SAN FRANCISCO--()--UnionBanCal Corporation (the Company or UB) today reported second quarter 2010 net income of $154 million, compared with net loss of $80 million a year earlier, and net income of $77 million in first quarter 2010. Total provision for credit losses was $45 million in second quarter 2010, compared with $375 million a year earlier, and $165 million in first quarter 2010. Net income (loss) included after-tax net expenses due to the privatization transaction of $8 million in second quarter 2010, $13 million in second quarter 2009, and $12 million in first quarter 2010. 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.
In a purchase and assumption agreement with the Federal Deposit Insurance Corporation (FDIC), on April 30, 2010, Union Bank, N.A. (the Bank), the Company’s primary subsidiary, acquired certain assets of Frontier Bank with a fair value of $2.93 billion, including $1.72 billion of loans and other real estate owned (OREO), $860 million related to the FDIC’s indemnification of the Company against certain future losses, and $345 million of other assets. Liabilities with a fair value of $2.93 billion were assumed, including $2.5 billion of deposits and $439 million of borrowings and other liabilities. All acquired loans and OREO are covered by loss share agreements between the FDIC and the Bank. Frontier Bank had 50 full service branches, all of which reopened on May 3, 2010, as Union Bank branches.
In a purchase and assumption agreement with the FDIC, on April 16, 2010, Union Bank acquired certain assets of Tamalpais Bank with a fair value of $571 million, including $381 million of loans and OREO, $41 million related to the FDIC’s indemnification of the Company against certain future losses, and $149 million of other assets. Liabilities with a fair value of $571 million were assumed, including $422 million of deposits and $149 million of borrowings and other liabilities. All acquired loans and OREO are covered by loss share agreements between the FDIC and the Bank. Tamalpais Bank had seven full-service branches, all of which reopened on April 19, 2010, as Union Bank branches.
Summary of Second Quarter Results
Second Quarter Total Revenue and Net Interest Income
For second quarter 2010, total revenue (taxable-equivalent net interest income plus noninterest income) was $847 million, up $111 million, or 15 percent, compared with second quarter 2009. Net interest income increased 9 percent, and noninterest income increased 33 percent.
Net interest income for second quarter 2010 was $603 million, up $50 million, or 9 percent, compared with second quarter 2009, primarily reflecting the impact of a $14 billion increase in average securities and lower rates paid on interest bearing deposits. These increases were partially offset by the impact of lower loan balances as loan demand remained soft in a weak economic environment, and lower yields on the securities portfolio.
Average total loans decreased $1.7 billion, or 3 percent, compared with second quarter 2009, reflecting a decrease in commercial, financial and industrial loans, partially offset by the acquisition of the Frontier Bank and Tamalpais Bank loan portfolios. Average interest bearing deposits increased $13 billion, or 32 percent; and average noninterest bearing deposits increased $906 million, or 7 percent. The strong growth in average total deposits reflects successful deposit-gathering initiatives in both the retail and commercial lines of business and the assumption of deposits from Frontier Bank and Tamalpais Bank. The liquidity that resulted from the combination of robust deposit growth and declining loan balances was invested primarily in lower yielding assets, particularly available for sale securities, due to soft demand in targeted lending markets. This contributed to a decrease in the net interest margin, from 3.41 percent for second quarter 2009, to 3.09 percent for second quarter 2010.
The annualized average all-in cost of funds was 0.58 percent in second quarter 2010, compared with 0.88 percent in second quarter 2009. The Company’s average core deposit-to-loan ratio was 114 percent in second quarter 2010, compared with 95 percent in second quarter 2009.
Compared with first quarter 2010, total revenue increased 8 percent, with net interest income up 5 percent and noninterest income up 16 percent. Average total loans increased $1 billion, or 2 percent, primarily due to the acquisition of the Frontier Bank and Tamalpais Bank loan portfolios during second quarter 2010. Average interest bearing deposits were flat, and average noninterest bearing deposits increased $427 million, or 3 percent. The net interest margin increased 14 basis points, from 2.95 percent in first quarter 2010, to 3.09 percent in second quarter 2010, primarily due to higher yields on total loans and lower rates paid on total interest bearing deposits.
Second Quarter Noninterest Income and Noninterest Expense
For second quarter 2010, noninterest income was $244 million, up $61 million, or 33 percent, from the same quarter a year ago. The increase was primarily due to a $29 million gain on the sale of securities in second quarter 2010, a $9 million increase in fees from trading account activities, a $7 million increase in gains on private capital investments, and $8 million of accretion income from indemnification assets associated with second quarter acquisitions.
Noninterest income increased $34 million, or 16 percent, compared with first quarter 2010, primarily due to a $9 million increase in merchant banking fees due to a higher volume of merchant banking transactions completed in second quarter, a $6 million increase in gains on private capital investments in second quarter, and $8 million of accretion income from indemnification assets.
Noninterest expense for second quarter 2010 was $584 million, up $52 million, or 10 percent, compared with second quarter 2009, with $26 million of the increase attributable to the Frontier Bank and Tamalpais Bank acquisitions. Salaries and employee benefits expense increased $87 million, primarily due to higher accruals for performance-related incentive expense and to an increase in employee count due to the acquisitions. Regulatory agencies expense decreased $22 million due to a one-time FDIC assessment recorded in second quarter 2009, expenses related to the privatization transaction (classified in privatization-related expense and intangible asset amortization expense) decreased $17 million, and the provision for losses on off-balance sheet commitments declined $14 million.
