UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

               |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15() OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

             | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15() OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE TRANSITION PERIOD FROM          TO

                         Commission file number 0-28118

                             UnionBanCal Corporation
             (Exact name of registrant as specified in its charter)

         CALIFORNIA                                       94-1234979
(State of Incorporation)                    (I.R.S. Employer Identification No.)

                              400 CALIFORNIA STREET
                      SAN FRANCISCO, CALIFORNIA 94104-1476
                    (Address of principal executive offices)

                  Registrant's telephone number (415) 765-2969

           Securities registered pursuant to Section 12(b) of the Act:
                                  Common Stock

           Securities registered pursuant to Section 12(g) of the Act:
                                      None

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes |X|  No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |X|

         As of  January  31,  2001 , the  aggregate  market  value of voting and
non-voting   common  equity  held  by   non-affiliates  of  the  registrant  was
$1,596,599,167. The aggregate market value was computed by reference to the last
sales price of such stock.

         As of  January  31,  2001,  the  number  of shares  outstanding  of the
registrant's Common Stock was 159,068,439.

                       DOCUMENTS INCORPORATED BY REFERENCE




INCORPORATED DOCUMENT                                      LOCATION IN FORM 10-K
---------------------                                      ---------------------
Portions of the Proxy Statement for the April 25,            Part III
2001 Annual Meeting of Shareholders


<PAGE>

<TABLE>
<CAPTION>


                                      INDEX




                                                                                                               PAGE
                                                                                                               ----

<S>                                                                                                            <C>
PART I
   Item 1. Business.........................................................................................    2
      General...............................................................................................    2
      Banking...............................................................................................    2
      Employees.............................................................................................    3
      Competition...........................................................................................    3
      Monetary Policy.......................................................................................    3
      Supervision and Regulation............................................................................    3
   Item 2. Properties.......................................................................................    5
   Item 3. Legal Proceedings................................................................................    5
   Item 4. Submission of Matters to a Vote of Security Holders..............................................    5
       Executive Officers of the Registrant.................................................................    6
PART II
   Item 5. Market for Registrant's Common Equity and Related Shareholder Matters............................    9
   Item 6. Selected Financial Data..........................................................................   10, F-1
   Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations............   10, F-1
   Item 7A. Quantitative and Qualitative Disclosures About Market Risk......................................   10, F-38
   Item 8. Financial Statements and Supplementary Data......................................................   10, F-45
   Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............   10
PART III
   Item 10. Directors and Executive Officers of the Registrant..............................................   10
   Item 11. Executive Compensation..........................................................................   11
   Item 12. Security Ownership of Certain Beneficial Owners and Management..................................   11
   Item 13. Certain Relationships and Related Transactions..................................................   11
PART IV
   Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................   11
Signatures..................................................................................................   II-1

</TABLE>

<PAGE>

                                     PART I



ITEM 1.  BUSINESS

         THIS DOCUMENT INCLUDES FORWARD-LOOKING INFORMATION, WHICH IS SUBJECT TO
THE "SAFE  HARBOR"  CREATED BY SECTION  27A OF THE  SECURITIES  ACT OF 1933,  AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OUR
MANAGEMENT MAY MAKE FORWARD-LOOKING  STATEMENTS IN OTHER SECURITIES AND EXCHANGE
COMMISSION FILINGS,  PRESS RELEASES,  NEWS ARTICLES,  CONFERENCE CALLS WITH WALL
STREET  ANALYSTS  AND  SHAREHOLDERS  AND  WHEN  WE ARE  SPEAKING  ON  BEHALF  OF
UNIONBANCAL  CORPORATION.  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,"  "ANTICIPATE,"  "INTEND,"  "PLAN,"
"ESTIMATE,"  "PROJECT," OR WORDS OF SIMILAR  MEANING,  OR FUTURE OR  CONDITIONAL
VERBS  SUCH  AS   "WILL,"   "WOULD,"   "SHOULD,"   "COULD,"   OR  "MAY."   THESE
FORWARD-LOOKING  STATEMENTS ARE INTENDED TO PROVIDE  INVESTORS  WITH  ADDITIONAL
INFORMATION  WITH  WHICH THEY MAY  ASSESS  OUR  FUTURE  POTENTIAL.  ALL OF THESE
FORWARD-LOOKING  STATEMENTS ARE BASED ON ASSUMPTIONS  ABOUT AN UNCERTAIN  FUTURE
AND ARE BASED ON INFORMATION AVAILABLE AT THE DATE SUCH STATEMENTS ARE ISSUED.

         THERE ARE NUMEROUS  RISKS AND  UNCERTAINTIES  THAT COULD AND WILL CAUSE
ACTUAL RESULTS TO DIFFER FROM THOSE DISCUSSED IN OUR FORWARD-LOOKING STATEMENTS.
MANY OF THESE  FACTORS  ARE BEYOND OUR  ABILITY TO CONTROL OR PREDICT  AND COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR STOCK PRICE, FINANCIAL CONDITION,  RESULTS
OF OPERATIONS OR PROSPECTS.  SUCH RISKS AND UNCERTAINTIES  INCLUDE,  BUT ARE NOT
LIMITED TO, THE FOLLOWING  FACTORS'  ADVERSE  ECONOMIC  CONDITIONS IN CALIFORNIA
(INCLUDING PROBLEMS ARISING FROM THE CALIFORNIA ENERGY CRISIS), ADVERSE ECONOMIC
CONDITIONS  AFFECTING  CERTAIN  INDUSTRIES,  FLUCTUATIONS IN INTEREST RATES, THE
CONTROLLING INTEREST IN US BY THE BANK OF TOKYO-MITSUBISHI, LTD., COMPETITION IN
THE BANKING INDUSTRY,  RESTRICTIONS ON DIVIDENDS, ADVERSE EFFECTS OF CURRENT AND
FUTURE BANKING RULES,  REGULATIONS AND  LEGISLATION,  AND RISKS  ASSOCIATED WITH
VARIOUS STRATEGIES WE MAY PURSUE, INCLUDING POTENTIAL ACQUISITIONS, DIVESTITURES
AND  RESTRUCTURINGS.  SEE ALSO THE  SECTION  ENTITLED,  "CERTAIN  BUSINESS  RISK
FACTORS" ON PAGE F-41.

GENERAL

         UnionBanCal   Corporation   is  a  commercial   bank  holding   company
incorporated in the State of California in 1952 and is among the oldest banks on
the West Coast,  having roots as far back as 1864. We were formed as a result of
the  combination  of Union Bank with BanCal  Tri-State  Corporation  on April 1,
1996. At December 31, 2000, Union Bank of California, N.A., our bank subsidiary,
was the third largest  commercial bank in California,  based on total assets and
total  deposits.  At December 31, 2000,  we were 66 percent owned by The Bank of
Tokyo-Mitsubishi, Ltd. and 34 percent owned by other shareholders.

         We provide a wide  range of  financial  services  to  consumers,  small
businesses,   middle-market  companies  and  major  corporations,  primarily  in
California, Oregon, and Washington, but nationally and internationally as well.

BANKING

         Our  operations  are  divided  into four  primary  segments,  which are
described more fully in Note 23 of the Consolidated Financial Statements.

 THE COMMUNITY  BANKING AND  INVESTMENT  SERVICES  GROUP.  This group offers its
customers a complete spectrum of financial needs under one convenient  umbrella.
With a full line of checking and savings, investment, loan and fee-based banking
products,  individual and business clients, including not-for-profit,  small and
institutional  investors, can each have their specific needs met. These products
are offered in 244 full-service branches, primarily in California, as well as in
Oregon, Washington, Guam and Saipan. In addition, the group offers international
and settlement services, e- banking through our web site, check cashing services
at our Cash & Save(R)  locations  and tailored loan  investment  products to our
high net worth  consumer  customers  through  the  Private  Bank.  Institutional
customers are offered employee benefit, 401(k) administration,  corporate trust,
securities  lending and custody (global and domestic)  services.  The

                                       2

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group also  includes a  registered  broker-dealer  and a  registered  investment
advisor,  which provides  investment advisory services and manages a proprietary
fund family.

 THE  COMMERCIAL  FINANCIAL  SERVICES  GROUP.  This  group  offers a variety  of
commercial  financial  services,  including  commercial and project loans,  real
estate financing,  asset-based and leveraged commercial financing, trade finance
and letters of credit, lease financing,  customized cash management services and
selected capital markets products.  The group's customers include middle- market
companies, large corporations,  real estate companies and other more specialized
industry customers. In addition,  specialized depository services are offered to
title  and  escrow  companies,   retailers,   domestic  financial  institutions,
bankruptcy trustees and other customers with significant deposit volumes.

 THE INTERNATIONAL  BANKING GROUP. This group primarily  provides  correspondent
banking  and  trade   finance-related   products   and   services  to  financial
institutions  worldwide,  primarily  in Asia.  The group  also  serves  selected
foreign  firms and U.S.  corporate  clients  in  selected  countries  worldwide,
particularly  in Asia.  This  group has a long and stable  history of  providing
correspondent   and  trade-   related   services  to   international   financial
institutions.

 THE GLOBAL MARKETS GROUP. This group, in collaboration  with our other business
groups,  offers  customers a broad range of products.  They include a variety of
foreign exchange  products and risk management  products,  such as interest rate
swaps and caps. The group trades money market and fixed income securities in the
secondary market and serves  institutional  investment  needs. The group manages
the  market-related   risks  for  us  as  part  of  its   responsibilities   for
asset/liability  management,  including  funding  our own  liquidity  needs  and
addressing our interest rate risk.

EMPLOYEES

         At January 31, 2001, we had 8,715 full-time-equivalent employees.

COMPETITION

         Banking is a highly competitive business. We compete actively for loan,
deposit,  and other  financial  services  business in  California,  Oregon,  and
Washington, as well as nationally and internationally. Our competitors include a
large number of state and national banks and major foreign-affiliated or foreign
banks,  as well as many  financial and  nonfinancial  firms which offer services
similar to those offered by us or our subsidiaries.

         We  believe   that   continued   emphasis  on  enhanced   services  and
distribution  systems,  an expanded  customer base,  increased  productivity and
strong credit quality,  together with an established capital base, will position
us to meet the challenges provided by this competition.

MONETARY POLICY

         The  operations of bank holding  companies and their  subsidiaries  are
affected by the credit and monetary policies of the Federal Reserve Board (FRB).
The FRB influences the financial performance of bank holding companies and their
subsidiaries  through its management of the discount rate, the money supply, and
reserve  requirements on bank deposits.  Monetary  policies of the FRB have had,
and will  continue to have, a  significant  effect on the  operating  results of
financial institutions, including us.

SUPERVISION AND REGULATION

         We and The Bank of  Tokyo-Mitsubishi,  Ltd.  are subject to  regulation
under the Bank Holding Company Act of 1956 (BHCA), as amended, which subjects us
to FRB reporting and examination requirements. Generally, the BHCA restricts any
investment  that we may make to no more than 5 percent of the  voting  shares of
any non-banking entity, and we may not acquire more than 5 percent of the voting
shares  of any  domestic  bank  without  the  prior  approval  of the  FRB.  Our
activities  are  limited,  with some

                                       3

<PAGE>

exceptions,  to banking,  the  business of managing or  controlling  banks,  and
activities  which the regulatory  authorities  deem to be so closely  related to
banking as to be a "proper incident thereto".

         Union  Bank  of  California,  N.A.  and  most of its  subsidiaries  are
regulated  by  the  Office  of  the  Comptroller  of  the  Currency  (OCC).  Our
subsidiaries  are  also  subject  to  extensive  regulation,   supervision,  and
examination by various other federal and state regulatory agencies. In addition,
Union Bank of  California,  N.A.  and its  subsidiaries  are  subject to certain
restrictions under the Federal Reserve Act, including  restrictions on affiliate
transactions.  Dividends  payable by Union Bank of  California,  N.A.  to us are
subject  to a formula  imposed by the OCC unless  express  approval  is given to
deviate from the formula. For more information  regarding  restrictions on loans
and  dividends  by Union  Bank of  California,  N.A.  to its  affiliates  and on
transactions with affiliates,  see Notes 17 and 22 to our Consolidated Financial
Statements included in this Form 10-K.

         The  Federal  Deposit  Insurance  Corporation  Improvement  Act of 1991
(FDICIA) imposed stricter capital requirements on banks. FDICIA requires federal
bank regulatory  authorities to take "prompt  corrective action" in dealing with
inadequately  capitalized  banks.  FDICIA  established  five  tiers  of  capital
measurement ranging from "well capitalized" to "critically undercapitalized". It
is our policy to maintain  risk-based  capital  ratios at or above the  required
minimum capital adequacy levels for both Union Bank of California,  N.A. and us.
At December 31, 2000, management believes Union Bank of California, N.A. met the
requirements of a "well capitalized" institution.

         Furthermore,  the activities of HighMark Capital  Management,  Inc. and
UBOCIS are subject to the rules and  regulations  of the Securities and Exchange
Commission as well as state securities regulators. UBOCIS is also subject to the
rules and regulations of the NASD.

         There are additional  requirements  and restrictions in the laws of the
United States and the states of California,  Oregon, and Washington,  as well as
other states in which Union Bank of California,  N.A. and its  subsidiaries  may
conduct  operations.  These include  restrictions on the amount of loans and the
nature and amount of  investments,  as well as activities as an  underwriter  of
securities,  the opening and closing of branches  and the  acquisition  of other
financial institutions. The Bank is subject to certain fair lending requirements
and  reporting  obligations  involving  home  mortgage  lending  operations  and
Community  Reinvestment  Act (CRA)  activities.  The CRA generally  requires the
federal  banking  agencies to evaluate the record of a financial  institution in
meeting the credit needs of their local communities,  including low and moderate
income  neighborhoods.  In  addition to  substantive  penalties  and  corrective
measures that may be required for a violation of certain fair lending laws,  the
federal banking agencies may take compliance with such laws and CRA into account
when regulating and supervising other activities.

         The  international  activities  of Union Bank of  California,  N.A. are
subject to the laws and regulations of the jurisdiction  where business is being
conducted  which  may  change  from  time  to  time  and  affect  Union  Bank of
California,   N.A.'s  business   opportunities  and   competitiveness  in  these
jurisdictions.  Furthermore,  due to the controlling ownership of us by The Bank
of Tokyo-Mitsubishi,  Ltd.,  regulatory  requirements adopted or enforced by the
Government  of Japan may have an effect on the  activities  and  investments  of
Union Bank of California, N.A. and us in the future.

         On  November   12,  1999   President   Clinton   signed  into  law  the
Gramm-Leach-Bliley  Act (the GLB Act), key portions of which became effective on
March 11, 2000. The GLB Act repeals provisions of the Glass-Steagall  Act, which
prohibited  commercial  banks and securities  firms from  affiliating  with each
other and  engaging  in each  other's  businesses.  Thus,  many of the  barriers
prohibiting affiliations between commercial banks and securities firms have been
eliminated.  The BHCA is also  amended by the GLB Act,  to allow new  "financial
holding  companies"  (FHC) to offer  banking,  insurance,  securities  and other
financial  products.  Specifically,  the GLB Act amends section 4 of the BHCA in
order to provide a framework for the  engagement  in new  financial  activities.
Bank holding  companies (BHC) such as we may elect to become a financial holding
company if all of their subsidiary depository  institutions are well-capitalized
and well-managed. Under current FRB interpretations, a foreign bank, such as The
Bank of  Tokyo-Mitsubishi  Ltd.,  which  owns a  subsidiary  U.S.  bank  holding
company,  must  make the  election  on


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behalf of itself and its U.S.  holding  company.  In addition,  the foreign bank
must  be  well  capitalized  and  well  managed  in  accordance  with  standards
comparable  to those  required of U.S.  banks as  determined by the FRB and must
have a  satisfactory  or better CRA  rating.  We do not expect  that The Bank of
Tokyo-Mitsubishi,  Ltd. will make a financial  holding  company  election in the
immediate  future.  Under  the GLB Act,  "financial  subsidiaries"  of banks may
engage in some types of activities  beyond those permitted to banks  themselves,
provided certain conditions are met.

         In  2000,  the  Union  Bank of  California,  N.A.  filed  a  "Financial
Subsidiary  Certification" with the OCC that the applicable  conditions were met
at that time. Although the Union Bank of California N.A. does not presently have
any "financial subsidiaries",  this certification would expedite the process for
the Bank to form or acquire  "financial  subsidiaries",  if it decides to do so.
Under the GLB Act, national banks (as well as FDIC-insured state banks,  subject
to various requirements),  such as Union Bank of California, N.A., are permitted
to engage through these "financial subsidiaries" in certain financial activities
permissible  for  affiliates  of FHCs.  However,  to be able to  engage  in such
activities, the national bank must also be well-capitalized and well-managed and
receive at least a "satisfactory" rating in its most recent CRA examination.  In
addition,  if the national bank ranks as one of the 50 largest  insured banks in
the United States, as we do, it must have an issue of outstanding long-term debt
rated in one of the 3 highest rating categories by an independent rating agency,
which we presently  do not. If the national  bank falls within the next group of
50, it must  either  meet the debt  rating  test  described  above or  satisfy a
comparable  test jointly  agreed to by the FRB and the Treasury  Department.  No
debt  rating is  required  for a national  bank not  within the top 100  largest
insured banks in the United States.

         We cannot be certain of the effect of the foregoing  legislation on our
business,   although  there  is  likely  to  be  consolidation  among  financial
institutions and increased competition for us.

         Changes in the laws, regulations, or policies that impact Union Bank of
California,  N.A. and us cannot necessarily be predicted and may have a material
effect on our business and earnings.

         See  Consolidated  Financial  Statements  starting  on  page  F-46  for
specific financial information on UnionBanCal Corporation and its subsidiaries.

ITEM 2.  PROPERTIES

         At  December  31,  2000,  we  operated  244 full  service  branches  in
California,  6 full service  branches in Oregon and Washington,  and 18 overseas
branches and business offices.  In addition,  we have another 40 limited service
branches,  including 5 Cash & Save(R) facilities, and 3 Private Bank offices. We
own the property  occupied by 85 of the domestic offices and lease the remaining
properties for periods of five to twenty years.

         We own  two  administrative  facilities  in San  Francisco,  one in Los
Angeles, and three in San Diego. Other administrative  offices in San Francisco,
Los Angeles,  Portland,  Seattle,  and New York operate under  long-term  leases
expiring in one to twenty-six years.

         Rental expense for branches and administrative premises are included in
Note 4 to our Consolidated Financial Statements.

ITEM 3.  LEGAL PROCEEDINGS

         We are subject to various  pending and  threatened  legal  actions that
arise in the normal  course of  business.  We maintain  reserves for losses from
legal  actions  that  are  both  probable  and  estimable.  In  the  opinion  of
management, the disposition of claims currently pending will not have a material
adverse effect on our financial position or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of 2000.


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EXECUTIVE OFFICERS OF THE REGISTRANT

         The following information pertains to our executive officers:

<TABLE>
<CAPTION>

EXECUTIVE OFFICER                    AGE    PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS
----------------------------------   ---    ----------------------------------------------------------------------------------

<S>                                   <C>   <C>
Kaoru Hayama......................    66    Mr. Hayama has served as Chairman of the UnionBanCal Corporation and Union Bank of
                                            California, N.A. since September 1998. He served as Deputy President of The Bank of
                                            Tokyo-Mitsubishi, Ltd. from April 1996 to June 1998 and as Deputy President of the Bank
                                            of Tokyo, Ltd. from June 1994 to April 1996. Mr. Hayama has served as a Director of the
                                            UnionBanCal Corporation and Union Bank of California, N.A. since September 1998.
Takahiro Moriguchi................    56    Mr. Moriguchi has served as President and Chief Executive Officer of the UnionBanCal
                                            Corporation and Union Bank of California, N.A. since May 1997. He served as Vice
                                            Chairman and Chief Financial Officer of the UnionBanCal Corporation and Union Bank of
                                            California, N.A. from April 1996 to May 1997. He served as Vice Chairman and Chief
                                            Financial Officer of Union Bank from June 1993 until March 1996. He has served as a
                                            Director of The Bank of Tokyo-Mitsubishi, Ltd. since April 1996 and as a Managing
                                            Director of The Bank of Tokyo-Mitsubishi, Ltd. since July 2000. Mr. Moriguchi has been
                                            a Director of the UnionBanCal Corporation and Union Bank of California, N.A. since
                                            June 1993.
Yoshihiko Someya..................    53    Mr. Someya has served as Deputy Chairman and head of Credit and Administration for
                                            UnionBanCal Corporation and Union Bank of California, N.A. since July 1998. He served
                                            as Executive Vice President and head of Credit Management and Support Liaison for
                                            UnionBanCal Corporation and Union Bank of California, N.A. from March 1998 to
                                            July 1998. He served as Deputy General Manager of the Osaka Branch of The Bank of
                                            Tokyo- Mitsubishi Ltd. from May 1996 to March 1998. He served as General Manager,
                                            Financial Institutions Division of Mitsubishi Bank, Ltd. from May 1995 to May 1996.
                                            Mr. Someya has served as a Director of UnionBanCal Corporation since July 1998.
Richard C. Hartnack...............    55    Mr. Hartnack has served as Vice Chairman and head of the Community Banking and
                                            Investment Services Group for UnionBanCal Corporation and Union Bank of California,
                                            N.A. since September 1999, and from April 1996 to September 1999 as head of the
                                            Community Banking Group. He served as Vice Chairman of Union Bank from June 1991 until
                                            March 1996. Mr. Hartnack has served as a Director of UnionBanCal Corporation since
                                            June 1991.





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<CAPTION>

EXECUTIVE OFFICER                    AGE    PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS
----------------------------------   ---    ----------------------------------------------------------------------------------
<S>                                   <C>   <C>
Norimichi Kanari..................    54    Mr. Kanari has served as Vice Chairman of the UnionBanCal Corporation and Union Bank of
                                            California, N.A. since July 2000. From May 1999 to July 2000, he served as General
                                            Manager of the Corporate Banking Division in Osaka Branch of The Bank of Tokyo-
                                            Mitsubishi, Ltd., after serving from August 1997 to May 1999 as General Manager of The
                                            Bank of Tokyo- Mitsubishi, Ltd.'s New York Branch and Cayman Branch. From April 1996 to
                                            June 1997, he was General Manager of The Bank of Tokyo-Mitsubishi, Ltd.'s Shimbashi
                                            branch. From March 1995 to April 1996, he was General Manager of The Bank of Tokyo's
                                            Shimbashi branch. He has served as a Director of The Bank of Tokyo-Mitsubishi, Ltd.
                                            since June 1997. Mr. Kanari has been a Director of the UnionBanCal Corporation and
                                            Union Bank of California, N.A. since July 2000.
Robert M. Walker..................    59    Mr. Walker has served as Vice Chairman and head of the Commercial Financial Services
                                            Group for UnionBanCal Corporation and Union Bank of California, N.A. since April 1996.
                                            He served as Vice Chairman with Union Bank from July 1992 until March 1996. Mr. Walker
                                            has served as a Director of UnionBanCal Corporation since July 1992.
Linda Betzer......................    54    Ms. Betzer has served as Executive Vice President and head of the Operations and
                                            Customer Services Group for UnionBanCal Corporation and Union Bank of California, N.A.
                                            since January 2000. She served as Executive Vice President of Commercial Customer
                                            Services from April 1996 to January 2000 and Senior Vice President of Commercial
                                            Customer Services with Union Bank from 1994 to April 1996.
Philip B. Flynn...................    43    Mr. Flynn has served as Executive Vice President and Chief Credit Officer of
                                            UnionBanCal Corporation and Union Bank of California, N.A. since September 2000. He
                                            served as Executive Vice President and head of Specialized Lending from May 2000 to
                                            September 2000 and as Executive Vice President and head of the Commercial Banking Group
                                            from June 1998 to May 2000. He served as Executive Vice President and head of Energy
                                            Capital Services from September 1996 to April 2000 and served as Senior Vice President
                                            and Manager of Energy Capital Services for Union Bank of California, N.A., and Union
                                            Bank for more than five years prior thereto.
Katsuyoshi Hamahashi..............    52    Mr. Hamahashi has served as head of Global Markets Group for UnionBanCal Corporation
                                            and Union Bank of California, N.A. since October 1998 and as Executive Vice President
                                            and Treasurer of UnionBanCal Corporation and Union Bank of California, N.A. since
                                            April 1996. He served as Executive Vice President and Treasurer of Union Bank from
                                            February 1996 until March 1996 and Senior Vice President and Treasurer of Union Bank
                                            from February 1993 to February 1996.





                                       7

<PAGE>


EXECUTIVE OFFICER                    AGE    PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS
----------------------------------   ---    ----------------------------------------------------------------------------------
<S>                                   <C>   <C>
Ronald H. Kendrick................    59    Mr. Kendrick has served as Executive Vice President and head of the Community Banking
                                            Group for UnionBanCal Corporation and Union Bank of California, N.A. since
                                            December 2000. He served as Executive Vice President and San Diego Area Executive for
                                            Union Bank of California, N.A. and Union Bank from March 1994 to December 2000.
David I. Matson...................    56    Mr. Matson has served as Executive Vice President and Chief Financial Officer of
                                            UnionBanCal Corporation and Union Bank of California, N.A. since July 1998. He served
                                            as Executive Vice President and Director of Finance of UnionBanCal Corporation and
                                            Union Bank of California, N.A. from August 1997 to July 1998. He served as Executive
                                            Vice President and head of the Institutional and Deposit Markets Division from April
                                            1996 until July 1997. He served in the same capacity at Union Bank from January 1994
                                            until March 1996.
Magan C. Patel....................    63    Mr. Patel has served as Executive Vice President and head of the International Banking
                                            Group for UnionBanCal Corporation and Union Bank of California, N.A. since April 1996.
                                            He served as Executive Vice President, International Banking Group of BanCal Tri-State
                                            Corporation and the Bank of California, N.A. for more than five years prior thereto.
Charles L. Pedersen...............    57    Mr. Pedersen has served as Executive Vice President and head of the Systems, Technology
                                            and Item Processing Group for UnionBanCal Corporation and Union Bank of California,
                                            N.A. since April 1996. He served as Executive Vice President and head of the Bank
                                            Operations and Automation Group for Union Bank from September 1992 until March 1996.
Michael A.C. Spilsbury............    51    Mr. Spilsbury has served as Executive Vice President and head of e-Business Solutions
                                            since January 2000 and of the Operations and Services Group of UnionBanCal Corporation
                                            and Union Bank of California, N.A. since April 1996. He served as Executive Vice
                                            President, Resources and Services with BanCal Tri-State Corporation and the Bank of
                                            California, N.A. from January 1992 through March 1996.
Ikuzo Sugiyama....................    51    Mr. Sugiyama has served as Executive Vice President and head of the Pacific Rim
                                            Corporate Group for UnionBanCal Corporation and Union Bank of California, N.A., and
                                            General Manager of the Los Angeles Branch of The Bank of Tokyo-Mitsubishi, Ltd. since
                                            July 1997. He served as Chief Manager, Corporate Banking Division No. 3 under Corporate
                                            Banking Group No. 1 of The Bank of Tokyo-Mitsubishi, Ltd. from April 1996 to July 1997.
                                            From April 1994 to April 1996, he served as Deputy General Manager of the Marunonchi
                                            Office of the Bank of Tokyo, Ltd.





                                       8

<PAGE>


EXECUTIVE OFFICER                    AGE    PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS
----------------------------------   ---    ----------------------------------------------------------------------------------
<S>                                   <C>   <C>
Osamu Uno.........................    48    Mr. Uno will serve as Executive Vice President and head of the Pacific Rim Corporate
                                            Group of UnionBanCal Corporation and Union Bank of California, N.A. and General Manager
                                            of the Los Angeles Branch of The Bank of Tokyo-Mitsubishi, Ltd. effective March 1,
                                            2001. He served as the General Manager, Corporate Banking Credit Division of The Bank
                                            of Tokyo-Mitsubishi, Ltd. from July 2000 to February 2001 and as Co-General Manager,
                                            Credit Supervision Division No. 2 of The Bank of Tokyo-Mitsubishi, Ltd. from April 1996
                                            to June 2000. From August 1994 to March 1996 he was seconded from The Bank of Tokyo,
                                            Ltd. to Tokyo Maruichi Shoji Co. where he served as Senior Supervisor.
Takaharu Saegusa..................    48    Mr. Saegusa has served as Executive Vice President of the UnionBanCal Corporation and
                                            Union Bank of California, N.A. since February 2001. He served as Deputy General
                                            Manager, Japanese Corporate Banking Group at The Bank of Tokyo-Mitsubishi, Ltd.'s New
                                            York Branch from June 1998 to February 2001. From January 1997 to May 1998, he served
                                            as General Manager of The Bank of Tokyo-Mitsubishi, Ltd.'s Shirno-Akatsuka Branch, and
                                            from May 1996 to December 1996, as an inspector in The Bank of Tokyo- Mitsubishi,
                                            Ltd.'s Inspection Division after serving as Senior Vice President and Chief Manager,
                                            Planning & Controllers Group, in Mitsubishi Bank, Ltd.'s North American Planning
                                            Division from May 1995 to April 1996. Mr. Saegusa has been a Director of the
                                            UnionBanCal Corporation and Union Bank of California, N.A. since March 2001.
</TABLE>


         The term of office of the executive  officer  extends until the officer
resigns, is removed,  retires,  or is otherwise  disqualified for service. It is
anticipated  that  Messrs.  Sugiyama  and Someya will return to Japan during the
first quarter of 2001.  Messrs. Uno and Saegusa,  respectively,  are expected to
succeed to their  responsibilities.  There is no family  relationship  among any
such officers.

                                     PART II



ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         Our  common  stock is traded on the New York Stock  Exchange  under the
symbol UB. As of January 31, 2001,  our common  stock was held by  approximately
2,200   registered   shareholders.   At   December   31,   2000,   The  Bank  of
Tokyo-Mitsubishi,  Ltd.  held 66 percent of our common  stock.  During  1999 and
2000,  the average  daily trading  volume of our common stock was  approximately
398,925 shares and 445,221 shares, respectively.  At December 31, 1998, 1999 and
2000, our common stock closed at $34.06 per share,  $39.44 per share, and $24.06
per share, respectively.  The following table presents stock quotations for each
quarterly period for the two years ended December 31, 2000.

<TABLE>
<CAPTION>

                                                           1999                  2000
                                                     -----------------     -----------------
                                                       HIGH        LOW       HIGH        LOW

<S>                                                  <C>        <C>        <C>        <C>
First quarter.................................       $37.88     $30.13     $37.25     $24.75
Second quarter................................        38.88      31.50      35.25      18.52
Third quarter.................................        40.88      35.00      25.69      18.38
Fourth quarter................................        46.44      34.69      24.25      18.88
</TABLE>


                                       9

<PAGE>


         The  following  table  presents  quarterly  per  share  cash  dividends
declared for 1999 and 2000:


                                                       1999      2000
                                                      -----     -----
First quarter...................................      $0.19     $0.25
Second quarter..................................       0.19      0.25
Third quarter...................................       0.19      0.25
Fourth quarter..................................       0.25      0.25


         On  November  17,  1999 our Board of  Directors  approved  a 32 percent
increase in our quarterly  common stock  dividend for the fourth quarter of 1999
from $0.19 per share to $0.25 per share.  Future  dividends will depend upon our
earnings,  financial  condition,  capital  requirements and other factors as our
Board of Directors may deem relevant.

         We offer a dividend  reinvestment and stock repurchase plan that allows
shareholders  to reinvest  dividends in our common stock at 5 percent  below the
market price. The Bank of Tokyo-Mitsubishi, Ltd. did not participate in the plan
during 1999 and 2000. For further  information about these plans, see Note 13 to
our Consolidated Financial Statements.

         The availability of our retained  earnings for the payment of dividends
is  affected  by certain  legal  restrictions.  See Note 17 to our  Consolidated
Financial Statements.

ITEM 6.  SELECTED FINANCIAL DATA

         See page F-1 of this Form 10-K.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         See pages F-1 through F-44 of this Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         See pages F-38 through F-40 of this Form 10-K.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See pages F-46 through F-90 of this Form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                    PART III



ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Reference is made to our Proxy  Statement for the April 25, 2001 Annual
Meeting of Shareholders for incorporation by reference of information concerning
directors and persons nominated to become directors of UnionBanCal  Corporation.
Information concerning our executive officers as of January 31, 2001 is included
in Part I above in  accordance  with  Instruction 3 to Item 401(b) of Regulation
S-K.


                                       10

<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION

         Information   concerning  executive  compensation  is  incorporated  by
reference from the text under the caption  "Compensation and Other  Transactions
with Management and Others" in the Proxy Statement for the April 25, 2001 Annual
Meeting of Shareholders.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information  concerning  ownership of the equity  stock of  UnionBanCal
Corporation  by certain  beneficial  owners and  management is  incorporated  by
reference from page 1 and the text under the caption  "Election of Directors" in
the Proxy Statement for the April 25, 2001 Annual Meeting of Shareholders.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information  concerning certain  relationships and related transactions
with officers, directors, and The Bank of Tokyo-Mitsubishi, Ltd. is incorporated
by reference from the text under the caption  "Transactions  with Management and
Others"  in the Proxy  Statement  for the  April  25,  2001  Annual  Meeting  of
Shareholders.

                                     PART IV



ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial Statements

         Our Consolidated  Financial Statements,  the Management Statement,  and
the independent  auditors' report are set forth on pages F-46 through F-92. (See
index on page F-45).















                                       11


<PAGE>


(a)(2) Financial Statement Schedules

         All  schedules to our  Consolidated  Financial  Statements  are omitted
because of the  absence of the  conditions  under  which  they are  required  or
because the  required  information  is included  in our  Consolidated  Financial
Statements or accompanying notes.

(a)(3) Exhibits

<TABLE>
<CAPTION>

   NO.                                 DESCRIPTION
 -----    ---------------------------------------------------------------------------------------
<S>       <C>
  3.1     Restated Articles of Incorporation of the Registrant, as amended(1)
  3.2     By-laws of the Registrant, as amended January 27, 1999(2)
 10.1     Management Stock Plan. (As restated effective June 1, 1997)*(3)
 10.2     Union Bank of California Deferred Compensation Plan. (January 1, 1997, Restatement,
          as amended November 21, 1996)*(4)
 10.3     Union Bank of California Senior Management Bonus Plan. (Effective January 1, 2000)*(5)
 10.4     Richard C. Hartnack Employment Agreement. (Effective January 1, 1998)*(6)
 10.5     Robert M. Walker Employment Agreement. (Effective January 1, 1998)*(6)
 10.6     Union Bank of California Supplemental Executive Retirement Plan. (Effective January 1,
          1988) (Amended and restated as of
          January 1, 1997)*(3)
 10.7     Union Bank Financial Services Reimbursement Program. (Effective January 1, 1996)*(7)
 10.8     Performance Share Plan. (Effective January 1, 1997)*(3)
 10.9     Service Agreement Between Union Bank of California and The Bank of Tokyo-Mitsubishi
          Ltd. (Effective October 1, 1997)*(3)
 10.10    Management Stock Plan. (As restated effective January 1, 2000)*(8)
 10.11    Union Bank of Califorinia, N.A. Supplemental retirement Plan for Policy Making Officers
          (effective November 1, 1999)(5)
 12.1     Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend
          Requirements(9)
 21.1     Subsidiaries of the Registrant(9)
 23.1     Consent of Deloitte & Touche LLP(9)
 24.1     Power of Attorney(9)
 24.2     Resolution of Board of Directors(9)

-----------
<FN>
(1)  Incorporated  by reference to Form 10-K for the year ended December 31, 1998.
(2)  Incorporated  by reference to Form 10-Q for the quarter ended March 31, 1999.
(3)  Incorporated  by reference to Form 10-K for the year ended December 31, 1997.
(4)  Incorporated  by reference to Form 10-K for the year ended December 31, 1996.
(5)  Incorporated  by reference to Form 10-Q for the quarter  ended June 30, 2000.
(6)  Incorporated  by reference to Form 10-Q for the quarter ended September 30, 1998.
(7)  Incorporated  by  reference  to Form 8-K dated  April 1, 1996 (filed as exhibit 10.14).
(8)  Incorporated  by reference to form 10-Q for the quarter  ended June 30, 1999.
(9)  Filed herewith.
*    Management contract or compensatory plan, contract or arrangement.

(b)  Reports on Form 8-K:
</FN>
</TABLE>

We  filed a  report  on  Form  8-K on  June  16,  2000  under  Item 5 to  report
UnionBanCal  Corporation's  June 15,  2000 press  release  concerning  estimated
operating earnings for the second quarter of 2000.


                                       12

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS



SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                          AS OF AND FOR THE YEARS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS, EXCEPT        ---------------------------------------------------------------------------------------------
  PER SHARE DATA)                          1996                1997                1998                 1999                2000
-----------------------------        ------------        ------------        ------------         ------------        ------------
<S>                                  <C>                 <C>                 <C>                  <C>                 <C>
RESULTS OF OPERATIONS:
   Net interest income......         $  1,175,302        $  1,237,010        $  1,322,655         $  1,419,019        $  1,587,008
   Provision for credit losses             40,000                   -              45,000               65,000             440,000
   Noninterest income.......              418,676             463,001             533,531              586,759             647,180
   Noninterest expense......            1,134,904           1,044,665           1,135,218            1,281,973           1,130,185
                                     ------------        ------------        ------------         ------------        ------------
   Income before income taxes             419,074             655,346             675,968              658,805             664,003
   Taxable-equivalent
      adjustment............                6,724               5,328               4,432                3,186               2,568
   Income tax expense.......              162,892             238,722             205,075              213,888             221,535
                                     ------------        ------------        ------------         ------------        ------------
   Net income...............         $    249,458        $    411,296        $    466,461         $    441,731        $    439,900
                                     ============        ============        ============         ============        ============
NET INCOME APPLICABLE TO
   COMMON STOCK.............             $238,152            $403,696            $466,461             $441,731            $439,900
                                     ============        ============        ============         ============        ============

PER COMMON SHARE:
   Net income (basic).......         $       1.37        $       2.31        $       2.66         $       2.65        $       2.72
   Net income (diluted).....                 1.36                2.30                2.65                 2.64                2.72
   Dividends................                 0.47                0.51                0.61                 0.82                1.00
   Book value (end of period)               13.53               15.32               17.45                18.18               20.17
   Common shares outstanding
      (end of period).......          174,457,603         174,917,674         175,259,919          164,282,622         159,234,454
   Weighted average common
      shares outstanding
      (basic)...............          174,391,048         174,683,338         175,127,487          166,382,074         161,604,648
   Weighted average common
      shares outstanding
      (diluted).............          174,783,565         175,189,078         175,737,303          167,149,207         161,989,388
BALANCE SHEET (END OF PERIOD):
   Total assets.............         $ 29,234,059        $ 30,585,265        $ 32,276,316         $ 33,684,776        $ 35,162,475
   Total loans..............           21,049,787          22,741,408          24,296,111           25,912,958          26,010,398
   Nonperforming assets.....              156,784             129,809              89,850              169,780             408,304
   Total deposits...........           21,532,960          23,296,374          24,507,879           26,256,607          27,283,183
   Subordinated capital notes             382,000             348,000             298,000              298,000             200,000
   Trust preferred securities                  --                  --                  --              350,000             350,000
   Preferred stock..........              135,000                  --                  --                   --                  --
   Common equity............            2,359,933           2,679,299           3,058,244            2,987,468           3,211,565
BALANCE SHEET (PERIOD
   AVERAGE):
   Total assets.............         $ 27,899,734        $ 29,692,992        $ 30,523,806         $ 32,141,497        $ 33,672,058
   Total loans..............           20,727,577          21,855,911          23,215,504           25,024,777          26,310,420
   Earning assets...........           24,717,326          26,291,822          27,487,390           29,017,122          30,379,730
   Total deposits...........           20,101,544          22,067,155          22,654,714           23,893,045          25,527,547
   Common equity............            2,325,437           2,514,610           2,845,964            2,939,591           3,139,844
FINANCIAL RATIOS:
   Return on average assets.                 0.89%               1.39%               1.53%                1.37%               1.31%
   Return on average common
      equity................                10.24               16.05               16.39                15.03               14.01
   Efficiency ratio.........                71.02               61.53               61.31                63.98               50.59
   Net interest margin......                 4.75                4.70                4.81                 4.89                5.22
   Dividend payout ratio....                34.31               22.08               22.93                30.94               36.76
   Tangible equity ratio....                 7.80                8.54                9.30                 8.70                9.01
   Tier 1 risk-based capital
      ratio.................                 9.08                8.96                9.64                 9.94               10.24
   Total risk-based capital
      ratio.................                11.17               11.05               11.61                11.79               12.07
   Leverage ratio...........                 8.41                8.53                9.38                10.10               10.19
   Allowance for credit
      losses to total loans.                 2.49                1.99                1.89                 1.82                2.36
   Allowance for credit
      losses to nonaccrual
      loans.................               408.48              413.12              585.50               281.00              153.48
   Net loans charged off to
      average total loans...                 0.34                0.33                0.15                 0.22                1.13
   Nonperforming assets to
      total loans, distressed
      loans held for sale,
      and foreclosed assets.                 0.74                0.57                0.37                 0.66                1.57
   Nonperforming assets to
      total assets..........                 0.54                0.42                0.28                 0.50                1.16
-----------
<FN>
(1)   Amounts are on a  taxable-equivalent  basis using the federal statutory
      tax rate of 35 percent.

