End of period total assets and assets used in calculating these
ratios include those of discontinued operations.
(4)
Average balances used to calculate our financial ratios are based on
continuing operations data only, unless otherwise indicated.
(5)
Annualized.
(6)
The efficiency ratio is noninterest expense, excluding foreclosed
asset expense (income) and the (reversal of) provision for losses
on off-balance sheet commitments, as a percentage of net interest
income (taxable-equivalent basis) and noninterest income, and is
calculated for continuing operations only.
(7)
Estimated as of December 31, 2006. The regulatory capital and
leverage ratios were not restated and therefore include
discontinued operations.
(8)
The allowance for credit losses ratios include the allowances for
loan losses and losses on off-balance sheet commitments. These
ratios relate to continuing operations only.
(9)
Yields and interest income are presented on a taxable-equivalent
basis using the federal statutory tax rate of 35 percent.
(10)
Average balances on loans outstanding include all nonperforming
loans and loans held for sale. The amortized portion of net loan
origination fees (costs) is included in interest income on loans,
representing an adjustment to the yield.
(11)
Net funding allocated from (to) discontinued operations represents
the shortage (excess) of assets over liabilities of discontinued
operations. The expense (earning) on funds allocated from (to)
discontinued operations is calculated by taking the net balance
and applying an earnings rate or a cost of funds equivalent to the
corresponding period's Federal funds purchased rate.
nm = not meaningful