Noninterest expense for second quarter increased $60 million, or 11 percent, compared with first quarter 2010, with $26 million of the increase attributable to the Frontier Bank and Tamalpais Bank acquisitions.
Year-to-Date Results
For first half 2010, net income was $231 million, compared with net loss of $90 million for first half 2009. For first half 2010, income before income tax expense was $306 million, compared with loss before income tax benefit of $194 million for first half 2009. The improvement in net income was primarily due to a $440 million decrease in total provision for credit losses and a $63 million gain on the sale of securities recorded in first half 2010.
Total revenue for first half 2010 was $1.6 billion, an increase of $160 million, or 11 percent, over first half 2009. Net interest income increased $64 million, or 6 percent, and noninterest income increased $96 million, or 27 percent. Noninterest expense increased $55 million, or 5 percent, primarily due to an increase of $123 million in salaries and employee benefits expense, partially offset by a $47 million decrease in expenses related to the privatization transaction (classified in privatization-related expense and intangible asset amortization expense), and a $45 million decrease in provision for off-balance sheet commitments.
Balance Sheet
At June 30, 2010, the Company had total assets of $84 billion, up $10 billion, or 14 percent, compared with June 30, 2009. Total loans were $48 billion, down $0.5 billion, or 1 percent, compared with June 30, 2009. Total securities were $23 billion, up $14 billion, as deposit growth significantly outpaced loan growth.
At June 30, 2010, total deposits were $66 billion, up $8 billion, or 14 percent, compared with June 30, 2009. Core deposits at period-end were $53 billion, up $2 billion, or 5 percent, compared with June 30, 2009. At June 30, 2010, the Company’s core deposit-to-loan ratio was 109 percent, up from 103 percent at June 30, 2009.
Credit Quality
On April 30, 2010, in a purchase and assumption agreement with the FDIC, as receiver of Frontier Bank, Union Bank acquired loans with a fair value of $1.56 billion and OREO with a fair value of $155 million. All acquired loans and OREO are covered by loss share agreements, with various terms, between the FDIC and the Bank.
The Bank entered into two loss share agreements with the FDIC related to the Frontier Bank acquisition — one for single-family residential mortgage loans and one for commercial loans and other covered assets. Pursuant to the terms of these loss share agreements, the FDIC’s obligation to reimburse the Bank for losses with respect to loans and OREO (collectively referred to as covered assets) begins with the first dollar of loss incurred. Pursuant to the terms of the loss share agreements, the FDIC is obligated to reimburse the Bank for 80 percent of losses with respect to the covered assets. The Bank will reimburse the FDIC for 80 percent of recoveries with respect to losses for which the FDIC paid the Bank under the loss share agreements.
The loss share agreement applicable to single-family residential mortgage loans provides for FDIC loss sharing and Bank reimbursement to the FDIC for recoveries for ten years from the acquisition date. The loss share agreement applicable to commercial loans and other covered assets provides for FDIC loss sharing for five years and Bank reimbursement of recoveries to the FDIC for a total of eight years.
On April 16, 2010, in a purchase and assumption agreement with the FDIC, as receiver of Tamalpais Bank, Union Bank acquired loans with a fair value of $373 million and OREO with a fair value of $7 million. All acquired loans and OREO are covered by loss share agreements, with various terms, between the FDIC and the Bank.
Nonperforming assets at June 30, 2010, were $1.56 billion, or 1.85 percent of total assets. Excluding FDIC covered assets, nonperforming assets were 1.68 percent of total assets at June 30, 2010. This compares with $1.47 billion, or 1.72 percent of total assets, at March 31, 2010, and $1.14 billion, or 1.55 percent of total assets, at June 30, 2009. The increase in nonperforming assets compared with June 30, 2009, resulted from weak economic conditions, which drove higher levels of nonaccrual loans in most segments of the loan portfolio.
For second quarter 2010, the total provision for credit losses was $45 million, down from $165 million for first quarter 2010. Net charge-offs were $94 million, or 0.78 percent annualized of average total loans, down from $119 million, or 1.03 percent annualized of average total loans, for first quarter 2010. Excluding FDIC covered assets, net charge-offs for second quarter 2010 were 0.81 percent annualized of average total loans. For second quarter 2009, the total provision for credit losses was $375 million and net charge-offs were $152 million, or 1.23 percent annualized of average total loans.
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 second quarter 2010, the provision for loan losses was $44 million and the provision for losses on off-balance sheet commitments was $1 million, which resulted in a total provision for credit losses of $45 million.
At June 30, 2010, the allowance for credit losses as a percent of total loans and as a percent of nonaccrual loans was 3.16 percent (3.29 percent excluding FDIC covered loans) and 113 percent, respectively. This compares with 3.38 percent and 111 percent, respectively, at March 31, 2010, and 2.55 percent and 113 percent, respectively, at June 30, 2009.
Capital
Total stockholder’s equity was $9.9 billion and tangible common equity was $7.2 billion at June 30, 2010. The Company’s tangible common equity ratio was 8.83 percent at June 30, 2010, compared with 8.47 percent at March 31, 2010. The Tier 1 common capital ratio at June 30, 2010, was 11.93 percent, compared with 11.96 percent at March 31, 2010. The Company’s Tier 1 and total risk-based capital ratios at June 30, 2010, were 11.95 percent and 14.64 percent, respectively.