(2)   Dividends  per  share  reflect   dividends   declared  on   UnionBanCal
      Corporation's  common stock  outstanding  as of the  declaration  date.
      Amounts  prior to the  merger  are based on Union  Bank only and do not
      include  the  dividend  of $145  million  paid to The  Mitsubishi  Bank
      Limited in the first  quarter of 1996 by BanCal  Tri-State  Corporation
      and The Bank of California, N.A.

(3)   The efficiency ratio is noninterest expense, excluding foreclosed asset
      expense   (income),   as  a   percentage   of   net   interest   income
      (taxable-equivalent)  and noninterest income.  Foreclosed asset expense
      (income) was $2.9  million,  $(1.3)  million,  $(2.8)  million,  $(1.3)
      million, and $(0.1) million for 1996 through 2000, respectively.
</FN>
</TABLE>


                                      F-1

<PAGE>


         THIS DOCUMENT INCLUDES FORWARD-LOOKING INFORMATION, WHICH IS SUBJECT TO
THE "SAFE  HARBOR"  CREATED BY SECTION  27A OF THE  SECURITIES  ACT OF 1933,  AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. OUR
MANAGEMENT MAY MAKE FORWARD-LOOKING  STATEMENTS IN OTHER SECURITIES AND EXCHANGE
COMMISSION FILINGS,  PRESS RELEASES,  NEWS ARTICLES,  CONFERENCE CALLS WITH WALL
STREET  ANALYSTS  AND  SHAREHOLDERS  AND  WHEN  WE ARE  SPEAKING  ON  BEHALF  OF
UNIONBANCAL  CORPORATION.  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,"  '"ANTICIPATE,"  "INTEND,"  "PLAN,"
"ESTIMATE,"  "PROJECT," OR WORDS OF SIMILAR  MEANING,  OR FUTURE OR  CONDITIONAL
VERBS SUCH AS "WILL,"  "WOULD,"  "SHOULD,"'  "COULD,"  OR "MAY."  THESE  FORWARD
-LOOKING   STATEMENTS  ARE  INTENDED  TO  PROVIDE   INVESTORS  WITH   ADDITIONAL
INFORMATION  WITH  WHICH THEY MAY  ASSESS  OUR  FUTURE  POTENTIAL.  ALL OF THESE
FORWARD-LOOKING  STATEMENTS ARE BASED ON ASSUMPTIONS  ABOUT AN UNCERTAIN  FUTURE
AND ARE BASED ON INFORMATION AVAILABLE AT THE DATE SUCH STATEMENTS ARE ISSUED.

         THERE ARE NUMEROUS  RISKS AND  UNCERTAINTIES  THAT COULD AND WILL CAUSE
ACTUAL RESULTS TO DIFFER FROM THOSE DISCUSSED IN OUR FORWARD-LOOKING STATEMENTS.
MANY OF THESE  FACTORS  ARE BEYOND OUR  ABILITY TO CONTROL OR PREDICT  AND COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR STOCK PRICE, FINANCIAL CONDITION,  RESULTS
OF OPERATIONS OR PROSPECTS.  SUCH RISKS AND UNCERTAINTIES  INCLUDE,  BUT ARE NOT
LIMITED TO, THE FOLLOWING  FACTORS'  ADVERSE  ECONOMIC  CONDITIONS IN CALIFORNIA
(INCLUDING PROBLEMS ARISING FROM THE CALIFORNIA ENERGY CRISIS), ADVERSE ECONOMIC
CONDITIONS  AFFECTING  CERTAIN  INDUSTRIES,  FLUCTUATIONS IN INTEREST RATES, THE
CONTROLLING INTEREST IN US BY THE BANK OF TOKYO-MITSUBISHI, LTD., COMPETITION IN
THE BANKING INDUSTRY,  RESTRICTIONS ON DIVIDENDS,  ADVERSE EFFECT OF CURRENT AND
FUTURE BANKING RULES,  REGULATIONS AND  LEGISLATION,  AND RISKS  ASSOCIATED WITH
VARIOUS STRATEGIES WE MAY PURSUE, INCLUDING POTENTIAL ACQUISITIONS, DIVESTITURES
AND  RESTRUCTURINGS.  SEE ALSO  THE  SECTION  ENTITLED  "CERTAIN  BUSINESS  RISK
FACTORS" ON PAGE F-41.

         You  should  read  the  following   discussion   and  analysis  of  our
consolidated  financial position and the results of our operations for the years
ended December 31, 1998, 1999 and 2000 together with our Consolidated  Financial
Statements and the Notes to Consolidated  Financial  Statements included in this
Form 10-K.  Averages as presented in the following tables are  substantially all
based upon daily average balances.

INTRODUCTION

         We  are  a  California-based,  commercial  bank  holding  company  with
consolidated  assets of $35.2  billion at December 31, 2000.  At year-end  2000,
Union  Bank  of  California,  N.A.  was the  third  largest  commercial  bank in
California,  based on total assets and total deposits in California,  and one of
the 30 largest commercial banks in the United States.

         UnionBanCal  Corporation  and its  banking  subsidiary,  Union  Bank of
California,  N.A., (the Bank) was created on April 1, 1996 by the combination of
Union Bank with BanCal  Tri-State  Corporation and its banking  subsidiary,  The
Bank of California,  N.A. The combination was accounted for as a  reorganization
of entities under common control, similar to a pooling of interests.

         On March 3, 1999,  we completed a secondary  offering of 28.75  million
shares  of our  Common  Stock  owned by our  majority  shareholder,  The Bank of
Tokyo-Mitsubishi, Ltd. We received no proceeds from this transaction. Concurrent
with  the  secondary  offering,   we  repurchased  8.6  million  shares  of  our
outstanding Common Stock from The Bank of Tokyo-Mitsubishi, Ltd. and 2.1 million
shares  owned by Meiji  Life  Insurance  Company  with $311  million  of the net
proceeds from the issuance of $350 million of 7 3/8 percent capital  securities.
After the secondary offering and the repurchase,  The Bank of  Tokyo-Mitsubishi,
Ltd. owned 64 percent of our stock,  or 105.6 million  shares,  compared with 82
percent prior to the transaction.

         We completed  the  repurchase  of $100 million in common stock  between
December  1999  and July  2000,  under a stock  repurchase  plan  authorized  in
November  1999.  In July 2000,  we announced an  additional  $100 million  stock
repurchase plan. The amount purchased under the new plan as of

                                      F-2

<PAGE>


December  31,  2000  was  $51.9  million.  At  December  31,  2000,  The Bank of
Toyko-Mitsubishi, Ltd. owned 66 percent of our common stock.

SELECTED SUPPLEMENTAL PRO FORMA FINANCIAL DATA

          To  facilitate  the  discussion  of the  results  of  operations,  the
following  table  includes  certain pro forma earnings  disclosures  and ratios.
These  presentations  supplement the  Consolidated  Statements of Income on page
F-46,  which are prepared in accordance  with  accounting  principles  generally
accepted in the United States of America (US GAAP),  by excluding the effects of
the following items:  (1) the  restructuring  charge,  which was recorded in the
third  quarter of 1999,  (2) the 1998  reduction  of  California  Franchise  Tax
liability,  which related to 1997, and (3) the restructuring  credit recorded in
the first and second quarters of 2000. Management believes that it is meaningful
to  understand  the  operating  results  and trends  excluding  these items and,
therefore,  has  included  information  in this  table  and in the  management's
discussion and analysis  which follows,  that presents  income  excluding  these
items and related pro forma ratio and per share calculations.

<TABLE>
<CAPTION>

                                                                                                  AS OF AND FOR THE YEARS ENDED
                                                                                                           DECEMBER 31,
                                                                                           -----------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                                                   1998            1999           2000
---------------------------------------------                                                   ----            ----           ----
<S>                                                                                         <C>             <C>             <C>

INCOME BEFORE INCOME TAXES (TAXABLE-EQUIVALENT BASIS)............................          $ 675,968       $ 658,805      $ 664,003
   Restructuring charge (credit).................................................                 --          85,000        (19,000)
   Taxable equivalent adjustment.................................................             (4,432)         (3,186)        (2,568)
   Income tax expense(1)(2)......................................................           (234,325)       (243,704)      (214,376)
                                                                                           ---------       ---------      ---------
PRO FORMA EARNINGS(1)(2).........................................................          $ 437,211       $ 496,915      $ 428,059
                                                                                           =========       =========      =========


PER COMMON SHARE, EXCLUDING RESTRUCTURING CHARGE (CREDIT) AND
   CERTAIN INCOME TAXES
   Pro forma earnings (basic)(1)(2)..............................................              $2.50           $2.99          $2.65
   Pro forma earnings (diluted)(1)(2)............................................               2.49            2.97           2.64

SELECTED FINANCIAL RATIOS, EXCLUDING RESTRUCTURING CHARGE (CREDIT)
   AND CERTAIN INCOME TAXES
   Pro forma return on average assets(1)(2)......................................               1.43%           1.55%          1.27%
   Pro forma return on average common equity(1)(2)...............................              15.36%          16.83%         13.63%
   Pro forma efficiency ratio....................................................              61.31%          59.74%         51.44%
   Pro forma dividend payout ratio(1)(2).........................................              24.40%          27.42%         37.74%


-----------
<FN>

(1)   Excludes  3rd  Quarter  1998  reduction  in  California  Franchise  Tax
      liability of $29.250  million (net of federal  tax),  which  related to
      1997.

(2)   Excludes  an income  tax  benefit  of  $29.816  million  related to the
      restructuring  charge recorded in 1999 and income tax expense of $7.159
      million related to the restructuring credit in 2000.

(3)   The pro  forma  efficiency  ratio  is  noninterest  expense,  excluding
      foreclosed  asset  income  and   restructuring   charge/credit,   as  a
      percentage of net interest income  (taxable-equivalent) and noninterest
      income.  Foreclosed asset income was $2.8 million in 1998, $1.3 million
      in 1999 and $0.1 million in 2000.

</FN>
</TABLE>


         Reported  net income was $441.7  million,  or $2.64 per diluted  common
share in 1999,  compared with $439.9 million,  or $2.72 per diluted common share
in 2000.  Excluding the effects of the $85 million  restructuring  charge ($55.2
million net of tax),  which was recorded in the third  quarter of 1999,  and the
effects of the $19.0  million in  restructuring  credits  ($11.8  million net of
taxes)  recorded in 2000, pro forma net earnings were $496.9  million,  or $2.97
per  diluted  common  share in 1999,  compared to $428.1  million,

                                      F-3

<PAGE>


or $2.64 per diluted  common share in 2000.  This  decrease in pro forma diluted
earnings  per  share of 11  percent  in 2000 was due to an  increase  of  $375.0
million,  or 577 percent in the provision for credit losses,  offset by a $168.0
million, or 12 percent, increase in net interest income, and a $60.4 million, or
10 percent,  increase in noninterest  income, and a $47.8 million, or 4 percent,
decrease in noninterest expense. Other highlights in 2000 include:

     o   Net interest income, on a  taxable-equivalent  basis, was $1.6
         billion in 2000, an increase of $168.0 million,  or 12 percent
         from 1999. Net interest  margin for 2000 was 5.22 percent,  or
         33 basis points higher than 1999.

     o   The provision for credit losses was $440.0 million in 2000, compared
         with $65.0 million in 1999.

     o   Noninterest income was $647.2 million in 2000, an increase of $60.4
         million, or 10 percent from 1999.

     o   Noninterest  expense,  excluding the restructuring  charge and credits,
         was $1.1 billion in 2000, a decrease of $47.8 million, or 4 percent
         over 1999.

     o   Reported  return on average  assets in 2000 was 1.31  percent,
         while  reported  return on average  common equity for the same
         period  was 14.01  percent.  Our pro forma  return on  average
         assets in 2000  decreased  to 1.27  percent,  compared to 1.55
         percent in 1999. Our pro forma return on average common equity
         in 2000 decreased to 13.63 percent,  compared to 16.83 percent
         in 1999.

MISSION EXCEL

         Mission  Excel,  a project  begun in the  second  quarter  1999,  was a
company-wide  initiative  to slow the rate of growth of our  expenses,  increase
sustainable  growth  in  our  revenues,   and  increase   productivity   through
elimination of unnecessary or duplicate functions.  The goal of this project was
to help us  achieve  or exceed an  efficiency  ratio of 54 to 56  percent by the
fourth quarter 2000. This goal was achieved both on a reported basis, as well as
on a pro forma earnings basis by June 30, 2000.

         In  connection   with  Mission  Excel,   we  incurred  an  $85  million
restructuring  charge in the third quarter of 1999. The charge  consisted of $70
million in personnel expense for approximately  1,400 employees to be terminated
under the plan. The remaining $15 million related to lease termination costs for
8 facilities that were to be vacated and professional  service costs incurred in
connection with Mission Excel.

         In 2000, we reduced the original restructuring charge by $19.0 million.
The reduction arose  primarily in the severance  portion of our reserve due to a
change in the  attrition  assumptions.  The strength of the  California  economy
during the first half of 2000, coupled with a tight labor market,  resulted in a
markedly higher attrition rate than we had anticipated.

         At  the   completion  of  the  plan,  we  currently   expect  to  sever
approximately  800 employees who are not  concentrated  in any group or class of
staff. Of the total, 680 employees have been severed as of December 31, 2000 and
the remaining 120 employees are expected to be severed  during the first quarter
of 2001.

         The following table presents the restructuring  reserve for the period,
the cash and noncash utilization of the reserve, and the resulting balance as of
December 31, 2000.

<TABLE>
<CAPTION>


                                                                DECEMBER 31,
                                                          ----------------------
(DOLLARS IN THOUSANDS)                                       1999           2000
----------------------                                       ----           ----
<S>                <C>                                    <C>          <C>

Balance at January 1......................................$    --      $ 69,359
Restructuring charge (credit)............................. 85,000       (19,000)
Less: Utilization for the period:
   Cash................................................... 11,950        33,566
   Noncash................................................  3,691           720
                                                          -------      --------
Balance at December 31....................................$69,359      $ 16,073
                                                          =======      ========

</TABLE>


                                      F-4

<PAGE>


BUSINESS SEGMENTS

         We segregate our  operations  into four primary  business units for the
purpose of management  reporting,  as shown in the table on the following pages.
The results show the financial performance of our major business units.

         During 1999, we introduced a new method for measuring the  contribution
provided by each of our  business  units.  The Risk  Adjusted  Return on Capital
(RAROC)  methodology  seeks to  attribute  economic  capital to  business  units
consistent with the level of risk they assume.  These risks are primarily credit
risk,  market risk and  operational  risk.  Credit risk is the potential loss in
economic  value due to the  likelihood  that the  obligor  will not  perform  as
agreed.  Market  risk is the  potential  loss in fair  value due to  changes  in
interest  rates,  currency  rates  and  volatilities.  Operational  risk  is the
potential loss due to failures in internal control, system failures, or external
events.

         The following table reflects the condensed income statements,  selected
average  balance  sheet  items and  selected  financial  ratios  for each of our
primary business units. The information presented does not necessarily represent
the business  units'  financial  condition  and results of operations as if they
were   independent   entities.   Unlike  financial   accounting,   there  is  no
authoritative body of guidance for management  accounting equivalent to US GAAP.
Consequently,  reported  results  are  not  necessarily  comparable  with  those
presented by other companies.

         The  RAROC  measurement   methodology  recognizes  credit  expense  for
expected losses arising from credit risk and attributes economic capital related
to unexpected  losses arising from credit,  market and  operational  risks. As a
result of the methodology used by the RAROC model to calculate  expected losses,
differences  between the provision  for credit losses and credit  expense in any
one period could be significant. However, over an economic cycle, the cumulative
provision  for credit  losses and credit  expense for expected  losses should be
substantially  the  same.  Business  unit  results  are  based  on  an  internal
management reporting system used by management to measure the performance of the
units and UnionBanCal  Corporation as a whole.  The management  reporting system
identifies  balance sheet and income statement items to each business unit based
on internal management  accounting  policies.  Net interest income is determined
using our internal funds transfer pricing system,  which assigns a cost of funds
to assets or a credit for funds to liabilities and capital, based on their type,
maturity or repricing  characteristics.  Noninterest income and expense directly
or indirectly attributable to a business unit are assigned to that business.


                                      F-5

<PAGE>


         We have restated the business  units'  results for the prior periods to
reflect any reorganizational changes that may have occurred.

<TABLE>
<CAPTION>


                                        COMMUNITY BANKING
                                          AND INVESTMENT                  COMMERCIAL FINANCIAL                INTERNATIONAL
                                         SERVICES GROUP                      SERVICES GROUP                   BANKING GROUP
                                    YEARS ENDED DECEMBER 31,            YEARS ENDED DECEMBER 31,         YEARS ENDED DECEMBER 31,
                                  ----------------------------          ------------------------         ------------------------
                                  1998        1999        2000         1998       1999       2000        1998      1999      2000
                                  ----        ----        ----         ----       ----       ----        ----      ----      ----
<S>                           <C>         <C>         <C>          <C>        <C>        <C>          <C>       <C>       <C>

RESULTS OF OPERATIONS
   (DOLLARS IN THOUSANDS):
   Net interest income..      $704,783    $697,113    $731,741     $462,271   $596,082   $719,202     $51,450   $43,824   $35,129
   Noninterest income...       333,345     370,917     412,197      109,819    133,994    173,089      57,750    56,201    60,352
                             ---------   ---------   ---------     --------   --------   --------     -------   -------   -------
   Total revenue........     1,038,128   1,068,030   1,143,938      572,090    730,076    892,291     109,200   100,025    95,481
   Noninterest expense(1)      742,477     760,163     721,907      250,651    284,680    299,963      58,650    52,275    55,558
   Credit expense (income)      63,854      53,410      48,582       73,329     98,916    120,619      14,086    13,948     7,268
                             ---------   ---------   ---------     --------   --------   --------     -------   -------   -------
   Income (loss) before        231,797     254,457     373,449      248,110    346,480    471,709      36,464    33,802    32,655
      income tax expense
      (benefit).........
   Income tax expense           91,583      98,375     142,844       96,268    127,175    168,137      13,684    12,927    12,491
      (benefit).........     ---------   ---------   ---------     --------   --------   --------     -------   -------   -------
   Net income...........      $140,214    $156,082    $230,605     $151,842   $219,305   $303,572     $22,780   $20,875   $20,164
                             =========   =========   =========     ========   ========   ========     =======   =======   =======


AVERAGE BALANCES
(DOLLARS IN MILLIONS):
   Total loans..........        $9,587      $8,320      $8,094     $ 11,162    $14,729    $16,798      $1,356    $1,050      $959
   Total assets.........        10,640       9,315       9,020       12,358     16,127     18,596       2,070     1,589     1,492
   Total deposits.......        13,742      14,201      14,155        5,362      5,888      6,393         851       815     1,031
FINANCIAL RATIOS:
   Risk adjusted return            23%         26%         41%          17%        18%        20%         17%       18%       21%
      on capital........
   Return on average              1.32        1.68        2.56         1.23       1.36       1.63        1.10      1.31      1.35
      assets............
   Efficiency ratio(2)..          71.5        71.2        63.1         43.6       39.0       33.6        54.6      52.3      58.2

</TABLE>

<TABLE>
<CAPTION>

                                         GLOBAL                                                              UNIONBANCAL
                                     MARKETS GROUP                        OTHER                              CORPORATION
                                YEARS ENDED DECEMBER 31,         YEARS ENDED DECEMBER 31,              YEARS ENDED DECEMBER 31,
                                ------------------------       ----------------------------         ------------------------------
                                1998      1999      2000       1998       1999         2000         1998         1999         2000
                                ----      ----      ----       ----       ----         ----         ----         ----         ----
<S>                          <C>       <C>       <C>       <C>         <C>        <C>         <C>          <C>          <C>

RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS):
   Net interest income..     $41,972   $60,884   $42,976   $ 57,747    $17,930    $  55,392   $1,318,223   $1,415,833   $1,584,440
   Noninterest income...      18,614    15,954    (7,083)    14,003      9,693        8,625      533,531      586,759      647,180
                             -------   -------   -------   --------   --------    ---------   ----------   ----------   ----------
   Total revenue........      60,586    76,838    35,893     71,750     27,623       64,017    1,851,754    2,002,592    2,231,620
   Noninterest expense(1)     24,709    20,826    15,757     58,731    164,029       37,000    1,135,218    1,281,973    1,130,185
   Credit expense (income)        --        --        --   (106,269)  (101,274)     263,531       45,000       65,000      440,000
                             -------   -------   -------   --------   --------    ---------   ----------   ----------   ----------
   Income (loss) before       35,877    56,012    20,136    119,288   (35,132)     (236,514)     671,536      655,619      661,435
      income tax expense
      (benefit).........
   Income tax expense         13,958    21,517     7,702    (10,418)   (46,106)    (109,639)     205,075      213,888      221,535
      (benefit).........     -------   -------   -------   --------   --------    ---------   ----------   ----------   ----------

   Net income...........     $21,919   $34,495    12,434   $129,706    $10,974    $(126,875)    $466,461   $  441,731     $439,900
                             =======   =======   =======   ========   ========    =========   ==========   ==========   ==========


AVERAGE BALANCES
(DOLLARS IN MILLIONS):
   Total loans..........     $    --   $    --   $    --   $  1,111       $926         $459      $23,216   $   25,025      $26,310
   Total assets.........       4,090     3,887     3,740      1,366      1,223          824       30,524       32,141       33,672
   Total deposits.......       2,662     3,053     3,235         38       (64)          714       22,655       23,893       25,528
FINANCIAL RATIOS:
   Risk adjusted return          13%        21%        7%        na         na           na           na           na           na
      on capital........
   Return on average            0.54      0.89      0.33         na         na           na        1.53%        1.37%        1.31%
      assets............
   Efficiency ratio(2)..        37.2      27.1      43.9         na         na           na         61.5         64.1         50.6

-----------
<FN>

(1)   "Other" includes 3rd quarter 1999 restructuring charge of $85.0 million
      ($55.2  million,  net of tax) and 2000  restructuring  credits of $19.0
      million ($11.8 million, net of taxes).

(2)   The efficiency ratio is noninterest expense, excluding foreclosed asset
      expense   (income),   as  a  percentage  of  net  interest  income  and
      noninterest income. Foreclosed asset expense (income) was $2.9 million,
      $(1.3) million,  $(2.8) million, $(1.3) million, and $(0.1) million for
      1996 through 2000, respectively.

na    = not applicable

</FN>
</TABLE>


 COMMUNITY BANKING AND INVESTMENT SERVICES GROUP

         The Community Banking and Investment  Services Group strives to provide
the best  possible  financial  products  to  individuals  and  small  businesses
including a broad set of credit,  deposit and trust products  delivered  through
branches,  relationship managers, private bankers and trust administrators.  The
Community Banking and Investment Services Group provides its customers with high
quality  customer  service executed through a number of responsive and efficient
delivery channels.

                                      F-6

<PAGE>


         In addition to our traditional network channels,  the Community Banking
and Investment  Services Group announced  earlier this year the establishment of
an alliance with Navicert  Financial Corp.,  doing business as NIX Check Cashing
and Operation Hope designed to bring  convenient  banking  services to a broader
community.  This  alliance  will allow our small  business and consumer  clients
access to a unique blend of financial  services  combining the NIX Check Cashing
services,  Union Bank of California  Banking  Services and Operation  Hope small
business education services. Checking and savings account services are available
today through selected NIX Check Cashing  locations with future services planned
to include  applications  for consumer  loans,  credit  cards,  new and used car
loans,  home  equity  loans and  residential  mortgages.  The NIX Check  Cashing
alliance  complements our current network of 15 Cash and Save(R) outlets located
throughout Southern and Central California.

         In 2000,  noninterest  expense  decreased in the Community  Banking and
Investment  Services  Group  by  $38.3  million,  due  to a  combination  of the
continued  implementation  of  Mission  Excel  cost  reduction  efforts  and the
introduction  of  technology  improvements  in back office  operations  and call
centers.

         Continued  success  in  these  strategies  has  resulted  in  increased
revenues,  reduced  costs,  improved  efficiency  ratios and  higher  returns on
capital.  In 2000, net income  increased  $74.5 million,  an increase of over 48
percent  compared to 1999.  Total revenue  increased $75.9 million compared to a
year  earlier  with the majority of that  increase  coming from a $41.3  million
increase in noninterest  income.  Noninterest  income  increases arose primarily
from a strategic  repricing effort initiated through Mission Excel, and from the
purchase  of trust  assets of the  Imperial  Trust  Company,  which  occurred in
mid-1999. Net interest income increased $34.6 million over the prior year due to
a  combination  of  higher  earning  asset  volume  and a higher  interest  rate
environment.

         In 2001,  the  Community  Banking and  Investment  Services  Group will
emphasize  growth in the consumer asset portfolio,  expanding wealth  management
services,  extending  the small  business  franchise  and  expanding  the branch
network.  The strategy for growing the consumer  asset  portfolio will primarily
focus on  mortgage  and home  equity  products,  originated  through  the branch
network,  as well as indirectly.  The Wealth  Management  division is focused on
becoming the preferred provider of banking and investment  products for affluent
individuals  in  geographic  areas  already  served  by the  Bank.  This will be
achieved  through a combination of superior  service,  a broad product suite, an
increased number of banking locations  convenient to the targeted  clientele and
improved  cross-selling   programs.  On  January  31,  2001,  we  completed  the
acquisition of Copper  Mountain  Trust  Company,  which will enhance our growing
custody and 401(k) administration businesses. Core elements of the initiative to
extend the Bank's small business  franchise  include  enhancing the sales force,
increasing  marketing  activities,  introducing  new insurance and trade finance
products, adding new locations, and developing online capabilities to complement
physical  distribution.  Expansion of the distribution  network will be achieved
through  acquisitions and de novo branching.  Expansion  opportunities  exist in
both Southern  California,  where we have a particularly  strong  presence,  and
Northern California.

         The Community  Banking and  Investment  Services  Group is comprised of
three major divisions:  Community Banking, Wealth Management,  and Institutional
Services and Asset Management.

         COMMUNITY  BANKING  serves over one  million  consumer  households  and
businesses through its 244 full-service  branches in California,  6 full-service
branches in Oregon and  Washington,  3 full-service  branches in Guam and Saipan
and its network of 438 proprietary ATMs.  Customers may also access our services
24 hours a day by telephone or through our Bank@Home product at www.UBOC.com. In
addition,  the division offers automated teller and point-of-sale debit services
through our founding  membership in the Star System(TM),  the largest shared ATM
network in the Western United States.

                                      F-7


<PAGE>


         This division is organized by service delivery  method,  by markets and
by geography. We serve our customers in the following ways:

     o   through community banking branches,  which serve consumers and
         businesses  with  checking  and deposit  services,  as well as
         various  types of  indirect  and direct  financing,  including
         leasing and residential real estate lending;

     o   through on-line access to our internet  banking services which
         augment our  physical  delivery  channels by  providing a wide
         array of customer  transaction,  bill payment and loan payment
         services;

     o   through business banking centers, which serve businesses with sales up
         to $5 million; and

     o   through in-store branches, which also serve consumers and businesses.

         WEALTH  MANAGEMENT  provides  private banking  services to our affluent
clientele as well as brokerage products and services.

     o   The Private Bank focuses  primarily on  delivering  integrated
         and   customized   financial   services   to  high  net  worth
         individuals with  sophisticated  financial needs as well as to
         professional  service  firms.  Specific  products and services
         include  trust  and  estate   services,   investment   account
         management   services,   and  customized  deposit  and  credit
         products.  The  Private  Bank's  strategy  is  to  expand  its
         business by  leveraging  existing  Bank client  relationships,
         increasing its geographic  market  coverage and the breadth of
         its products and services.  Through 8 existing locations, plus
         4 newly converted Priority Banking locations, the Private Bank
         relationship  managers  offer  all  of  the  Bank's  available
         products and services.

     o   Our brokerage  products and services are provided through UBOC
         Investment Services, Inc., a registered broker/dealer offering
         a  full  line  of  investment   products  to  individuals  and
         institutional  clients.  Its  primary  strategy  is to further
         penetrate our existing client base.

         INSTITUTIONAL   SERVICES  AND  ASSET  MANAGEMENT   provides  investment
management  and  administration  services for a broad range of  individuals  and
institutions.

     o   HighMark  Capital  Management,  Inc., a registered  investment
         advisor,  provides  investment advisory services to affiliated
         domestic and offshore  mutual  funds,  including  the HighMark
         Funds.  It also  provides  advisory  services to Union Bank of
         California  trust  clients,  including  corporations,  pension
         funds  and  individuals.   HighMark  Capital  Management  also
         provides  mutual  fund  support  services.   HighMark  Capital
         Management's  strategy is to increase assets under  management
         by  broadening  its  client  base and  helping  to expand  the
         distribution of shares of its mutual fund clients.

     o   Business Trust provides  retirement  services,  which includes
         trustee   services,    investment   management,   and   401(k)
         administration and record keeping, to businesses, professional
         corporations,   government  agencies,  unions  and  non-profit
         organizations.  Business  Trust's  strategy is to leverage the
         Bank's  existing  commercial   relationships  and  third-party
         distribution  network  which  includes  attorneys,   certified
         public accountants, and third party administration firms.

     o   Securities  Services is engaged in domestic and multi-currency
         custody,  safekeeping,  mutual  fund  accounting,   securities
         lending,  and  corporate  trust  services.   Its  client  base
         includes  financial   institutions,   businesses,   government
         agencies,   unions,   insurance   companies,   mutual   funds,
         investment managers and non-profit  organizations.  Securities
         Services is the only West Coast based,  in-house provider of a
         full range of institutional trust services.

         Through alliances with other financial  institutions,  the group offers
additional products and services, such as credit cards, leasing, and asset-based
and leveraged financing.

                                      F-8

<PAGE>


         The group  competes  with larger  banks by  providing  service  quality
superior to that of its major competitors.  We have been recognized as among the
highest rated banks in California for customer service quality and satisfaction.

         The group's primary means of competing with community banks include its
large and  convenient  branch  network and its  reputation for innovative use of
technology to deliver banking services. We have the fifth largest branch network
among depository  institutions in California.  We also offer convenient  banking
hours to consumers  through our  drive-through  banking  locations  and selected
branches that are open seven days a week.

         The group competes with a number of commercial  banks,  internet banks,
savings  associations and credit unions,  as well as more specialized  financial
service  providers  such as investment  brokerage  companies,  consumer  finance
companies,  and residential real estate lenders. The group's primary competitors
are other major  depository  institutions  such as Bank of  America,  California
Federal,  Washington  Mutual and Wells Fargo, as well as smaller community banks
in the markets in which we operate.

COMMERCIAL FINANCIAL SERVICES GROUP

         The Commercial Financial Services Group offers customized financing and
cash  management  services  to  middle  market  and large  corporate  businesses
primarily  headquartered in the western United States. The Commercial  Financial
Services  Group has continued to produce strong  earnings  growth by focusing on
customer  segmentation,  allowing  the group to  provide  specialized  financing
expertise  to  specific   geographic  markets  and  industry  segments  such  as
Communications,  Energy,  Entertainment,  and Retail.  Relationship managers and
credit  executives in the  Commercial  Financial  Services  Group provide credit
services  including   commercial  loans,   accounts  receivables  and  inventory
financing,  project financing,  lease financing, trade financing and real estate
financing. In addition to credit services, the group offers its customers access
to high quality cash management  services delivered through  specialized deposit
managers with extensive experience in cash management solutions for businesses.

         The  group's  continued  success  in  their  focused  approach  to  the
wholesale  market led to 2000 net  income  growth of $84.3  million  over a year
earlier.  Revenues  increased  by $162.2  million  primarily  due to strong loan
growth,  higher  interest  rates and improved  noninterest  income.  Noninterest
expense  increased  $15.3 million over a year earlier due to higher  expenses to
support increased deposit volume.  Despite this increase, the group continues to
improve efficiency with revenue growth  significantly  outpacing expense growth.
Credit expenses  increased $21.7 million in response to the loan growth over the
prior  year  (see F-4 for an  explanation  of  credit  expense  under  our RAROC
methodology).

         The group's  initiatives  for 2001 include  expanding  capital  markets
activities,   increasing   domestic  trade  financing  and  expanding  the  item
processing business.  Loan growth strategies include  originating,  underwriting
and syndicating loans in core competency markets,  such as the California middle
market, commercial real estate, communications, media, energy, equipment leasing
and commercial finance. In expanding capital markets activities,  the group aims
to broaden the range of services offered to business  customers  seeking bundled
financial  services.  Some services that  Commercial  Financial  Services  Group
intends to begin  offering in this arena include debt  underwriting  and private
placements. The Commercial Financial Services Group operates a strong processing
business,   including   services  such  as  check  processing,   front-end  item
processing,   cash  vault  services  and  digital  imaging.   Opportunities  for
outsourcing  these  capabilities  for  correspondent  banks,  e-banks and credit
unions  are  significant.  In  the  processing  business,  Commercial  Financial
Services  Group  intends to build new  capabilities,  in addition to  leveraging
existing  capabilities.  Some new initiatives  underway  include cash management
products with internet  delivery,  check  truncation at  point-of-sale,  digital
certificates  and e-bill payment and  presentment.  The  combination of expanded
products  and an emphasis on core  competencies  are expected to  contribute  to
strong growth in operating earnings in 2001.

                                      F-9

<PAGE>


         The  Commercial   Financial  Services  Group  comprises  the  following
business units:

     o   the Commercial Banking Division, which serves California middle-market
         companies;

     o   the  Corporate  Deposit  Services  Division,   which  provides
         deposit and cash management expertise to clients in the middle
         market, large corporate market and specialized industries;

     o   the Institutional and Deposit Services Division, which provides deposit
         and cash management  expertise to clients in specific deposit-intensive
         industries;

     o   the  Corporate  Capital  Markets   Division,   which  provides
         merchant and investment banking related products and services.

     o   the National Banking Division,  which provides credit services
         to a variety of specialized  industries  including  retailers,
         finance  companies and insurance  companies,  as well as large
         corporate clients headquartered outside the United States;

     o   the Real  Estate  Industries  Division,  which  provides  real
         estate lending products such as construction loans, commercial
         mortgages and bridge financing;

     o   the Energy Capital  Services  Division,  which provides custom
         financing and project  financing to oil and gas companies,  as
         well as power and utility companies, in California and Texas;

     o   the Communications  and Media Division,  which provides custom
         financing to middle market and large corporate  clients in the
         communications, entertainment and media industries; and

     o   the Commercial Finance Division, which provides asset based lending to
         middle market companies.

         The group  competes  with  other  banks  primarily  on the basis of its
reputation as a "business bank," the quality of its relationship  managers,  and
the delivery of superior  customer  service.  We are recognized in California as
having a superior "business banking"  reputation  relative to other large banks.
We are also highly rated among  financial  institutions  for our cash management
services and systems.

         The group's main  strategy is to target  industries  and  companies for
which the group can reasonably  expect to be one of a customer's  primary banks.
Consistent  with its strategy,  the group  attempts to serve a large part of its
targeted customers' credit and depository needs.

         The  group  competes  with  a  variety  of  other  financial   services
companies.  Competitors  include  other  major  California  banks,  as  well  as
regional,  national  and  international  banks.  In  addition,  we compete  with
investment banks, commercial finance companies, leasing companies, and insurance
companies.

 INTERNATIONAL BANKING GROUP

         The  International  Banking  Group  focuses on providing  correspondent
banking  and trade  finance  related  products  and  services  to  international
financial  institutions  worldwide,  primarily  in  Asia.  This  focus  includes
products  and  services  such as  letters  of  credit,  international  payments,
collections  and  financing of mostly  short-term  transactions.  The group also
serves certain foreign firms and U.S.  corporate  clients in selected  countries
where we have branches, including Taipei, Taiwan, Seoul, Korea and Tokyo, Japan.
In the U.S., the group serves  subsidiaries and affiliates of non-Japanese Asian
companies and U.S.  branches/agencies  of foreign banks. In addition,  the group
also provides  international  services to domestic  corporate  clients along the
West Coast. The majority of revenue generated by the International Banking Group
is from customers domiciled outside of the U.S.

         In 2000,  net income  decreased by $0.7  million  compared to the prior
year.  Slower than expected  economic recovery in Asia and a related increase in
liquidity put  significant  pressure on spreads in the region.  Lower  portfolio
exposure  and a $6.7  million  reduction  in credit  expense  versus 1999 helped
offset these lower spreads.  In addition,  noninterest  expense was $3.3 million
lower  than the  prior  year,  as  Mission  Excel  initiatives  continued  to be
implemented.  The nature of the  International  Banking Group business

                                      F-10

<PAGE>


revolves around  short-term,  trade financing and service related income,  which
tends to result in  significantly  lower  credit  risk  when  compared  to other
long-term lending activities.

         The group has a long and stable history of providing  correspondent and
trade-related  services  to  international  financial  institutions.  The  group
continues to be a market leader,  achieving  strong customer loyalty in the Asia
Pacific  correspondent  banking  market by providing  high quality  products and
services at competitive  prices. The International  Banking Group head office is
located in San Francisco with branches in Tokyo, Taipei,  Seoul, Manila and Hong
Kong. In addition, the group maintains  representative offices in other parts of
Asia and Latin America and an international banking subsidiary in New York.

 GLOBAL MARKETS GROUP

         The Global  Markets Group  conducts  business  activities  primarily to
support the previously described business groups and their customers. This group
offers a broad range of risk management  products,  such as foreign exchange and
interest rate swaps, caps and floors.  Additionally,  it places debt securities,
including Union Bank of California,  N.A.'s own liabilities,  with institutional
investors and trades debt instruments in the secondary market. At the same time,
this group manages our market-related  risks as part of its responsibilities for
asset/liability  management including wholesale funding,  liquidity,  securities
portfolio, and off-balance sheet interest rate risk hedges.

         In 2000, total Company revenue from risk management  products increased
$11.4 million or 63 percent from the prior year, primarily due to higher foreign
exchange  profits.  The  majority  of the  revenue  generated  from  these  risk
management  products are distributed to the other business segments  responsible
for the cross-selling of these products. The group's net income of $12.4 million
decreased  $22.1  million  compared  to 1999,  mainly  due to a higher  level of
revenue  from these risk  management  products  being  distributed  to the other
business  segments   responsible  for  the  cross  selling  of  these  products.
Noninterest income for 2000 decreased $23.0 million compared to 1999, mainly due
to losses on the sale of  securities  in our  investment  portfolio  in order to
replace low  yielding  with  higher  yielding  securities  as part of the bank's
asset/liability management strategy.  Noninterest expense in 2000 decreased $5.1
million compared to 1999, largely due to personnel expense reductions.

 OTHER

         "Other" includes the following items:

     o   corporate activities that are not directly attributable to one
         of the four major  business  units.  Included in this category
         are  goodwill  and certain  other  nonrecurring  items such as
         restructuring  charges  and  credits,  merger and  integration
         expense, certain parent company non-bank subsidiaries, and the
         elimination of the fully taxable-equivalent amounts;

     o   the adjustment  between the credit expense under RAROC and the
         provision  for  credit  losses  under  US  GAAP  and  earnings
         associated with unallocated equity capital;

     o   the Credit  Management  Group,  containing the Special Assets
         Division,  which  includes  $169.8 million  and $408.3
         million of nonperforming assets for 1999 and 2000, respectively;

     o   the Pacific Rim Corporate Group,  which offers a range of credit,
         deposit,  and investment  management  products and services to
         companies in the U.S.,  which are affiliated  with companies
         headquartered  outside the U.S.,  mostly in Japan; and

     o   the residual costs of support groups.

         Net loss for  "other"  in 2000 was $126.9  million.  The  results  were
impacted by the following factors:

     o   Credit expense of $263.5 million due to the difference between
         the $440 million in  provision  for credit  losses  calculated
         under the company's GAAP methodology and the $176.5 million in

                                      F-11

<PAGE>


         expected losses for the reportable  business  segments,  which
         utilizes the RAROC methodology, offset by

     o   Net interest income of $55.4 million,  which resulted from the
         differences  between the credit for equity for the  reportable
         segments  under RAROC and the net  interest  income  earned by
         UnionBanCal  Corporation,  and a credit for demand deposits in
         the Pacific Rim Group.

     o   Noninterest expense of $37 million, which included the $19
         million restructuring credit.

         Net  income for  "other"  in 1999 was $11  million.  The  results  were
impacted by the following factors:

     o   Net interest income of $17.9 million,  which resulted from the
         differences  between the credit for equity for the  reportable
         segments and the net interest  income  earned by  UnionBancCal
         Corporation and

     o   Credit benefit of $101.3 million due to the difference between
         the $65  million in  provision  for credit  losses  calculated
         under the company's GAAP methodology and the $166.3 million in
         expected losses for the reportable  business  segments,  which
         utilizes the RAROC methodology, and

     o   Noninterest expense of $164 million, which included the $85 million
         restructuring charge.

 STRATEGIC INITIATIVES

         In connection with our strategic initiatives, we have established long-
term  financial  performance  goals.  These  goals  will  serve  as a tool  for
measuring the long-term  success of our  operating  strategies,  based on normal
business  operations,  without including unusual events that may occur from time
to time. Our long-term financial performance goals include:

<TABLE>
<CAPTION>


PERFORMANCE RATIO                                          GOAL
---------------------------------------------------------  ------------
<S>                                                        <C>    <C>

o  Return on average common equity.......................  15% to 17%
o  Earnings per share growth.............................  10% to 12%
o  Efficiency ratio......................................  54% to 56%
o  Tangible common equity to assets......................  7.5% to 8.5%

</TABLE>


         Although  we believe  these  goals are  realizable  given our  proposed
operating strategies and our current asset quality, we cannot assure you that we
will attain these long-term financial  performance goals at any particular time.
See paragraph on certain business risk factors on page F-41.

                                      F-12

<PAGE>


NET INTEREST INCOME

         The table below shows the major  components of net interest  income and
net interest margin.

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                            --------------------------------------------------------------------------------------------------------
                                          1998                              1999                               2000
                            --------------------------------  ---------------------------------  -----------------------------------
                                        Interest     Average               Interest     Average                 Interest    Average
                              Average   Income/      Yield/     Average    Income/      Yield       Average     Income/     Yield/
(Dollars in thousands)        Balance   Expense(1)   Rate(1)    Balance    Expense(1)   Rate(1)     Balance     Expense(1)  Rate(1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>         <C>             <C>   <C>          <C>            <C>     <C>           <C>            <C>

ASSETS
Loans:(2)
   Domestic..............   $21,890,350 $1,736,847      7.93% $23,931,438  $1,862,037     7.78%   $25,260,924   $2,170,653     8.59%
   Foreign(3)............     1,325,154     90,011      6.79    1,093,339      69,593     6.37      1,049,496       71,812     6.84
Securities--taxable(4)...     3,056,152    192,404      6.30    3,287,983     205,899     6.26      3,426,164      221,606     6.47
Securities--tax-exempt(4)       103,097     11,384     11.04       78,289       7,852    10.03         68,759        6,772     9.85
Interest bearing deposits       260,720     17,080      6.55      203,752      12,174     5.97        174,769        9,126     5.22
   in banks..............
Federal funds sold and          296,285     16,056      5.42      156,839       8,108     5.17        131,449        8,160     6.21
   securities purchased
   under resale agreements
Trading account assets...       555,632     25,829      4.65      265,482      12,293     4.63        268,169       15,519     5.79
                            -----------  ---------             ----------   ---------              ----------    ---------
      Total earning assets   27,487,390  2,089,611      7.60   29,017,122   2,177,956     7.51     30,379,730    2,503,648     8.24
                                         ---------                          ---------                            ---------
Allowance for credit losses    (471,113                          (453,126)                            (509,653)
Cash and due from banks..     1,919,714                         2,026,730                            2,140,369
Premises and equipment, net     405,562                           434,313                              429,668
Other assets.............     1,182,253                         1,116,458                            1,231,944
                            -----------                       -----------                          -----------
      Total assets.......   $30,523,806                       $32,141,497                          $33,672,058
                            ===========                       ===========                          ===========

LIABILITIES
Domestic deposits:
   Interest bearing......    $5,482,257    153,805      2.81   $5,704,138     143,334     2.51     $6,039,773      163,446     2.71
   Savings and consumer       3,205,823    120,778      3.77    3,368,328     107,974     3.21      3,371,948      119,910     3.56
      time...............
   Large time............     3,644,732    194,324      5.33    4,107,360     205,587     5.01      4,550,938      274,052     6.02
Foreign deposits(3)......     1,704,027     86,221      5.06    1,600,047      73,829     4.61      1,924,839      107,183     5.57
                             ----------    -------             ----------     -------              ----------      -------
      Total interest         14,036,839    555,128      3.95   14,779,873     530,724     3.59     15,887,498      664,591     4.18
        bearing deposits.    ----------    -------             ----------     -------              ----------      -------

Federal funds purchased       1,604,675     84,440      5.26    1,489,214      72,083     4.84      1,548,730       96,606     6.24
   and securities sold
   under repurchase
   agreements............
Commercial paper.........     1,631,216     88,358      5.42    1,529,814      77,041     5.04      1,521,614       94,905     6.24
Other borrowed funds.....       328,872     18,683      5.68      708,625      37,420     5.28        314,425       16,709     5.31
Subordinated capital notes      325,808     20,347      6.24      298,000      17,100     5.74        255,426       17,617     6.90
UnionBanCal                          --         --        --      303,014      24,569     8.11        350,000       26,212     7.49
   Corporation-obligated
   mandatorily redeemable
   preferred securities of
   subsidiary grantor trust
                             ----------    -------             ----------     -------               ---------      -------
      Total borrowed funds    3,890,571    211,828      5.44    4,328,667     228,213     5.27      3,990,195      252,049     6.32
                             ----------    -------             ----------     -------               ---------      -------
      Total interest         17,927,410    766,956      4.28   19,108,540     758,937     3.97     19,877,693      916,640     4.61
        bearing liabilities                -------                            -------                              -------

Noninterest bearing           8,617,875                         9,113,172                            9,640,049
   deposits..............
Other liabilities........     1,132,557                           980,194                            1,014,472
                             ----------                        ----------                            ---------
      Total liabilities..    27,677,842                        29,201,906                           30,532,214
SHAREHOLDERS' EQUITY
Common equity............     2,845,964                         2,939,591                            3,139,844
                             ----------                        ----------                           ----------
      Total shareholders'     2,845,964                         2,939,591                            3,139,844
        equity...........    ----------                        ----------                           ----------

      Total liabilities     $30,523,806                       $32,141,497                          $33,672,058
        and shareholders'   ===========                       ===========                          ===========
        equity...........

                                         1,322,655      4.81%               1,419,019     4.89%                  1,587,008    5.22%
Net interest income/margin
   (taxable-equivalent
   basis)................
Less: taxable-equivalent                     4,432                              3,186                                2,568
   adjustment............               ----------                         ----------                           ----------

      Net interest income               $1,318,223                         $1,415,833                           $1,584,440
                                        ==========                         ==========                           ==========
-----------
<FN>

(1)   Yields and interest income are presented on a taxable-equivalent  basis
      using the federal statutory tax rate of 35 percent.

(2)   Average balances on loans outstanding include all nonperforming  loans.
      The amortized  portion of net loan origination fees (costs) is included
      in interest income on loans, representing an adjustment to the yield.

(3)   Foreign  loans and deposits are those loans and deposits  originated in
      foreign branches.

(4)   For  the  purpose  of the  net  interest  margin  analysis,  yields  on
      securities available for sale are based on fair value.

</FN>
</TABLE>

                                      F-13


<PAGE>


         Net interest income,  on a  taxable-equivalent  basis, was $1.4 billion
in 1999, compared with $1.6 billion in 2000. This increase of $168.0 million, or
12 percent, was attributable partially to a $1.4 billion, or 5 percent, increase
in average  earning assets,  which was in part funded by a $526.9 million,  or 6
percent,  increase in average noninterest bearing deposits. In addition, the net
interest  margin was favorably  impacted by the interest rate  environment  that
contributed  to  higher  yields  on loans and  other  interest  bearing  assets,
partially  offset by higher rates on deposits and other average interest bearing
liabilities  (see table at F-15).  The net  interest  margin  increased 33 basis
points to 5.22 percent.

         Average earning assets were $29.0 billion in 1999,  compared with $30.4
billion in 2000. This growth was primarily  attributable to a $1.3 billion, or 5
percent,  increase in average loans, and a $128.7 million, or 4 percent increase
in average securities. The growth in average loans was mostly due to an increase
in  average  commercial,  financial  and  industrial  loans of  $670.0  million,
commercial  mortgage  loans of  $269.8  million,  construction  loans of  $279.7
million, and residential  mortgage loans of $217.9 million,  partially offset by
lower  average  consumer  loans of $179.4  million,  (see page F-18 for  further
discussion  of loans).  The increase in average  securities,  which is comprised
primarily of fixed rate available for sale securities,  reflected  liquidity and
interest rate risk management actions.

         The higher  interest  rate  environment  resulted  in higher  yields on
average earning assets of 73 basis points, partially offset by higher rates paid
on average  interest  bearing  liabilities  of 64 basis points.  The decision to
maintain an asset  sensitive  balance sheet  contributed to the higher yields in
2000. The $769.2 million,  or 4 percent,  increase in average  interest  bearing
liabilities  during  2000 was due to an  increase  in average  interest  bearing
deposits of $1.1  billion,  or 8 percent,  partially in large time  deposits and
partially in interest bearing core deposits.

         Average  noninterest  bearing deposits  increased $526.9 million,  or 6
percent,  over 1999.  This  large base of  interest-free  funding  continues  to
benefit our lower cost of funds.

ANALYSIS OF CHANGES IN NET INTEREST INCOME

         The following table shows the changes in the components of net interest
income on a taxable-equivalent basis. The changes in net interest income between
periods have been reflected as

                                      F-14

<PAGE>


attributable  either to volume or to rate  changes.  For purposes of this table,
changes that are not solely due to volume or rate changes are allocated to rate.

<TABLE>
<CAPTION>

                                                                               YEARS ENDED DECEMBER 31,
                                                      ---------------------------------------------------------------------------
                                                               1999 VERSUS 1998                          2000 VERSUS 1999
                                                      ----------------------------------      -----------------------------------
                                                          INCREASE (DECREASE) DUE TO              INCREASE (DECREASE) DUE TO
                                                                  CHANGE IN                               CHANGE IN
                                                      ----------------------------------      -----------------------------------
                                                       AVERAGE      AVERAGE          NET       AVERAGE       AVERAGE          NET
(DOLLARS IN THOUSANDS)                                  VOLUME         RATE       CHANGE        VOLUME          RATE       CHANGE
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>          <C>          <C>           <C>           <C>          <C>

CHANGES IN INTEREST INCOME
Loans:
   Domestic....................................       $161,858     $(36,668)    $125,190      $103,434      $205,182     $308,616
   Foreign(1)..................................        (15,740)      (4,678)     (20,418)       (2,793)        5,012        2,219
Securities--taxable.............................        14,605       (1,110)      13,495         8,650         7,057       15,707
Securities--tax-exempt..........................        (2,739)        (793)      (3,532)         (956)         (124)      (1,080)
Interest bearing deposits in banks.............         (3,731)      (1,175)      (4,906)       (1,730)       (1,318)      (3,048)
Federal funds sold and securities purchased             (7,558)        (390)      (7,948)       (1,313)        1,365           52
   under resale agreements.....................
Trading account assets.........................        (13,492)         (44)     (13,536)          124         3,102        3,226
                                                      --------     --------     --------      --------      --------     --------
      Total earning assets.....................        133,203      (44,858)      88,345       105,416       220,276      325,692
                                                      --------     --------     --------      --------      --------     --------

CHANGES IN INTEREST EXPENSE
Domestic deposits:.............................
   Interest bearing............................       $  6,235     $(16,706)    $(10,471)     $  8,424      $ 11,688     $ 20,112
   Savings and consumer time...................          6,126      (18,930)     (12,804)          116        11,820       11,936
   Large time..................................         24,658      (13,395)      11,263        22,223        46,242       68,465
Foreign deposits(1)............................         (5,261)      (7,131)     (12,392)       14,973        18,381       33,354
                                                      --------     --------     --------      --------      --------     --------
      Total interest bearing deposits..........         31,758      (56,162)     (24,404)       45,736        88,131      133,867
                                                      --------     --------     --------      --------      --------     --------
Federal funds purchased and securities sold             (6,073)      (6,284)     (12,357)        2,881        21,642       24,523
   under repurchase agreements.................
Commercial paper...............................         (5,496)      (5,821)     (11,317)         (413)       18,277       17,864
Other borrowed funds...........................         21,570       (2,833)      18,737       (20,814)          103      (20,711)
Subordinated capital notes.....................         (1,735)      (1,512)      (3,247)       (2,444)        2,961          517
UnionBanCal Corporation-obligated mandatorily           24,569           --       24,569         3,811        (2,168)       1,643
   redeemable preferred securities of subsidiary      --------     --------     --------      --------      --------     --------
   grantor trust...............................

      Total borrowed funds.....................         32,835      (16,450)      16,385       (16,979)       40,815       23,836
                                                      --------     --------     --------      --------      --------     --------
      Total interest bearing liabilities.......         64,593      (72,612)      (8,019)       28,757       128,946      157,703
                                                      --------     --------     --------      --------      --------     --------
      Changes in net interest income...........       $ 68,610     $ 27,754     $ 96,364      $ 76,659      $ 91,330     $167,989
                                                      ========     ========     ========      ========      ========     ========
-----------
<FN>

(1)      Foreign loans and deposits are those loans and deposits originated in foreign branches.

</FN>
</TABLE>

<TABLE>
<CAPTION>

NONINTEREST INCOME



                                                                                                   INCREASE (DECREASE)
                                                                                      ----------------------------------------------
                                                                                                  YEARS ENDED DECEMBER 31,
                                                                                      ----------------------------------------------
                                                  YEARS ENDED DECEMBER 31,              1999 VERSUS 1998           2000 VERSUS 1999
                                           -----------------------------------        -------------------        -------------------
(DOLLARS IN THOUSANDS)                         1998         1999          2000         AMOUNT     PERCENT         AMOUNT     PERCENT
----------------------                         ----         ----          ----         ------     -------         ------     -------
<S>                                        <C>          <C>           <C>             <C>             <C>        <C>             <C>

Service charges on deposit accounts        $138,847     $172,700      $210,257        $33,853         24%        $37,557         22%
Trust and investment management fees        121,226      140,878       154,387         19,652          16         13,509         10
Merchant transaction processing fees         56,929       68,037        73,521         11,108          20          5,484          8
International commissions and fees.          72,036       70,801        71,189        (1,235)         (2)            388          1
Merchant banking fees..............          31,402       38,036        48,985          6,634          21         10,949         29
Brokerage commissions and fees.....          19,085       27,038        35,755          7,953          42          8,717         32
Securities gains, net..............           5,686        7,941         8,784          2,255          40            843         11
Other..............................          88,320       61,328        44,302        (26,992)        (31)       (17,026)       (28)
                                           --------     --------      --------        -------         ---        -------         ---
   Total noninterest income........        $533,531     $586,759      $647,180        $53,228         10%        $60,421         10%
                                           ========     ========      ========        =======         ===        =======         ===
-----------
<FN>

nm = not meaningful

</FN>
</TABLE>


                                      F-15

<PAGE>


         Noninterest  income in 2000 was $647.2  million,  an  increase of $60.4
million,  or 10 percent,  over 1999.  This increase was primarily  attributed to
growth in deposit-related income, trust and investment management fees, merchant
banking fees, brokerage commissions & fees, and merchant transaction  processing
fees, partially offset by other income.

     o   Revenue  from service  charges on deposit  accounts was $210.3
         million, an increase of $37.6 million or 22 percent over 1999.
         The  increase  was  primarily  attributable  to  a  7  percent
         increase in average  deposits,  higher overdraft fees due to a
         change in fee structure, and the expansion of several products
         and services over the last two years.

     o   Trust and investment  management fees were $154.4 million,  an
         increase  of  $13.5  million  or 10  percent  over  1999.  The
         acquisition  of the assets of  Imperial  Trust  accounted  for
         approximately  30  percent  of  the  increase  with  the  rest
         attributed to growth in our SelectBENEFIT 401(k) product which
         increased  $3.7  million  or  23  percent,  and  institutional
         custody  services which  increased $4.0 million or 21 percent.
         Overall assets under  administration  grew to 136.5 billion at
         year-end, an increase of 7 percent over 1999.

     o   Merchant banking fees were $49.0 million, an increase of $10.9
         million or 29 percent over 1999.  The  increase was  primarily
         related to higher  syndication  fees.  Although  the number of
         syndicated  deals  closed was one less than in 1999,  our 2000
         deals were larger in size generating higher revenues per deal.

     o   Brokerage commissions and fees were $35.8 million, an increase
         of $8.7  million or 32 percent  over 1999.  The  increase  was
         primarily  related  to  brokerage   commissions  on  sales  of
         non-proprietary   mutual  funds,   annuities,   and  insurance
         products and pricing changes implemented in the fourth quarter
         of 1999.

     o   Merchant  transaction  processing fees were $73.5 million,  an
         increase of $5.5 million or 8 percent over 1999. This increase
         was   primarily   attributed   to  product   pricing   changes
         implemented in mid-1999.

     o   Securities  gains, net were $8.8 million,  an increase of $0.8
         million or 11 percent over 1999.  This  increase was primarily
         related  to the gains on sale of  venture  capital  securities
         investments, partially offset by the losses on sale of certain
         lower yielding  securities in our portfolio where the proceeds
         were used to purchase higher yielding securities.

     o   Other  noninterest  income was $44.3  million,  a decrease  of
         $17.0 million or 28 percent over 1999. The decrease was mainly
         attributed  to higher  losses on the  valuation  of auto lease
         residuals of $23.5  million, as a result of  deterioration  in
         the used car market.  Continued  deterioration in the used car
         market for 2001 would lead us to anticipate  further losses on
         the valuation of auto lease  residuals.  The decrease in other
         noninterest income was also due to losses on the sale of loans
         of $3.9 million,  partially offset by foreign exchange profits
         of  $7.6  million   mainly   resulting  from  an  increase  in
         exporters' cross border transactions  reflecting a stronger US
         dollar in the first  half of the year,  which  resulted  in an
         increase in overseas  direct  investments  and capital  market
         securities investments, and a $4.1 million gain on the sale of
         a property.

                                      F-16

<PAGE>

<TABLE>
<CAPTION>


NONINTEREST EXPENSE



                                                                                                INCREASE (DECREASE)
                                                                                   -------------------------------------------------
                                                                                             YEARS ENDED DECEMBER 31,
                                                                                   -------------------------------------------------
                                          YEARS ENDED DECEMBER 31,                 1999 VERSUS 1998                2000 VERSUS 1999
                                          ------------------------                 ----------------                ----------------
(DOLLARS IN THOUSANDS)                   1998            1999             2000       AMOUNT      PERCENT          AMOUNT     PERCENT
----------------------                   ----            ----             ----       ------      -------          ------     -------
<S>                                  <C>             <C>              <C>           <C>               <C>      <C>              <C>

Salaries and other                   $501,220        $539,056         $517,459      $37,836           8%       $(21,597)        (4)%
   compensation............
Employee benefits..........           116,344         122,288           83,003        5,944           5         (39,285)       (32)
                                     --------        --------         --------      -------         ---        --------        ---
   Salaries and employee              617,564         661,344          600,462       43,780           7         (60,882)        (9)
      benefits.............
Net occupancy..............            90,917          90,162           92,567         (755)         (1)          2,405          3
Equipment..................            56,252          67,095           63,290       10,843          19          (3,805)        (6)
Merchant transaction                   43,926          49,435           49,609        5,509          13             174         --
   processing..............
Communications.............            41,710          43,179           43,744        1,469           4             565          1
Professional services......            36,748          38,399           42,042        1,651           4           3,643          9
Data processing............            28,091          31,811           34,803        3,720          13           2,992          9
Advertising and public                 31,897          27,163           29,125       (4,734)        (15)          1,962          7
   relations...............
Printing and office supplies           26,716          22,535           20,057       (4,181)        (16)         (2,478)       (11)
Intangible asset amortization          13,581          13,980           13,352          399           3            (628)        (4)
Foreclosed asset income....           (2,821)         (1,344)              (80)       1,477          nm           1,264         nm
Restructuring charge (credit)              --          85,000          (19,000)      85,000          nm        (104,000)        nm
Other......................           150,637         153,214          160,214        2,577           2           7,000          5
                                     --------        --------         --------      -------         ---       ---------        ---
   Total noninterest expense       $1,135,218      $1,281,973       $1,130,185     $146,755          13%      $(151,788)       (12)%
                                   ==========      ==========       ==========     ========                   =========

-----------
<FN>

nm = not meaningful

</FN>
</TABLE>


         Noninterest  expense,  excluding  the  restructuring  charge  of  $85.0
million recorded in 1999 and the restructuring  credit of $19.0 million recorded
in 2000, was $1.1 billion, a decrease of $47.8 million, or 4 percent, over 1999.
This decrease was  attributed  to lower  expenses  realized  through our Mission
Excel expense  reduction  efforts,  higher expenses in the prior year related to
the Year 2000 conversion, and a one-time credit related to an accounting change,
partially offset by higher expenses related to growth in our e-business group.

     o   Salaries and employee  benefits expense was $600.5 million,  a
         decrease  of  $60.9  million  or 9  percent  over  1999.  This
         decrease  was  attributed  to  personnel  reductions  achieved
         through  Mission  Excel,  a one-time  credit for an accounting
         methodology  change in pension  expense of $16.0 million,  and
         changes to our pension plan assumptions.


INCOME TAX EXPENSE



                                                YEARS ENDED DECEMBER 31,
                                           -----------------------------------
(DOLLARS IN THOUSANDS)                       1998         1999          2000
----------------------                       ----         ----          ----

Income before income taxes.................$671,536     $655,619      $661,435
Income tax expense......................... 205,075      213,888       221,535
Effective tax rate.........................      31%          33%           33%

                                      F-17

<PAGE>


         The effective  tax rate for 1999 and 2000 was 33 percent.  During 1999,
we  recognized  a net tax  benefit of $10.7  million as a result of various  tax
refunds.  Excluding this tax benefit,  our effective tax rate would have been 34
percent. For further explanation see Note 9.

         Our effective tax rate in 1998 was 31 percent  compared with 33 percent
in 1999.  Our  effective tax rate in 1999 was affected by various tax credits of
$10.7 million.  The lower 1998 effective tax rate was due to our ability to file
our 1997 and 1998 California franchise tax returns on a worldwide unitary basis,
incorporating  the financial results of The Bank of  Tokyo-Mitsubishi,  Ltd. and
its  worldwide  affiliates.  As a  result,  we  reduced  our  state  income  tax
liabilities  by $29 million,  net of federal tax,  for  previously  accrued 1997
state tax liabilities,  and lowered our 1998 state tax provision by $31 million,
net of federal tax. It is our  intention to file our 2000  California  franchise
tax  returns on a  worldwide  unitary  basis as well.  In 1997,  we  received an
after-tax refund from the California Franchise Tax Board (FTB) of $25 million to
settle  litigation,  administration,  and  audit  disputes  covering  the  years
1975-1987.  Excluding  the various tax refunds,  the effective tax rates were 35
percent in 1998, and 34 percent in 1999.

CREDIT RISK MANAGEMENT

         Our principal  business activity is the extension of credit in the form
of loans and credit substitutes to individuals and businesses.  Our policies and
applicable laws and  regulations  governing the extension of credit require risk
analysis  including  an extensive  evaluation  of the purpose of the request and
borrowers'  ability and  willingness to repay as scheduled.  Our evaluation also
includes   ongoing   portfolio   and   credit   management   through   portfolio
diversification, lending limit constraints, credit review and approval policies,
and extensive internal monitoring.

         We manage  and  control  credit  risk  through  diversification  of the
portfolio by type of loan,  industry  concentration,  dollar  limits on multiple
loans to the  same  borrower,  geographic  distribution  and  type of  borrower.
Geographic  diversification  of loans  originated  through our branch network is
generally within California,  Oregon and Washington, which we consider to be our
principal markets. In addition, we will continue to originate and participate in
lending activities outside these states, as well as internationally.

         In analyzing our existing loan portfolios, we apply specific monitoring
policies and  procedures  that vary  according to the relative  risk profile and
other   characteristics  of  the  loans  within  the  various  portfolios.   Our
residential  and consumer  loans and leases are  relatively  homogeneous  and no
single loan is  individually  significant in terms of its size or potential risk
of loss.  Therefore,  we review  our  residential  and  consumer  portfolios  by
analyzing  their  performance  as a pool of loans.  In contrast,  our monitoring
process for the commercial, financial and industrial,  construction,  commercial
mortgage,  leases,  and foreign loan  portfolios  includes a periodic  review of
individual  loans.  Loans  that are  performing  but have  shown  some  signs of
weakness are  subjected to more  stringent  reporting and  oversight.  We review
these loans to assess the ability of the borrowing entity to continue to service
all of its interest  and  principal  obligations  and as a result may adjust the
risk grade  accordingly.  In the event that we believe that full  collection  of
principal and interest is not reasonably assured, the loan will be appropriately
downgraded and, if warranted,  placed on nonaccrual status, even though the loan
may be current as to principal and interest payments.

         We have a Credit Review and Management  Committee composed of the Chief
Executive Officer,  the Chief Credit Officer,  and other executive officers that
establishes overall risk appetite,  portfolio  concentration  limits, and credit
risk rating methodology. This committee is supported by the Credit Policy Forum,
composed of lending group Senior Credit  Officers that have  responsibility  for
establishing  credit  policy,  credit  underwriting  criteria,  and  other  risk
management  controls  including  the  approval  of business  strategies.  Credit
Administration   under  the  direction  of  the  Senior   Credit   Officers  has
responsibility  for  administering  the  credit  approval  process  and  related
policies.  Policies  require an  extensive  evaluation  of credit  requests  and
continuing review of existing credit in order to promptly identify, monitor, and
quantify evidence of deterioration in asset credit quality or potential loss. As
another part of the control  process,  an internal credit  examination  function
provides the Board of Directors with an independent assessment of

                                      F-18

<PAGE>

both the level of portfolio  quality and the  effectiveness of the Bank's credit
management  process. At the portfolio level the Credit Examination Group reviews
existing and proposed credit policies,  underwriting  guidelines,  and portfolio
management  practices to determine that credit risks are defined and controlled.
In addition,  this group  routinely  reviews the accuracy and timeliness of risk
grades  assigned to  individual  borrowers to ensure that the line driven credit
risk  identification  and grading  process is functioning  properly.  The Credit
Examination  Group  summarizes its  significant  findings on a regular basis and
provides recommendations for corrective action when credit management or control
deficiencies are identified.

LOANS

         The  following  table  shows  loans  outstanding  by loan type and as a
percentage of total loans for 1996 through 2000.

<TABLE>
<CAPTION>


                                                                           DECEMBER 31,
                                        ------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS)                        1996             1997              1998               1999            2000
------------------------------------    -------------   ----------------   --------------   ---------------   --------------
<S>                                     <C>       <C>   <C>          <C>   <C>        <C>   <C>          <C>  <C>        <C>

Domestic:
   Commercial, financial and            $9,496    45%  $10,747       47%   $13,120    54%   $14,177      55%  $13,749    53%
      industrial...................
   Construction....................        358     2       293        1        440     2        648       3       939     4
   Mortgage:
      Residential..................      2,961    14     2,961       13      2,628    11      2,581      10     3,295    13
      Commercial...................      2,598    12     2,952       13      2,975    12      3,572      14     3,348    13
                                        ------          ------              ------           ------            ------
        Total mortgage.............      5,559    26     5,913       26      5,603    23      6,153      24     6,643    26
   Consumer:
      Installment..................      2,063    10     2,091        9      1,985     8      1,922       7     1,656     6
      Home equity..................      1,113     5       993        5        818     4        728       3       755     3
      Credit card and other lines of       303     1       270        1         --    --         --      --        --    --
        credit.....................     ------          ------              ------           ------            ------

        Total consumer.............      3,479    16     3,354       15      2,803    12      2,650      10     2,411     9
   Lease financing.................        800     4       875        4      1,032     4      1,149       4     1,134     4
                                        ------          ------              ------           ------            ------
        Total loans in domestic         19,692    93    21,182       93     22,998    95     24,777      96    24,876    96
           offices.................
Loans originated in foreign branches     1,358     7     1,559        7      1,298     5      1,136       4     1,134     4
                                        ------          ------              ------           ------            ------
        Total loans................    $21,050   100%  $22,741      100%   $24,296   100%   $25,913     100%  $26,010   100%
                                       =======         =======             =======          =======           =======

</TABLE>


         Our lending  activities  are  predominantly  domestic,  with such loans
comprising  96 percent of the total loan  portfolio at December 31, 2000.  Total
loans at December 31, 2000 were $26.0  billion,  an increase of $97 million,  or
0.4 percent,  over December 31, 1999. The increase was attributable to growth in
residential  mortgage  loan  portfolio,  which  increased  $714  million and the
construction loan portfolio,  which increased $291 million,  partially offset by
the commercial,  financial and industrial  loan portfolio,  which decreased $428
million,  the consumer loan  portfolio,  which  decreased $239 million,  and the
commercial mortgage loan portfolio, which decreased $224 million.

COMMERCIAL, FINANCIAL AND INDUSTRIAL LOANS

         Commercial,  financial  and  industrial  loans  represent  the  largest
category in the loan  portfolio.  These loans are extended  principally to major
corporations,  middle market businesses, and small businesses,  with no industry
concentration exceeding 10 percent of total commercial, financial and industrial
loans. This

                                      F-19

<PAGE>

portfolio  has a high  degree  of  geographic  diversification  based  upon  our
customer's  revenue  bases,  which  lowers our  vulnerability  to changes in the
economic outlook of any particular region of the U.S.

         Our commercial market lending originates  primarily through our banking
office network. These offices,  which rely extensively on  relationship-oriented
banking,  provide many services  including cash  management  services,  lines of
credit, accounts receivable and inventory financing. Separately, we originate or
participate in a wide variety of financial services to major corporations. These
services  include  traditional  commercial  banking  and  specialized  financing
tailored to the needs of each customer's  specific industry.  Presently,  we are
active in the communications,  media and entertainment, energy capital services,
technology, agribusiness, retailing and financial services industries.

         At December 31, 2000, the  commercial,  financial and  industrial  loan
portfolio  was $13.7  billion,  or 53 percent of the total loan  portfolio.  The
decrease of $428 million, or 3 percent, from the previous year- end was impacted
by a higher level of charge-offs, distressed loan sales of $151 million, as well
as reductions in our exposure in nonrelationship participations.  This portfolio
of loans,  which comprises $2.0 billion of our total  commercial,  financial and
industrial loans, has caused a disproportionate share of our credit problems.

CONSTRUCTION AND COMMERCIAL MORTGAGE LOANS

         We  engage  in  non-residential   real  estate  lending  that  includes
commercial  mortgage  loans and  construction  loans  secured by deeds of trust.
Construction loans are made primarily to commercial  property  developers and to
residential builders.

         At  December  31,  2000,  construction  loans were $939  million,  or 4
percent  of the total  loan  portfolio.  The  increase  of $291  million,  or 45
percent, from the previous year-end was primarily  attributable to the favorable
California real estate market and West Coast economy.

         At December 31, 2000, the  commercial  mortgage loan portfolio was $3.3
billion,  or 13 percent of the total loan portfolio.  Commercial  mortgage loans
decreased by $224 million, or 6 percent,  from December 31, 1999,  primarily due
to the refinancing of bridge loans, which are classified as commercial  mortgage
loans,  with other  permanent  lenders  (such as life  insurance  companies  and
institutional investors). The demand for commercial mortgage loans reflects both
the favorable California real estate market and West Coast economy.

RESIDENTIAL MORTGAGE LOANS

         We originate  residential mortgage loans, secured by one-to-four family
residential   properties,   through  our  multiple  channel  network  (including
branches, mortgage brokers, and loan by phone) throughout California, Oregon and
Washington, and periodically purchase loans in our market area.

         At December 31, 2000,  residential mortgage loans were $3.3 billion, or
13 percent of the total loan  portfolio.  The  increase of $714  million,  or 28
percent, from December 31, 1999 was influenced by purchases of $133.0 million in
adjustable rate mortgages (ARM) primarily originated in California,  Oregon, and
Washington and a strategic  decision to hold to maturity a larger portion of our
ARM loan originations resulting in lesser loan sales in the current year.

CONSUMER LOANS

         Through our branch network,  we originate  consumer loans, such as auto
loans and home equity loans and lines.  Auto leases are  originated  through our
dealer network. Approximately 95 percent of our consumer loans are secured. Most
of the unsecured portfolio is in personal lines of credit.

                                      F-20

<PAGE>

         At December 31, 2000, consumer loans were $2.4 billion, or 9 percent of
the total loan portfolio.  The decrease of $239 million, or 9 percent,  from the
previous  year-end was primarily  attributable to exiting the dealer  automobile
loan business in the third quarter of 2000.

LEASE FINANCING

         We enter  into  direct  financing  and  leveraged  leases  through  our
Equipment Leasing  Division,  and also through an agreement with a subsidiary of
The Bank of Tokyo-Mitsubishi, Ltd. In addition, we originate auto leases through
our Consumer Asset  Management  section of the Community  Banking and Investment
Services Group.

         At December 31, 2000, lease financing  outstandings  were $1.1 billion,
or 4 percent of the total loan portfolio,  remaining  relatively  unchanged from
the prior year.

LOANS ORIGINATED IN FOREIGN BRANCHES

         Our  loans  originated  in  foreign   branches  consist   primarily  of
short-term  extensions of credit to financial  institutions located primarily in
Asia and to corporations in Japan, Korea and Taiwan.

         At December 31, 2000, loans originated in foreign branches totaled $1.1
billion,  or 4  percent  of  the  total  loan  portfolio,  remaining  relatively
unchanged from the prior year, as we continue to monitor the economic  situation
in the Asian markets.

CROSS-BORDER OUTSTANDINGS

         Our cross-border  outstandings  reflect certain additional economic and
political  risks that are not  reflected in domestic  outstandings.  These risks
include those arising from exchange rate  fluctuations  and  restrictions on the
transfer of funds. The following table sets forth our cross-border  outstandings
as of December 31, 1998, 1999 and 2000 for each country where such  outstandings
exceeded 1 percent of total assets. The cross-border  outstandings were compiled
based upon  category and domicile of ultimate risk and are comprised of balances
with banks, trading account assets,  securities  available for sale,  securities
purchased  under  resale  agreements,   loans,   accrued  interest   receivable,
acceptances  outstanding  and  investments  with foreign  entities.  The amounts
outstanding  for each country  exclude local  currency  outstandings.  For those
individual  countries shown in the table below, we do not have significant local
currency  outstandings  that are not hedged or are not funded by local  currency
borrowings.

<TABLE>
<CAPTION>


                                                                                       PUBLIC       CORPORATIONS
                                                                     FINANCIAL         SECTOR         AND OTHER          TOTAL
(DOLLARS IN MILLIONS)                                               INSTITUTIONS      ENTITIES        BORROWERS       OUTSTANDINGS
-----------------------------------------------------------         ------------      --------      ------------      ------------
<S>                                                                         <C>             <C>              <C>                <C>

December 31, 1998
   Japan....................................................                $173         $--             $464              $637
   Korea....................................................                 448           1              117               566
December 31, 1999
   Japan....................................................                 $82         $--             $339              $421
   Korea....................................................                 422          --               53               475
December 31, 2000
   Korea....................................................                $507         $--             $ 46              $553

</TABLE>


PROVISION FOR CREDIT LOSSES

         We recorded a $65 million provision for credit losses in 1999, compared
with a $440 million  provision for credit losses in 2000.  Provisions for credit
losses are charged to income to bring our allowance for credit losses to a level
deemed appropriate by management based on the factors discussed under "Allowance
for Credit Losses" below.

                                      F-21

<PAGE>

         Our provision for 2000,  compared with the 1999  provision was affected
by the following factors:

     o   The  application of stricter  standards to the  definitions of
         potential and  well-defined  weaknesses in our loan portfolio,
         resulting in higher levels of  criticized  assets and downward
         migration within the criticized grades,

     o   The deteriorating asset quality in our commercial loan portfolio and,
         in particular, non-agented syndicated credits,

     o   The increased impairment and higher volume of loans placed on non-
         accrual during the period,

     o   The  establishment of a separate loss factor for foreign loans
         based on  historical  losses in our  foreign  loan  portfolio,
         which reduced our provision requirement,

     o   The refinement of our reserve  methodology,  which  eliminated the
         portion of the  unallocated  allowance  related to model and
         estimation risk, and

     o   The higher level of charge-offs resulting from more active management
         of the portfolio through loan sales.