Non-GAAP Financial Measures
This press release contains certain references to financial measures identified as excluding privatization transaction expenses, 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 $84 billion at June 30, 2010. 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 operated 396 banking offices in California, Washington, Oregon and Texas, as well as two international offices, on June 30, 2010. 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.
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UnionBanCal Corporation and Subsidiaries |
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| As of and for the Three Months Ended |
Percent Change to June 30, 2010 from |
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| (Dollars in thousands) |
June 30, 2009 |
September 30, 2009 |
December 31, 2009 |
March 31, 2010 |
June 30, 2010 |
June 30, 2009 |
March 31, 2010 |
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| Results of operations: | ||||||||||||||||||||||||||
| Net interest income (1) | $ | 553,094 | $ | 564,296 | $ | 580,412 | $ | 576,794 | $ | 602,775 | 9.0 | % | 4.5 | % | ||||||||||||
| Noninterest income | 183,213 | 183,929 | 185,286 | 209,905 | 244,294 | 33.3 | % | 16.4 | % | |||||||||||||||||
| Total revenue | 736,307 | 748,225 | 765,698 | 786,699 | 847,069 | 15.0 | % | 7.7 | % | |||||||||||||||||
| Noninterest expense | 532,058 | 505,815 | 529,245 | 524,572 | 584,200 | 9.8 | % | 11.4 | % | |||||||||||||||||
| Pre-tax, pre-provision income | 204,249 | 242,410 | 236,453 | 262,127 | 262,869 | 28.7 | % | 0.3 | % | |||||||||||||||||
| Provision for loan losses | 360,000 | 314,000 | 191,000 | 170,000 | 44,000 | (87.8 | %) | (74.1 | %) | |||||||||||||||||
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Income (loss) before income taxes and including noncontrolling interests (1) |
(155,751 | ) | (71,590 | ) | 45,453 | 92,127 | 218,869 | nm | nm | |||||||||||||||||
| Taxable-equivalent adjustment | 2,748 | 3,260 | 2,685 | 2,441 | 2,382 | (13.3 | %) | (2.4 | %) | |||||||||||||||||
| Income tax expense (benefit) | (78,492 | ) | (57,821 | ) | 885 | 15,401 | 66,264 | nm | nm | |||||||||||||||||
| Net income (loss) including noncontrolling interests | (80,007 | ) | (17,029 | ) | 41,883 | 74,285 | 150,223 | nm | nm | |||||||||||||||||
| Deduct: Net loss from noncontrolling interests | - | - | - | 3,059 | 3,536 | nm | 15.6 | % | ||||||||||||||||||
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Net income (loss) attributable to UnionBanCal Corporation (UNBC) |
$ | (80,007 | ) | $ | (17,029 | ) | $ | 41,883 | $ | 77,344 | $ | 153,759 | nm | 98.8 | % | |||||||||||
| Balance sheet (end of period): | ||||||||||||||||||||||||||
| Total assets | $ | 73,984,788 | $ | 78,153,207 | $ | 85,598,128 | $ | 85,471,296 | $ | 84,309,990 | 14.0 | % | (1.4 | %) | ||||||||||||
| Total securities (3) | 8,574,553 | 19,403,911 | 23,786,547 | 23,412,283 | 23,054,467 | nm | (1.5 | %) | ||||||||||||||||||
| Total loans | 48,896,520 | 48,169,508 | 47,228,508 | 46,721,210 | 48,362,889 | (1.1 | %) | 3.5 | % | |||||||||||||||||
| Core deposits (4) | 50,538,879 | 50,109,655 | 55,687,108 | 53,073,409 | 52,934,521 | 4.7 | % | (0.3 | %) | |||||||||||||||||
| Total deposits | 58,338,959 | 60,691,368 | 68,517,653 | 66,581,593 | 66,270,584 | 13.6 | % | (0.5 | %) | |||||||||||||||||
| Medium- and long-term debt | 5,131,068 | 5,121,553 | 4,212,184 | 4,710,979 | 4,702,403 | (8.4 | %) | (0.2 | %) | |||||||||||||||||
| UNBC stockholder's equity | 7,429,500 | 9,475,004 | 9,580,333 | 9,706,081 | 9,941,892 | 33.8 | % | 2.4 | % | |||||||||||||||||
| Balance sheet (period average): | ||||||||||||||||||||||||||
| Total assets | $ | 71,495,226 | $ | 74,352,649 | $ | 81,964,956 | $ | 84,810,109 | $ | 85,510,707 | 19.6 | % | 0.8 | % | ||||||||||||
| Total securities (3) | 8,612,531 | 10,774,972 | 20,230,854 | 23,546,665 | 23,088,490 | nm | (1.9 | %) | ||||||||||||||||||
| Total loans | 49,556,222 | 48,764,826 | 47,871,715 | 46,847,523 | 47,827,078 | (3.5 | %) | 2.1 | % | |||||||||||||||||
| Earning assets | 65,008,223 | 68,235,083 | 75,800,728 | 78,311,856 | 78,135,432 | 20.2 | % | (0.2 | %) | |||||||||||||||||