                                      F-22

<PAGE>


ALLOWANCE FOR CREDIT LOSSES

         The following table reflects the allowance allocated to each respective
loan  category at period end and as a percentage of the total period end balance
of that loan category, as set forth in the "Loans" table on page F-19.

<TABLE>
<CAPTION>

                                                                                          DECEMBER 31,
                                                              --------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                                                1996                     1997                     1998
------------------------------------------------------        --------------------    ---------------------    -------------------
<S>                                                           <C>            <C>      <C>             <C>      <C>            <C>

Domestic:
   Commercial, financial, and industrial..............        $166,100       1.75%    $123,610        1.15%    $145,100       1.11%
   Construction.......................................           5,700       1.59        3,221        1.10        5,500       1.25
   Mortgage:
      Residential.....................................           4,000       0.14        2,700        0.09        1,100       0.04
      Commercial......................................          39,000       1.50       60,680        2.06       17,500       0.59
                                                              --------                --------                 --------
        Total mortgage................................          43,000       0.77       63,380        1.07       18,600       0.33
   Consumer:
      Installment.....................................          10,400       0.50       11,400        0.55       20,900       1.05
      Home equity.....................................           4,900       0.44        3,600        0.36        3,800       0.46
      Credit card and other lines of credit...........          34,000      11.22       30,500       11.30           --         --
                                                              --------                --------                 --------
        Total consumer................................          49,300       1.42       45,500        1.36       24,700       0.88
   Lease financing....................................           5,300       0.66        4,862        0.56        3,800       0.37
                                                              --------                --------                 --------
        Total domestic allowance......................         269,400       1.37      240,573        1.14      197,700       0.86
Foreign allowance.....................................           9,394       0.69       39,313        2.52       47,000       3.62
Unallocated...........................................         245,152                 171,806                  214,628
                                                              --------                --------                 --------
        Total allowance for credit losses.............        $523,946       2.49%    $451,692        1.99%    $459,328       1.89%
                                                              ========                ========                 ========

<CAPTION>

                                                                             DECEMBER 31,
                                                              ---------------------------------------------
(DOLLARS IN THOUSANDS)                                                1999                   2000
------------------------------------------------------        ------------------      ---------------------
<S>                                                           <C>            <C>      <C>             <C>

Domestic:
   Commercial, financial, and industrial..............        $238,200       1.68%    $452,400        3.29%
   Construction.......................................          10,000        1.54      10,200        1.09
   Mortgage:
      Residential.....................................             800       0.03        1,000        0.03
      Commercial......................................          21,900       0.61       19,100        0.57
                                                              --------                --------
        Total mortgage................................          22,700       0.37       20,100        0.30
   Consumer:
      Installment.....................................          14,900       0.78       17,500        1.06
      Home equity.....................................             900       0.12        1,000        0.13
      Credit card and other lines of credit...........              --                      --
                                                              --------                --------
        Total consumer................................          15,800       0.60       18,500        0.77
   Lease financing....................................           4,600       0.40        7,900        0.70
                                                              --------                --------
        Total domestic allowance......................         291,300       1.18      509,100        2.05
Foreign allowance.....................................          17,200       1.51        3,400        0.30
Unallocated...........................................         161,878                 101,402
                                                              --------                --------
        Total allowance for credit losses.............        $470,378       1.82%    $613,902        2.36%
                                                              ========                ========
</TABLE>

                                      F-23

<PAGE>


ALLOWANCE POLICY AND METHODOLOGY

         We maintain an allowance for credit losses to absorb losses inherent in
the loan portfolio. The allowance is based on our regular, quarterly assessments
of the probable estimated losses inherent in the loan portfolio, and to a lesser
extent,  unused commitments to provide financing.  Our methodology for measuring
the  appropriate  level of the allowance  relies on several key elements,  which
include the formula allowance,  specific allowances for identified problem loans
and portfolio segments and the unallocated allowance.

         The  formula  allowance  is  calculated  by  applying  loss  factors to
outstanding  loans and  certain  unused  commitments,  in each case based on the
internal  risk grade of such  loans,  pools of loans,  leases  and  commitments.
Changes in risk grades of both  performing  and  nonperforming  loans affect the
amount of the formula  allowance.  Loss factors are based on our historical loss
experience  and may be adjusted for  significant  factors that, in  management's
judgment,  affect the collectibility of the portfolio as of the evaluation date.
Loss factors are developed in the following ways:

     o   Problem  graded loan loss factors are derived from a migration
         model  that  tracks  historical  loss over a period,  which we
         believe  captures  the  inherent  default  losses  on our loan
         portfolio,

     o   Pass graded loan loss factors are based on the average  annual
         net  charge-off  rate  over a  period  of 10  years,  which we
         believe is reflective of a full economic cycle,

     o   Pooled loan loss factors (not  individually  graded loans) are
         based on expected net charge-offs  for one year.  Pooled loans
         are loans that are  homogeneous  in nature,  such as  consumer
         installment  and  residential  mortgage  loans and  automobile
         leases.

         We believe that a business  cycle is a period in which both upturns and
downturns  in the  economy  have been  reflected.  The  long-term  nature of the
current economic expansion has required us to extend our historical  perspective
to capture the highs and lows of a more typical economic cycle.

         Specific  allowances  are  established  in cases where  management  has
identified  significant  conditions  or  circumstances  related to a credit that
management believes indicate the probability that a loss has been incurred. This
amount may be determined either by a method prescribed by Statement of Financial
Accounting  Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of
a Loan", or by a method which identifies certain qualitative factors.

         The  unallocated   allowance   contains   amounts  that  are  based  on
management's  evaluation  of  conditions  that are not directly  measured in the
determination  of the formula and specific  allowances.  The  evaluation  of the
inherent loss with respect to these  conditions is subject to a higher degree of
uncertainty  because they are not identified  with specific  problem  credits or
portfolio segments.  The conditions evaluated in connection with the unallocated
allowance include the following, which existed at the balance sheet date:

     o   General economic and business conditions affecting our key lending
         areas,

     o   Credit quality trends (including trends in nonperforming loans expected
         to result from existing conditions),

     o   Collateral values,

     o   Loan volumes and concentrations,

     o   Seasoning of the loan portfolio,

     o   Specific industry conditions within portfolio segments,

     o   Recent loss experience in particular segments of the portfolio,

     o   Duration of the current business cycle,

                                      F-24

<PAGE>

     o   Bank regulatory examination results, and

     o   Findings of our internal credit examiners.

         Executive  management reviews these conditions  quarterly in discussion
with our senior credit  officers.  To the extent that any of these conditions is
evidenced by a specifically  identifiable problem credit or portfolio segment as
of the evaluation  date,  management's  estimate of the effect of such condition
may be reflected as a specific allowance, applicable to such credit or portfolio
segment.  Where  any of these  conditions  is not  evidenced  by a  specifically
identifiable  problem  credit or portfolio  segment as of the  evaluation  date,
management's  evaluation  of the  probable  loss  related to such  condition  is
reflected in the unallocated allowance.

         The  allowance  for credit  losses is based upon  estimates of probable
losses  inherent  in the loan  portfolio.  The  actual  losses can vary from the
estimated amounts.  Our methodology  includes several features that are intended
to  reduce  the  differences  between  estimated  and  actual  losses.  The loss
migration  model that is used to  establish  the loan loss  factors  for problem
graded loans is designed to be  self-correcting  by taking into account our loss
experience over prescribed  periods.  Similarly,  by basing the pass graded loan
loss factors over a period  reflective of a business  cycle,  the methodology is
designed  to take our recent  loss  experience  into  account.  Pooled loan loss
factors are adjusted quarterly based upon the level of net charge-offs  expected
by  management in the next twelve  months.  Furthermore,  based on  management's
judgement,  our methodology  permits  adjustments to any loss factor used in the
computation of the formula allowance for significant  factors,  which affect the
collectibility of the portfolio as of the evaluation date, but are not reflected
in the loss factors.  By assessing the probable estimated losses inherent in the
loan portfolio on a quarterly basis, we are able to adjust specific and inherent
loss estimates based upon the most recent information that has become available.

 COMPARISON OF THE TOTAL ALLOWANCE AND RELATED PROVISON FOR CREDIT LOSSES

         At December 31, 1998,  our total  allowance  for credit losses was $459
million or 1.89  percent of the total loan  portfolio  and 586  percent of total
nonaccrual  loans.  At December 31, 1999, our total  allowance for credit losses
was $470 million, or 1.82 percent of the total loan portfolio and 281 percent of
total  nonaccrual  loans.  At December 31, 2000, our total  allowance for credit
losses was $614  million,  or 2.36 percent of the total loan  portfolio  and 153
percent of total  nonaccruals.  In  addition,  the  allowance  incorporates  the
results of  measuring  impaired  loans as  provided in SFAS No. 114 and SFAS No.
118,  "Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures".  These  accounting  standards  prescribe the measurement  methods,
income  recognition and  disclosures  related to impaired loans. At December 31,
1998,  total  impaired  loans were $78 million,  and the  associated  impairment
allowance  was  $11  million   compared  with  $167  million  and  $42  million,
respectively,   at  December  31,  1999  and  $400  million  and  $118  million,
respectively, at December 31, 2000.

         Historically,   our  credit  policy  prescribed  that  our  unallocated
allowance  include a component in respect of model and estimation  risk equal to
20% to 25% of the allocated allowance.  The primary reason for this component of
the  unallocated  allowance was the  dissimilarity  of the loss histories of our
predecessor institutions,  Union Bank and the Bank of California, prior to their
combination  in 1996.  As part of our  ongoing  effort to refine  our  allowance
methodology, we conducted a review of model imprecision for our pass and problem
graded loans,  which was completed  during the third quarter of 2000. The review
indicated the following:

     o   In light of the  expansion  to a 10-year  loss history for our
         pass graded loans and our analysis of our loss  experience for
         the  10-year  period,  we have  concluded  that  model risk is
         adequately  reflected  in  the  factors  and  that  it is  not
         necessary  to  provide a  separate  amount for model risk with
         respect to this portion of the formula allowance.

                                      F-25

<PAGE>

     o   Our loss migration model, upon which we calculate loss factors
         for problem graded loans contains  adequate  default loss data
         to  eliminate  the need to provide for  additional  model risk
         with respect to this portion of the formula allowance.

     o   In addition,  we have concluded that our impaired loans, which
         are  re-measured  on a  monthly  basis,  have no  significant,
         evidenced estimation risk within our specific allowance.

         As a result of this  refinement,  we  eliminated  the  requirement  for
separately  calculated  model  imprecision  as a  component  of the  unallocated
allowance.

         During 1998, 1999 and 2000, there were no changes in estimation methods
or assumptions  that affected our methodology for assessing the  appropriateness
of the  formula  and  specific  allowances  for credit  losses,  except  that we
adjusted the periods  contained  within the model and what we believe reflects a
business cycle as explained on page F-24. The impact of these adjustments in the
formula  allowance  for 1998 and 1999  increased  the formula  allowance  by $19
million  and $28  million,  respectively.  There was no  impact  on the  formula
allowance for these  adjustments in 2000.  Changes in estimates and  assumptions
regarding the effects of economic and business conditions on borrowers and other
factors,  which  are  described  below,  also  affected  the  assessment  of the
unallocated  allowance.  Estimation  risk,  which continues to be present in the
allowance  for credit  losses,  will now be included  as part of our  attributed
factors within the unallocated allowance for credit losses.

         We recorded a $45 million provision in 1998, a $65 million provision in
1999, and a $440 provision in 2000.  Although the level of net  charge-offs  and
the decline of  nonperforming  loans  during 1998  favorably  impacted our asset
quality  ratios,  losses on certain  sectors of our  commercial,  financial  and
industrial loans have been steadily  increasing  since then.  Losses inherent in
this type of credit are more difficult to assess because historically these have
been more volatile than losses from other credits.

         The following table sets forth the allowance for credit losses.

                                                                DECEMBER 31,
                                                            --------------------
(DOLLARS IN MILLIONS)                                       1998    1999    2000
---------------------                                       ----    ----    ----

Allocated allowance:
   Formula.............................................     $206    $257    $380
   Specific............................................       38      51     133
                                                            ----    ----    ----
      Total allocated allowance........................      244     308     513
Unallocated allowance..................................      215     162     101
                                                            ----    ----    ----
Total allowance for credit losses......................     $459    $470    $614
                                                            ====    ====    ====


 CHANGES IN THE FORMULA AND SPECIFIC ALLOWANCES

         At December 31, 1999,  the formula  allowance  increased by $51 million
from the prior year,  primarily due to a rise in criticized credits and downward
migration  within the  criticized  range.  At  December  31,  2000,  the formula
allowance  increased by $123 million from the prior year,  primarily  due to the
dramatic rise in criticized  credits and the downward  migration of loans within
the criticized range.

         At December 31, 1999, the specific  allowance  increased by $13 million
from the prior year  primarily  due to both the level of our impaired  loans and
the  degree of the  impairment  offset  by the  elimination  of the $26  million
allowance on Asian  country  exposures.  This  exposure has been captured in the
formula allowance. At December 31, 2000, the specific allowance increased by $82
million, due to the significant rise in our impaired loans.

         At December 31, 1998, the allocated portion of the allowance for credit
losses included $53 million  related to special mention and classified  credits,
compared to $145  million at December  31, 1999 and $346 million at December 31,
2000.  Special mention and classified credits are those that are internally risk

                                      F-26

<PAGE>


graded as  "special  mention",  "substandard"  or  "doubtful".  Special  mention
credits are potentially weak, as the borrower has begun to exhibit deteriorating
trends  which,  if not  corrected,  could  jeopardize  repayment of the loan and
result in further downgrade.  Substandard  credits have well-defined  weaknesses
which, if not corrected,  could jeopardize the full  satisfaction of the debt. A
credit  classified  as  "doubtful"  has  critical   weaknesses  that  make  full
collection improbable.

         Our problem  credits  continue to be  centered in the  commercial  loan
portfolio and mostly within  syndicated  loan  purchases.  We continue to see no
deterioration  in the real  estate  or  consumer  loan  portfolios.  Within  our
commercial loan portfolio,  we are seeing a higher  incidence of problem credits
outside our primary areas of industry expertise.

 CHANGES IN THE UNALLOCATED ALLOWANCE

         At December 31, 1999, the  unallocated  allowance  declined $53 million
from the prior year because management believed that the inherent losses related
to certain conditions,  described on page F-24,  considered in its evaluation of
the unallocated allowance at December 31, 1998 which had been recognized through
charge-offs,  had been  reflected  in the formula or specific  allowance  or had
declined.

         At December  31,  2000,  the  unallocated  allowance  was $101  million
compared to $162 million at December  31,  1999,  a decrease of $61 million.  As
discussed  previously,  during the third  quarter  2000 we refined  our  reserve
methodology to eliminate the prescribed  component of the unallocated  allowance
in respect of model and  estimation  risk. In light of the  elimination  of this
mandatory component of the unallocated  reserve, we have increased the remaining
component  of the  unallocated  allowance  to reflect the  estimation  risk that
management believes exists in the formula and specific allowances,  primarily in
respect of the  probable  downward  regradings  of loans in  certain  identified
sectors of our portfolio. Management believes that other inherent losses related
to certain conditions  considered in its evaluation of the unallocated allowance
have been recognized in the formula allowance during the year ended December 31,
2000.

         The following table identifies the components of the attribution of the
unallocated allowance and the range of inherent loss.

<TABLE>
<CAPTION>

                                                 1998                              1999                              2000
                                     ---------------------------       ---------------------------       ---------------------------
CONCENTRATION                        OUTSTANDING     LOW    HIGH       OUTSTANDING     LOW    HIGH       OUTSTANDING     LOW    HIGH
----------------------------         -----------     ---    ----       -----------     ---    ----       -----------     ---    ----
<S>                                        <C>      <C>     <C>            <C>        <C>     <C>             <C>        <C>     <C>

Communications..............                 $na    $ --    $ --             $na      $ --    $ --            $1,743     $21     $35
Utilities...................                  na      --      --              na        --      --             1,427      17      31
Retailing...................                  na      --      --              na        --      --               642       6      13
Foreign.....................                 988      65      95           1,540        22      46               816       5      10
Technology..................                 913      18      27             729        15      22               714       4       7
Other.......................               2,066      32      48           4,419        18      39             1,994       5      12
Model Imprecision...........                          49      61                        62      77                        --      --
                                                    ----    ----                      ----    ----                       ---    ----
Total Attributed............                        $164    $231                      $117    $184                       $58    $108
                                                    ====    ====                      ====    ====                       ===    ====

-----------
<FN>

na = not applicable to this assessment.

</FN>
</TABLE>


                                      F-27

<PAGE>


         In our  assessment  as of December 31,  1998,  management  focused,  in
particular, on the following factors:

     o   With respect to the margin for model and estimation risk, which
         could be in the range of $49 million to $61 million.

     o   With respect to cross-border  loans and acceptances to certain
         Asia/Pacific  countries,  management  considered the improving
         but continuing effects of the global financial turmoil,  which
         changed the range to $55 million to $80 million.

     o   With respect to the technology industry, management considered
         the  effects  of  export   market   conditions   and  cyclical
         over-capacity  on  borrowers  in the  chip  and  semiconductor
         industries,  which could be in the range of $18 million to $27
         million.

     o   With respect to oil and gas, we considered  the effects of the
         decline in oil prices on the cash  flows of  borrowers  in the
         oil and gas  industry,  which  could  be in the  range  of $14
         million to $22 million.

     o   With respect to the agricultural  industry,  we considered the
         effects of  abnormal  weather  conditions  and  export  market
         conditions on  agricultural  borrowers,  which could be in the
         range of $11 million to $16 million.

     o   With respect to  cross-border  loans and  acceptances to Latin
         American  countries,   management   considered  the  continued
         effects of the global financial turmoil, which could be in the
         range of $10 million to $15 million.

         In our  assessment  as of December 31,  1999,  management  focused,  in
particular, on the following factors:

     o   With respect to the margin for model and estimation risk, which
         could be in the range of $62 million to $77 million.

     o   With respect to cross-border  loans and acceptances to certain
         Asia/Pacific  countries,  management  considered the improving
         but continuing effects of the global financial turmoil,  which
         has  reduced  the  exposure  to a range of $18  million to $39
         million.

     o   With respect to the technology industry, management considered
         the improvements in export market conditions and the reduction
         in the  cyclical  over-capacity  on  borrowers in the chip and
         semiconductor industries,  which has reduced the exposure to a
         range of $15 million to $22 million.

     o   With respect to  cross-border  loans and  acceptances to Latin
         America, primarily Brazil, management considered the improving
         but continuing effects of the global financial turmoil,  which
         has  reduced  the  exposure  to a range  of $4  million  to $7
         million.

     o   With respect to the  agriculture  industry,  we considered the
         reduction of the impact of previous  years'  abnormal  weather
         conditions  and  improvement  in export  market  conditions on
         agricultural  borrowers,  which has reduced the  exposure to a
         range of $3 million to $6 million.

     o   With respect to oil and gas, management considered the effects
         of rising oil prices and the  improvement in the cash flows of
         borrowers  in the  oil  and  gas  industry,  which  no  longer
         required an attribution of the unallocated allowance.

                                      F-28

<PAGE>


         In our  assessment  as of December 31,  2000,  management  focused,  in
particular, on the following factors:

     o   With  respect  to  model  and  estimation  risk,  as  formerly
         required by our credit policy, management determined that this
         amount was no longer necessary.

     o   With  respect  to  the  communications  industry,   management
         considered  the  adverse  effects of changes in the  economic,
         regulatory and technology environments,  which could be in the
         range of $21 million to $35 million.

     o   With respect to the utilities industry,  management considered
         the  adverse  effects of rising  fuel  prices  and  government
         regulation,  which could be in the range of $17 million to $31
         million.

     o   With respect to the retailing industry,  management considered
         the adverse  effects of recent  slowing  trends in  same-store
         sales and softening consumer confidence, which could be in the
         range of $6 million to $13 million.

     o   With respect to cross-border  loans and acceptances to certain
         foreign countries, management considered the lingering effects
         of the  financial  crisis,  which  could be in the range of $5
         million to $10 million.

     o   With respect to the technology industry, management considered
         the adverse  effects of export market  conditions and cyclical
         over-capacity, which could be in the range of $4 million to $7
         million.

         There  can be no  assurance  that the  adverse  impact  of any of these
conditions  on us will not be in  excess  of the  range  set  forth  above.  See
paragraph on forward-looking statements on page F-2.

         Although in certain  instances the downgrading of a loan resulting from
these effects was reflected in the formula allowance,  management  believed that
in most  instances  the  impact  of these  events on the  collectibility  of the
applicable loans was not reflected in the level of nonperforming loans or in the
internal  risk  grading  process with  respect of such loans.  Accordingly,  our
evaluation of the probable  losses related to these factors was reflected in the
unallocated  allowance.  The  evaluations of the inherent losses with respect to
these factors were subject to higher  degrees of  uncertainty  because they were
not identified with specific problem credits.

                                      F-29

<PAGE>


CHANGE IN THE TOTAL ALLOWANCE FOR CREDIT LOSSES

         The  following  table  sets  forth a  reconciliation  of changes in our
allowance for credit losses.

<TABLE>
<CAPTION>

                                                                                            YEARS ENDED DECEMBER 31,
                                                                      -------------------------------------------------------------
(DOLLARS IN THOUSANDS)                                                  1996         1997          1998          1999        2000
--------------------------------------------------------------        --------     --------      --------      --------    --------
<S>                                                                   <C>          <C>           <C>           <C>         <C>

Balance, beginning of period..................................        $555,149     $523,946      $451,692      $459,328    $470,378
Loans charged off:
   Commercial, financial and industrial.......................          42,134       58,664        38,219        48,597     302,152
   Construction...............................................           3,249          120             3            --          --
   Mortgage...................................................          13,483        5,058         6,547           747         174
   Consumer...................................................          56,361       55,336        29,312        15,009      11,760
   Lease financing............................................           2,623        3,601         2,709         3,232       2,925
   Foreign(1).................................................           1,250           --            --        14,100       5,352
                                                                      --------     --------      --------      --------    --------
      Total loans charged off.................................         119,100      122,779        76,790        81,685     322,363
Recoveries of loans previously charged off:
   Commercial, financial and industrial.......................          22,341       23,371        23,762        17,851      16,440
   Construction...............................................             132        9,054             3            --          --
   Mortgage...................................................          12,277        3,292         2,857           521       2,394
   Consumer...................................................          12,906       14,946        14,021         8,356       6,882
   Lease financing............................................             368          351           501           811         581
   Foreign(1).................................................              --           --            --            --          --
                                                                      --------     --------      --------      --------    --------
      Total recoveries of loans previously charged off........          48,024       51,014        41,144        27,539      26,297
                                                                      --------     --------      --------      --------    --------
        Net loans charged off.................................          71,076       71,765        35,646        54,146     296,066
Provision for credit losses...................................          40,000           --        45,000        65,000     440,000
Transfer of reserve for trading account assets................              --           --        (1,911)           --          --
Foreign translation adjustment and other net additions                    (127)        (489)          193           196        (410)
   (deductions)...............................................        --------     --------      --------      --------    --------
Balance, end of period........................................        $523,946     $451,692      $459,328      $470,378    $613,902
                                                                      ========     ========      ========      ========    ========
                                                                          2.49%        1.99%         1.89%         1.82%       2.36%
Allowance for credit losses to total loans....................
Provision for credit losses to net loans charged off..........           56.28           nm        126.24        120.05      148.62
Net loans charged off to average loans outstanding............            0.34         0.33          0.15          0.22        1.13


-----------
<FN>

(1)  Foreign loans are those loans originated in foreign branches.

nm = not meaningful

</FN>
</TABLE>


         Loans charged off in 1999 increased by $5 million over 1998,  primarily
due to a $10 million increase in commercial,  financial and industrial loans and
a $14 million  increase in foreign loans charged off,  partially offset by a $14
million  decrease in  consumer  loans  charged off and a $6 million  decrease in
mortgage  loans charged off. The foreign loan  charge-off  consisted of a single
Taiwanese credit. Loans charged off in 2000 increased by $241 million over 1999,
primarily due to losses on distressed loans held for accelerated  disposition as
well as reducing the carrying value on impaired loans.  Charge-offs  reflect the
realization of losses in the portfolio that were recognized  previously  through
provisions for credit losses. Recoveries of loans previously charged off in 1999
decreased by $14 million over 1998.  Recoveries of loans previously  charged off
in 2000  decreased by $1 million over 1999. At December 31, 2000,  the allowance
for credit  losses  exceeded the net loans  charged off during 1999,  reflecting
management's belief, based on the foregoing analysis, that there were additional
losses inherent in the portfolio.

                                      F-30

<PAGE>

         At December 31, 1998, our average annual net  charge-offs  for the past
five years were $88 million,  compared with $59 million at December 31, 1999 and
$106 million at December 31, 2000.  These net  charge-offs  represent 5.2 years,
8.0 years and 5.8 years of losses based on the level of the allowance for credit
losses at  December  31,  1998,  1999 and  2000,  respectively.  Historical  net
charge-offs are not necessarily indicative of the amount of net charge-offs that
we will realize in the future.

NONPERFORMING ASSETS

         Nonperforming assets consist of nonaccrual loans, distressed loans held
for sale, and foreclosed assets. Nonaccrual loans are those for which management
has  discontinued   accrual  of  interest   because  there  exists   significant
uncertainty as to the full and timely collection of either principal or interest
or such  loans  have  become  contractually  past due 90 days  with  respect  to
principal or interest.  For a more  detailed  discussion of the  accounting  for
nonaccrual loans, see Note 1 to our Consolidated Financial Statements.

         Distressed  loans held for sale are loans,  which  would  otherwise  be
included in nonaccrual  loans,  but that have been  identified  for  accelerated
disposition.  Disposition of these assets is contemplated  within a short period
of time, not to exceed one year.

         Foreclosed  assets  include  property  where we acquired  title through
foreclosure or "deed in lieu" of foreclosure.

         The following table sets forth an analysis of nonperforming assets.

<TABLE>
<CAPTION>


                                                                                              DECEMBER 31,
                                                                   ----------------------------------------------------------------
(DOLLARS IN THOUSANDS)                                               1996           1997         1998         1999           2000
------------------------------------------------------------       --------       -------      -------      --------       --------
<S>                                                                 <C>           <C>          <C>          <C>            <C>

Commercial, financial and industrial........................        $56,864       $46,392      $60,703      $159,479       $385,263
Construction................................................          7,349         4,071        4,359         4,286          3,967
Mortgage:
   Residential..............................................         11,214           954           --            --             --
   Commercial...............................................         52,593        57,921        8,254         3,629         10,769
                                                                   --------       -------      -------      --------       --------
      Total mortgage........................................         63,807        58,875        8,254         3,629         10,769
Other.......................................................            247            --        5,134            --             --
                                                                   --------       -------      -------      --------       --------
      Total nonaccrual loans................................        128,267       109,338       78,450       167,394        399,999
Distressed loans held for sale..............................             --            --           --            --          7,124
Foreclosed assets...........................................         28,517        20,471       11,400         2,386          1,181
                                                                   --------       -------      -------      --------       --------
      Total nonperforming assets............................        156,784       129,809       89,850       169,780        408,304
                                                                   ========       =======      =======      ========       ========
                                                                   $523,946      $451,692     $459,328      $470,378       $613,902
Allowance for credit losses.................................       ========       =======      =======      ========       ========


                                                                       0.61%         0.48%        0.32%         0.65%          1.54%
Nonaccrual loans to total loans.............................
Allowance for credit losses to nonaccrual loans.............         408.48        413.12       585.50        281.00         153.48
Nonperforming assets to total loans, distressed loans held             0.74          0.57         0.37          0.66           1.57
   for sale, and foreclosed assets..........................
Nonperforming assets to total assets........................           0.54          0.42         0.28          0.50           1.16

</TABLE>


         At December  31,  2000,  nonaccrual  loans  totaled  $400  million,  an
increase of $233 million, or 139 percent,  from year-end 1999. Our nonperforming
assets  are  concentrated  in our  non-agented  syndicated  loan  portfolio  and
approximately  65 percent of our total  nonaccrual  loans are syndicated  loans.
Included in nonperforming  assets were $7.1 million in distressed loans that are
being held for accelerated  disposition.  During 2000, we sold $151.2 million of
distressed loans under this accelerated disposition program.

                                      F-31

<PAGE>


         Nonaccrual  loans as a  percentage  of total loans were 0.65 percent at
December 31, 1999 compared with 1.54 percent at December 31, 2000. Nonperforming
assets as a  percentage  of total  loans,  distressed  loans held for sale,  and
foreclosed  assets  increased to 1.57 percent at year-end 2000 from 0.66 percent
at  December  31,  1999.  At  December  31,  2000,  approximately  96 percent of
nonaccrual loans were related to commercial, financial and industrial.

         The following table sets forth an analysis of loans  contractually past
due 90 days or more as to interest or principal,  but not included in nonaccrual
loans above.

<TABLE>
<CAPTION>

                                                                                   DECEMBER 31,
                                                           --------------------------------------------------------
(DOLLARS IN THOSUANDS)                                       1996        1997         1998        1999        2000
---------------------------------------------------------  -------     -------      -------     -------      ------
<S>                                                        <C>            <C>       <C>         <C>          <C>

Commercial, financial and industrial.....................  $ 4,527        $450      $   913     $ 2,729      $1,713
Construction.............................................       --          --           --          --          --
Mortgage:
   Residential...........................................    8,969      10,170        9,338       5,830       2,699
   Commercial............................................      168       1,660       13,955         442          --
                                                           -------     -------      -------     -------      ------
      Total mortgage.....................................    9,137      11,830       23,293       6,272       2,699
Consumer and other.......................................   10,028       7,712        7,292       2,932       2,921
                                                           -------     -------      -------     -------      ------
   Total loans 90 days or more past due and still
      accruing...........................................  $23,692     $19,992      $31,498     $11,933      $7,333
                                                           =======     =======      =======     =======      ======

</TABLE>


         Total  loans  90 days or more  past  due and  still  accruing  were $12
million at December 31, 1999 compared with $7 million at December 31, 2000.

INTEREST FOREGONE

         Interest  foregone  during  1999  and  2000  for  loans  that  were  on
nonaccrual  status at December 31, 1999 and 2000 was $8 million and $19 million,
respectively. We recognized interest income of $23 thousand and $1.2 million for
loans that were on nonaccrual status at December 31, 1999 and December 31, 2000,
respectively.

SECURITIES

         The  following  tables  summarize  the  composition  of the  securities
portfolio and the gross unrealized gains and losses within the portfolio.

                                      F-32

<PAGE>

<TABLE>
<CAPTION>


SECURITIES AVAILABLE FOR SALE

                                                                    December 31,
                                    -----------------------------------------------------------------------
                                       1998                                  1999
                                    ----------     --------------------------------------------------------
                                                                    GROSS        GROSS
                                    FAIR           AMORTIZED        UNREALIZED   UNREALIZED      FAIR
(DOLLARS IN THOUSANDS)              VALUE          COST             GAINS        LOSSES          VALUE
------------------------            ----------     ----------       ----------   ----------      ----------
<S>                                 <C>            <C>              <C>          <C>             <C>

U.S. Treasury...........            $  770,332     $  450,238       $ 1,302      $      912      $  450,628
Other U.S. government...               868,827        974,211           294          13,621         960,884
Mortgage-backed securities           1,881,778      1,665,317            62          49,094       1,616,285
State and municipal.....                84,246         55,496         7,786              --          63,282
Corporate debt securities                8,069         50,058            --              26          50,032
Equity securities.......                18,401         50,888         1,403              --          52,291
Foreign securities......                 6,879         16,597           104               4          16,697
                                    ----------     ----------       -------      ----------      ----------
   Total securities available       $3,638,532     $3,262,805       $10,951      $   63,657      $3,210,099
      for sale..........            ==========     ==========       =======      ==========      ==========

<CAPTION>

                                                         December 31,
                                    --------------------------------------------------------
                                                             2000
                                    --------------------------------------------------------
                                                     GROSS        GROSS
                                    AMORTIZED        UNREALIZED   UNREALIZED      FAIR
                                    COST             GAINS        LOSSES          VALUE
                                    ----------       ----------   ----------      ----------
<S>                                 <C>            <C>              <C>          <C>

U.S. Treasury...........            $  433,703     $    6,394       $    --      $  440,097
Other U.S. government...             1,233,908         40,441           594       1,273,755
Mortgage-backed securities           2,138,101         19,447         6,516       2,151,032
State and municipal.....                52,881          8,908            --          61,789
Corporate debt securities               99,003             10           290          98,723
Equity securities.......                95,685            268           306          95,647
Foreign securities......                 6,570             69            12           6,627
                                    ----------     ----------       -------      ----------
   Total securities available       $4,059,851     $   75,537       $ 7,718      $4,127,670
      for sale..........            ==========     ==========       =======      ==========

</TABLE>

<TABLE>
<CAPTION>

SECURITIES HELD TO MATURITY


                                                                    December 31,
                                    -----------------------------------------------------------------------
                                       1998                                  1999
                                    ----------     --------------------------------------------------------
                                                                    GROSS        GROSS
                                    AMORTIZED      AMORTIZED        UNREALIZED   UNREALIZED      FAIR
(DOLLARS IN THOUSANDS)              COST           COST             GAINS        LOSSES          VALUE
------------------------            ----------     ----------       ----------   ----------      ----------
<S>                                 <C>            <C>              <C>          <C>             <C>

U.S. Treasury...........            $   41,097     $       --       $    --      $       --      $       --
Other U.S. government...                91,175         19,996            35              --          20,031
Mortgage-backed securities              16,425         11,302           577               3          11,876
State and municipal.....                14,547         15,228            --           1,759          13,469
                                    ----------     ----------       -------      ----------      ----------
   Total securities HELD TO         $  163,244     $   46,526       $   612      $    1,762      $   45,376
      maturity..........            ==========     ==========       =======      ==========      ==========

<CAPTION>

                                                         December 31,
                                    --------------------------------------------------------
                                                             2000
                                    --------------------------------------------------------
                                                     GROSS        GROSS
                                    AMORTIZED        UNREALIZED   UNREALIZED      FAIR
                                    COST             GAINS        LOSSES          VALUE
                                    ----------       ----------   ----------      ----------
<S>                                 <C>            <C>              <C>          <C>

U.S. Treasury...........            $       --     $       --       $    --      $       --
Other U.S. government...                    --             --            --              --
Mortgage-backed securities               8,521            437             1           8,957
State and municipal.....                15,008             --           663          14,345
                                    ----------     ----------       -------      ----------
   Total securities held to         $   23,529     $      437       $   664      $   23,302
      maturity..........            ==========     ==========       =======      ==========


</TABLE>


         Management of the securities  portfolio  involves the  maximization  of
return while  maintaining  prudent levels of quality and liquidity.  At December
31, 2000, approximately 95 percent of total securities were investment grade.

ANALYSIS OF SECURITIES PORTFOLIO

         The following  tables show the  remaining  contractual  maturities  and
expected yields of the securities portfolio at December 31, 2000.

                                      F-33

<PAGE>



<TABLE>
<CAPTION>

SECURITIES AVAILABLE FOR SALE

                                                                           MATURITY
                                  --------------------------------------------------------------------------------------------
                                       ONE YEAR             OVER ONE YEAR           OVER FIVE YEARS
                                       OR LESS            THROUGH FIVE YEARS       THROUGH TEN YEARS         OVER TEN YEARS
                                    ---------------      --------------------      -----------------       -------------------
(DOLLARS IN THOUSANDS)              AMOUNT YIELD(4)          AMOUNT  YIELD(4)        AMOUNT YIELD(4)           AMOUNT YIELD(4)
----------------------              ------ --------          ------  --------        ------ --------           ------ --------
<S>                               <C>         <C>          <C>          <C>              <C>                       <C>

U.S. Treasury.............        $220,067     6.38%     $  213,636      6.64%     $     --       --%      $       --       --%
Other U.S. government.....          75,278     6.18       1,798,939      6.66       178,011     7.11               --       --
Mortgage-backed                     14,781     6.51         115,414      6.35       142,444     6.66        1,047,142     6.50
   securities(1)..........
State and municipal(2)....           3,185    11.08          12,185      9.76        12,569    10.84           24,942    11.07
Corporate debt securities.              --       --          11,418     10.44         7,629    10.81           79,956    11.09
Equity securities(3)......              --       --              --        --            --       --               --       --
Foreign securities........           4,980     0.30           1,590      5.27            --       --               --       --
                                  --------               ----------                --------                ----------
   Total securities               $318,291     6.29%     $2,153,182      6.68%     $340,653     7.14%      $1,152,040     6.92%
      available for sale..        ========               ==========                ========                ==========

<CAPTION>

                                      TOTAL
                                  AMORTIZED COST
                                  --------------
(DOLLARS IN THOUSANDS)              AMOUNT      YIELD(4)
--------------------------        ----------    --------
<S>                                 <C>           <C>

U.S. Treasury.............        $  433,703      6.51%
Other U.S. government.....         2,052,228      6.68
Mortgage-backed                    1,319,781      6.50
   securities(1)..........
State and municipal(2)....            52,881     10.71
Corporate debt securities.            99,003     10.99
Equity securities(3)......            95,685        --
Foreign securities........             6,570      1.50
                                  ----------
   Total securities               $4,059,851      6.76%
      available for sale..        ==========

</TABLE>

<TABLE>
<CAPTION>

SECURITIES HELD TO MATURITY


                                                                           MATURITY
                                  --------------------------------------------------------------------------------------------
                                       ONE YEAR             OVER ONE YEAR           OVER FIVE YEARS
                                       OR LESS            THROUGH FIVE YEARS       THROUGH TEN YEARS         OVER TEN YEARS
                                    ---------------      --------------------      -----------------       -------------------
(DOLLARS IN THOUSANDS)              AMOUNT YIELD(4)          AMOUNT  YIELD(4)        AMOUNT YIELD(4)           AMOUNT YIELD(4)
----------------------              ------ --------          ------  --------        ------ --------           ------ --------
<S>                               <C>         <C>          <C>          <C>              <C>                       <C>

Mortgage-backed                   $    185     9.37%      $      34      9.25%      $ 8,299     9.01%       $       3     8.76%
   securities(1)..........
State and municipal(2)....              --       --           1,490      6.26         2,499     5.83           11,019     5.79
                                  --------               ----------                --------                ----------
   Total securities               $    185     9.37%      $   1,524      6.33%      $10,798     8.27%       $  11,022     5.79%
      held to maturity....        ========               ==========                ========                ==========

<CAPTION>

                                      TOTAL
                                  AMORTIZED COST
                                  --------------
(DOLLARS IN THOUSANDS)              AMOUNT      YIELD(4)
--------------------------        ----------    --------
<S>                                 <C>           <C>

Mortgage-backed                   $    8,521      9.02%
   securities(1)..........
State and municipal(2)....            15,008      5.84
                                  ----------
   Total securities               $   23,529      6.99%
      held to maturity....        ==========

-----------
<FN>

(1)   The remaining contractual maturities of mortgage-backed securities were
      allocated  assuming no prepayments.  The contractual  maturity of these
      securities is not a reliable  indicator of their  expected life because
      borrowers have the right to repay their obligations at any time.

(2)   Yields  on  tax-exempt   municipal   securities   are  presented  on  a
      taxable-equivalent basis using the current federal statutory rate of 35
      percent.

(3)   Equity securities do not have a stated maturity and are included in the
      total column only.

(4)   For the purposes of the analysis of the securities portfolio, yields are
      based on amortized cost.

</FN>
</TABLE>


                                      F-34

<PAGE>

LOAN MATURITIES

         The following table presents our loans by maturity.

<TABLE>
<CAPTION>

                                                                                           December 31, 2000
                                                                     ---------------------------------------------------------------
                                                                                       OVER
                                                                                       ONE YEAR
                                                                      ONE YEAR         THROUGH          OVER
(DOLLARS IN THOUSANDS)                                                OR LESS          FIVE YEARS       FIVE YEARS         TOTAL
-------------------------------------------------------------        ----------       -----------       ----------      ------------
<S>                                                                  <C>               <C>              <C>              <C>

Domestic:
   Commercial, financial and industrial......................        $4,737,687       $ 7,089,573       $1,921,578       $13,748,838
   Construction..............................................           620,991           307,031           11,280           939,302
   Mortgage:
      Residential............................................            55,409           147,539        3,091,537         3,294,485
      Commercial.............................................           760,538         1,653,887          933,827         3,348,252
                                                                     ----------       -----------       ----------       -----------
        Total mortgage.......................................           815,947         1,801,426        4,025,364         6,642,737
   Consumer:
      Installment............................................           382,944           466,937          805,795         1,655,676
      Home equity............................................            31,009            72,139          651,905           755,053
                                                                     ----------       -----------       ----------       -----------
        Total consumer.......................................           413,953           539,076        1,457,700         2,410,729
   Lease financing...........................................           408,469           722,217            3,754         1,134,440
                                                                     ----------       -----------       ----------       -----------
        Total loans in domestic offices......................         6,997,047        10,459,323        7,419,676        24,876,046
Loans originated in foreign branches.........................         1,049,006            29,116           56,230         1,134,352
                                                                     ----------       -----------       ----------       -----------
        Total loans..........................................        $8,046,053       $10,488,439       $7,475,906       $26,010,398
                                                                     ==========       ===========       ==========       ===========
                                                                                                                             613,902
           Allowance for credit losses.......................                                                            -----------
        Loans, net...........................................                                                            $25,396,496
                                                                                                                         ===========
                                                                                                                          $6,467,164
Total fixed rate loans due after one year....................
Total variable rate loans due after one year.................                                                             11,497,181
                                                                                                                          ----------
        Total loans due after one year.......................                                                            $17,964,345
                                                                                                                         ===========

</TABLE>


CERTIFICATES OF DEPOSIT OF $100,000 AND OVER

         The  following  table  presents  domestic  certificates  of  deposit of
$100,000 and over by maturity.

(DOLLARS IN THOUSANDS)                                           2000
-----------------------------------------------------------  ------------

Three months or less.......................................  $3,148,198
Over three months through six months.......................     852,050
Over six months through twelve months......................     444,143
Over twelve months.........................................     120,464
                                                             ----------
Total domestic certificates of deposit
of $100,000 and over.......................................  $4,564,855
                                                             ==========

         We offer  certificates  of deposit of $100,000 and over at market rates
of interest. Many of these certificates are issued to customers, both public and
private,  who have done  business with us for an extended  period.  Based on our
historical  experience,  we expect that as these deposits come due, the majority
will continue to be renewed at market rates of interest.

         Substantially  all of our deposits in foreign branches are certificates
of deposit of $100,000 and over and mature in less than one year.

                                      F-35

<PAGE>

BORROWED FUNDS

         The following table presents information on our borrowed funds.

<TABLE>
<CAPTION>


                                                                                         DECEMBER 31,
                                                                         ------------------------------------------
(DOLLARS IN THOUSANDS)                                                      1998            1999            2000
-----------------------------------------------------------------        ----------      ----------      ----------
<S>                                                                      <C>             <C>             <C>

Federal funds purchased and securities sold under repurchase
  agreements with weighted average interest rates of 4.88%,
  5.09% and 6.52% at December 31, 1998, 1999 and 2000,
  respectively...................................................        $1,307,744      $1,156,799      $1,387,667
Commercial paper, with weighted average interest rates of
  5.01%, 5.45% and 6.49% at December 31, 1998, 1999 and
  2000, respectively.............................................         1,444,745       1,108,258       1,385,771
Other borrowed funds, with weighted average interest rates of
  5.35%, 5.91% and 5.64% at December 31, 1998, 1999 and
  2000, respectively.............................................           331,165         540,496         249,469

   Total borrowed funds..........................................        $3,083,654      $2,805,553      $3,022,907



Federal funds purchased and securities sold under repurchase
   agreements:
   Maximum outstanding at any month end..........................        $2,058,610      $1,786,594      $2,095,868
   Average balance during the year...............................         1,604,675       1,489,214       1,548,730
   Weighted average interest rate during the year................              5.26%           4.84%           6.24%
Commercial paper:
   Maximum outstanding at any month end..........................        $1,918,700      $1,737,265      $1,525,932
   Average balance during the year...............................         1,631,216       1,529,814       1,521,614
   Weighted average interest rate during the year................              5.42%           5.04%           6.24%
Other borrowed funds:
   Maximum outstanding at any month end..........................        $  438,151      $  993,550      $  507,782
   Average balance during the year...............................           328,872         708,625         314,425
   Weighted average interest rate during the year................              5.68%           5.28%           5.31%

</TABLE>


CAPITAL ADEQUACY AND DIVIDENDS

         Our principal  capital  objectives  are to support  future  growth,  to
protect  depositors,  to absorb  any  unanticipated  losses  and to comply  with
various regulatory requirements. From December 1999 to July 2000, we repurchased
$100  million  in common  stock  under a stock  repurchase  plan  authorized  in
November  1999.  In July 2000,  we announced an  additional  $100 million  stock
repurchase authorization.

         Total  shareholders'  equity was $3.2 billion at December 31, 2000,  an
increase of $224 million from year-end 1999.  This change was primarily a result
of $440  million of net income for 2000,  offset by dividends on common stock of
$161  million,  repurchases  of our  common  stock  of  $131  million,  and  net
unrealized gain on securities available for sale of $74 million.

         We offer a  dividend  reinvestment  plan that  allows  shareholders  to
reinvest  dividends  in our common  stock at 5 percent  below the market  price.
During 1999 and 2000, The Bank of Tokyo- Mitsubishi, Ltd. did not participate in
the plan.

         Capital  adequacy  depends  on a variety  of  factors  including  asset
quality  and  risk  profile,  liquidity,  earnings  stability,  competitive  and
economic  conditions,  and  management.  We believe  that the  current  level of
profitability,  coupled with a prudent dividend  policy,  is adequate to support
normal growth in operations while meeting regulatory capital guidelines.

                                      F-36

<PAGE>

         The following table  summarizes our risk-based  capital,  risk-weighted
assets, and risk-based capital ratios.

<TABLE>
<CAPTION>

                                                       DECEMBER 31,                                          MINIMUM
                             ---------------------------------------------------------------------------     REGULATORY
(DOLLARS IN THOUSANDS)           1996            1997           1998            1999             2000        REQUIREMENT
----------------------       -----------     -----------     -----------     -----------     -----------     -----------
<S>                          <C>             <C>             <C>             <C>             <C>                    <C>

CAPITAL COMPONENTS
Tier 1 capital..........     $ 2,395,580     $ 2,587,071     $ 2,965,865     $ 3,308,912     $ 3,471,289
Tier 2 capital..........         551,074         601,102         604,938         616,772         620,102
                             -----------     -----------     -----------     -----------     -----------
Total risk-based capital     $ 2,946,654     $ 3,188,173     $ 3,570,803     $ 3,925,684     $ 4,091,391
                             ===========     ===========     ===========     ===========     ===========
                             $26,390,288     $28,862,340     $30,753,030     $33,288,167     $33,900,404
Risk-weighted assets....     ===========     ===========     ===========     ===========     ===========
                             $28,496,355     $30,334,507     $31,627,022     $32,765,347     $34,075,813
Quarterly average assets     ===========     ===========     ===========     ===========     ===========

CAPITAL RATIOS
Total risk-based capital          11.17%           11.05%          11.61%          11.79%          12.07%           8.0%
Tier 1 risk-based capital           9.08            8.96            9.64            9.94           10.24            4.0
Leverage ratio(1).......            8.41            8.53            9.38           10.10           10.19            4.0

-----------
<FN>

(1)   Tier 1 capital divided by quarterly average assets  (excluding  certain
      intangible assets).

</FN>
</TABLE>


         We and Union Bank of California, N.A. are subject to various regula-
tions of the federal banking agencies,  including minimum capital  requirements.
We and Union Bank of California, N.A. are required to maintain minimum ratios of
total and Tier 1  capital  to  risk-weighted  assets  and of Tier 1  capital  to
quarterly average assets (the leverage ratio).

         Compared with December 31, 1999, our Tier 1 risk-based capital ratio at
December  31,  2000  increased  30 basis  points  to 10.24  percent,  our  total
risk-based  capital ratio  increased 28 basis points to 12.07  percent,  and our
leverage ratio  increased 9 basis points to 10.19  percent.  The increase in our
capital ratios was primarily  attributable to retained  earnings  growing faster
than both risk-weighted assets and average assets.

         As of December 31,  2000,  management  believes  the capital  ratios of
Union  Bank  of  California,   N.A.  met  all  regulatory   requirements   of  a
"well-capitalized" institution.

COMPARISON OF FINANCIAL RESULTS OF 1998 TO 1999

         Reported  net income was $466.5  million,  or $2.65 per diluted  common
share in 1998,  compared with $441.7 million,  or $2.64 per diluted common share
in 1999.  Excluding the effects of the $85 million  restructuring  charge ($55.2
million net of tax),  which was recorded in the third  quarter of 1999,  and the
effects of the $29.3 million in reduced  California  Franchise  Tax  liabilities
(related to tax year 1997), recorded in 1998, pro forma net earnings were $437.2
million,  or $2.49 per diluted common share in 1998, compared to $496.9 million,
or 2.97 per diluted  common share in 1999.  This  increase in pro forma  diluted
earnings  per  share  of 19  percent  in 1999 was due to a $96.4  million,  or 7
percent,  increase in net interest income,  and a $53.2 million,  or 10 percent,
increase in noninterest  income,  offset by an increase of $20.0 million,  or 44
percent in the provision for credit losses,  and a $61.8 million,  or 5 percent,
increase in noninterest expense. Other highlights in 1999 include:

     o   Net interest income,  on a  taxable-equivalent  basis, was
         $1.4 billion in 1999, an increase of  $96.4 million,  or 7
         percent from 1998. Net interest margin for 1999 was 4.89
         percent, or 8 basis points higher than 1998.

     o   The provision for credit losses was $65.0 million in 1999,
         compared with $45.0 million in 1998.

     o   Noninterest  income was $586.8 million in 1999, an increase of
         $53.2  million,  or 10 percent  from 1998.  Excluding  a $17.1
         million  pre-tax gain ($10.3  million after tax) from the sale
         of our

                                      F-37

<PAGE>


         $253  million  credit  card  portfolio  in April  1998, noninterest
         income increased $70.3 million,  or 14 percent in 1999.

     o   Noninterest expense,  excluding the restructuring  charge, was
         $1.2 billion in 1999, an increase of $61.8 million, or
         5 percent over 1998.

     o   Our pro  forma  effective  tax  rate in  1998  was 35  percent
         (excluding  the  effects  of  the  California   Franchise  Tax
         liability reduction detailed on F-3), compared with 33 percent
         in 1999.

     o   Reported  return on average  assets in 1999 was 1.37  percent,
         while  reported  return on average  common equity for the same
         period  was 15.03  percent.  Our pro forma  return on  average
         assets in 1999  increased  to 1.55  percent,  compared to 1.43
         percent in 1998. Our pro forma return on average common equity
         in 1999 increased to 16.83 percent,  compared to 15.36 percent
         in 1998.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



 GENERAL

         Market risk is the risk of loss to future earnings,  to fair values, or
to future  cash flows that may result  from  changes in the price of a financial
instrument.  The  value of a  financial  instrument  may  change  as a result of
changes in interest rates,  foreign currency  exchange rates,  commodity prices,
equity  prices,  and other  market  changes  that affect  market risk  sensitive
instruments.  Market risk is attributed to all market risk  sensitive  financial
instruments,  including securities,  loans, deposits, and borrowings, as well as
derivative  instruments.  Our exposure to market risk is a function of our asset
and liability management activities, our trading activities for our own account,
and our role as a financial intermediary in customer-related  transactions.  The
objective  of market  risk  management  is to avoid  excessive  exposure  of our
earnings  and equity to loss and to reduce the  volatility  inherent  in certain
financial instruments.

         The  management  of market risk is governed  by policies  reviewed  and
approved  annually  by  our  Board  of  Directors  (Board).  The  Board  assigns
responsibility  for market risk  management to the Asset & Liability  Management
Committee  (ALCO),  which is  composed  of bank  senior  executives  and reports
quarterly  to the  Finance  and  Capital  Committee  of the Board on  activities
related to the  management  of market  risk.  As part of the  management  of our
market risk,  ALCO may direct changes in the mix of assets and  liabilities  and
the use of derivative  instruments such as interest rate swaps, caps and floors.
ALCO also reviews and approves market  risk-management  programs and market risk
limits.  The ALCO Chairman is  responsible  for the  company-wide  management of
market risk. The Treasurer is responsible for implementing funding,  investment,
and hedging strategies  designed to manage this risk. On a day-to-day basis, the
oversight of market risk  management  takes place at a centralized  level within
the Risk  Monitoring  Unit (RMU).  The RMU is responsible for measuring risks to
ensure compliance with all market risk limits and guidelines incorporated within
the policies and procedures  established  by ALCO. The RMU reports  quarterly to
ALCO on the effectiveness of our hedging activities,  on trading risk exposures,
and on compliance with policy limits. In addition,  periodic reviews by internal
audit,  regulators and independent  accountants  provide  further  evaluation of
controls over the risk management process.

         We have  separate  and  distinct  methods for  managing the market risk
associated  with our trading  activities and our asset and liability  management
activities, as described below.

 INTEREST RATE RISK MANAGEMENT (OTHER THAN TRADING)

         We  engage  in  asset  and  liability  management  activities  with the
objective  of  reducing  adverse  changes in  earnings as a result of changes in
interest  rates.  The management of interest rate risk relates to the timing and
magnitude of the  repricing of assets  compared to  liabilities  and has, as its
objective, the control of risks associated with movements in interest rates.

                                      F-38

<PAGE>


         The Asset & Liability  Management  (ALM)  Policy  approved by the Board
requires  monthly  monitoring  of  interest  rate  risk by ALCO.  As part of the
management of our interest rate risk, ALCO may direct changes in the composition
of the  balance  sheet and the  extent  to which we  utilize  off-balance  sheet
derivative instruments such as interest rate swaps, floors, and caps.

         Our unhedged balance sheet is inherently "asset-sensitive", which means
that  assets   generally   reprice  more  often  than   liabilities.   Since  an
asset-sensitive  balance sheet tends to reduce net interest income when interest
rates  decline and to increase net  interest  income when  interest  rates rise,
off-balance  sheet hedges and the  securities  portfolio are used to manage this
interest rate risk.

         To  quantify  the impact of  changing  interest  rates on net  interest
income (NII) we use a simulation  model. A frequency  distribution  of simulated
12-month NII outcomes  based on rate  scenarios  produced  through a Monte Carlo
rate generation process is prepared monthly to statistically  determine the mean
NII.  The amount of Earnings at Risk (EaR),  defined as the  potential  negative
change in NII,  is measured at a 97.5  percent  confidence  level and is managed
within the limit established in the Board's ALM Policy at 5 percent of mean NII.
The following table summarizes our EaR and EaR as a percentage of NII.

                                                  DECEMBER 31,
                                               -----------------
     (DOLLARS IN MILLIONS)                      1999        2000
     ---------------------                      ----        ----

     EaR...................................... $53.9       $30.9
     EaR as a percentage of mean NII..........  3.69%       2.02%

         During the latter part of 2000,  our EaR decreased  significantly  from
the previous year as we reduced our asset sensitivity to protect interest income
from the likelihood of falling rates in the year ahead. With an  asset-sensitive
balance sheet, EaR measures the potential risk to earnings during a falling rate
environment.

         An additional limit established by the Board's ALM Policy is that under
single  interest  rate  shock  scenarios,  up or  down  200  basis  points,  the
difference between the lower simulated NII and the mean NII must be no more than
8  percent  of the mean NII.  The  following  table  sets  forth  the  change in
simulated  NII for both an  upward  and  downward  shock  scenario  of 200 basis
points.

                                                 DECEMBER 31,
                                            -------------------
     (DOLLARS IN MILLIONS)                    1999        2000
     ---------------------                    ----        ----

     +200 basis points....................   $ 48.6      $ 49.6
     as a percentage of mean NII..........     3.33%       3.25%
     -200 basis points....................   $(81.2)     $(50.3)
     as a percentage of mean NII..........     5.57%       3.30%

         During 2000,  simulated  mean NII increased  modestly from the previous
year, roughly in line with the $1.4 billion increase in average earning assets.

 TRADING ACTIVITIES

         We enter into  trading  account  activities  primarily  as a  financial
intermediary  for customers,  and, to a lesser extent,  for our own account.  By
acting as a financial  intermediary,  we are able to provide our customers  with
access to a wide range of products from the securities,  foreign  exchange,  and
derivatives  markets.  In acting for our own account,  we may take  positions in
some of these  instruments  with the  objective of generating  trading  profits.
These  activities  expose us to two primary types of market risk:  interest rate
and foreign currency exchange risk.

         In order to manage  interest  rate and foreign  currency  exchange risk
associated with our trading activities,  we utilize a variety of non-statistical
methods including:  position limits for each trading activity,  daily marking of
all positions to market, daily profit and loss statements, position reports, and
independent

                                      F-39

<PAGE>


verification of all inventory pricing.  Additionally,  the RMU reports positions
and profits and losses daily to the Treasurer and trading managers and weekly to
the ALCO Chairman.  ALCO is provided reports on a monthly basis. We believe that
these procedures,  which stress timely communication  between the RMU and senior
management, are the most important elements of the risk management process.

         We use a form of Value at Risk (VaR) methodology to measure the overall
market risk inherent in our trading account activities.  Under this methodology,
management statistically calculates, with 97.5 percent confidence, the potential
loss in fair value that we might experience if an adverse shift in market prices
were to occur within a period of 5 business  days.  The amount of VaR is managed
within  limits well below the maximum limit  established  by Board policy at 0.5
percent of  shareholders'  equity.  The VaR model  incorporates  a number of key
assumptions, including assumed holding period and historical volatility based on
3 years of historical  market data updated  quarterly.  The following table sets
forth the average, high and low VaR during the year for our trading activities.

                                                  DECEMBER 31,
                            ----------------------------------------------------
                                       1999                        2000
                            ------------------------     -----------------------
                            AVERAGE    HIGH      LOW     AVERAGE    HIGH     LOW
(DOLLARS IN THOUSANDS)          VAR     VAR      VAR         VAR     VAR     VAR
----------------------      -------    ----      ---     -------    ----     ---

Foreign exchange............   $260    $730      $78        $355    $850    $109
Securities..................    249     741       62         156     280      63

         The VaRs for  foreign  exchange  trading  increased  during 2000 due to
higher volumes of foreign exchange activities as well as higher approved trading
limits.  While the VaRs are  significantly  greater than the previous year, they
are well  within the limits  established  by our  trading  policy.  The VaRs for
securities  trading  declined  significantly  during 2000,  reflecting  the full
effect  of the  decision  made in 1999 to exit the  municipal  underwriting  and
certain other capital markets businesses, combined with generally lower balances
in trading inventories during much of 2000.

         Our  interest  rate  derivative   contracts  include  $4.6  billion  of
derivative  contracts entered into as an accommodation for customers.  We act as
an  intermediary  and match these  contracts at a profit with contracts with The
Bank of Tokyo-Mitsubishi,  Ltd. or other dealers,  thus neutralizing the related
market risk.  We maintain  responsibility  for the credit risk  associated  with
these contracts.

LIQUIDITY RISK

         Liquidity  risk  represents  the  potential  for  loss as a  result  of
limitations  on our ability to adjust our future cash flows to meet the needs of
depositors and borrowers and to fund  operations on a timely and  cost-effective
basis.  The ALM Policy approved by the Board requires  quarterly  reviews of our
liquidity by ALCO.  Our  liquidity  management  draws upon the  strengths of our
extensive  retail and commercial  market  business  franchise,  coupled with the
ability  to  obtain  funds  for  various  terms in a  variety  of  domestic  and
international  money  markets.  Liquidity  is managed  through  the  funding and
investment functions of the Global Markets Group.

         Core deposits provide us with a sizable source of relatively stable and
low-cost funds. Our average core deposits,  which include demand deposits, money
market demand  accounts,  and savings and consumer time deposits,  combined with
average common shareholders'  equity,  funded 66 percent of average total assets
of $33.7  billion for the year ended  December 31, 2000.  Most of the  remaining
funding  was  provided  by  short-term  borrowings  in the  form  of  negotiable
certificates  of  deposit,   foreign  deposits,   federal  funds  purchased  and
securities  sold  under  repurchase  agreements,   commercial  paper  and  other
borrowings.

         Liquidity may also be provided by the sale or maturity of assets.  Such
assets  include  interest  bearing  deposits  in banks,  federal  funds sold and
securities  purchased under resale agreements,  and trading account  securities.
The  aggregate of these assets  averaged  $0.6 billion  during 2000.  Additional
liquidity  may be  provided by  investment  securities  available  for sale that
amounted to $4.1  billion at  December  31,

                                      F-40

<PAGE>


2000, and by loan  maturities.  At December 31, 2000, $8.0 billion of loans were
scheduled to mature within one year.

CERTAIN BUSINESS RISK FACTORS
-----------------------------


 ADVERSE CALIFORNIA ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS

         A  substantial  majority of our assets and  deposits  are  generated in
California.  As a result, poor economic conditions in California may cause us to
incur losses  associated  with higher  default  rates and  decreased  collateral
values  in our loan  portfolio.  In the early  1990's,  the  California  economy
experienced  an economic  recession  that  resulted in increases in the level of
delinquencies  and  losses  for  us and  many  of the  state's  other  financial
institutions. If California were to experience another recession, we expect that
our level of problem assets would increase accordingly.

 ADVERSE ECONOMIC FACTORS AFFECTING CERTAIN INDUSTRIES COULD ADVERSELY AFFECT
 OUR BUSINESS

         We are also subject to certain industry-specific  economic factors. For
example,  a portion  of our total  loan  portfolio  is  related  to real  estate
obligations,  and a portion of our recent  growth has been fueled by the general
real estate recovery in California.  Accordingly,  a downturn in the real estate
industry  in  California  could  have  an  adverse  effect  on  our  operations.
Similarly,  a  portion  of our  total  loan  portfolio  is to  borrowers  in the
agricultural industry.  Adverse weather conditions,  combined with low commodity
prices, may adversely affect the agricultural  industry and,  consequently,  may
impact our business negatively.  In addition,  auto leases comprise a portion of
our total loan  portfolio.  Continued  deterioration  in the used car market may
result in  additional  losses on the  valuation of auto lease  residuals  beyond
those  reported for 2000.  Further,  portions of our total loan portfolio are to
borrowers in the industries referred to in "Allowance for Credit Losses", above,
which could be adversely affected by the factors referred to in that section.

 RISKS ASSOCIATED WITH THE CALIFORNIA ENERGY CRISIS

         Due to problems  associated  with the  deregulation  of the  electrical
power industry in California,  two California  utilities have publicly announced
that their financial  situation is grave and that  bankruptcy  proceedings are a
possibility unless remedial measures are adopted by the California  legislature.
The utilities have also  announced  that they have already  defaulted on certain
payment  obligations.  As a lender to the utility industry we face the risk that
the industry will sustain increased defaults on payments or bankruptcy filings.

         In addition,  customers of the utilities have been faced with increased
gas and electric prices,  power shortages and, in some cases, rolling blackouts.
The  long-term  impact of the energy crisis in California on our markets and our
business  cannot be predicted  but could result in an economic  slow-down.  This
could  have an  adverse  effect on the  demand  for new  loans,  the  ability of
borrowers  to repay  outstanding  loans,  the  value of real  estate  and  other
collateral securing loans and, as a result, on our financial condition,  results
of operations and the market value of our common stock.

 FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR BUSINESS

         Significant  increases in market interest rates, or the perception that
an increase may occur,  could adversely affect both our ability to originate new
loans and our ability to grow.  Conversely,  a decrease in interest  rates could
result in an  acceleration  in the  prepayment  of loans.  An increase in market
interest  rate could also  adversely  affect  the  ability of our  floating-rate
borrowers to meet their higher payment obligations.  If this occurred,  it could
cause an increase in nonperforming assets and charge-offs, which could adversely
affect our business.

                                      F-41

<PAGE>


 FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR MARGIN SPREAD

         Changes in market interest rates, including changes in the relationship
between  short-term and long-term  market  interest  rates or between  different
interest rate indices,  can impact our margin  spread,  that is, the  difference
between the interest rates we charge on interest earning assets,  such as loans,
and the interest rates we pay on interest bearing liabilities, such as deposits.
The impact, particularly in a falling interest rate environment, could result in
an increase in our interest expense relative to interest income.

 SHAREHOLDER VOTES ARE CONTROLLED BY THE BANK OF TOKYO-MITSUBISHI, LTD.

         A  majority  of  our   directors  are  not  officers  or  employees  of
UnionBanCal  Corporation or any of our affiliates,  including The Bank of Tokyo-
Mitsubishi,  Ltd.  However,  because  of The  Bank of  Tokyo-Mitsubishi,  Ltd.'s
control over the election of our directors, The Bank of Tokyo- Mitsubishi,  Ltd.
could change the  composition  of our Board of Directors so that the Board would
not have a majority of outside  directors.  The Bank of  Tokyo-Mitsubishi,  Ltd.
owns a majority of the outstanding  shares of our common stock. As a result, The
Bank of  Tokyo-Mitsubishi,  Ltd. can elect all of our  directors and as a result
can control the vote on all matters,  including determinations such as: approval
of mergers or other business combinations;  sales of all or substantially all of
our assets; any matters submitted to a vote of our shareholders; issuance of any
additional  common stock or other equity  securities;  incurrence  of debt other
than in the ordinary  course of business;  the selection and tenure of our Chief
Executive  Officer;  payment of dividends  with respect to common stock or other
equity  securities;  and matters  that might be  favorable to The Bank of Tokyo-
Mitsubishi,  Ltd.  The Bank of  Tokyo-Mitsubishi,  Ltd.'s  ability to prevent an
unsolicited  bid for us or any other  change in  control  could  have an adverse
effect on the market price for our common stock.

 THE BANK OF TOKYO-MITSUBISHI, LTD.'S FINANCIAL CONDITION COULD ADVERSELY AFFECT
 OUR OPERATIONS

         Although  we  fund  our  operations   independently   of  The  Bank  of
Tokyo-Mitsubishi,  Ltd.  and believe our  business  is not  necessarily  closely
related to The Bank of Tokyo-Mitsubishi, Ltd.'s business or outlook, The Bank of
Tokyo-Mitsubishi,   Ltd.'s  credit  ratings  may  affect  our  credit   ratings.
Deterioration  in  The  Bank  of  Tokyo-Mitsubishi,  Ltd.'s  credit  ratings  or
financial condition could result in an increase in our borrowing costs and could
impair  our  access to the  public  and  private  capital  markets.  The Bank of
Tokyo-Mitsubishi,  Ltd. is also subject to regulatory  oversight and review. Our
business  operations  and  expansion  plans  could  be  negatively  affected  by
regulatory  concerns  related to the Japanese  financial  system and The Bank of
Tokyo-Mitsubishi, Ltd.

 POTENTIAL CONFLICTS OF INTEREST WITH THE BANK OF TOKYO-MITSUBISHI, LTD. COULD
 ADVERSELY AFFECT US

         As part of The Bank of Tokyo-Mitsubishi,  Ltd.'s normal risk management
processes,  The Bank of  Tokyo-Mitsubishi,  Ltd. manages global credit exposures
and  concentrations on an aggregate basis,  including us. Therefore,  at certain
levels,  our ability to approve  certain  credits and categories of customers is
subject to  concurrence  by The Bank of  Tokyo-Mitsubishi,  Ltd.  We may wish to
extend  credit to the same  customer as The Bank of  Tokyo-Mitsubishi,  Ltd. Our
ability to do so may be  limited  for  various  reasons,  including  The Bank of
Tokyo-Mitsubishi,  Ltd's  aggregate  credit  exposure  and  marketing  policies.
Certain  directors'  and  officers'  ownership  interests  in The Bank of Tokyo-
Mitsubishi,  Ltd.'s  common  stock or service as a director  or officer or other
employee  of both us and The Bank of  Tokyo-Mitsubishi,  Ltd.  could  create  or
appear to create  potential  conflicts of interest,  especially since both of us
compete in the United States banking industry.

                                      F-42

<PAGE>

 SUBSTANTIAL COMPETITION IN THE CALIFORNIA BANKING MARKET COULD ADVERSELY AFFECT
 US

         Banking is a highly competitive business. We compete actively for loan,
deposit,  and  other  financial  services  business  in  California,  as well as
nationally and internationally.  Our competitors include a large number of state
and national banks, thrift institutions and major  foreign-affiliated or foreign
banks,  as well as many  financial and  non-financial  firms that offer services
similar to those offered by us. Some of our competitors are community banks that
have strong local market positions.  Other  competitors  include large financial
institutions (such as Bank of America,  California  Federal,  Washington Mutual,
and Wells  Fargo)  that  have  substantial  capital,  technology  and  marketing
resources.  Such large financial institutions may have greater access to capital
at a lower  cost than us,  which may  adversely  affect  our  ability to compete
effectively.

 RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS COULD LIMIT AMOUNTS PAYABLE
 TO US

         A substantial  portion of our cash flow typically  comes from dividends
our  bank and  nonbank  subsidiaries  pay to us.  Various  statutory  provisions
restrict  the  amount  of  dividends  our  subsidiaries  can  pay to us  without
regulatory approval.  In addition, if any of our subsidiaries  liquidates,  that
subsidiary's creditors will be entitled to receive distributions from the assets
of that  subsidiary to satisfy their claims against it before we, as a holder of
an equity  interest  in the  subsidiary,  will be entitled to receive any of the
assets of the subsidiary.

 ADVERSE EFFECTS OF BANKING REGULATIONS OR CHANGES IN BANKING REGULATIONS COULD
 ADVERSELY AFFECT US

         We  are  subject  to  significant  federal  and  state  regulation  and
supervision,  which is primarily for the benefit and protection of our customers
and not for the  benefit  of  investors.  In the  past,  our  business  has been
materially  affected by these  regulations.  This trend is likely to continue in
the  future.  Laws,  regulations  or  policies  currently  affecting  us and our
subsidiaries  may change at any time.  Regulatory  authorities  may also  change
their interpretation of these statutes and regulations.  Therefore, our business
may be adversely affected by any future changes in laws,  regulations,  policies
or interpretations. Additionally, our international activities may be subject to
the laws and regulations of the jurisdiction  where business is being conducted.
International  laws,  regulations and policies affecting us and our subsidiaries
may change at any time and affect our business opportunities and competitiveness
in these jurisdictions. Due to The Bank of Tokyo-Mitsubishi,  Ltd.'s controlling
ownership  of us,  laws,  regulations  and  policies  adopted or enforced by the
Government of Japan may adversely  affect our  activities  and  investments  and
those of our  subsidiaries  in the future.  Under long-  standing  policy of the
Board of  Governors of the Federal  Reserve  System,  a bank holding  company is
expected to act as a source of financial strength for its subsidiary banks. As a
result  of that  policy,  we may be  required  to  commit  financial  and  other
resources to our subsidiary bank in  circumstances  where we might not otherwise
do so.

 POSSIBLE FUTURE SALES OF SHARES BY THE BANK OF TOKYO-MITSUBISHI, LTD. COULD
 ADVERSELY AFFECT THE MARKET FOR OUR STOCK

         Although The Bank of Tokyo-Mitsubishi, Ltd. has announced its intention
to maintain its majority ownership in us, The Bank of Tokyo-Mitsubishi, Ltd. may
sell shares of our common stock in compliance with the federal  securities laws.
By virtue of The Bank of  Tokyo-Mitsubishi,  Ltd.'s  current  control of us, The
Bank of Tokyo-Mitsubishi,  Ltd. could sell large amounts of shares of our common
stock by causing us to file a  registration  statement  that would allow them to
sell shares more easily. In addition,  The Bank of Tokyo-Mitsubishi,  Ltd. could
sell shares of our common stock without registration  pursuant to Rule 144 under
the Securities Act. Although we can make no prediction as to the effect, if any,
that such sales  would have on the market  price of our common  stock,  sales of
substantial amounts of our common stock, or the perception that such sales could
occur, could adversely affect our market price. If The Bank of Tokyo-Mitsubishi,
Ltd. sells or transfers shares of our common stock as a block, another person or
entity could become our controlling shareholder.

                                      F-43

<PAGE>


 STRATEGIES

         In connection  with our  strategic  plan  established  in 2000, we have
developed long-term financial  performance goals (described on page F-12), which
we expect to result from successful  implementation of our operating strategies.
We cannot  assure you that we will be successful  in achieving  these  long-term
goals or that our operating strategies will be successful.  Achieving success in
these areas is  dependent  on a number of factors,  many of which are beyond our
direct  control.  Factors  that may  adversely  affect our ability to attain our
long-term financial performance goals include:

     o   deterioration of our asset quality,

     o   our inability to control noninterest expenses,

     o   our inability to increase noninterest income,

     o   our inability to decrease reliance on asset revenues,

     o   our ability to sustain loan growth,

     o   regulatory and other impediments associated with making
         acquisitions,

     o   deterioration in general economic conditions, especially
         in our core markets,

     o   decreases in net interest margins,

     o   increases in competition,

     o   adverse regulatory or legislative developments, and

     o   unexpected increases in costs related to potential
         acquisitions.

 RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR DIVESTITURES OR RESTRUCTURING

         We may  acquire  or  invest in  companies,  technologies,  services  or
products  that  complement  our business.  In addition,  we continue to evaluate
performance  of all of our businesses and business lines and may sell a business
or business lines. Any acquisitions, divestitures or restructuring may result in
potentially dilutive issuance of equity securities,  significant write-offs, the
amortization of expenses related to goodwill and other intangible  assets and/or
the incurrence of debt, any of which could have a material adverse effect on our
business,   financial   condition  and  results  of  operations.   Acquisitions,
divestitures or restructuring  could involve numerous additional risks including
difficulties in the assimilation or separation of operations, services, products
and  personnel,  the diversion of  management's  attention  from other  business
concerns,  the  disruption  of our  business,  and  the  potential  loss  of key
employees.  There can be no assurance  that we would be successful in overcoming
these or any other significant risks encountered.

 WE MIGHT BE UNABLE TO RECRUIT OR RETAIN NECESSARY  PERSONNEL,  WHICH COULD SLOW
 THE DEVELOPMENT OF OUR BUSINESS.

         Our  performance is  substantially  dependent on the performance of our
key managerial,  marketing and technical personnel. We are dependent both on our
ability to retain and motivate our key personnel  and to attract new  personnel.
However, the labor markets in California are tight and we cannot be sure that we
will be able to attract,  motivate and retain such  personnel.  Competition  for
qualified  personnel in California is intense both within our industry and other
industry sectors,  including high technology.  Competitors and others, including
high  technology  companies,  have in the past and may in the future  attempt to
recruit our employees.  Inability to attract,  retain and motivate the personnel
necessary  to support the growth of our business  could have a material  adverse
effect upon our business, results of operations, and financial condition.