| Core deposits (4) | 47,250,740 | 50,246,297 | 53,995,708 | 54,588,331 | 54,380,813 | 15.1 | % | (0.4 | %) | |||||||||||||||||
| Total deposits | 54,352,412 | 59,453,936 | 65,697,920 | 67,838,145 | 68,104,408 | 25.3 | % | 0.4 | % | |||||||||||||||||
| UNBC stockholder's equity | 7,303,050 | 7,358,773 | 9,405,635 | 9,532,428 | 9,630,657 | 31.9 | % | 1.0 | % | |||||||||||||||||
| Performance ratios: | ||||||||||||||||||||||||||
| Return on average assets (2) | (0.45 | %) | (0.09 | %) | 0.20 | % | 0.37 | % | 0.72 | % | ||||||||||||||||
| Return on average UNBC stockholder's equity (2) | (4.39 | %) | (0.92 | %) | 1.77 | % | 3.29 | % | 6.40 | % | ||||||||||||||||
| Efficiency ratio (5) | 68.28 | % | 65.07 | % | 66.36 | % | 64.98 | % | 64.86 | % | ||||||||||||||||
| Net interest margin (1) (2) | 3.41 | % | 3.31 | % | 3.06 | % | 2.95 | % | 3.09 | % | ||||||||||||||||
| Capital ratios: | ||||||||||||||||||||||||||
| Tangible common equity ratio (6) | 6.56 | % | 8.94 | % | 8.29 | % | 8.47 | % | 8.83 | % | ||||||||||||||||
| Tier 1 common capital ratio (7)(8) | 8.66 | % | 11.58 | % | 11.80 | % | 11.96 | % | 11.93 | % | ||||||||||||||||
| Tier 1 risk-based capital ratio (8) | 8.68 | % | 11.60 | % | 11.82 | % | 11.98 | % | 11.95 | % | ||||||||||||||||
| Total risk-based capital ratio (8) | 11.54 | % | 14.42 | % | 14.54 | % | 14.70 | % | 14.64 | % | ||||||||||||||||
| Leverage ratio (8) | 7.89 | % | 10.39 | % | 9.45 | % | 9.22 | % | 9.23 | % | ||||||||||||||||
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Selected financial ratios excluding impact of privatization transaction (12): |
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| From net income (loss) attributable to UNBC: | ||||||||||||||||||||||||||
| Return on average assets (2) | (0.39 | %) | (0.03 | %) | 0.28 | % | 0.44 | % | 0.78 | % | ||||||||||||||||
| Return on average stockholder's equity (2) | (5.48 | %) | (0.45 | %) | 3.15 | % | 5.10 | % | 9.01 | % | ||||||||||||||||
| Efficiency ratio (5) | 63.97 | % | 60.36 | % | 62.29 | % | 61.51 | % | 62.39 | % | ||||||||||||||||
| Refer to Exhibit 13 for footnote explanations. | ||||||||||||||||||||||||||
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UnionBanCal Corporation and Subsidiaries Exhibit 2 |
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| As of and for the Six Months Ended |
Percent Change to June 30, 2010 from |
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| (Dollars in thousands) |
June 30, 2009 (1) |
June 30, 2010 (1) |
June 30, 2009 |
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| Results of operations: | ||||||||||
| Net interest income (1) | $ | 1,115,714 | $ | 1,179,569 | 5.7% | |||||
| Noninterest income | 357,929 | 454,199 | 26.9% | |||||||
| Total revenue | 1,473,643 | 1,633,768 | 10.9% | |||||||
| Noninterest expense | 1,053,441 | 1,108,772 | 5.3% | |||||||
| Pre-tax, pre-provision income | 420,202 | 524,996 | 24.9% | |||||||
| Provision for loan losses | 609,000 | 214,000 | (64.9%) | |||||||
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Income (loss) before income taxes and including noncontrolling interests (1) |
(188,798 | ) | 310,996 | nm | ||||||
| Taxable-equivalent adjustment | 5,365 | 4,823 | (10.1%) | |||||||
| Income tax expense (benefit) | (104,348 | ) | 81,665 | nm | ||||||
| Net income (loss) including noncontrolling interests | (89,815 | ) | 224,508 | nm | ||||||
| Deduct: Net loss from noncontrolling interests | - | 6,595 | nm | |||||||
| Net income (loss) attributable to UNBC | $ | (89,815 | ) | $ | 231,103 | nm | ||||
| Balance sheet (end of period): | ||||||||||
| Total assets | $ | 73,984,788 | $ | 84,309,990 | 14.0% | |||||
| Total securities (3) | 8,574,553 | 23,054,467 | nm | |||||||
| Total loans | 48,896,520 | 48,362,889 | (1.1%) | |||||||
| Core deposits (4) | 50,538,879 | 52,934,521 | 4.7% | |||||||
| Total deposits | 58,338,959 | 66,270,584 | 13.6% | |||||||
| Medium- and long-term debt | 5,131,068 | 4,702,403 | (8.4%) | |||||||
| UNBC stockholder's equity | 7,429,500 | 9,941,892 | 33.8% | |||||||
| Balance sheet (period average): | ||||||||||
| Total assets | $ | 69,296,183 | $ | 85,162,313 | 22.9% | |||||