                                      F-44

<PAGE>

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>


                                                                                                             PAGE
                                                                                                             ----

<S>                                                                                                          <C>
Consolidated Statements of Income for the Years Ended December 31, 1998, 1999, and 2000................      F-46
Consolidated Balance Sheets as of December 31, 1999 and 2000...........................................      F-47
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31,
  1998, 1999, and 2000.................................................................................      F-48
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998, 1999, and 2000............      F-49
Notes to Consolidated Financial Statements.............................................................      F-50
Management Statement...................................................................................      F-91
Independent Auditors' Report...........................................................................      F-92

</TABLE>






















                                      F-45

<PAGE>


<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME



                                                                                                 YEARS ENDED DECEMBER 31,
                                                                                      ------------------------------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)                                             1998            1999            2000
---------------------------------------------------------------------------------     ----------      ----------      ----------
<S>                                                                                   <C>             <C>             <C>
INTEREST INCOME
Loans............................................................................     $1,826,096      $1,931,146      $2,242,182
Securities.......................................................................        200,337         211,192         226,194
Interest bearing deposits in banks...............................................         17,080          12,174           9,126
Federal funds sold and securities purchased under resale agreements..............         16,056           8,108           8,160
Trading account assets...........................................................         25,610          12,150          15,418
                                                                                      ----------      ----------      ----------
   Total interest income.........................................................      2,085,179       2,174,770       2,501,080
                                                                                      ----------      ----------      ----------
INTEREST EXPENSE
Domestic deposits................................................................        468,907         456,895         557,408
Foreign deposits.................................................................         86,221          73,829         107,183
Federal funds purchased and securities sold under repurchase agreements..........         84,440          72,083          96,606
Commercial paper.................................................................         88,358          77,041          94,905
Subordinated capital notes.......................................................         20,347          17,100          17,617
UnionBanCal Corporation-obligated mandatorily redeemable preferred securities of
   subsidiary grantor trust......................................................             --          24,569          26,212
Other borrowed funds.............................................................         18,683          37,420          16,709
                                                                                      ----------      ----------      ----------
   Total interest expense........................................................        766,956         758,937         916,640
                                                                                      ----------      ----------      ----------
NET INTEREST INCOME..............................................................      1,318,223       1,415,833       1,584,440
Provision for credit losses......................................................         45,000          65,000         440,000
                                                                                      ----------      ----------      ----------
   Net interest income after provision for credit losses.........................      1,273,223       1,350,833       1,144,440
                                                                                      ----------      ----------      ----------
NONINTEREST INCOME
Service charges on deposit accounts..............................................        138,847         172,700         210,257
Trust and investment management fees.............................................        121,226         140,878         154,387
Merchant transaction processing fees.............................................         56,929          68,037          73,521
International commissions and fees...............................................         72,036          70,801          71,189
Merchant banking fees............................................................         31,402          38,036          48,985
Brokerage commissions and fees...................................................         19,085          27,038          35,755
Securities gains, net............................................................          5,686           7,941           8,784
Other............................................................................         88,320          61,328          44,302
                                                                                      ----------      ----------      ----------
   Total noninterest income......................................................        533,531         586,759         647,180
                                                                                      ----------      ----------      ----------
NONINTEREST EXPENSE
Salaries and employee benefits...................................................        617,564         661,344         600,462
Net occupancy....................................................................         90,917          90,162          92,567
Equipment........................................................................         56,252          67,095          63,290
Merchant transaction processing..................................................         43,926          49,435          49,609
Communications...................................................................         41,710          43,179          43,744
Professional services............................................................         36,748          38,399          42,042
Data processing..................................................................         28,091          31,811          34,803
Foreclosed asset income..........................................................        (2,821)         (1,344)            (80)
Restructuring charge (credit)....................................................             --          85,000        (19,000)
Other............................................................................        222,831         216,892         222,748
                                                                                      ----------      ----------      ----------
   Total noninterest expense.....................................................      1,135,218       1,281,973       1,130,185
                                                                                      ----------      ----------      ----------
Income before income taxes.......................................................        671,536         655,619         661,435
Income tax expense...............................................................        205,075         213,888         221,535
                                                                                      ----------      ----------      ----------
NET INCOME.......................................................................     $  466,461      $  441,731      $  439,900
                                                                                      ==========      ==========      ==========

NET INCOME PER COMMON SHARE--BASIC................................................    $     2.66      $     2.65      $     2.72
                                                                                      ==========      ==========      ==========

NET INCOME PER COMMON SHARE--DILUTED..............................................    $     2.65      $     2.64      $     2.72
                                                                                      ==========      ==========      ==========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING--BASIC.................................       175,127         166,382         161,605
                                                                                      ==========      ==========      ==========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING--DILUTED...............................       175,737         167,149         161,989
                                                                                      ==========      ==========      ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-46

<PAGE>

<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS



                                                                                                             DECEMBER 31,
                                                                                                     -----------------------------
(DOLLARS IN THOUSANDS)                                                                                   1999              2000
-----------------------------------------------------------------------------------------------      -----------       -----------
<S>                                                                                                  <C>               <C>
ASSETS
Cash and due from banks........................................................................      $ 2,141,964       $ 2,957,103
Interest bearing deposits in banks.............................................................          182,719            73,936
Federal funds sold and securities purchased under resale agreements............................          833,450           291,940
                                                                                                     -----------       -----------
      Total cash and cash equivalents..........................................................        3,158,133         3,322,979
Trading account assets.........................................................................          179,935           339,695
Securities available for sale:
   Securities pledged as collateral............................................................               --           593,686
   Held in portfolio...........................................................................        3,210,099         3,533,984
Securities held to maturity (fair value: 1999, $45,376; 2000, $23,302).........................           46,526            23,529
Loans (net of allowance for credit losses: 1999, $470,378; 2000, $613,902).....................       25,442,580        25,396,496
Due from customers on acceptances..............................................................          259,340           268,116
Premises and equipment, net....................................................................          425,021           474,279
Other assets...................................................................................          963,142         1,209,711
                                                                                                     -----------       -----------
      Total assets.............................................................................      $33,684,776       $35,162,475
                                                                                                     ===========       ===========


LIABILITIES
Domestic deposits:
   Noninterest bearing.........................................................................      $ 9,395,925       $10,916,710
   Interest bearing............................................................................       14,274,310        13,986,774
Foreign deposits:
   Noninterest bearing.........................................................................          325,415           323,783
   Interest bearing............................................................................        2,260,957         2,055,916
                                                                                                     -----------       -----------
      Total deposits...........................................................................       26,256,607        27,283,183
Federal funds purchased and securities sold under repurchase agreements........................        1,156,799         1,387,667
Commercial paper...............................................................................        1,108,258         1,385,771
Other borrowed funds...........................................................................          540,496           249,469
Acceptances outstanding........................................................................          259,340           268,116
Other liabilities..............................................................................          727,808           826,704
Subordinated capital notes.....................................................................          298,000           200,000
UnionBanCal Corporation-obligated mandatorily redeemable preferred securities of subsidiary
   grantor trust...............................................................................          350,000           350,000
                                                                                                     -----------       -----------
      Total liabilities........................................................................       30,697,308        31,950,910
                                                                                                     -----------       -----------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock:
   Authorized 5,000,000 shares, no shares issued or outstanding at December 31, 1999 or 2000...               --                --
Common stock--no stated value:
   Authorized 300,000,000 shares, issued 164,282,622 shares in 1999 and 159,234,454 shares in
      2000.....................................................................................        1,404,155         1,275,587
Retained earnings..............................................................................        1,625,263         1,906,093
Accumulated other comprehensive income (loss)..................................................         (41,950)            29,885
                                                                                                     -----------       -----------
      Total shareholders' equity...............................................................        2,987,468         3,211,565
                                                                                                     -----------       -----------
      Total liabilities and shareholders' equity...............................................      $33,684,776       $35,162,475
                                                                                                     ===========       ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-47

<PAGE>

<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY



                                                                           YEARS ENDED DECEMBER 31,
                                               ------------------------------------------------------------------------------------
                                                       1998                          1999                          2000
                                               -----------------------       -----------------------       ------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
 DATA)
------------------------------------------
<S>                                            <C>            <C>            <C>            <C>            <C>            <C>
COMMON STOCK
Balance, beginning of year................     $1,714,209                    $1,725,619                    $1,404,155
Dividend reinvestment plan................             28                            50                            52
Deferred compensation--restricted stock
   awards.................................          5,744                          (221)                          238
Stock options exercised...................          5,638                         7,369                         1,784
Common stock repurchased..................             --                      (328,662)                     (130,642)
                                               ----------                    ----------                    ----------
   Balance, end of year...................     $1,725,619                    $1,404,155                    $1,275,587
                                               ----------                    ----------                    ----------
RETAINED EARNINGS
Balance, beginning of year................     $  957,662                    $1,314,915                    $1,625,263
Net income................................        466,461     $466,461          441,731     $441,731          439,900     $439,900
Dividends on common stock(1)..............       (106,932)                     (134,992)                     (161,227)
Deferred compensation--restricted stock
   awards.................................         (2,276)                        3,609                         2,157
                                               ----------                    ----------                    ----------
   Balance, end of year...................     $1,314,915                    $1,625,263                    $1,906,093
                                               ----------                    ----------                    ----------
ACCUMULATED OTHER COMPREHENSIVE INCOME
   (LOSS)
Balance, beginning of year................     $    7,428                    $   17,710                    $  (41,950)
Unrealized holding gains (losses) arising
   during the year on securities available
   for sale, net of tax expense (benefit)
   of $6,672 in 1998, $(35,155) in 1999,
   and $49,462 in 2000....................                      12,734                       (56,753)                       79,851
Less: reclassification adjustment for
      gains on securities available for
      sale included in net-income, net of
      tax expense of $2,175 in 1998,
      $3,307 in 1999, and $3,360 in 2000..                      (3,511)                       (4,904)                       (5,424)
                                                              --------                      --------                      --------
Net unrealized gains (losses) on
   securities available for sale..........                       9,223                       (61,657)                       74,427
Foreign currency translation adjustment,
   net of tax expense (benefit) of
   $1,739 in 1998, $581 in 1999, and
   $(1,535) in 2000.......................                       2,807                           938                        (2,478)
Minimum pension liability adjustment, net
   of tax expense (benefit) of $(1,083)
   in 1998, $427 in 1999, and $(71) in
   2000...................................                      (1,748)                        1,059                          (114)
                                                              --------                      --------                      --------
Other comprehensive income (loss).........         10,282       10,282          (59,660)     (59,660)          71,835       71,835
                                               ----------     --------       ----------     --------       ----------     --------
Total comprehensive income................                    $476,743                      $382,071                      $511,735
                                                              ========                      ========                      ========
   Balance, end of year...................     $   17,710                    $  (41,950)                   $   29,885
                                               ----------                    ----------                    ----------
      TOTAL SHAREHOLDERS' EQUITY..........     $3,058,244                    $2,987,468                    $3,211,565
                                               ==========                    ==========                    ==========
-----------
<FN>
(1)  Dividends per share were $0.61 in 1998, $0.82 in 1999, and $1.00 in 2000.
</FN>
</TABLE>

See accompanying notes to consolidated financial statements.



                                      F-48

<PAGE>

<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                            YEARS ENDED DECEMBER 31,
                                                                                -------------------------------------------------
(DOLLARS IN THOUSANDS)                                                              1998               1999               2000
-------------------------------------------------------------------------       -----------        -----------        -----------
<S>                                                                             <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income............................................................       $   466,461        $   441,731        $   439,900
   Adjustments to reconcile net income to net cash provided by operating
      activities:
      Provision for credit losses........................................            45,000             65,000            440,000
      Depreciation, amortization and accretion...........................            67,640             79,795             72,710
      Provision (benefit) for deferred income taxes......................            28,097            (10,529)            13,709
      Gain on sales of securities available for sale, net................           (5,686)             (7,941)            (8,784)
      Utilization (in excess of) less than restructuring charge/credit...                --             69,359            (53,286)
      Net (increase) decrease in trading account assets..................           126,595             87,783           (159,760)
      Other, net.........................................................          (129,646)          (292,064)          (144,373)
                                                                                -----------        -----------        -----------
        Total adjustments................................................           132,000             (8,597)           160,216
                                                                                -----------        -----------        -----------
   Net cash provided by operating activities.............................           598,461            433,134            600,116
                                                                                -----------        -----------        -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sales of securities available for sale..................           418,477            209,920            422,881
   Proceeds from matured and called securities available for sale........           259,465            827,595            847,158
   Purchases of securities available for sale............................        (1,528,281)          (697,023)        (2,056,594)
   Proceeds from matured and called securities held to maturity..........            28,540            114,168             23,003
   Purchases of premises and equipment...................................           (82,880)           (72,020)          (163,716)
   Net increase in loans.................................................        (1,625,149)        (1,711,391)          (391,672)
   Other, net............................................................            12,466             (1,893)             5,433
                                                                                -----------        -----------        -----------
   Net cash used by investing activities.................................        (2,517,362)        (1,330,644)        (1,313,507)
                                                                                -----------        -----------        -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net increase in deposits..............................................         1,211,505          1,748,728          1,026,576
   Net increase (decrease) in federal funds purchased and securities sold
      under repurchase agreements........................................           (28,140)           (150,945)           230,868
   Net increase (decrease) in commercial paper and other borrowed funds..           333,325           (127,156)            34,441
   Common stock repurchased..............................................                --           (328,662)          (130,642)
   Maturity and redemption of subordinated debt..........................           (50,000)                --            (98,000)
   Proceeds from issuance of trust preferred securities..................                --            350,000                 --
   Payments of cash dividends............................................           (98,160)          (127,119)          (162,575)
   Other, net............................................................             8,473             (3,677)              (642)
                                                                                -----------        -----------        -----------
   Net cash provided by financing activities.............................         1,377,003          1,361,169            900,026
                                                                                -----------        -----------        -----------
Net increase (decrease) in cash and cash equivalents.....................          (541,898)           463,659            186,635
Cash and cash equivalents at beginning of year...........................         3,199,455          2,678,478          3,158,133
Effect of exchange rate changes on cash and cash equivalents.............            20,921             15,996            (21,789)
                                                                                -----------        -----------        -----------
Cash and cash equivalents at end of year.................................       $ 2,678,478        $ 3,158,133        $ 3,322,979
                                                                                ===========        ===========        ===========
CASH PAID DURING THE YEAR FOR:
   Interest..............................................................       $   784,023        $   702,880        $   883,706
   Income taxes..........................................................           234,895            145,279            260,117
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Loans transferred to foreclosed assets (OREO) and/or distressed loans
      held for sale......................................................       $    17,260        $     6,979        $     9,924
   Dividends declared but unpaid.........................................            33,300             41,172             39,824
   Debt assumed in purchase of building..................................                --                 --             47,955
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-49

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS

         INTRODUCTION

         UnionBanCal  Corporation  is a  commercial  bank  holding  company (the
Company) and has, as its major subsidiary,  a banking subsidiary,  Union Bank of
California,  N.A.  (the Bank).  The Company  provides a wide range of  financial
services to  consumers,  small  businesses,  middle  market  companies and major
corporations,   primarily  in  California,  Oregon,  and  Washington,  but  also
nationally and internationally.

         On March 3, 1999, the Company  completed a secondary  offering of 28.75
million shares of its Common Stock owned by The Bank of  Tokyo-Mitsubishi,  Ltd.
(BTM). The Company received no proceeds from this  transaction.  Concurrent with
the  secondary  offering,  the Company  repurchased  8.6  million  shares of its
outstanding  Common  Stock from BTM and 2.1 million  shares  owned by Meiji Life
Insurance  Company with $311  million of the net  proceeds  from the issuance of
$350  million of 7 3/8  percent  trust  preferred  securities  that  occurred on
February 19, 1999. After the secondary  offering and the repurchase  referred to
previously,  BTM owned 64  percent  of the  Company,  or 105.6  million  shares,
compared with 82 percent prior to these transactions.

         The Company  completed  the  repurchase of $100 million in common stock
between December 1999 and July 2000, under a stock repurchase plan authorized in
November  1999. In July 2000, the Company  announced an additional  $100 million
stock  repurchase  plan. The amount  purchased under the new plan as of December
31, 2000 was $51.9  million.  At December 31, 2000,  BTM owned 66 percent of the
Company.

         BASIS OF FINANCIAL STATEMENT PRESENTATION

         The  accounting  and  reporting  policies  of the  Company  conform  to
accounting  principles  generally  accepted in the United  States of America (US
GAAP) and general  practice  within the banking  industry.  Those  policies that
materially   affect  the  determination  of  financial   position,   results  of
operations, and cash flows are summarized below.

         The  Consolidated  Financial  Statements  include  the  accounts of the
Company.  All  material   intercompany   transactions  and  balances  have  been
eliminated.  The preparation of financial  statements in conformity with US GAAP
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.  Certain amounts for prior periods have been  reclassified
to conform with current financial statement presentation.

         CASH AND CASH EQUIVALENTS

         For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks,  interest  bearing deposits in banks, and federal funds
sold and securities  purchased  under resale  agreements,  substantially  all of
which have maturities less than 90 days.

         TRADING ACCOUNT ASSETS

         Trading account assets are those financial  instruments that management
acquires  with the  intent  to hold for short  periods  of time in order to take
advantage of anticipated  changes in market values.  Substantially  all of these
assets are securities with a high degree of liquidity and a readily determinable
market value.  Interest  earned,  paid, or accrued on trading  account assets is
included  in interest  income


                                      F-50

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
        (CONTINUED)

using a method that generally produces a level yield.  Realized gains and losses
from the close out of trading  account  positions  and  unrealized  market value
adjustments are recognized in noninterest income. The reserve for derivative and
foreign exchange  contracts is presented as an offset to trading account assets.
Changes in the reserve as a result of changes in the positive  replacement  cost
of those  contracts  are  provided  as an offset to trading  gains and losses in
noninterest income.

         SECURITIES AVAILABLE FOR SALE AND SECURITIES HELD TO MATURITY

         The  Company's  securities   portfolios  consist  of  debt  and  equity
securities  that are  classified  either  as  securities  available  for sale or
securities held to maturity.

         Debt  securities  for which the  Company  has the  positive  intent and
ability to hold until maturity are classified as securities held to maturity and
carried at amortized cost.

         Debt securities and equity securities with readily  determinable market
values that are not classified as either  securities held to maturity or trading
account  assets are  classified as securities  available for sale and carried at
fair  value,  with the  unrealized  gains or losses  reported  net of taxes as a
component of  accumulated  other  comprehensive  income (loss) in  shareholders'
equity until realized.

         Realized gains and losses arising from the sale of securities are based
upon the specific  identification  method and included in noninterest  income as
securities gains (losses), net.

         Interest  income  on  debt  securities  includes  the  amortization  of
premiums and the accretion of discounts using the effective  interest method and
is  included  in  interest  income  on  securities.  Dividend  income  on equity
securities is included in noninterest income.

         Securities  available  for sale that are pledged  under an agreement to
repurchase  and which may be sold or repledged  under that  agreement  have been
separately identified as pledged as collateral.

         LOANS

         Loans  are  reported  at  the  principal  amounts  outstanding,  net of
unamortized  nonrefundable  loan fees and related direct loan origination costs.
Deferred net fees and costs are recognized in interest income over the loan term
using a method that generally produces a level yield on the unpaid loan balance.
Nonrefundable  fees and direct loan origination  costs related to loans held for
sale are  deferred  and  recognized  as a component of the gain or loss on sale.
Interest income is accrued principally on a simple interest basis.

         Nonaccrual  loans  are  those for  which  management  has  discontinued
accrual of interest because there exists significant  uncertainty as to the full
and timely  collection of either principal or interest or such loans have become
contractually past due 90 days with respect to principal or interest.

         Interest  accruals are continued for certain small  business loans that
are processed  centrally,  consumer loans,  and one-to-four  family  residential
mortgage  loans.  These  loans  are  charged  off or  written  down to their net
realizable  value  based on  delinquency  time frames that range from 120 to 270
days, depending on the type of credit that has been extended.  Interest accruals
are also  continued for loans that are both  well-secured  and in the process of
collection.  For this purpose,  loans are  considered  well-secured  if they are
collateralized by property having a net realizable value in excess of the amount
of principal and accrued interest outstanding or are guaranteed by a financially
responsible  and  willing  party.  Loans  are


                                      F-51

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
        (CONTINUED)

considered  "in the process of  collection"  if  collection is proceeding in due
course either through legal action or other actions that are reasonably expected
to result in the prompt  repayment of the debt or in its  restoration to current
status.

         When a loan  is  placed  on  nonaccrual,  all  previously  accrued  but
uncollected  interest is reversed against current period operating results.  All
subsequent  payments  received are first applied to unpaid principal and then to
uncollected  interest.  Interest  income is  accrued at such time as the loan is
brought fully current as to both  principal and interest,  and, in  management's
judgment,  such loans are considered to be fully collectible.  However,  Company
policy also allows  management to continue the recognition of interest income on
certain loans designated as nonaccrual. This portion of the nonaccrual portfolio
is referred to as "Cash Basis  Nonaccrual"  loans.  This policy only  applies to
loans that are well secured and in  management's  judgment are  considered to be
fully collectible.  Although the accrual of interest is suspended,  any payments
received  may be  applied to the loan  according  to its  contractual  terms and
interest income recognized when cash is received.

         Loans are considered impaired when, based on current information, it is
probable that the Company will be unable to collect all amounts due according to
the  contractual  terms  of the loan  agreement,  including  interest  payments.
Impaired loans are carried at the lower of the recorded  investment in the loan,
the estimated  present value of total expected future cash flows,  discounted at
the loan's  effective rate, or the fair value of the collateral,  if the loan is
collateral dependent. Additionally, some impaired loans with commitments of less
than $1 million are  aggregated  for the purpose of measuring  impairment  using
historical loss factors as a means of measurement.  Excluded from the impairment
analysis are large groups of smaller balance  homogeneous loans such as consumer
and residential mortgage loans, and automobile leases.

         The  Company  offers  primarily  two types of leases to  customers:  1)
direct financing leases where the assets leased are acquired without  additional
financing  from other  sources,  and 2)  leveraged  leases  where a  substantial
portion of the  financing  is provided by debt with no recourse to the  Company.
Direct  financing  leases  are  carried  net  of  unearned  income,  unamortized
nonrefundable  fees and related direct costs  associated with the origination or
purchase of leases. Leveraged leases are carried net of nonrecourse debt.

         ALLOWANCE FOR CREDIT LOSSES

         The Company  maintains an allowance  for credit losses to absorb losses
inherent in the loan  portfolio.  The  allowance is based on ongoing,  quarterly
assessments of the probable estimated losses inherent in the loan portfolio, and
to a lesser extent,  unused commitments to provide  financing.  The allowance is
increased by the provision for credit losses,  which is charged  against current
period  operating  results and  decreased by the amount of  charge-offs,  net of
recoveries.  The Company's  methodology for assessing the appropriateness of the
allowance consists of several key elements, which include the formula allowance,
specific allowances and the unallocated allowance.

         The  formula  allowance  is  calculated  by  applying  loss  factors to
outstanding loans and certain unused commitments.  Loss factors are based on the
Company's historical loss experience and may be adjusted for significant factors
that, in management's  judgement,  affect the collectibility of the portfolio as
of the evaluation  date. The Company derives the loss factors for problem graded
loans from a loss  migration  model,  for pass graded loans by using  historical
average net charge-offs  during a business cycle,  and for


                                      F-52

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
        (CONTINUED)

pooled loans by using expected net  charge-offs  for one year.  Pooled loans are
homogeneous in nature and include  consumer and residential  mortgage loans, and
automobile leases.

         Specific  allowances  are  established  in cases where  management  has
identified  significant  conditions  or  circumstances  related to a credit that
management  believes  indicate the probability  that a loss has been incurred in
excess of the amount determined by the application of the formula allowance.

         The unallocated allowance is composed of attribution factors, which are
based upon management's  evaluation of various  conditions that are not directly
measured  in the  determination  of the  formula and  specific  allowances.  The
conditions  evaluated in connection with the  unallocated  allowance may include
existing  general  economic and business  conditions  affecting  the key lending
areas of the Company, credit quality trends, collateral values, loan volumes and
concentrations,  seasoning of the loan portfolio,  specific industry  conditions
within portfolio segments,  recent loss experience in particular segments of the
portfolio,  duration of the current business cycle, bank regulatory  examination
results and findings of the Company's internal credit examiners.

         The allowance also incorporates the results of measuring impaired loans
as provided in  Statement  of  Financial  Accounting  Standards  (SFAS) No. 114,
"Accounting by Creditors for Impairment of a Loan" and SFAS No. 118, "Accounting
by Creditors for  Impairment of a  Loan--Income  Recognition  and  Disclosures".
These accounting standards prescribe the measurement methods, income recognition
and disclosures  related to impaired  loans. A loan is considered  impaired when
management  determines  that it is probable  that the Company  will be unable to
collect all amounts due according to the original  contractual terms of the loan
agreement.  Impairment  is  measured  by the  difference  between  the  recorded
investment in the loan (including  accrued  interest,  net deferred loan fees or
costs and  unamortized  premium or discount) and the estimated  present value of
total expected  future cash flows,  discounted at the loan's  effective rate, or
the  fair  value  of  the  collateral,  if the  loan  is  collateral  dependent.
Additionally,  some impaired loans with  commitments of less than $1 million are
aggregated for the purpose of measuring impairment using historical loss factors
as a means of  measurement.  In addition,  the impairment  allowance may include
amounts  related  to  certain  qualitative  factors  that  have yet to  manifest
themselves in the other  measurements.  Impairment is recognized by adjusting an
allocation of the existing allowance for credit losses.

         PREMISES AND EQUIPMENT

         Premises  and   equipment  are  carried  at  cost,   less   accumulated
depreciation  and  amortization.  Depreciation  and  amortization are calculated
using the  straight-line  method over the  estimated  useful life of each asset.
Lives of premises  range from ten to forty years;  lives of furniture,  fixtures
and  equipment  range  from three to eight  years.  Leasehold  improvements  are
amortized  over  the term of the  respective  lease or 10  years,  whichever  is
shorter.

         Long-lived  assets  that  are held or that  are to be  disposed  of and
certain  intangibles  are evaluated  periodically  for impairment when events or
changes  in  circumstances   indicate  that  the  carrying  amount  may  not  be
recoverable. The impairment is calculated as the difference between the expected
future cash flows of a long-lived  asset, if lower,  and its carrying value. The
impairment loss is reflected in noninterest expense.



                                      F-53

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
        (CONTINUED)


OTHER ASSETS

         Goodwill represents the excess of purchase price over the fair value of
identifiable  net assets of acquired  companies  and is  reported as  intangible
assets. Goodwill is amortized using the straight-line method,  generally over 15
years.

         Other real estate  owned  (OREO)  represents  the  collateral  acquired
through foreclosure in full or partial satisfaction of the related loan. OREO is
recorded at the lower of the loan's unpaid  principal  balance or its fair value
as established  by a current  appraisal,  adjusted for  disposition  costs.  Any
write-down  at the date of  transfer  is  charged  to the  allowance  for credit
losses. OREO values,  recorded in other assets, are reviewed on an ongoing basis
and any  decline  in value is  recognized  as  foreclosed  asset  expense in the
current period.  The net operating results from these assets are included in the
current period in noninterest expense as foreclosed asset expense (income).

         Distressed  loans  held for sale are  included  in other  assets in the
consolidated  financial  statements  and are those  loans that the  Company  has
identified as available for accelerated disposition.  These are loans that would
otherwise be included in nonaccrual loans.  Distressed loans are recorded at the
lower of the loan's unpaid principal balance or their fair value. Any write-down
at the  date  of  transfer  is  charged  to the  allowance  for  credit  losses.
Distressed loans values,  recorded in other assets,  are reviewed on a quarterly
basis and any decline in value is recognized in other noninterest  income during
the period in which the decline occurs.

         DERIVATIVE INSTRUMENTS HELD FOR TRADING OR CUSTOMER ACCOMMODATION

         The  Company  enters  into  a  variety  of  interest  rate   derivative
contracts,  primarily swaps, options and foreign exchange contracts,  either for
trading  purposes,   based  on  management's  intent  at  inception,  or  as  an
accommodation to customers.

         Derivatives  held or issued for trading or customer  accommodation  are
carried at fair value,  with realized and  unrealized  changes in fair values on
contracts  included  in  noninterest  income in the period in which the  changes
occur.  Unrealized  gains and losses are reported  gross and included in trading
account assets and other liabilities,  respectively. Cash flows are reported net
as operating activities.

         DERIVATIVE INSTRUMENTS HELD FOR PURPOSES OTHER THAN TRADING

         The Company enters into a variety of derivative contracts as a means of
reducing  the  Company's  interest  rate  and  foreign  exchange  exposures.  At
inception  these  contracts  are evaluated in order to determine if they qualify
for hedge  accounting  treatment  and are  accounted  for either on a  deferral,
accrual or market value basis,  depending on the nature of the  Company's  hedge
strategy  and the method used to account  for the hedged  item.  Hedge  criteria
include   demonstrating  the  manner  in  which  the  hedge  will  reduce  risk,
identifying the specific asset,  liability or firm commitment being hedged,  and
citing the time  horizon  being  hedged.  A monthly  evaluation  is performed to
ensure that continuing  correlation  exists between the hedge and the item being
hedged.

         Net  interest   settlements  on  interest  rate  swap,  cap  and  floor
agreements  are  recognized on an accrual  basis as interest  income or interest
expense of the  related  asset or  liability  over the lives of the  agreements.
Premiums paid or received for interest rate caps and floors are amortized either
to interest income or to interest expense of the related asset or liability over
the lives of the agreements.  If an agreement is


                                      F-54

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
        (CONTINUED)

terminated  early,  any  resulting  gain or loss is deferred  and  amortized  as
interest  income or interest  expense of the related asset or liability over the
remaining life of the original  agreement.  Net settlement  amounts are reported
gross as other  assets and other  liabilities.  Cash flows are  reported  net as
operating activities.

         FOREIGN CURRENCY TRANSLATION

         Assets,  liabilities and results of operations for foreign branches are
recorded based on the functional  currency of each branch.  Since the functional
currency of the branches is the local  currency,  the net assets are  remeasured
into U.S. dollars using a combination of current and historical  exchange rates.
The  resulting  gains or losses  are  included  in  shareholders'  equity,  as a
component of accumulated  other  comprehensive  income  (loss),  on a net of tax
basis.

         INCOME TAXES

         The Company files  consolidated  federal and combined  state income tax
returns.  Amounts  provided for income tax expense are based on income  reported
for  financial  statement  purposes  and do not  necessarily  represent  amounts
currently payable under tax laws.  Deferred taxes,  which arise principally from
temporary  differences  between the period in which certain  income and expenses
are  recognized for financial  accounting  purposes and the period in which they
affect taxable  income,  are included in the amounts  provided for income taxes.
Under this method,  the  computation  of the net deferred tax liability or asset
gives current recognition to changes in the tax laws.

         NET INCOME PER COMMON SHARE

         Basic earnings per share (EPS) is computed by dividing net income after
preferred  dividends by the weighted average number of common shares outstanding
during the period.  Diluted EPS incorporates the dilutive effect of common stock
equivalents  outstanding  on an average  basis during the period.  Stock options
(see Note 14) are a common stock equivalent. Also see Note 19.

         EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS

         The Company  provides a variety of benefit and  incentive  compensation
plans for eligible  employees  and retirees.  Provisions  for the costs of these
employee  benefit  and  incentive  plans and  postretirement  benefit  plans are
accrued and charged to expense when the benefit is earned.

         On January 1, 2000, the Company changed the method it uses to calculate
the market-related  value of its pension plan assets.  This change increased the
value of plan assets on which the  expected  returns  are based and,  therefore,
results in lower net periodic pension cost. This change in methodology  resulted
in a one-time  credit to salaries and benefits of $16.0  million.  The impact on
future years is not considered significant.

         STOCK-BASED COMPENSATION

         As  allowed  under the  provisions  of SFAS No.  123,  "Accounting  for
Stock-Based  Compensation",  the Company  has chosen to  continue  to  recognize
compensation  expense  using the intrinsic  value-based  method of valuing stock
options  prescribed in Accounting  Principles Board Opinion No. 25,  "Accounting
for Stock Issued to Employees" and related Interpretations.  Under the intrinsic
value-based  method,


                                      F-55

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
        (CONTINUED)

compensation  cost is measured as the amount by which the quoted market price of
the Company's stock at the date of grant exceeds the stock option exercise price
(also see Note 14).

         Compensation  cost  associated with the Company's  unvested  restricted
stock issued  under the  management  stock plan is measured  based on the market
price of the stock at the grant date and is expensed over the vesting period.

         SEGMENT REPORTING

         Business  unit  results are based on an internal  management  reporting
system  used by  management  to  measure  the  performance  of the units and the
Company as a whole. The management reporting system identifies balance sheet and
income  statement  items to each  business  unit  based on  internal  management
accounting  policies.  Net interest  income is  determined  using the  Company's
internal funds transfer pricing system,  which assigns a cost of funds to assets
or a credit for funds to liabilities  and capital based on their type,  maturity
or  repricing  characteristics.  Noninterest  income  and  expense  directly  or
indirectly  attributable  to a  business  unit are  assigned  to that  business.
Economic  capital is  attributed  to each  business  units using a Risk Adjusted
Return on Capital (RAROC)  methodology,  which seeks to allocate capital to each
business  unit  consistent  with the level of risk they assume.  These risks are
primarily  credit risk,  market risk and  operational  risk.  Credit risk is the
potential loss in economic value due to the likelihood that the obligor will not
perform  as  agreed.  Market  risk is the  potential  loss in fair  value due to
changes in interest rates, currency rates and volatilities.  Operational risk is
the potential loss due to failures in internal  controls,  system  failures,  or
external events.

         RESALE AND REPURCHASE AGREEMENTS

         Transactions  involving  purchases of  securities  under  agreements to
resell (reverse  repurchase  agreements or reverse repos) or sales of securities
under  agreements to repurchase  (repurchase  agreements or repos) are accounted
for as  collateralized  financings  except  where the  Company  does not have an
agreement to sell (or purchase) the same or  substantially  the same  securities
before maturity at a fixed or  determinable  price.  The Company's  policy is to
obtain possession of collateral with a market value equal to or in excess of the
principal amount loaned under resale agreements. Collateral is valued daily, and
the Company may  require  counterparties  to deposit  additional  collateral  or
return collateral pledged when appropriate.

         COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
         SUBSIDIARY GRANTOR TRUST

         Company-obligated   mandatorily   redeemable  preferred  securities  of
subsidiary  grantor trust (trust  preferred  securities)  are accounted for as a
liability on the balance sheet.  Dividends (or distributions) on trust preferred
securities are treated as interest expense on an accrual basis.

         PENDING ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities".
The  Statement  will require the Company to  recognize  all  derivatives  on the
balance sheet at fair value.  SFAS No. 133 requires that derivative  instruments
used  to  hedge  be  identified  specifically  to  assets,   liabilities,   firm
commitments or anticipated  transactions  and measured as to  effectiveness  and
ineffectiveness  when  hedging  changes in fair value or cash flows.


                                      F-56

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS
        (CONTINUED)

Derivative  instruments  that do not qualify as either a fair value or cash flow
hedge will be valued at fair value with the resultant gain or loss recognized in
current earnings.  Changes in the effective portion of fair value hedges will be
recognized in current earnings along with the change in fair value of the hedged
item.  Changes in the  effective  portion of the fair value of cash flow  hedges
will be recognized in other  comprehensive  income until realization of the cash
flows of the hedged item through current  earnings.  Any ineffective  portion of
hedges will be recognized  in current  earnings.  In June 1999,  the FASB issued
SFAS No. 137,  "Deferral of the  Effective  Date of FASB  Statement No. 133", to
defer for one year the effective date of implementation of SFAS No. 133. In June
2000, FASB issued SFAS No. 138,  "Accounting for Certain Derivative  Instruments
and Certain  Hedging  Activities",  which amends the  accounting  and  reporting
standards of SFAS No. 133 for certain derivative instruments and certain hedging
activity.  The Company's  hedging  strategies are primarily related to hedges of
cash flows from variable  rate loans.  On January 1, 2001,  the Company  adopted
SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138. The cumulative effect
of the change in accounting principle on net income, net of tax, was $4 million.
The cumulative effect of the change in accounting principle on accumulated other
comprehensive income, net of tax, was $22 million.

         In  September  2000,  the FASB  issued SFAS No.  140,  "Accounting  for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
which replaces SFAS No. 125. The Statement  revises the standards for accounting
for the  securitization  and other transfers of financial assets and collateral,
and  requires  certain  disclosures,  but  carries  over most of SFAS No.  125's
provisions without  reconsideration.  SFAS No.140 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001.  Management  believes that adopting these components of SFAS No.
140 will not have a  material  impact on the  Company's  financial  position  or
results  of  operations.  SFAS  No.  140  must  be  applied  prospectively.  For
recognition and  reclassification of collateral and for disclosures  relating to
securitization  transactions  and  collateral,  this Statement was adopted as of
December 31, 2000 and did not have a material impact on the Company's  financial
position.












                                      F-57

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 2--SECURITIES

         The amortized cost, gross unrealized  gains,  gross unrealized  losses,
and fair values of securities are presented below.

<TABLE>
<CAPTION>

SECURITIES AVAILABLE FOR SALE

                                                                         DECEMBER 31,
                              -----------------------------------------------------------------------------------------------------
                                                 1999                                                  2000
                              -------------------------------------------------   -------------------------------------------------
                                             GROSS        GROSS                                  GROSS         GROSS
                              AMORTIZED   UNREALIZED   UNREALIZED       FAIR      AMORTIZED   UNREALIZED    UNREALIZED      FAIR
(DOLLARS IN THOUSANDS)           COST        GAINS       LOSSES         VALUE       COST         GAINS        LOSSES        VALUE
---------------------------   ----------  ----------   ----------    ----------   ----------  ----------    ----------   ----------
<S>                           <C>           <C>          <C>         <C>          <C>           <C>           <C>        <C>
U.S. Treasury..............   $  450,238    $ 1,302      $   912     $  450,628   $  433,703    $ 6,394       $   --     $  440,097
Other U.S. government......      974,211        294       13,621        960,884    1,233,908     40,441          594      1,273,755
Mortgage-backed securities.    1,665,317         62       49,094      1,616,285    2,138,101     19,447        6,516      2,151,032
State and municipal........       55,496      7,786           --         63,282       52,881      8,908           --         61,789
Corporate debt securities..       50,058         --           26         50,032       99,003         10          290         98,723
Equity securities..........       50,888      1,403           --         52,291       95,685        268          306         95,647
Foreign securities.........       16,597        104            4         16,697        6,570         69           12          6,627
                              ----------    -------      -------     ----------   ----------    -------       ------     ----------
   Total securities
      available for sale...   $3,262,805    $10,951      $63,657     $3,210,099   $4,059,851    $75,537       $7,718     $4,127,670
                              ==========    =======      =======     ==========   ==========    =======       ======     ==========
</TABLE>



<TABLE>
<CAPTION>

SECURITIES HELD TO MATURITY

                                                                         DECEMBER 31,
                              -----------------------------------------------------------------------------------------------------
                                                 1999                                                  2000
                              -------------------------------------------------   -------------------------------------------------
                                             GROSS        GROSS                                  GROSS         GROSS
                              AMORTIZED   UNREALIZED   UNREALIZED       FAIR      AMORTIZED   UNREALIZED    UNREALIZED      FAIR
(DOLLARS IN THOUSANDS)           COST        GAINS       LOSSES         VALUE       COST         GAINS        LOSSES        VALUE
----------------------------- ----------  ----------   ----------    ----------   ----------  ----------    ----------   ----------
<S>                           <C>           <C>          <C>         <C>          <C>           <C>           <C>        <C>
Other U.S. government........ $   19,996    $    35      $    --     $   20,031   $       --    $    --       $   --     $      --
Mortgage-backed securities...     11,302        577            3         11,876        8,521        437            1         8,957
State and municipal..........     15,228         --        1,759         13,469       15,008         --          663        14,345
                              ----------    -------      -------     ----------   ----------    -------       ------     ---------
      Total securities held
        to maturity.......... $   46,526    $   612      $ 1,762     $   45,376   $   23,529    $   437       $  664     $  23,302
                              ==========    =======      =======     ==========   ==========    =======       ======     =========
</TABLE>

         The  amortized  cost  and  fair  value of  securities,  by  contractual
maturity,  are shown  below.  Expected  maturities  may differ from  contractual
maturities  because borrowers may have the right to call or prepay  obligations,
with or without call or prepayment penalties.

         On  January  1,  2001,  as  permitted  by SFAS  No.  133,  the  Company
reclassified all of its securities held to maturity to securities  available for
sale.





                                      F-58

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999 AND 2000


NOTE 2--SECURITIES (CONTINUED)

<TABLE>
<CAPTION>

MATURITY SCHEDULE OF SECURITIES

                                                                        SECURITIES                    SECURITIES
                                                                   AVAILABLE FOR SALE(1)           HELD TO MATURITY(1)
                                                                 --------------------------       --------------------
                                                                    DECEMBER 31, 2000              DECEMBER 31, 2000
                                                                 --------------------------       --------------------
                                                                  AMORTIZED        FAIR           AMORTIZED     FAIR
(DOLLARS IN THOUSANDS)                                              COST           VALUE            COST        VALUE
---------------------------------------------------------         ---------      ----------        -------     -------
<S>                                                              <C>             <C>               <C>         <C>
Due in one year or less..................................        $  318,072      $  318,972        $   185     $   187
Due after one year through five years....................         2,153,182       2,198,276          1,524       1,503
Due after five years through ten years...................           340,653         346,407         10,798      11,165
Due after ten years......................................         1,152,040       1,168,368         11,022      10,447
Equity securities........................................            95,685          95,647             --          --
                                                                 ----------      ----------        -------     -------
   Total securities......................................        $4,059,851      $4,127,670        $23,529     $23,302
                                                                 ==========      ==========        =======     =======
-----------
<FN>
(1)      The remaining contractual maturities of mortgage-backed  securities are
         classified without regard to prepayments.  The contractual  maturity of
         these  securities  is not a reliable  indicator of their  expected life
         since borrowers have the right to repay their obligations at any time.
</FN>
</TABLE>

         During  the years  ended  1998,  1999 and 2000,  there were no sales or
transfers from the securities held to maturity portfolio.

         In 1998, proceeds from sales of securities available for sale were $418
million with gross realized gains of $6 million and no gross realized losses. In
1999,  proceeds  from sales of  securities  available for sale were $210 million
with gross realized gains of $8 million and no gross realized  losses.  In 2000,
proceeds  from sales of  securities  available  for sale were $423  million with
gross realized gains of $27 million and $18 million of gross realized losses.

         COLLATERAL

         The  Company  reports  securities  pledged  as  collateral  in  secured
borrowings  and other  arrangements  when the secured party can sell or repledge
the securities. These securities have been separately identified. If the secured
party cannot resell or repledge the securities of the Company,  those securities
are not  separately  identified.  As of December  31,  2000,  the Company had no
pledged  collateral  to  secured  parties  who are not  permitted  to  resell or
repledge those securities.

         As of  December  31,  2000,  the  Company  had  no  reverse  repurchase
agreements  or accepted  collateral  that it is permitted by contract to sell or
repledge.


                                      F-59

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000

NOTE 3--LOANS AND ALLOWANCE FOR CREDIT LOSSES

         A summary of loans,  net of unearned  interest and fees of $120 million
and $83 million, at December 31, 1999 and 2000, respectively, is as follows:

<TABLE>
<CAPTION>

                                                                            DECEMBER 31,
                                                                  -----------------------------
(DOLLARS IN THOUSANDS)                                                1999              2000
----------------------------------------------------------        -----------       -----------
<S>                                                               <C>               <C>
Domestic:
   Commercial, financial and industrial...................        $14,176,630       $13,748,838
   Construction...........................................            648,478           939,302
   Mortgage:
      Residential.........................................          2,581,141         3,294,485
      Commercial..........................................          3,572,347         3,348,252
                                                                  -----------       -----------
        Total mortgage....................................          6,153,488         6,642,737
   Consumer:
      Installment.........................................          1,922,158         1,655,676
      Home equity.........................................            727,776           755,053
                                                                  -----------       -----------
        Total consumer....................................          2,649,934         2,410,729
   Lease financing........................................          1,148,542         1,134,440
                                                                  -----------       -----------
        Total loans in domestic offices...................         24,777,072        24,876,046
Loans originated in foreign branches......................          1,135,886         1,134,352
                                                                  -----------       -----------
        Total loans.......................................         25,912,958        26,010,398
        Allowance for credit losses.......................            470,378           613,902
                                                                  -----------       -----------
        Loans, net........................................        $25,442,580       $25,396,496
                                                                  ===========       ===========
</TABLE>

         Changes in the allowance for credit losses were as follows:

<TABLE>
<CAPTION>

                                                                                       YEARS ENDED DECEMBER 31,
                                                                                 ---------------------------------------
(DOLLARS IN THOUSANDS)                                                              1998          1999            2000
---------------------------------------------------------------------------      ---------     ---------      ----------
<S>                                                                              <C>           <C>            <C>
Balance, beginning of year.................................................      $ 451,692     $ 459,328      $  470,378
Loans charged off..........................................................        (76,790)      (81,685)       (322,363)
Recoveries of loans previously charged off.................................         41,144        27,539          26,297
                                                                                 ---------     ---------      ----------
   Total net loans charged off.............................................        (35,646)      (54,146)       (296,606)
Provision for credit losses................................................         45,000        65,000         440,000
Transfer of reserve for trading account assets.............................         (1,911)           --              --
Foreign translation adjustment and other net additions (deductions)........            193           196            (410)
                                                                                 ---------     ---------      ----------
Balance, end of year.......................................................      $ 459,328     $ 470,378      $  613,902
                                                                                 =========     =========      ==========
</TABLE>

         In 1998, the Company reclassified a $1.9 million previously established
reserve for credit  losses  related to  interest  rate  derivatives  and foreign
exchange  contracts  from the  unallocated  portion of the  allowance for credit
losses.  The reserve for derivative and foreign exchange  contracts is presented
as an offset to trading account assets.




                                      F-60

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000

NOTE 3--LOANS AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED)

         Nonaccrual  loans totaled $167 million and $400 million at December 31,
1999 and 2000,  respectively.  There were no renegotiated  loans at December 31,
1999 and 2000.  Interest  foregone on loans designated as nonaccrual at December
31,  1998,  1999  and  2000  was  $4  million,   $8  million  and  $19  million,
respectively.

         LOAN IMPAIRMENT

         Impaired  loans  of  the  Company  include  commercial,  financial  and
industrial, construction and commercial mortgage loans designated as nonaccrual.
When the value of an impaired  loan is less than the recorded  investment in the
loan, a portion of the Company's  allowance for credit losses is allocated as an
impairment allowance.

         The Company's policy for recognition of interest income, charge-offs of
loans,  and  application of payments on impaired loans is the same as the policy
applied to nonaccrual loans.

         The following table sets forth information about the Company's impaired
loans.

<TABLE>
<CAPTION>

                                                                                             DECEMBER 31,
                                                                                  ----------------------------------
(DOLLARS IN THOUSANDS)                                                             1998          1999         2000
---------------------------------------------------------------------------       -------      --------     --------
<S>                                                                               <C>          <C>          <C>
Impaired loans with an allowance...........................................       $49,741      $128,576     $318,418
Impaired loans without an allowance(1).....................................        28,709        38,818       81,581
                                                                                  -------      --------     --------
   Total impaired loans(2).................................................       $78,450      $167,394     $399,999
                                                                                  =======      ========     ========
Allowance for impaired loans...............................................       $11,219       $42,429     $118,378
Average balance of impaired loans during the year..........................       $91,233      $128,403     $257,650
Interest income recognized on nonaccrual loans during the year.............          $274           $23       $1,221

-----------
<FN>
(1)      These loans do not require an  allowance  for credit  losses  since the
         fair  values  of the  impaired  loans  equal  or  exceed  the  recorded
         investments in the loans.

(2)      This  amount was  evaluated  for  impairment  using  three  measurement
         methods as follows:  $53 million,  $141  million,  and $361 million was
         evaluated  using the present value of the expected future cash flows at
         December 31, 1998, 1999 and 2000, respectively; $8 million, $6 million,
         and $13 million was evaluated using the fair value of the collateral at
         December 31, 1998, 1999 and 2000,  respectively;  and $17 million,  $21
         million, and $26 million was evaluated using historical loss factors at
         December 31, 1998, 1999 and 2000, respectively.
</FN>
</TABLE>


         RELATED PARTY LOANS

         In some cases, the Company makes loans to related parties including its
directors,  executive officers, and their affiliated companies.  At December 31,
1999,  related party loans outstanding to individuals who served as directors or
executive officers at anytime during the year totaled $133 million,  as compared
to $107  million at  December  31,  2000.  In the opinion of  management,  these
related  party  loans  were  made on  substantially  the same  terms,  including
interest rates and  collateral  requirements,  as those terms  prevailing at the
date these loans were made. During 1999 and 2000, there were no loans to related
parties  which were  charged off.  Additionally,  at December 31, 1999 and 2000,
there were no loans to related parties which were nonperforming.


                                      F-61

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 4--PREMISES AND EQUIPMENT

         Premises  and   equipment  are  carried  at  cost,   less   accumulated
depreciation  and  amortization.  As of December 31, 1999 and 2000,  the amounts
were:

<TABLE>
<CAPTION>

                                                                     DECEMBER 31,
                                --------------------------------------------------------------------------------------
                                                  1999                                          2000
                                ---------------------------------------      -----------------------------------------
                                               ACCUMULATED                                    ACCUMULATED
                                            DEPRECIATION AND   NET BOOK                    DEPRECIATION AND   NET BOOK
(DOLLARS IN THOUSANDS)            COST        AMORTIZATION      VALUE           COST         AMORTIZATION      VALUE
------------------------        --------   -----------------   --------      ----------    ----------------   --------
<S>                             <C>              <C>           <C>           <C>                 <C>          <C>
Land....................        $ 67,532         $     --      $ 67,532      $   66,090          $     --     $ 66,090
Premises................         265,156          103,948       161,208         314,255           103,144      211,111
Leasehold improvements..         155,409          101,526        53,883         168,778           112,240       56,538
Furniture, fixtures and
   equipment............         473,371          330,973       142,398         494,357           353,817      140,540
                                --------         --------      --------      ----------          --------     --------
      Total.............        $961,468         $536,447      $425,021      $1,043,480          $569,201     $474,279
                                ========         ========      ========      ==========          ========     ========
</TABLE>

         Rental and depreciation and amortization expenses were as follows:

<TABLE>
<CAPTION>
                                                                                 YEARS ENDED DECEMBER 31,
                                                                             -------------------------------
(DOLLARS IN THOUSANDS)                                                          1998        1999        2000
----------------------------------------------------------------------       -------     -------    --------
<S>                                                                          <C>         <C>        <C>
Rental expense of premises............................................       $51,695     $49,719    $ 52,085
Less:  rental income..................................................        12,161      13,900      15,464
                                                                             -------     -------    --------
   Net rental expense.................................................       $39,534     $35,819    $ 36,621
                                                                             =======     =======    ========
Other net rental expense (income), primarily for equipment............       $  (374)    $  (821)   $ (1,300)
                                                                             =======     =======    ========
Depreciation and amortization of premises and equipment...............       $56,490     $68,090    $ 66,503
                                                                             =======     =======    ========
</TABLE>

         Future minimum lease payments are as follows:

<TABLE>
<CAPTION>

(DOLLARS IN THOUSANDS)                                                               DECEMBER 31, 2000
---------------------------------------------------------------------------------    -----------------
<S>                                                                                     <C>

Years ending December 31,
   2001..........................................................................        $ 48,855
   2002..........................................................................          44,430
   2003..........................................................................          39,673
   2004..........................................................................          32,706
   2005..........................................................................          26,673
   Later years...................................................................          87,826
                                                                                         --------
Total minimum operating lease payments...........................................        $280,163
                                                                                         ========
Minimum rental income due in the future under noncancellable subleases...........        $ 67,708
                                                                                         ========
</TABLE>

         Included in other  liabilities  in the  accompanying  December 31, 2000
Consolidated  Balance Sheet is $9.1 million of future  operating  lease payments
accrued in  connection  with the 1996 merger and the 1999  restructuring  charge
(also see Note 7).



                                      F-62

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 4--PREMISES AND EQUIPMENT (CONTINUED)

         A majority of the leases provide for the payment of taxes, maintenance,
insurance, and certain other expenses applicable to the leased premises. Many of
the leases  contain  extension  provisions,  escalation  clauses,  and  purchase
options.  There are no restrictions on paying  dividends,  incurring  additional
debt or  negotiating  additional  leases  under the terms of the  present  lease
agreements.

NOTE 5--DEPOSITS

         At December 31, 2000, the Company had $389 million in domestic interest
bearing time deposits  with a remaining  term of greater than one year, of which
$120 million exceeded $100,000.  Maturity  information for all domestic interest
bearing  time  deposits  with a  remaining  term of  greater  than  one  year is
summarized below.

<TABLE>
<CAPTION>

(DOLLARS IN THOUSANDS)                                                                DECEMBER 31, 2000
---------------------------------------------------------------------------------     -----------------
<S>                                                                                        <C>

Due after one year through two years.............................................          $222,210
Due after two years through three years..........................................            73,109
Due after three years through four years.........................................            37,093
Due after four years through five years..........................................            49,248
Due after five years.............................................................             7,325
                                                                                           --------
   Total.........................................................................          $388,985
                                                                                           ========
</TABLE>

         Substantially  all  of  the  foreign  interest  bearing  time  deposits
exceeding $100,000 mature in less than one year.

NOTE 6--EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS

         RETIREMENT PLANS

         The Company  maintains the Union Bank of  California,  N.A.  Retirement
Plan (the  Plan),  which is a  noncontributory  defined  benefit  plan  covering
substantially all of the employees of the Company.  The Plan provides retirement
benefits based on years of credited  service and the final average  compensation
amount,  as defined in the Plan.  Employees  become eligible for this plan after
one year of service and become  fully  vested  after five years of service.  The
Company's  funding  policy  is  to  make  contributions  equal  to  the  maximum
deductible  amount as allowed by the Internal  Revenue Code.  Contributions  are
intended to provide not only for benefits  attributed  to services to date,  but
also for those expected to be earned in the future.  Plan assets are invested in
U.S. government securities, corporate bonds, and commingled investment funds.

         OTHER POSTRETIREMENT BENEFITS

         The  Company  provides  certain  health care  benefits  for its retired
employees and life insurance  benefits for those  employees who retired prior to
January 1, 2001.  The health  care cost is shared  between  the  Company and the
retiree.  The life  insurance  plan is  noncontributory.  The accounting for the
health care plan  anticipates  future  cost-sharing  changes that are consistent
with the Company's  intent to maintain a level of cost-sharing at  approximately
25 percent. Assets set aside to cover such obligations are primarily invested in
mutual funds.


                                      F-63

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 6--EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS
        (CONTINUED)

         The  following  table  sets forth the  funded  status of the  Company's
defined benefit pension plan and its other postretirement benefit plans.

<TABLE>
<CAPTION>

                                                                        PENSION BENEFITS               OTHER BENEFITS
                                                                   -------------------------      ------------------------
                                                                          YEARS ENDED                    YEARS ENDED
                                                                          DECEMBER 31,                   DECEMBER 31,
                                                                   -------------------------      ------------------------
(DOLLARS IN THOUSANDS)                                                1999            2000           1999           2000
----------------------                                             ---------        --------      ---------      ---------
<S>                                                                <C>              <C>           <C>            <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation, beginning of year.....................         $ 489,378        $439,908      $  83,029      $  96,257
Service cost..............................................            25,107          20,688          3,450          3,024
Interest cost.............................................            31,295          34,429          5,552          6,708
Plan participants' contributions..........................                --              --          1,033          1,143
Amendments................................................                --              --           (855)        (1,537)
Actuarial (gain) loss.....................................           (91,286)         30,805         10,237         (4,286)
Benefits paid.............................................           (14,586)        (16,814)        (6,189)        (7,201)
                                                                   ---------        --------      ---------      ---------
Benefit obligation, end of year...........................           439,908         509,016         96,257         94,108
                                                                   ---------        --------      ---------      ---------
CHANGE IN PLAN ASSETS
Fair value of plan assets, beginning of year..............           537,087         601,527         39,468         46,666
Actual return on plan assets..............................            63,814         (12,328)         2,390         (1,319)
Employer contribution.....................................            15,212          16,084          9,964         11,007
Plan participants' contributions..........................                --              --          1,033          1,143
Benefits paid.............................................           (14,586)        (16,814)        (6,189)        (7,201)
                                                                   ---------        --------      ---------      ---------
Fair value of plan assets, end of year....................           601,527         588,469         46,666         50,296
                                                                   ---------        --------      ---------      ---------
Funded status.............................................           161,619          79,453        (49,590)       (43,812)
Unrecognized transition amount............................                --              --         44,918         38,595
Unrecognized net actuarial gain...........................          (144,845)        (39,240)        (8,339)        (6,624)
Unrecognized prior service cost...........................             7,725           6,658             --         (1,537)
                                                                   ---------        --------      ---------      ---------
Prepaid (accrued) benefit cost............................         $  24,499        $ 46,871      $ (13,011)      $(13,378)
                                                                   =========        ========      =========      =========
</TABLE>

         The following table  summarizes the  assumptions  used in computing the
present value of the projected benefit obligation and the net pension expense.

<TABLE>
<CAPTION>

                                                                                PENSION BENEFITS               OTHER BENEFITS
                                                                              -------------------------    ------------------------
                                                                              YEARS ENDED DECEMBER 31,     YEARS ENDED DECEMBER 31,
                                                                              -------------------------    ------------------------
                                                                              1998       1999      2000    1998      1999      2000
                                                                              ----       ----      ----    ----      ----      ----

<S>                                                                           <C>        <C>       <C>     <C>       <C>       <C>
Discount rate in determining expense......................................    7.00%      6.50%     7.75%   7.00%     6.50%     7.75%
Discount rate in determining benefit obligations at year end..............    6.50       7.75      7.50    6.50      7.75      7.50%
Rate of increase in future compensation levels for determining expense....    5.00       5.00      5.00      --        --        --
Rate of increase in future compensation levels for determining benefit
   obligations at year end................................................    5.00       5.00      5.00      --        --        --

Expected return on plan assets............................................    8.25       8.25      8.25    8.00      8.00      8.00
</TABLE>


                                      F-64


<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 6--EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS
        (CONTINUED)

         The following table sets forth the components of postretirement benefit
expense.

<TABLE>
<CAPTION>

                                                             PENSION BENEFITS                              OTHER BENEFITS
                                                     -------------------------------------        ------------------------------
                                                           YEARS ENDED DECEMBER 31,                   YEARS ENDED DECEMBER 31,
                                                     -------------------------------------        ------------------------------
(DOLLARS IN THOUSANDS)                                 1998           1999           2000          1998        1999        2000
-----------------------------------------------      -------        -------        -------        ------     -------     -------
<S>                                                  <C>            <C>            <C>            <C>        <C>         <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost...................................      $22,697        $25,107        $20,688        $3,067     $ 3,450     $ 3,025
Interest cost..................................       28,475         31,295         34,429         5,068       5,552       6,708
Expected return on plan assets.................      (31,648)       (36,194)       (45,357)       (2,491)     (3,317)     (3,894)
Amortization of prior service cost.............        3,175          2,016          1,067            --          --          --
Amortization of transition amount..............         (149)           (61)            --         3,987       3,987       3,455
Recognized net actuarial (gain) loss...........        1,330          2,435         (1,077)       (2,000)       (878)       (858)
                                                     -------        -------        -------        ------     -------     -------
   Net periodic benefit cost...................       23,880         24,598          9,750         7,631       8,794       8,436
Loss due to curtailment........................           --             --             --            --       6,132       2,868
                                                     -------        -------        -------        ------     -------     -------
   Total benefit cost for year.................      $23,880        $24,598        $ 9,750        $7,631     $14,926     $11,304
                                                     =======        =======        =======        ======     =======     =======
</TABLE>

         For 1998,  the Company  assumed a 9 percent  annual rate of increase in
the per capita cost of  postretirement  medical  benefits for the indemnity plan
and a 7 percent annual rate of increase for the health maintenance  organization
(HMO)  plan.  For  future  periods,  the  assumed  rate for the  indemnity  plan
gradually  decreased  from 9 percent  to 5.5  percent  in 2007  remaining  level
thereafter.  The rate for the HMO plan was expected to gradually decrease to 5.5
percent in 2007 and thereafter.

         For 1999, the Company  assumed an 11 percent annual rate of increase in
the per capita cost of  postretirement  medical  benefits for the indemnity plan
and an 8.5 percent annual rate of increase for the HMO plan. For future periods,
the rate for the  indemnity  plan was  expected to  gradually  decrease  from 11
percent to 5 percent in 2007 remaining  level  thereafter.  The rate for the HMO
plan was expected to gradually  decrease from 8.5 percent to 5.0 percent in 2007
and remain at that level thereafter.

         For 2000,  the Company  assumed a 10 percent annual rate of increase in
the per capita cost of  postretirement  medical  benefits for the indemnity plan
and an 8 percent annual rate of increase for the HMO plan.  For future  periods,
the rate for the  indemnity  plan was  expected to  gradually  decrease  from 10
percent to 5 percent in 2007 and will remain at that level thereafter.  The rate
for the HMO plan was expected to gradually  decrease from 8 percent to 5 percent
in 2007 and remain at that level thereafter.

         The healthcare cost trend rate  assumption has a significant  effect on
the amounts reported for the health care plans. A one-percentage-point change in
assumed health care cost trend rates would have the following effects.

<TABLE>
<CAPTION>

                                                                                                 1-PERCENTAGE-        1-PERCENTAGE-
(DOLLARS IN THOUSANDS)                                                                           POINT INCREASE       POINT DECREASE
---------------------------------------------------------------------------------------          --------------       --------------
<S>                                                                                                     <C>                 <C>
Effect on total of service and interest cost components................................              $1,243               $  (846)
Effect on postretirement benefit obligation............................................               9,596                (8,156)
</TABLE>



                                      F-65

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 6--EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS
        (CONTINUED)

         EXECUTIVE SUPPLEMENTAL BENEFIT PLANS

         The Company has several  Executive  Supplemental  Benefit  Plans (ESBP)
which provide eligible  employees with  supplemental  retirement  benefits.  The
plans  are  unfunded.  The  accrued  liability  for  ESBP's  included  in  other
liabilities in the  Consolidated  Balance Sheets was $25 million at December 31,
1999 and $28 million at December 31, 2000. The Company's expense relating to the
ESBP's was $3 million for each of the years ended  December 31, 1998,  1999, and
$2 million for the year ended December 31, 2000.

         SECTION 401(K) SAVINGS PLANS

         The Company has a defined  contribution  plan authorized  under Section
401(k) of the Internal  Revenue Code.  All  benefits-eligible  employees with at
least one year of service are eligible to participate in the plan. Employees may
contribute up to 16 percent of their pre-tax  covered  compensation  or up to 10
percent of their after-tax covered compensation  through salary deductions.  The
Company  contributes 50 percent of every pre-tax dollar an employee  contributes
up to the  first 6  percent  of the  employee's  pre-tax  covered  compensation.
Employees  are fully  vested in the  employer's  contributions  immediately.  In
addition,   the  Company  may  make  a   discretionary   annual   profit-sharing
contribution  up to  2.5  percent  of an  employee's  pay.  This  profit-sharing
contribution is for all eligible employees, regardless of whether an employee is
participating  in the 401(k) plan,  and depends on the Bank's  annual  financial
performance.  All employer  contributions are tax deductible by the Company. The
Company's combined matching  contribution  expense was $12 million,  $17 million
and  $6  million  for  the  years  ended  December  31,  1998,  1999  and  2000,
respectively.

NOTE 7--RESTRUCTURING CHARGE

         A restructuring charge of $85 million was recorded in the third quarter
of 1999. The restructuring charge was incurred in connection with a company-wide
project referred to as "Mission  Excel".  Mission Excel is an initiative to slow
the rate of growth of expenses,  increase  sustainable  growth in revenues,  and
increase productivity through elimination of unnecessary or duplicate functions.
The  restructuring  charge includes only direct and incremental costs associated
with the program.

         The Company  reduced the  restructuring  charge by $19.0 million during
the year ended  December 31, 2000.  The reduction  was primarily  related to the
severance portion of the reserve reflecting changes in attrition assumptions.


                                      F-66

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000

NOTE 7--RESTRUCTURING CHARGE (CONTINUED)

         The table, which follows, provides details of the restructuring related
reserve:

<TABLE>
<CAPTION>

                                                                                       OCCUPANCY
(DOLLARS IN THOUSANDS)                                                  PERSONNEL      AND OTHER         TOTAL
-----------------------------------------------------------------       ---------      ---------       --------
<S>                 <C>                                                  <C>             <C>           <C>
Balances at January 1, 1999......................................        $     --        $    --       $     --
Restructuring charge.............................................          70,000         15,000         85,000
Less: Utilization
   Cash..........................................................           6,859          5,091         11,950
   Noncash.......................................................           3,616             75          3,691
                                                                         --------        -------       --------
      Total utilization..........................................          10,475          5,166         15,641
                                                                         --------        -------       --------
Balances at December 31, 1999....................................          59,525          9,834         69,359
Restructuring credit.............................................         (18,000)        (1,000)       (19,000)
Less: Utilization
   Cash..........................................................          27,162          6,404         33,566
   Noncash.......................................................              --            720            720
                                                                         --------        -------       --------
      Total utilization..........................................          27,162          7,124         34,286
                                                                         --------        -------       --------
Balances at December 31, 2000....................................        $ 14,363        $ 1,710       $ 16,073
                                                                         ========        =======       ========
</TABLE>




         Personnel expense consists of severance and related benefits to be paid
under the  Company's  enhanced  severance  plans.  At the  completion of Mission
Excel, the Company expects to have terminated approximately 800 employees.  From
August 16, 1999 to December 31, 2000,  680 employees were  terminated  under the
plan.  Occupancy and other consists of lease  termination costs and professional
services costs incurred during the assessment phase of the project.

NOTE 8--OTHER EXPENSES

         The detail of other expenses is as follows:

<TABLE>
<CAPTION>

                                                                        YEARS ENDED DECEMBER 31,
                                                                  -----------------------------------
(DOLLARS IN THOUSANDS)                                              1998          1999         2000
----------------------                                            --------      --------     --------
<S>                                                               <C>           <C>          <C>
Advertising and public relations.............................     $ 31,897      $ 27,163     $ 29,125
Printing and office supplies.................................       26,716        22,535       20,057
Intangible asset amortization................................       13,581        13,980       13,352
Other........................................................      150,637       153,214      160,214
                                                                  --------      --------     --------
   Total other expenses......................................     $222,831      $216,892     $222,748
                                                                  ========      ========     ========
</TABLE>



                                      F-67


<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000

NOTE 9--INCOME TAXES

         The components of income tax expense were as follows:

<TABLE>
<CAPTION>

                                                                               YEARS ENDED DECEMBER 31,
                                                                         -----------------------------------
(DOLLARS IN THOUSANDS)                                                     1998          1999         2000
------------------------------------------------------------------       --------      --------     --------
<S>                                                                      <C>           <C>          <C>
Taxes currently payable:
   Federal........................................................       $218,949      $217,713     $202,427
   State..........................................................        (44,731)        5,140        3,595
   Foreign........................................................          2,760         1,564        1,804
                                                                         --------      --------     --------
      Total currently payable.....................................        176,978       224,417      207,826
                                                                         --------      --------     --------
Taxes deferred:
   Federal........................................................         25,458        (7,600)       9,300
   State..........................................................          2,152        (2,040)       3,998
   Foreign........................................................            487          (889)         411
                                                                         --------      --------     --------
      Total deferred..............................................         28,097       (10,529)      13,709
                                                                         --------      --------     --------
      Total income tax expense....................................       $205,075      $213,888     $221,535
                                                                         ========      ========     ========
</TABLE>

         The  components of the net deferred tax balances of the Company were as
follows:

<TABLE>
<CAPTION>

                                                                                         DECEMBER 31,
                                                                                   ---------------------
(DOLLARS IN THOUSANDS)                                                               1999         2000
---------------------------------------------------------------------------        --------     --------
<S>                                                                                <C>          <C>
Deferred tax assets:
   Allowance for credit losses.............................................        $184,377     $245,985
   Accrued income and expense..............................................          34,114       27,617
   Accrued restructuring expenses..........................................          41,782       15,871
   Unrealized loss on securities available for sale........................          20,273           --
   Net operating loss carryforwards........................................          14,974           --
   Deferred state taxes....................................................           3,406        4,740
   Other...................................................................           6,745        7,973
   Valuation allowance.....................................................         (14,974)          --
                                                                                   --------     --------
      Total deferred tax assets............................................         290,697      302,186
                                                                                   --------     --------
Deferred tax liabilities:
   Leasing.................................................................         365,169      399,034
   Unrealized gain on securities available for sale........................              --       25,940
   Depreciation............................................................           3,345       13,735
                                                                                   --------     --------
      Total deferred tax liabilities.......................................         368,514      438,709
                                                                                   --------     --------
        Net deferred tax liability.........................................        $ 77,817     $136,523
                                                                                   ========     ========
</TABLE>

         During 1998, a valuation  allowance was  established to offset deferred
tax assets  related to state income tax net operating  loss  carryforwards  that
expire on December 31, 2002. The net operating loss  carryforwards  are expected
to be utilized in the Company's 2000  California  tax return,  and therefore the
tax benefits of the net operating losses were recognized as a reduction to state
income tax expense in 2000. In management's  opinion, the valuation allowance is
no longer necessary.


                                      F-68

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000

NOTE 9--INCOME TAXES (CONTINUED)

         The following table is an analysis of the effective tax rate:

<TABLE>
<CAPTION>

                                                                                YEARS ENDED
                                                                                DECEMBER 31,
                                                                           ---------------------
                                                                            1998    1999    2000
                                                                            ----    ----    ----
<S>                                                                          <C>     <C>     <C>
Federal income tax rate...............................................       35%     35%     35%
Net tax effects of:
   State income taxes, net of federal income tax benefit..............       (4)      --      1
   Tax credits........................................................        --     (1)     (2)
   Net refunds from tax audits........................................        --     (2)     --
   Other..............................................................        --      1      (1)
                                                                            ----    ----    ----
      Effective tax rate..............................................       31%     33%     33%
                                                                            ====    ====    ====
</TABLE>




         During 1999, the Company  recognized tax benefits of $10.7 million from
federal and California audit settlements covering the years 1986 to 1994.

         The  Company  has filed its 1998 and 1999 and  intends to file its 2000
California franchise tax returns on a worldwide unitary basis, incorporating the
financial results of BTM and its worldwide affiliates.  During 1998, the Company
reduced its state income tax liabilities by $29 million, net of federal tax, for
previously  accrued  1997 state tax  liabilities  as a result of its decision to
file its California tax returns on the worldwide unitary basis.

         Federal and state tax returns for several years are under or subject to
examination by the respective taxing authorities.  Although the ultimate outcome
of such examinations cannot be determined at this time, management believes that
the  resolution  of  issues  that  have  been or may be  raised  will not have a
material  adverse  effect on the Company's  consolidated  financial  position or
results of operations.



                                      F-69

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 10--BORROWED FUNDS

         The following is a summary of the major categories of borrowed funds:

<TABLE>
<CAPTION>

                                                                                                              DECEMBER 31,
                                                                                                     ----------------------------
(DOLLARS IN THOUSANDS)                                                                                  1999              2000
-----------------------------------------------------------------------------------------------      ----------        ----------
<S>                                                                                                  <C>               <C>
Federal funds purchased and securities sold under repurchase agreements with weighted average
   interest rates of 5.09% and 6.52% at December 31, 1999 and 2000, respectively...............      $1,156,799        $1,387,667
Commercial paper, with weighted average interest rates of 5.45% and 6.49% at December 31, 1999
   and 2000, respectively......................................................................       1,108,258         1,385,771
Other borrowed funds, with weighted average interest rates of 5.91% and 5.64% at December 31,
   1999 and 2000, respectively.................................................................         540,496           249,469
                                                                                                     ----------        ----------
Total borrowed funds...........................................................................      $2,805,553        $3,022,907
                                                                                                     ==========        ==========


Federal funds purchased and securities sold under repurchase agreements:
   Maximum outstanding at any month end........................................................      $1,786,594        $2,095,868
   Average balance during the year.............................................................       1,489,214         1,548,730
   Weighted average interest rate during the year..............................................            4.84%             6.24%
Commercial paper:
   Maximum outstanding at any month end........................................................      $1,737,265        $1,525,932
   Average balance during the year.............................................................       1,529,814         1,521,614
   Weighted average interest rate during the year..............................................            5.04%             6.24%
Other borrowed funds:
   Maximum outstanding at any month end........................................................      $  993,550        $  507,782
   Average balance during the year.............................................................         708,625           314,425
   Weighted average interest rate during the year..............................................            5.28%             5.31%

</TABLE>

         Included in other  borrowed  funds in 2000 are assumed  mortgage  notes
related to the  purchase of the  Company's  administrative  facility at Monterey
Park.  The notes  consist of 20 zero coupon  notes with varying  maturity  dates
through 2011.  Maturities of these notes for the next five years are as follows:
no  maturities  in 2001,  $6.5  million in each of 2002,  2003,  and 2004,  $5.3
million in 2005 and $34.4 million thereafter.

NOTE 11--SUBORDINATED CAPITAL NOTES AND PREFERRED STOCK

         The  following is a summary of capital notes that are  subordinated  to
other obligations of the Company.

<TABLE>
<CAPTION>

                                                                                                          DECEMBER 31,
                                                                                                    ----------------------
(DOLLARS IN THOUSANDS)                                                                                 1999         2000
--------------------------------------------------------------------------------------------------  ---------     --------
<S>                          <C>                                <C>          <C>
Floating rate notes due June 2007. These notes bear interest at 0.325% above 3-month
   London Interbank Offered Rate (LIBOR) and are payable to BTM...................................   $200,000     $200,000
Floating rate notes due July 2000. These notes bear interest at 0.30% above 3-month LIBOR.........     98,000           --
                                                                                                     --------     --------
Total subordinated capital notes..................................................................   $298,000     $200,000
                                                                                                     ========     ========
</TABLE>


                                      F-70

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 11--SUBORDINATED CAPITAL NOTES AND PREFERRED STOCK (CONTINUED)

         The above notes qualify as Tier 2 risk-based  capital under the Federal
Reserve guidelines for assessing  regulatory  capital.  For the total risk-based
capital  ratio,  the amount of notes  that  qualify as capital is reduced as the
notes  approach  maturity.  At December  31, 1999 and 2000,  $200 million of the
notes qualified as risk-based capital.

         Provisions of certain notes restrict the use of the Company's  property
as security  for  borrowings,  and place  limitations  on leases,  indebtedness,
distributions to shareholders,  mergers,  sales of certain assets,  transactions
with affiliates,  and changes in majority stock ownership of the Company. All of
the notes mature after 2005.

NOTE 12-- UNIONBANCAL CORPORATION--OBLIGATED MANDATORILY REDEEMABLE PREFERRED
          SECURITIES OF SUBSIDIARY GRANTOR TRUST

         In February  1999,  UnionBanCal  Finance  Trust I issued  $350  million
preferred  securities  to the public and  $10,824,750  common  securities to the
Company.  The proceeds of such issuances  were invested by  UnionBanCal  Finance
Trust I in  $360,824,750  aggregate  principal  amount  of the  Company's  7 3/8
percent  debt  securities  due May 15, 2029 (the Trust  Notes).  The Trust Notes
represent the sole asset of UnionBanCal  Finance Trust I. The Trust Notes mature
on May 15, 2029, bear interest at the rate of 7 3/8 percent,  payable quarterly,
and are redeemable by the Company beginning on or after February 19, 2004 at 100
percent of the principal amount thereof, plus any accrued and unpaid interest to
the redemption date.

         Holders of the preferred  securities and common securities are entitled
to  cumulative  cash  distributions  at an annual  rate of 7 3/8  percent of the
liquidation amount of $25 per security.  The preferred securities are subject to
mandatory  redemption  upon repayment of the Trust Notes and are callable by the
Company at 100 percent of the liquidation  amount beginning on or after February
19,  2004.  The Trust  exists  for the sole  purpose of  issuing  the  preferred
securities and investing the proceeds in the Trust Notes issued by the Company.

         The Company has guaranteed, on a subordinated basis,  distributions and
other payments due on the preferred  securities (the Guarantee).  The Guarantee,
when taken together with the Company's  obligations under the Trust Notes and in
the  indenture  pursuant to which the Trust Notes were issued and the  Company's
obligations  under the Amended and Restated  Declaration of Trust  governing the
subsidiary trust,  provide a full and unconditional  guarantee of amounts due on
the Trust Preferred securities.

         The  grantor  trust  is  a  wholly  owned   subsidiary  of  UnionBanCal
Corporation.  The Trust Notes and related  trust  investment  in the Trust Notes
have been eliminated in consolidation and the preferred securities are reflected
as outstanding in the accompanying financial statements.

NOTE 13--DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

         The Company has a dividend  reinvestment  and stock  purchase  plan for
shareholders. The plan allows shareholders to automatically reinvest all or part
of their dividends in additional  shares of the Company's common stock at a cost
of 5 percent below the market price.  Participating  shareholders  also have the
option of  purchasing  additional  shares  at the full  market  price  with cash
payments of $25 to $3,000 per quarter.  The Company  obtains shares required for
reinvestment through open market purchases or through the issuance of new shares
from its authorized but unissued  stock.  During 1998,  1999, and 2000,  83,727,
101,570,   and  440,677  shares,   respectively,   were  required  for  dividend
reinvestment  purposes, of


                                      F-71

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 13--DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN (CONTINUED)

which 5,166, 6,407, and 24,245 shares were considered new issuances during 1998,
1999, and 2000, respectively.  BTM did not participate in the plan in 1998, 1999
or 2000.

NOTE 14--MANAGEMENT STOCK PLAN

         The Company has a management stock plan (the Stock Plan),  which has 10
million  shares of the  Company's  common stock  authorized to be awarded to key
employees  and  outside  directors  of  the  Company  at the  discretion  of the
Executive  Compensation  and Benefits  Committee of the Board of Directors  (the
Committee).  Committee  members and employees on rotational  assignment from BTM
are not eligible for stock awards.

         The Committee  determines the term of each stock option grant,  up to a
maximum of ten years from the date of grant.  The exercise  price of the options
issued  under the Stock Plan shall not be less than the fair market value on the
date the option is granted.  Unvested  restricted  stock  issued under the Stock
Plan is shown as a reduction to retained  earnings.  The value of the restricted
shares  at the date of grant  is  amortized  to  compensation  expense  over its
vesting period.  All cancelled or forfeited  options and restricted stock become
available for future grants.

         In 1998,  1999 and 2000, the Company  granted  options to  non-employee
directors and various key employees,  including policy-making officers under the
1997 and 2000 Management Stock Plans. Under both Stock Plans, options granted to
employees  vest pro-rata on each  anniversary of the grant date and become fully
exercisable  three years from the grant date,  provided  that the  employee  has
completed the specified continuous service requirement. The options vest earlier
if the employee dies, is permanently  disabled,  or retires under certain grant,
age, and service conditions. Options granted to non-employee directors are fully
vested on the grant date and  exercisable  33 1/3  percent  on each  anniversary
under the 1997 Stock Plan,  and fully vested and  exercisable  on the grant date
under the 2000 Stock Plan.

         The following is a summary of stock option transactions under the Stock
Plan.

<TABLE>
<CAPTION>

                                                                         YEARS ENDED DECEMBER 31,
                                    -------------------------------------------------------------------------------------------
                                                1998                         1999                         2000
                                    ----------------------------  -----------------------------  ------------------------------
                                    NUMBER OF   WEIGHTED-AVERAGE  NUMBER OF    WEIGHTED-AVERAGE   NUMBER OF    WEIGHTED-AVERAGE
                                     SHARES      EXERCISE PRICE     SHARES      EXERCISE PRICE     SHARES      EXERCISE PRICE

<S>                                 <C>               <C>         <C>               <C>          <C>                <C>
Options outstanding, beginning      1,397,178         $15.41      1,740,081         $21.47       3,281,273          $28.46
   of year...................
      Granted................         533,850          35.08      1,747,750          34.31       2,126,506           27.99
      Exercised..............        (169,995)         13.34       (157,007)         14.65         (98,004)          13.18
      Forfeited..............         (20,952)         30.63        (49,551)         33.04        (117,876)          32.04
                                    ---------                     ---------                      ---------
Options outstanding,
end of year..................       1,740,081         $21.47      3,281,273         $28.46       5,191,899          $28.47
                                    =========                     =========                      =========
Options exercisable,
end of year..................         894,432         $13.77      1,266,976         $20.01       2,135,228          $25.90
                                    =========                     =========                      =========
</TABLE>

         The  weighted-average  fair value of options  granted was $11.99 during
1998, $9.77 during 1999, and $10.21 during 2000.


                                      F-72

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 14--MANAGEMENT STOCK PLAN (CONTINUED)

         The  following  table  summarizes   information   about  stock  options
outstanding.