| Total securities (3) | 8,491,983 | 23,316,311 | nm | |||||||
| Total loans | 49,671,989 | 47,340,005 | (4.7%) | |||||||
| Earning assets | 62,743,021 | 78,223,154 | 24.7% | |||||||
| Core deposits (4) | 43,318,458 | 54,483,999 | 25.8% | |||||||
| Total deposits | 50,514,116 | 67,972,012 | 34.6% | |||||||
| UNBC stockholder's equity | 7,319,518 | 9,581,811 | 30.9% | |||||||
| Performance ratios: | ||||||||||
| Return on average assets (2) | (0.26 | %) | 0.55 | % | ||||||
| Return on average UNBC stockholder's equity (2) | (2.47 | %) | 4.86 | % | ||||||
| Efficiency ratio (5) | 66.98 | % | 64.92 | % | ||||||
| Net interest margin (1) (2) | 3.56 | % | 3.02 | % | ||||||
| Capital ratios: | ||||||||||
| Tangible common equity ratio (6) | 6.56 | % | 8.83 | % | ||||||
| Tier 1 common capital ratio (7)(8) | 8.66 | % | 11.93 | % | ||||||
| Tier 1 risk-based capital ratio (8) | 8.68 | % | 11.95 | % | ||||||
| Total risk-based capital ratio (8) | 11.54 | % | 14.64 | % | ||||||
| Leverage ratio (8) | 7.89 | % | 9.23 | % | ||||||
|
Selected financial ratios excluding impact of privatization transaction (12): |
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| From net income (loss) attributable to UNBC: | ||||||||||
| Return on average assets (2) | (0.17 | %) | 0.61 | % | ||||||
| Return on average stockholder's equity (2) | (2.28 | %) | 7.08 | % | ||||||
| Efficiency ratio (5) | 61.54 | % | 61.97 | % | ||||||
| Refer to Exhibit 13 for footnote explanations. | ||||||||||
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UnionBanCal Corporation and Subsidiaries |
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| As of and for the Three Months Ended |
Percent Change to June 30, 2010 from |
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| (Dollars in thousands) |
June 30, 2009 |
September 30, 2009 |
December 31, 2009 |
March 31, 2010 |
June 30, 2010 |
June 30, 2009 |
March 31, 2010 |
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| Credit Data: | ||||||||||||||||||||||||||
| Provision for loan losses | $ | 360,000 | $ | 314,000 | $ | 191,000 | $ | 170,000 | $ | 44,000 | (87.8 | %) | (74.1 | %) | ||||||||||||
| Provision (reversal) for off-balance sheet commitments | 15,000 | 6,000 | 4,000 | (5,000 | ) | 1,000 | (93.3 | %) | nm | |||||||||||||||||
| Total provision for credit losses | $ | 375,000 | $ | 320,000 | $ | 195,000 | $ | 165,000 | $ | 45,000 | (88.0 | %) | (72.7 | %) | ||||||||||||
| Net charge-offs | $ | 151,579 | $ | 136,673 | $ | 94,780 | $ | 119,411 | $ | 93,531 | (38.3 | %) | (21.7 | %) | ||||||||||||
| Nonperforming assets | 1,144,602 | 1,367,691 | 1,349,793 | 1,466,937 | 1,562,804 | 36.5 | % | 6.5 | % | |||||||||||||||||
| Credit Ratios: | ||||||||||||||||||||||||||
| Allowance for loan losses to: | ||||||||||||||||||||||||||
| Total loans | 2.21 | % | 2.62 | % | 2.87 | % | 3.01 | % | 2.81 | % | ||||||||||||||||
| Nonaccrual loans | 98.14 | % | 95.15 | % | 103.03 | % | 99.06 | % | 100.38 | % | ||||||||||||||||
| Allowances for credit losses to (9) : | ||||||||||||||||||||||||||
| Total loans | 2.55 | % | 2.97 | % | 3.25 | % | 3.38 | % | 3.16 | % | ||||||||||||||||
| Nonaccrual loans | 113.24 | % | 108.16 | % | 116.42 | % | 111.11 | % | 113.13 | % | ||||||||||||||||
| Net charge-offs to average total loans (2) | 1.23 | % | 1.11 | % | 0.79 | % | 1.03 | % | 0.78 | % | ||||||||||||||||
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Nonperforming assets to total loans, foreclosed assets and distressed loans held for sale |
2.34 | % | 2.84 | % | 2.86 | % | 3.14 | % | 3.22 | % | ||||||||||||||||
| Nonaccrual loans to total loans | 2.25 | % | 2.75 | % | 2.79 | % | 3.04 | % | 2.80 | % | ||||||||||||||||
| Nonperforming assets to total assets | 1.55 | % | 1.75 | % | 1.58 | % | 1.72 | % | 1.85 | % | ||||||||||||||||
| Excluding FDIC covered assets (13): | ||||||||||||||||||||||||||
| Allowance for loan losses to: | ||||||||||||||||||||||||||
| Total loans | N/A | N/A | N/A | N/A | 2.92 | % | ||||||||||||||||||||
| Nonaccrual loans | N/A | N/A | N/A | N/A | 102.17 | % | ||||||||||||||||||||
| Allowances for credit losses to (9) : | ||||||||||||||||||||||||||
| Total loans | N/A | N/A | N/A | N/A | 3.29 | % | ||||||||||||||||||||
| Nonaccrual loans | N/A | N/A | N/A | N/A | 115.14 | % | ||||||||||||||||||||
| Net charge-offs to average total loans (2) | N/A | N/A | N/A | N/A | 0.81 | % | ||||||||||||||||||||
|
Nonperforming assets to total loans, foreclosed assets and distressed loans held for sale |
N/A | N/A | N/A | N/A | 2.97 | % | ||||||||||||||||||||
| Nonaccrual loans to total loans | N/A | N/A | N/A | N/A | 2.86 | % | ||||||||||||||||||||
| Nonperforming assets to total assets | N/A | N/A | N/A | N/A | 1.68 | % | ||||||||||||||||||||
| As of and for the Six Months Ended |
Percent Change to June 30, 2010 from |
|||||||||||||||||||||||||
| (Dollars in thousands) |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
|||||||||||||||||||||||
| Credit Data: | ||||||||||||||||||||||||||
| Provision for loan losses | $ | 609,000 | $ | 214,000 | (64.9 | %) | ||||||||||||||||||||
| Provision for off-balance sheet commitments | 41,000 | (4,000 | ) | nm | ||||||||||||||||||||||
| Total provision for credit losses | $ | 650,000 | $ | 210,000 | (67.7 | %) | ||||||||||||||||||||
| Net charge-offs | $ | 267,957 | $ | 212,942 | (20.5 | %) | ||||||||||||||||||||
| Nonperforming assets | 1,144,602 | 1,562,804 | 36.5 | % | ||||||||||||||||||||||
| Credit Ratios: | ||||||||||||||||||||||||||
| Net charge-offs to average total loans (2) | 1.09 | % | 0.91 | % | ||||||||||||||||||||||
| Nonperforming assets to total assets | 1.55 | % | 1.85 | % | ||||||||||||||||||||||
| Excluding FDIC covered assets (13): | ||||||||||||||||||||||||||
| Net charge-offs to average total loans (2) | N/A | 0.92 | % | |||||||||||||||||||||||
| Nonperforming assets to total assets | N/A | 1.68 | % | |||||||||||||||||||||||
| Refer to Exhibit 13 for footnote explanations. | ||||||||||||||||||||||||||
|
UnionBanCal Corporation and Subsidiaries |
||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||
| (Amounts in thousands) |
June 30, 2009 |
September 30, 2009 |
December 31, 2009 |
March 31, 2010 |
June 30, 2010 |
|||||||||||||
| Interest Income | ||||||||||||||||||
| Loans | $ | 584,532 | $ | 576,166 | $ | 557,103 | $ | 539,574 | $ | 568,852 | ||||||||
| Securities | 98,385 | 109,279 | 144,623 | 143,336 | 134,591 | |||||||||||||
| Interest bearing deposits in banks | 3,550 | 4,956 | 4,043 | 4,055 | 3,696 | |||||||||||||
|
Federal funds sold and securities purchased under resale agreements |
97 | 110 | 23 | 119 | 150 | |||||||||||||
| Trading account assets | 210 | 250 | 355 | 819 | 585 | |||||||||||||
| Total interest income | 686,774 | 690,761 | 706,147 | 687,903 | 707,874 | |||||||||||||
| Interest Expense | ||||||||||||||||||
| Deposits | 100,186 | 101,374 | 101,703 | 85,562 | 78,477 | |||||||||||||
|
Federal funds purchased and securities sold under repurchase agreements |
19 | 41 | 24 | 37 | 41 | |||||||||||||
| Commercial paper | 954 | 355 | 194 | 240 | 289 | |||||||||||||
| Other borrowed funds | 5,616 | 604 | 613 | 1,202 | 1,172 | |||||||||||||
| Medium- and long-term debt | 29,415 | 27,112 | 25,648 | 26,241 | 27,175 | |||||||||||||
| Trust notes | 238 | 239 | 238 | 268 | 327 | |||||||||||||
| Total interest expense | 136,428 | 129,725 | 128,420 | 113,550 | 107,481 | |||||||||||||
| Net Interest Income | 550,346 | 561,036 | 577,727 | 574,353 | 600,393 | |||||||||||||
| Provision for loan losses | 360,000 | 314,000 | 191,000 | 170,000 | 44,000 | |||||||||||||
| Net interest income after provision for loan losses | 190,346 | 247,036 | 386,727 | 404,353 | 556,393 | |||||||||||||
| Noninterest Income | ||||||||||||||||||
| Service charges on deposit accounts | 71,843 | 74,888 | 72,711 | 66,140 | 63,843 | |||||||||||||
| Trust and investment management fees | 34,130 | 34,506 | 32,454 | 31,420 | 34,244 | |||||||||||||
| Securities gains (losses), net | (172 | ) | 12,694 | 11,759 | 33,893 | 27,244 | ||||||||||||
| Trading account activities | 16,251 | 10,513 | 24,134 | 21,093 | 25,379 | |||||||||||||
| Merchant banking fees | 19,924 | 14,601 | 16,295 | 13,676 | 22,223 | |||||||||||||
| Card processing fees, net | 8,124 | 8,559 | 8,293 | 8,620 | 12,856 | |||||||||||||
| Brokerage commissions and fees | 8,506 | 8,611 | 8,160 | 8,528 | 10,906 | |||||||||||||
| Other | 24,607 | 19,557 | 11,480 | 26,535 | 47,599 | |||||||||||||
| Total noninterest income | 183,213 | 183,929 | 185,286 | 209,905 | 244,294 | |||||||||||||
| Noninterest Expense | ||||||||||||||||||
| Salaries and other compensation | 191,104 | 198,768 | 220,789 | 224,400 | 269,749 | |||||||||||||
| Employee benefits | 41,953 | 35,213 | 40,266 | 55,186 | 49,942 | |||||||||||||
| Salaries and employee benefits | 233,057 | 233,981 | 261,055 | 279,586 | 319,691 | |||||||||||||
| Net occupancy | 43,222 | 43,146 | 38,793 | 43,380 | 46,441 | |||||||||||||
| Intangible asset amortization | 40,281 | 40,641 | 40,101 | 31,793 | 30,613 | |||||||||||||
| Regulatory agencies | 52,836 | 30,739 | 32,103 | 29,848 | 30,526 | |||||||||||||
| Outside services | 22,948 | 22,219 | 25,288 | 22,785 | 24,269 | |||||||||||||
| Professional services | 19,489 | 17,647 | 16,981 | 16,361 | 26,103 | |||||||||||||
| Equipment | 16,602 | 17,838 | 16,383 | 15,811 | 16,929 | |||||||||||||
| Software | 14,205 | 16,502 | 17,205 | 14,728 | 15,831 | |||||||||||||
| Foreclosed asset expense (income) | 3,282 | (144 | ) | 2,315 | (198 | ) | 871 | |||||||||||
|
Provision for (reversal of) losses on off-balance sheet commitments |
15,000 | 6,000 | 4,000 | (5,000 | ) | 1,000 | ||||||||||||
| Privatization-related expense | 7,433 | 6,649 | 4,981 | 5,153 | 426 | |||||||||||||
| Other | 63,703 | 70,597 | 70,040 | 70,325 | 71,500 | |||||||||||||
| Total noninterest expense | 532,058 | 505,815 | 529,245 | 524,572 | 584,200 | |||||||||||||
| Income (loss) before income taxes and including | ||||||||||||||||||
| noncontrolling interests | (158,499 | ) | (74,850 | ) | 42,768 | 89,686 | 216,487 | |||||||||||
| Income tax expense (benefit) | (78,492 | ) | (57,821 | ) | 885 | 15,401 | 66,264 | |||||||||||
| Net Income (Loss) including Noncontrolling Interests | (80,007 | ) | (17,029 | ) | 41,883 | 74,285 | 150,223 | |||||||||||
| Deduct: Net loss from noncontrolling interests | - | - | - | 3,059 | 3,536 | |||||||||||||
| Net Income (Loss) attributable to UNBC | $ | (80,007 | ) | $ | (17,029 | ) | $ | 41,883 | $ | 77,344 | $ | 153,759 | ||||||
|
UnionBanCal Corporation and Subsidiaries |
||||||||
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| (Amounts in thousands) | 2009 | 2010 | ||||||
| Interest Income | ||||||||
| Loans | $ | 1,186,374 | $ | 1,108,426 | ||||
| Securities | 201,282 | 277,927 | ||||||
| Interest bearing deposits in banks | 4,450 | 7,751 | ||||||
|
Federal funds sold and securities purchased under resale agreements |
238 | 269 | ||||||
| Trading account assets | 360 | 1,404 | ||||||
| Total interest income | 1,392,704 | 1,395,777 | ||||||
| Interest Expense | ||||||||
| Deposits | 205,224 | 164,039 | ||||||
|
Federal funds purchased and securities sold under repurchase agreements |
72 | 78 | ||||||
| Commercial paper | 2,546 | 529 | ||||||
| Other borrowed funds | 17,093 | 2,374 | ||||||
| Medium- and long-term debt | 56,944 | 53,416 | ||||||
| Trust notes | 476 | 595 | ||||||
| Total interest expense | 282,355 | 221,031 | ||||||
| Net Interest Income | 1,110,349 | 1,174,746 | ||||||
| Provision for loan losses | 609,000 | 214,000 | ||||||
| Net interest income after provision for loan losses | 501,349 | 960,746 | ||||||
| Noninterest Income | ||||||||
| Service charges on deposit accounts | 143,165 | 129,983 | ||||||
| Trust and investment management fees | 68,037 | 65,664 | ||||||
| Securities gains (losses), net | (172 | ) | 61,137 | |||||
| Trading account activities | 38,943 | 46,472 | ||||||
| Merchant banking fees | 33,756 | 35,899 | ||||||
| Card processing fees, net | 15,660 | 21,476 | ||||||
| Brokerage commissions and fees | 16,813 | 19,434 | ||||||
| Other | 41,727 | 74,134 | ||||||
| Total noninterest income | 357,929 | 454,199 | ||||||
| Noninterest Expense | ||||||||
| Salaries and other compensation | 379,327 | 494,149 | ||||||
| Employee benefits | 97,293 | 105,128 | ||||||
| Salaries and employee benefits | 476,620 | 599,277 | ||||||
| Net occupancy | 85,143 | 89,821 | ||||||
| Intangible asset amortization | 81,168 | 62,406 | ||||||
| Regulatory agencies | 70,774 | 60,374 | ||||||
| Outside services | 41,782 | 47,054 | ||||||
| Professional services | 35,427 | 42,464 | ||||||
| Equipment | 32,015 | 32,740 | ||||||
| Software | 29,243 | 30,559 | ||||||
| Foreclosed asset expense | 4,168 | 673 | ||||||
|
(Reversal of) provision for losses on off-balance sheet commitments |
41,000 | (4,000 | ) | |||||
| Privatization-related expense | 34,252 | 5,579 | ||||||
| Other | 121,849 | 141,825 | ||||||
| Total noninterest expense | 1,053,441 | 1,108,772 | ||||||
|
Income (loss) before income taxes and including noncontrolling interests |
(194,163 | ) | 306,173 | |||||
| Income tax expense (benefit) | (104,348 | ) | 81,665 | |||||
| Net Income (Loss) including Noncontrolling Interests | (89,815 | ) | 224,508 | |||||
| Deduct: Net loss from noncontrolling interests | - | 6,595 | ||||||
| Net Income (Loss) attributable to UNBC | $ | (89,815 | ) | $ | 231,103 | |||
|
UnionBanCal Corporation and Subsidiaries Consolidated Balance Sheets Exhibit 6 |
||||||||||
| (Dollars in thousands) |
(Unaudited) June 30, 2009 |
(Unaudited) September 30, 2009 |
December 31, 2009 |
(Unaudited) March 31, 2010 |
(Unaudited) June 30, 2010 |
|||||
| Assets | ||||||||||
| Cash and due from banks | $ 1,285,780 | $ 1,155,497 | $ 1,198,258 | $ 1,110,333 | $ 1,221,462 | |||||
|
Interest bearing deposits in banks (includes $9,991 at March 31, 2010 and $13,176 at June 30, 2010 related to consolidated variable interest entities (VIEs)) |
8,556,837 | 2,659,460 | 6,585,029 | 6,874,338 | 2,873,014 | |||||
|
Federal funds sold and securities purchased under resale agreements |
198,955 | 437,328 | 442,552 | 488,520 | 287,698 | |||||
| Total cash and cash equivalents | 10,041,572 | 4,252,285 | 8,225,839 | 8,473,191 | 4,382,174 | |||||
| Trading account assets: | ||||||||||
| Pledged as collateral | 51,714 | 60,816 | 15,168 | 54,380 | 64,106 | |||||
| Held in portfolio | 853,922 | 879,734 | 710,480 | 775,915 | 1,054,994 | |||||
| Securities available for sale: | ||||||||||
| Pledged as collateral | - | - | 2,500 | - | - | |||||
| Held in portfolio | 7,403,173 | 18,210,574 | 22,556,329 | 22,164,722 | 21,788,581 | |||||
|
Securities held to maturity (Fair value: June 30, 2009, $1,112,813; September 30, 2009 $1,269,934; December 31, 2009, $1,457,654; March 31, 2010, $1,500,746; June 30, 2010, $1,433,596) |
1,171,380 | 1,193,337 | 1,227,718 | 1,247,561 | 1,265,886 | |||||
| Loans: | ||||||||||
| Loans, excluding FDIC covered loans | 48,896,520 | 48,169,508 | 47,228,508 | 46,721,210 | 46,498,887 | |||||
| FDIC covered loans | - | - | - | - | 1,864,002 | |||||
| Total loans | 48,896,520 | 48,169,508 | 47,228,508 | 46,721,210 | 48,362,889 | |||||
| Allowance for loan losses | (1,081,633) | (1,260,307) | (1,357,000) | (1,408,013) | (1,357,869) | |||||
| Loans, net | 47,814,887 | 46,909,201 | 45,871,508 | 45,313,197 | 47,005,020 | |||||
| Due from customers on acceptances | 19,944 | 12,842 | 8,514 | 7,788 | 11,446 | |||||
| Premises and equipment, net | 664,673 | 667,005 | 674,298 | 671,230 | 669,302 | |||||
| Intangible assets, net | 641,406 | 601,140 | 561,040 | 529,247 | 517,311 | |||||
| Goodwill | 2,369,326 | 2,369,326 | 2,369,326 | 2,369,326 | 2,416,979 | |||||
| FDIC indemnification asset | - | - | - | - | 908,771 | |||||
|
Other assets (includes $297,736 at March 31, 2010 and $293,881 at June 30, 2010 related to consolidated VIEs) |
2,952,791 | 2,996,947 | 3,375,408 | 3,864,739 | 4,225,420 | |||||
| Total assets | $ 73,984,788 | $ 78,153,207 | $ 85,598,128 | $ 85,471,296 | $ 84,309,990 | |||||
| Liabilities | ||||||||||
| Noninterest bearing | $ 14,926,564 | $ 14,472,375 | $ 14,558,989 | $ 14,389,261 | $ 15,319,290 | |||||
| Interest bearing | 43,412,395 | 46,218,993 | 53,958,664 | 52,192,332 | 50,951,294 | |||||
| Total deposits | 58,338,959 | 60,691,368 | 68,517,653 | 66,581,593 | 66,270,584 | |||||
|
Federal funds purchased and securities sold under repurchase agreements |
203,205 | 229,268 | 150,453 | 575,668 | 101,516 | |||||
| Commercial paper | 492,127 | 423,499 | 888,541 | 799,106 | 610,580 | |||||
| Other borrowed funds | 606,019 | 164,861 | 591,934 | 833,617 | 286,275 | |||||
| Trading account liabilities | 690,704 | |||||||||