<TABLE>
<CAPTION>

                                  OPTIONS OUTSTANDING AT DECEMBER 31, 20000                      OPTIONS EXERCISABLE
                         ------------------------------------------------------------            AT DECEMBER 31, 2000
                                             WEIGHTED-AVERAGE                               -----------------------------------
       RANGE OF             NUMBER               REMAINING            WEIGHTED-AVERAGE         NUMBER          WEIGHTED-AVERAGE
    EXERCISE PRICES      OUTSTANDING         CONTRACTURAL LIFE         EXERCISE PRICE       EXERCISABLE         EXERCISE PRICE
    ---------------      -----------         -----------------        ----------------      -----------        ----------------
     <S>                   <C>                      <C>                   <C>                <C>                   <C>
     $ 6.67 -  9.08          117,304                1.9 years             $ 8.54               117,304             $ 8.54
      11.25 - 12.83          335,753                3.0                    11.75               335,753              11.75
      18.29 - 25.00          698,598                5.7                    21.48               548,712              20.98
      27.56 - 39.25        4,017,244                8.2                    31.58             1,125,793              34.19
      44.56 - 44.56           23,000                8.9                    44.56                 7,666              44.56
                         -----------                                                         ---------
                           5,191,899                                                         2,135,228
                         ===========                                                         =========
</TABLE>

         In 1998, 1999, and 2000, the Company also granted  184,935,  1,050, and
13,500  shares,  respectively,  of restricted  stock to key officers,  including
policy-making  officers,  under the Stock Plan.  The awards of restricted  stock
vest pro rata on each anniversary of the grant date and become fully vested four
years  from the  grant  date,  provided  that the  employee  has  completed  the
specified  continuous  service  requirement.  They vest  earlier if the employee
dies, is permanently and totally disabled,  or retires under certain grant, age,
and service  conditions.  Restricted  shareholders  have the right to vote their
restricted shares and receive dividends.

         The following is a summary of restricted stock  transactions  under the
Stock Plan.

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                    ---------------------------------------------------------------------------------------------
                                               1998                            1999                            2000
                                    ----------------------------  ----------------------------------  ---------------------------
                                                WEIGHTED-AVERAGE                    WEIGHTED-AVERAGE             WEIGHTED-AVERAGE
                                    NUMBER OF      GRANT DATE      NUMBER OF           GRANT DATE     NUMBER OF      GRANT DATE
                                     SHARES        FAIR VALUE        SHARES            FAIR VALUE      SHARES        FAIR VALUE
                                    ---------   ----------------   ---------        ----------------  ---------   ---------------
<S>                                 <C>             <C>             <C>                  <C>          <C>              <C>
Restricted stock awards
   outstanding, beginning of
   year......................       1,337,217       $11.59          1,504,302            $14.12       1,496,106        $14.05
   Granted...................         184,935        33.43              1,050             32.88          13,500         25.00
   Cancelled.................         (17,850)       24.58             (9,246)             27.60         (3,444)        31.66
                                    ---------                       ---------                         ---------
Restricted stock awards
   outstanding, end of year..       1,504,302       $14.12          1,496,106            $14.05       1,506,162        $14.11
                                    =========                       =========                         =========
Restricted stock awards vested,
 end of year...................     1,115,229       $10.18          1,290,900            $11.84       1,408,696        $13.00
                                    =========                       =========                         =========

</TABLE>

         At December 31, 1998, 1999 and 2000, 2,685,603,  989,811, and 8,969,424
shares,  respectively,  were available for future grants as either stock options
or restricted stock under the Stock Plan.


                                      F-73

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 14--MANAGEMENT STOCK PLAN (CONTINUED)

         The Company  follows the intrinsic value based method in accounting for
its employee stock-based  compensation plan.  Accordingly,  no compensation cost
has been recognized for its stock option grants.  Had compensation  cost for the
Company's  stock-based plan been determined based on the fair value at the grant
dates for awards  under that plan  consistent  with the method of SFAS No.  123,
"Accounting  for  Stock-Based  Compensation",  the  Company's net income and net
income per share would have decreased to the pro forma amounts  indicated in the
following table.

<TABLE>
<CAPTION>

                                                                        YEARS ENDED DECEMBER 31,
                                                                  -----------------------------------
                                                                    1998          1999          2000
                                                                  --------      --------     --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
------------------------------------------------------------
<S>                                                               <C>           <C>          <C>
Net income                                       As reported      $466,461      $441,731     $439,900
                                                   Pro forma       463,998       435,766      429,730
Net income per share--basic                      As reported      $   2.66      $   2.65     $   2.72
                                                   Pro forma          2.65          2.62         2.66
Net income per share--diluted                    As reported      $   2.65      $   2.64     $   2.72
                                                   Pro forma          2.64          2.61         2.65

</TABLE>

         The fair value of each option  grant is  estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions  used for grants  made in 1998,  1999 and 2000;  risk-free  interest
rates of 5.8  percent in 1998,  5.2  percent in 1999,  and 6.4  percent in 2000;
expected volatility of 29 percent in 1998, 30 percent in 1999, and 44 percent in
2000;  expected  lives  of  6,  5,  and  5  years  for  1998,  1999,  and  2000,
respectively;  and expected  dividend yields of 1.5 percent in 1998, 2.2 percent
in 1999, and 3.5 percent in 2000.

         Effective January 1, 1997, the Company  established a Performance Share
Plan. Eligible  participants may earn performance share awards to be redeemed in
cash  three  years  after the date of grant.  Performance  shares  are linked to
shareholder  value in two ways:  (1) the market  price of the  Company's  common
stock, and (2) return on assets,  a performance  measure closely linked to value
creation.  Eligible participants  generally receive grants of performance shares
annually.  The total number of performance  shares granted under the plan cannot
exceed 600,000. The Company granted 24,900 shares in 1998, 22,000 shares in 1999
and 31,500 shares in 2000. In 1998, 2,400 performance shares were forfeited.  No
performance  shares were  forfeited  in either  1999 or in 2000.  The value of a
performance  share is equal to the market price of the  Company's  common stock.
All  cancelled or  forfeited  performance  shares  become  available  for future
grants.

NOTE 15--FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair  value of a  financial  instrument  is the amount at which the
instrument could be exchanged in a current  transaction between willing parties,
other than in a forced or  liquidation  sale.  All of the fair values  presented
below are as of their  respective  period  ends and have been  made  under  this
definition of fair value unless otherwise disclosed.

         It is  management's  belief  that the fair values  presented  below are
reasonable  based on the valuation  techniques and data available to the Company
as of December 31, 1999 and 2000, as more fully  described  below.  It should be
noted that the  operations  of the Company are managed on a going  concern basis
and not on a liquidation basis. As a result, the ultimate value realized for the
financial instruments  presented could be substantially  different when actually
recognized  over time through the normal course of


                                      F-74

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 15--FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

operations.  Additionally,  a substantial  portion of an institution's  inherent
value is its capitalization and franchise value. Neither of these components has
been given consideration in the presentation of fair values that follow.

         The table  below  presents  the  carrying  value and fair  value of the
specified assets and liabilities held by the Company.

<TABLE>
<CAPTION>

                                                                                       DECEMBER 31,
                                                                ----------------------------------------------------------------
                                                                              1999                                2000
                                                                -----------------------------      -----------------------------
                                                                  CARRYING           FAIR           CARRYING            FAIR
                                                                   VALUE             VALUE            VALUE             VALUE
                                                                -----------       -----------      -----------       -----------
<S>                                                             <C>               <C>              <C>               <C>
ASSETS
   Cash and cash equivalents................................    $ 3,158,133       $ 3,158,133      $ 3,322,979       $ 3,322,979
   Trading account assets...................................        179,935           179,935          339,695           339,695
   Securities available for sale:
      Securities pledged as collateral......................             --                --          593,686           593,686
      Held in portfolio.....................................      3,210,099         3,210,099        3,533,984         3,533,984
   Securities held to maturity..............................         46,526            45,376           23,529            23,302
   Loans, net of allowance for credit losses (1)............     24,298,638        24,016,569       24,269,956        24,475,952
LIABILITIES
   Deposits:
      Noninterest bearing...................................      9,721,340         9,721,340       11,240,493        11,240,493
      Interest bearing......................................     16,535,267        16,536,770       16,042,690        16,042,718
                                                                -----------       -----------      -----------       -----------
        Total deposits......................................     26,256,607        26,258,110       27,283,183        27,283,211
   Borrowed funds...........................................      2,805,553         2,805,125        3,022,907         3,019,884
   Subordinated capital notes...............................        298,000           298,000          200,000           200,000
   UnionBanCal Corporation-obligated mandatorily redeemable
      preferred securities of subsidiary grantor trust......        350,000           280,000          350,000           317,100

-----------
<FN>
(1)      Excludes lease financing.
</FN>
</TABLE>

         The  Company  is also a party  to  financial  instruments  that are not
reflected on the balance sheet but represent  obligations  of the Company in the
normal  course  of  business.  For  information  regarding  the  fair  value  of
off-balance sheet financial instruments, see Note 16.

         The following  methods and assumptions were used to estimate fair value
of each class of financial  instruments  for which it is practicable to estimate
that value.

         CASH  AND CASH EQUIVALENTS: The book value of cash and cash equivalents
is considered a reasonable estimate of fair value.

         TRADING ACCOUNT ASSETS: Trading account assets are short term in nature
and valued at market based on quoted market prices or dealer quotes. If a quoted
market price is not available,  the recorded  amounts are estimated using quoted
market  prices for similar  securities.  Thus,  carrying  value is  considered a
reasonable estimate of fair value for these financial instruments.


                                      F-75

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 15--FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

         SECURITIES:  The fair  value of securities  is  based  on quoted market
prices or dealer quotes.  If a quoted market price is not available,  fair value
is  estimated  using quoted  market  prices for similar  securities.  Securities
available for sale are carried at their aggregate fair value,  while  securities
held to maturity are carried at amortized cost.

         LOANS: The fair value for performing fixed and non-reference rate loans
was  estimated by  discounting  the future cash flows using the current rates at
which similar loans would be made to borrowers  with similar  credit ratings and
for similar remaining maturities and, where available, discount rates were based
on current market rates.

         Loans  that are on  nonaccrual  status  were not  included  in the loan
valuation  methods  discussed  previously.  The fair  value of these  assets was
estimated  assuming  these  loans were sold at their  carrying  value less their
impairment allowance.

         The fair value of performing  mortgage loans was based on quoted market
prices for loans with similar credit and interest rate risk characteristics.

         The fair value of credit  lines is assumed  to  approximate  their book
value.

         NONINTEREST BEARING DEPOSITS:  The  fair  value  of noninterest bearing
deposits is the amount  payable on demand at the reporting  date. The fair value
of the demand deposit intangible has not been estimated.

         INTEREST BEARING DEPOSITS:  The  fair  value  of  savings  accounts and
certain money market  accounts is the amount  payable on demand at the reporting
date.  The fair value of fixed  maturity  certificates  of deposit was estimated
using rates currently being offered on certificates with similar maturities.

         BORROWED FUNDS:  The  book  values  of  federal  funds  purchased   and
securities sold under repurchase  agreements and other short-term borrowed funds
are  assumed  to  approximate  their fair  value due to their  limited  duration
characteristics.  The fair value for  commercial  paper and term  federal  funds
purchased was estimated using market quotes.

         SUBORDINATED  CAPITAL  NOTES:    The  book  values   for  variable-rate
subordinated capital notes are assumed to approximate fair market value.

         TRUST  PREFERRED  SECURITIES:   The  fair  value  of  fixed-rate  trust
preferred securities was estimated using market quotes.

NOTE 16-- DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS WITH OFF-
          BALANCE SHEET RISK

         The  Company  is a party to  certain  derivative  and  other  financial
instruments   that  are  not  reflected  on  the  balance  sheet  but  represent
obligations  or assets of the Company in the normal  course of  business.  These
financial  instruments are used for trading  activities of the Company,  to meet
the needs of  customers,  and to reduce  the impact on the  Company's  operating
results due to market fluctuations in currency or interest rates.

         These financial  instruments  involve, to varying degrees,  elements of
credit and market risk which are not  recognized  on the balance  sheet.  Credit
risk is defined  as the  possibility  that a loss may occur from the  failure of
another  party to perform in  accordance  with the terms of the  contract  which
exceeds  the  value  of the  existing  collateral,  if any.  Market  risk is the
possibility  that future  changes in market  conditions  may make the  financial
instrument less valuable.


                                      F-76

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 16-- DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS WITH OFF-
          BALANCE SHEET RISK (CONTINUED)

         The fair value of the derivative  financial  instruments was calculated
based on quoted market prices where available.  If quoted market prices were not
available,  the Company  used the  estimated  amount it would  receive or pay to
offset or terminate the  agreements at December 31, 1999 and 2000 based upon the
terms of such contracts relative to prevailing interest rates.

 TRADING ACTIVITIES IN DERIVATIVE INSTRUMENTS

         The  following  table  reflects  the  Company's  positions  relating to
trading  activities in derivative  instruments.  Trading activities include both
activities for the Company's own account and for customers. At December 31, 1999
and 2000, the majority of the Company's  derivative  transactions  for customers
are hedged with essentially offsetting contracts with other counterparties.  The
average fair value of derivatives  held or written for trading  purposes  during
the year is not  significant.  The  notional  amount of  derivative  instruments
reflects  the extent of the  Company's  involvement  in these  instruments.  For
interest rate swap, cap and floor agreements,  notional amounts do not represent
exposure to credit or market risk. Notional amounts are not exchanged, but serve
as a point of reference for calculating payments.















                                      F-77

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 16-- DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS WITH OFF-
          BALANCE SHEET RISK (CONTINUED)

         The  following is a summary of derivative  instruments  held or written
for trading purposes.

<TABLE>
<CAPTION>

                                                                             DECEMBER 31,
                                           --------------------------------------------------------------------------------------
                                                             1999                                          2000
                                           ----------------------------------------      ----------------------------------------
                                             NOTIONAL        CREDIT       ESTIMATED        NOTIONAL        CREDIT       ESTIMATED
(DOLLARAS IN THOUSANDS)                       AMOUNTS        RISK(1)     FAIR VALUE         AMOUNTS        RISK(1)     FAIR VALUE
--------------------------------------
<S>                                        <C>              <C>           <C>            <C>              <C>           <C>
HELD OR WRITTEN FOR TRADING PURPOSES
   AND CUSTOMER ACCOMMODATIONS
Foreign exchange forward contracts:
   Commitments to purchase............     $  422,614       $21,914       $  20,520      $  968,876       $ 7,273       $ (54,745)
   Commitments to sell................        560,357         2,725         (19,951)      1,041,029        66,610          58,023
Foreign exchange OTC options:
   Options purchased..................        104,370           204             204         171,637           102             102
   Options written....................        104,370            --            (204)        171,637            --            (102)
Currency swap agreements:
   Commitments to pay.................         36,725         5,338           5,338          19,417         2,310           2,310
   Commitments to receive.............         36,725            --          (5,250)         19,417            --          (2,239)
Interest rate contracts:
   Caps purchased.....................      1,111,622         3,311           3,311       1,547,849         4,261           4,261
   Floors purchased...................        579,610           110             110         884,890         5,789           5,789
   Caps written.......................      1,111,622            --          (3,311)      1,547,849            --          (4,259)
   Floors written.....................        579,610            --            (110)        884,890            --          (5,789)
   Swap contracts:
      Pay variable/receive variable...         40,000            88              --              --            --              --
      Pay fixed/receive variable......      1,107,472        13,815           7,983       2,124,058         3,025         (47,006)
      Pay variable/receive fixed......      1,107,472         6,316          (6,402)      2,124,058        54,671          61,881

-----------
<FN>
(1)      Credit risk amounts reflect the replacement cost for those contracts in
         a gain position in the event of default.
</FN>
</TABLE>

         ASSET AND LIABILITY MANAGEMENT DERIVATIVE INSTRUMENTS

         Derivative   positions   are  integral   components  of  the  Company's
designated asset and liability  management  activities.  Therefore,  the Company
does  not  believe  it  is  meaningful  to  separately  analyze  the  derivative
components  of  its  risk  management   activities  in  isolation  from  related
positions.  The Company uses interest rate derivative instruments as part of its
management  of asset and  liability  positions.  Derivatives  are used to manage
interest  rate risk  relating  to  specified  groups of assets and  liabilities,
primarily  LIBOR based  commercial  loans and trust  preferred  securities.  The
Company uses foreign currency  forward  contracts as a means of managing foreign
exchange rate risk associated with assets or liabilities  denominated in foreign
currencies.

         The  following  table  reflects   summary   information  on  derivative
contracts used to hedge or modify the Company's risk as of December 31, 1999 and
2000.  Amounts  included in the fair value column do not include gains or losses
from changes in the value of the  underlying  asset or liability  being  hedged.
Notional

                                      F-78

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 16-- DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS WITH OFF-
          BALANCE SHEET RISK (CONTINUED)

amounts are not  exchanged,  but serve as a point of reference  for  calculating
payments. For interest rate swap, cap and floor agreements,  notional amounts do
not represent exposure to credit or market risk.

<TABLE>
<CAPTION>

                                                                             DECEMBER 31,
                                  -------------------------------------------------------------------------------------------------
                                                   1999                                               2000
                                  ----------------------------------------------   ------------------------------------------------
                                    NOTIONAL  UNAMORTIZED   CREDIT    ESTIMATED     NOTIONAL    UNAMORTIZED    CREDIT    ESTIMATED
                                    AMOUNTS     PREMIUM     RISK(1)   FAIR VALUE    AMOUNTS       PREMIUM      RISK(1)   FAIR VALUE
                                                  PAID                                              PAID
(DOLLARS IN THOUSANDS)                         (RECEIVED)                                        (RECEIVED)
-----------------------------     ----------  -----------   -------   ----------   ----------  -----------     -------   ----------
<S>                               <C>            <C>        <C>        <C>        <C>              <C>       <C>         <C>
HELD FOR ASSET AND LIABILITY
   MANAGEMENT PURPOSES
Foreign exchange forward
   contracts:
   Commitments to purchase.       $  213,025     $   --     $1,468     $    401   $  157,348       $   --    $ 2,215     $   550
   Commitments to sell.....           32,832         --         98           48       35,858           --          6        (291)
Currency swap agreements:
   Commitments to pay......           24,464         --         --      (3,960)       23,496           --         --        (815)
Interest rate contracts:
   Caps purchased..........               --         --         --                        --           --         --
   Floors purchased........        2,300,000      3,576      1,084      (2,491)    1,350,000        7,945     24,514      16,569
   Caps written............               --         --         --           --           --           --         --          --
   Floors written..........        1,450,000         --         --         (65)      500,000           --         --      (2,117)
   Swap contracts:
      Pay variable/receive
        fixed..............          900,000         --        106     (10,165)    1,200,000           --     19,653      17,941

-----------
<FN>
(1)      Credit risk amounts reflect the replacement cost for those contracts in
         a gain position in the event of default.
</FN>
</TABLE>


         OTHER FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

         Commitments to extend credit are legally binding  agreements to lend to
a customer provided there are no violations of any condition  established in the
contract.  Commitments have fixed expiration dates or other termination  clauses
and may require payment of a fee or maintenance of compensatory  balances.  Such
fees  are  deferred  and,  upon  partial  or full  exercise  of the  commitment,
amortized over the life of the loan or, if exercise is deemed remote,  amortized
over the commitment period. Since many of the commitments are expected to expire
without being drawn upon, the contractual  amounts do not necessarily  represent
future cash  requirements.  With  respect to  commitments  to extend  credit and
letters  of  credit,  the  Company's  exposure  to  credit  risk in the event of
nonperformance  by customers is represented by the  contractual  amount of those
instruments.

         Standby  letters of credit are  provided to  customers  to assure their
performance to a third party,  generally in the production of goods and services
or under contractual commitments in the financial markets. Commercial letters of
credit  are  issued  to  customers  to  facilitate  foreign  or  domestic  trade
transactions.  The  Company  charges  fees  for  the  issuance  of  standby  and
commercial  letters of credit.  The majority of these types of commitments  have
terms of one year or less and any fees  charged are  recognized  as  noninterest
income upon  extension of the  commitment.  The credit risk  involved in issuing
letters of credit is  essentially  the same as that  involved in extending  loan
facilities to customers and is  represented by the  contractual  amount of those
instruments.  When deemed necessary,  the Company holds  appropriate  collateral
supporting those commitments.


                                      F-79

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 16-- DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS WITH OFF-
          BALANCE SHEET RISK (CONTINUED)

         The Company uses the same credit  underwriting  policies in granting or
accepting such  commitments or contingent  obligations as it does for on-balance
sheet instruments,  by evaluating  customers' credit  worthiness.  The amount of
collateral  obtained,  if deemed  necessary  by the Company  upon  extension  of
credit, is based on management's  evaluation of the customer.  The nature of the
collateral  varies but may  include  deposits  held in  financial  institutions,
marketable securities,  accounts receivable,  inventory, property and equipment,
and real  estate.  The Company also  provides  for  probable  losses from either
commitments to extend credit or standby  letters of credit as a component of its
evaluation  in  determining  the adequacy of its allowance for credit losses and
resulting level of provision charged against current period earnings.

         The Company's  pricing of these  financial  instruments is based on the
credit quality and other covenants or requirements. Management believes that the
current fees assessed on these  off-balance  sheet items represent  market rates
that would be charged for similar agreements.  Based on this belief, the Company
feels that the carrying  amounts are  reasonable  estimates of the fair value of
these  financial  instruments.  At  December  31,  1999  and  2000,  fair  value
represents  management's  estimate of the unamortized fee income associated with
these  instruments.  The following is a summary of other  financial  instruments
with off-balance sheet risk.

<TABLE>
<CAPTION>

                                                                         DECEMBER 31,
                                                        -----------------------------------------------------
                                                                 1999                          2000
                                                        -----------------------      ------------------------
                                                          CONTRACTUAL     FAIR       CONTRACTUAL       FAIR
(DOLLARS IN THOUSANDS)                                      AMOUNTS       VALUE        AMOUNTS         VALUE
-----------------------------------------------         -------------   -------      -----------      -------
<S>                                                     <C>             <C>          <C>              <C>
Commitments to extend credit...................         $16,022,479     $62,947      $15,330,751      $54,942
Standby letters of credit......................           2,422,032       7,761        2,742,788        7,960
Other letters of credit........................             352,499          --          272,076           --
</TABLE>

         The Company conducts securities lending  transactions for institutional
customers as a fully disclosed agent,  and, at times,  indemnifies its customers
against  counterparty  default.  All lending  transactions  are  collateralized,
primarily by cash. The amount of securities lent with indemnification was $1,023
million and $1,218  million at December  31,  1999 and 2000,  respectively.  The
market value of the associated  collateral was $1,043 million and $1,247 million
at December 31, 1999 and 2000, respectively.

NOTE 17--RESTRICTIONS ON CASH AND DUE FROM BANKS, SECURITIES, LOANS AND
         DIVIDENDS

         Federal Reserve Board regulations  require the Bank to maintain reserve
balances based on the types and amounts of deposits  received.  Average  reserve
balances  were  approximately  $202 million and $201 million for the years ended
December 31, 1999 and 2000, respectively.

         As of December  31, 1999 and 2000,  securities  carried at $1.7 billion
and $1.8 billion and loans of $6.9 billion and $6.2 billion, respectively,  were
pledged as collateral  for  borrowings,  to secure  public and trust  department
deposits, and for repurchase agreements as required by contract or law.

         The Federal  Reserve Act  restricts the extension of credit by the Bank
to BTM and  affiliates  and to the Company  and its  non-bank  subsidiaries  and
requires that such loans be secured by certain types of collateral.  At December
31, 2000,  $132.9  million  remained  outstanding  on eight  Bankers  Commercial



                                      F-80

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000

NOTE 17--RESTRICTIONS ON CASH AND DUE FROM BANKS, SECURITIES, LOANS AND
         DIVIDENDS (CONTINUED)

Corporation  notes  payable  to  the  Bank.  The  respective  notes  were  fully
collateralized with equipment leases pledged by Bankers Commercial Corporation.

         The payment of  dividends  by the Bank to the Company is subject to the
approval of the Office of the  Comptroller of the Currency (OCC) if the total of
all dividends declared in any calendar year exceeds certain calculated  amounts.
The payment of dividends is also limited by minimum capital requirements imposed
on national banks by the OCC. At December 31, 2000, the Bank could have declared
dividends aggregating $336 million without prior regulatory approval.

NOTE 18--REGULATORY CAPITAL REQUIREMENTS

         The  Company  and the Bank are  subject to various  regulatory  capital
requirements  administered  by the  federal  banking  agencies.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory,  and possibly
additional discretionary,  actions by regulators that, if undertaken, could have
a direct material  effect on the Company's  Consolidated  Financial  Statements.
Under  capital  adequacy  guidelines  and the  regulatory  framework  for prompt
corrective  action,  the  Company  and  the  Bank  must  meet  specific  capital
guidelines  that  involve  quantitative  measures  of the  Company's  and Bank's
assets,  liabilities,  and certain  off-balance  sheet items as calculated under
regulatory  accounting  practices.  The capital  amounts  and the Bank's  prompt
corrective action  classification  are also subject to qualitative  judgments by
the regulators  about  components,  risk  weightings  and other factors.  Prompt
corrective action provisions are not applicable to Bank Holding Companies.

         Quantitative  measures  established  by  regulation  to ensure  capital
adequacy require the Company and the Bank to maintain minimum amounts and ratios
(set forth in the table  below) of total and Tier 1 capital  (as  defined in the
regulations)  to  risk-weighted  assets (as  defined)  and of Tier 1 capital (as
defined) to quarterly average assets (as defined).  Management  believes,  as of
December  31,  1999 and  2000,  that the  Company  and the Bank met all  capital
adequacy requirements to which they are subject.

         On  February  19,  1999,  the  Company  issued  $350  million  of trust
preferred  securities,  which  qualify  as  Tier 1  capital.  See  Note 12 for a
complete description of these securities.

         As of December 31, 1999 and 2000, the most recent notification from the
OCC categorized the Bank as "well  capitalized"  under the regulatory  framework
for prompt corrective action. To be categorized as "well capitalized",  the Bank
must maintain minimum total risk-based,  Tier 1 risk-based,  and Tier 1 leverage
ratios as set forth in the  following  table.  There are no conditions or events
since  that  notification  that  management  believes  have  changed  the Bank's
category.


                                      F-81

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 18--REGULATORY CAPITAL REQUIREMENTS (CONTINUED)

         The Company's and the Bank's  capital  amounts and ratios are presented
in the following tables.

<TABLE>
<CAPTION>

                                                                                                     FOR CAPITAL
                                                                             ACTUAL               ADEQUACY PURPOSES
                                                                     ----------------------      -------------------
(DOLLARS IN THOUSANDS)                                                 AMOUNT        RATIO         AMOUNT     RATIO
-------------------------------------------------------------        ----------      ------      -----------  ------
<S>                                                                  <C>             <C>       <C>            <C>
CAPITAL RATIOS FOR THE COMPANY:
As of December 31, 1999:
Total capital (to risk-weighted assets)......................        $3,925,684      11.79%    >  $2,663,054  >  8.0%
                                                                                               -              -
Tier 1 capital (to risk-weighted assets).....................         3,308,912       9.94     >   1,331,527  >  4.0
                                                                                               -              -
Tier 1 capital (to quarterly average assets)(1)..............         3,308,912      10.10     >   1,310,614  >  4.0
                                                                                               -              -
As of December 31, 2000
Total capital (to risk-weighted assets)......................        $4,091,391      12.07%    >  $2,712,032  >  8.0%
                                                                                               -              -
Tier 1 capital (to risk-weighted assets).....................         3,471,289      10.24     >   1,356,016  >  4.0
                                                                                               -              -
Tier 1 capital (to quarterly average assets)(1)..............         3,471,289      10.19     >   1,363,033  >  4.0
                                                                                               -              -
-----------
<FN>
(1)      Excludes certain intangible assets.
</FN>
</TABLE>

<TABLE>
<CAPTION>

                                                                                                            TO BE WELL CAPITALIZED
                                                                                     FOR CAPITAL            UNDER PROMPT CORRECTIVE
                                                               ACTUAL              ADEQUACY PURPOSES          ACTION PROVISIONS
                                                          -------------------     --------------------      ----------------------
(DOLLARS IN THOUSANDS)                                     AMOUNT       RATIO        AMOUNT      RATIO         AMOUNT       RATIO
--------------------------------------------------        ----------    -----     -----------    -----      -----------     ------
<S>                                                       <C>           <C>     <C>           <C>        <C>             <C>
CAPITAL RATIOS FOR THE BANK:
As of December 31, 1999:
Total capital (to risk-weighted assets)...........        $3,614,651    11.00%  > $2,628,046  >  8.0%    >  $3,285,058   >  10.0%
                                                                                -             -          -               -
Tier 1 capital (to risk-weighted assets)..........         3,103,324     9.45   >  1,314,023  >  4.0     >   1,971,035   >   6.0
                                                                                -             -          -               -
Tier 1 capital (to quarterly average assets)(1)...         3,103,324     9.55   >  1,300,283  >  4.0     >   1,625,354   >   5.0
                                                                                -             -          -               -
As of December 31, 2000
Total capital (to risk-weighted assets)...........        $3,670,660    11.01%  > $2,667,340  >  8.0%    >  $3,334,175   >  10.0%
                                                                                -             -          -               -
Tier 1 capital (to risk-weighted assets)..........         3,157,516     9.47   >  1,333,670  >  4.0     >   2,000,505   >   6.0
                                                                                -             -          -               -
Tier 1 capital (to quarterly average assets)(1)...         3,157,516     9.24   >  1,366,949  >  4.0     >   1,708,686   >   5.0
                                                                                -             -          -               -
-----------
<FN>
(1)      Excludes certain intangible assets.
</FN>
</TABLE>


NOTE 19--EARNINGS PER SHARE

         Basic EPS is computed by dividing net income after preferred  dividends
by the weighted average number of common shares  outstanding  during the period.
For all periods presented,  there were no dividends on preferred stock.  Diluted
EPS  is  computed  based  on  the  weighted  average  number  of  common  shares
outstanding adjusted for common stock equivalents,  which include stock options.
The following



                                      F-82

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 19--EARNINGS PER SHARE (CONTINUED)

table  presents a  reconciliation  of basic and  diluted EPS for the years ended
December 31, 1998, 1999 and 2000:

<TABLE>
<CAPTION>

                                                                                      DECEMBER 31,
                                                        ----------------------------------------------------------------------------
                                                                1998                       1999                       2000
                                                        ----------------------     ----------------------      ---------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)            BASIC        DILUTED       BASIC         DILUTED       BASIC       DILUTED
-------------------------------------------------       --------     ---------     --------      --------      --------    ---------
<S>                                                     <C>           <C>          <C>           <C>           <C>          <C>
Net income.......................................       $466,461      $466,461     $441,731      $441,731      $439,900     $439,900
Weighted average common shares outstanding.......        175,127       175,127      166,382       166,382       161,605      161,605
Additional shares due to:
   Assumed conversion of dilutive stock options..             --           610           --           767            --          384
                                                        --------      --------     --------      --------      --------     --------
Adjusted weighted average common shares outstanding      175,127       175,737      166,382       167,149       161,605      161,989
                                                        ========      ========     ========      ========      ========     ========
Net income per share.............................       $   2.66      $   2.65     $   2.65      $   2.64      $   2.72     $   2.72
                                                        ========      ========     ========      ========      ========     ========
</TABLE>

         Options to  purchase  519,600  shares of common  stock at $35 per share
were  outstanding  but not included in the  computation  of diluted EPS in 1998.
Options to purchase 1,500 shares of common stock at $39.25 per share and options
to purchase  23,000 shares of common stock at $44.56 per share were  outstanding
but not included in the computation of diluted EPS in 1999.  Options to purchase
4,040,244  shares of common stock with the range from $27.56 to $44.56 per share
were  outstanding  but not included in the  computation  of diluted EPS in 2000.
These options to purchase shares were not included in the computation of diluted
EPS in each of 1998, 1999, and 2000 because they were anti-dilutive

NOTE 20--ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

         The  following  is a summary of the  components  of  accumulated  other
comprehensive income (loss):

<TABLE>
<CAPTION>

                                                                FOREIGN                         NET UNREALIZED GAINS (LOSSES)
                                                         CURRENCY TRANSLATION                  ON SECURITIES AVAILABLE FOR SALE
                                                   -------------------------------------     -------------------------------------
                                                       YEARS ENDED DECEMBER 31,                  YEARS ENDED DECEMBER 31,
                                                   -------------------------------------     -------------------------------------
(DOLLARS IN THOUSANDS)                                1998          1999           2000       1998           1999           2000
---------------------------------------------      ---------      --------      --------     -------      ---------      ---------
<S>                                                <C>            <C>           <C>          <C>           <C>           <C>
Beginning balance............................      $(12,458)      $(9,651)      $ (8,713)    $19,886       $ 29,109      $(32,548)
Change during the year.......................         2,807           938         (2,478)      9,223        (61,657)       74,427
                                                   ---------      --------      --------     -------       --------      --------
Ending balance...............................      $ (9,651)      $(8,713)      $(11,191)    $29,109       $(32,548)     $ 41,879
                                                   ========       =======       ========     =======       ========      ========
</TABLE>

<TABLE>
<CAPTION>
                                                          MINIMUM PENSION                          ACCUMULATED OTHER
                                                        LIABILITY ADJUSTMENT                  COMPREHENSIVE INCOME (LOSS)
                                                   -----------------------------------     -------------------------------------
                                                      YEARS ENDED DECEMBER 31,                 YEARS ENDED DECEMBER 31,
                                                   -----------------------------------     -------------------------------------
(DOLLARS IN THOUSANDS)                               1998         1999          2000        1998           1999           2000
---------------------------------------------      --------     -------         ------     -------      --------       ---------
<S>                                                <C>         <C>              <C>        <C>          <C>            <C>
Beginning balance............................      $     --    $ (1,748)        $(689)     $ 7,428      $ 17,710       $(41,950)
Change during the year.......................        (1,748)      1,059          (114)      10,282       (59,660)        71,835
                                                   --------    --------         -----      -------      --------       --------
Ending balance...............................      $ (1,748)   $   (689)        $(803)     $17,710      $(41,950)      $ 29,885
                                                     ========    ========         =====      =======      ========       ========
</TABLE>



                                      F-83

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 21--CONTINGENCIES

         The Company is subject to various pending and threatened  legal actions
that arise in the normal course of business.  The Company maintains reserves for
losses from legal actions that are both probable and  estimable.  In the opinion
of  management,  the  disposition  of claims  currently  pending will not have a
material  adverse  effect on the  Company's  financial  position  or  results of
operations.

NOTE 22--TRANSACTIONS WITH AFFILIATES

         The  Company  had,   and  expects  to  have  in  the  future,   banking
transactions and other  transactions in the ordinary course of business with BTM
and with its affiliates. During 1998, 1999 and 2000, such transactions included,
but were not limited to, origination,  participation,  servicing and remarketing
of loans and leases, purchase and sale of acceptances, interest rate derivatives
and foreign exchange transactions, funds transfers,  custodianships,  electronic
data  processing,   investment  advice  and  management,   deposits  and  credit
examination, and trust services. In the opinion of management, such transactions
were made at prevailing  rates,  terms,  and  conditions and do not involve more
than the normal risk of collectibility or present other unfavorable features. In
addition,  some compensation for services rendered to the Company is paid to the
expatriate  officers  from BTM,  and  reimbursed  by the  Company to BTM under a
service agreement.

NOTE 23--BUSINESS SEGMENTS

         The Company is organized  based on the  products  and services  that it
offers and operates in four principal areas:

         o        The Community  Banking and Investment  Services Group offers a
                  full range of banking  services,  primarily to individuals and
                  small  businesses,  delivered  through a tri-state  network of
                  branches and ATM's.  These services include  commercial loans,
                  mortgages  and home equity  lines of credit,  consumer  loans,
                  deposit  services and cash  management  as well as  fiduciary,
                  private banking,  investment and asset management services for
                  individuals and institutions.

         o        The Commercial  Financial  Services Group  primarily  provides
                  tailored  credit  and  cash   management   services  to  large
                  corporate  and  middle  market  companies.   Services  include
                  commercial loans, asset based lending,  commercial real estate
                  lending,  leasing and a comprehensive product array of deposit
                  and cash management services.

         o        The   International   Banking  Group  provides   trade-finance
                  products to banks, and extends primarily  short-term credit to
                  corporations  engaged in international  business.  The group's
                  revenue predominately relates to foreign customers.

         o        The Global  Markets  Group  manages the  Company's  securities
                  portfolio,  trading  operations,  wholesale funding needs, and
                  interest rate and liquidity risk.

         The information,  set forth in the table on page F-86 reflects selected
income  statement items and a selected  balance sheet item by business unit. The
information  presented  does  not  necessarily  represent  the  business  units'
financial  condition  and  results  of  operations  as if they were  independent
entities.  Unlike  financial  accounting,  there  is no  authoritative  body  of
guidance for management  accounting  equivalent to generally accepted accounting
principles.  Consequently,  reported results are not necessarily comparable with
those presented by other companies.


                                      F-84

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 23--BUSINESS SEGMENTS (CONTINUED)

         The  information in this table is derived from the internal  management
reporting  system used by management to measure the  performance of the segments
and the Company overall.  The management  reporting system assigns balance sheet
and  income  statement  items  to each  segment  based  on  internal  management
accounting policies. Net interest income is determined by the Company's internal
funds  transfer  pricing  system,  which assigns a cost of funds or a credit for
funds to  assets or  liabilities  based on their  type,  maturity  or  repricing
characteristics.  Noninterest  income and  expense  directly  attributable  to a
segment  are  assigned  to  that  business,  other  than  restructuring  charges
(credits). Indirect costs, such as overhead, operations, and technology expense,
are  allocated  to the  segments  based on  studies of  billable  unit costs for
product or data processing.  Under the Company's risk-adjusted return on capital
(RAROC) methodology, credit expense is charged to businesses based upon expected
losses  arising  from credit  risk.  In addition,  the  attribution  of economic
capital  is  related  to  unexpected  losses  arising  from  credit,  market and
operational risks.

         "Other" is comprised  of  goodwill,  certain  parent  company  non-bank
subsidiaries,  the  elimination  of the fully  taxable-equivalent  amounts,  the
allowance  and related  provision  for credit  losses in excess of that ascribed
through the  Company's  RAROC  methodology,  the  earnings  associated  with the
unallocated equity capital, and the residual costs of support groups, as well as
certain nonrecurring items such as restructuring charges (credits). In addition,
it  includes  two  units,  the  Credit  and  Compliance  Group,   which  manages
nonperforming assets, and the Pacific Rim Group, which offers financial products
to Asian-owned  subsidiaries located in the U.S. On an individual basis, none of
the items in "Other" are significant to the Company's business.















                                      F-85


<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 23--BUSINESS SEGMENTS (CONTINUED)

<TABLE>
<CAPTION>

                                    COMMUNITY BANKING                     COMMERCIAL FINANCIAL               INTERNATIONAL
                               AND INVESTMENT SERVICES GROUP                 SERVICES GROUP                  BANKING GROUP
                              ------------------------------------   -----------------------------   -----------------------------
                                     YEARS ENDED DECEMBER 31,           YEARS ENDED DECEMBER 31,        YEARS ENDED DECEMBER 31,
                              ------------------------------------   -----------------------------   -----------------------------
                                    1998        1999        2000       1998       1999      2000       1998      1999         2000
                              ----------   ----------   ----------   --------   --------  --------   --------   --------   -------
<S>                           <C>          <C>          <C>          <C>        <C>       <C>        <C>        <C>        <C>

RESULTS OF OPERATIONS
  (DOLLARS IN THOUSANDS):
Net interest income........   $  704,783   $  697,113   $  731,741   $462,271   $596,082  $719,202   $ 51,450   $ 43,824   $35,129
Noninterest income.........      333,345      370,917      412,197    109,819    133,994   173,089     57,750     56,201    60,352
                              ----------   ----------   ----------   --------   --------  --------   --------   --------   -------
Total revenue..............    1,038,128    1,068,030    1,143,938    572,090    730,076   892,291    109,200    100,025    95,481
Noninterest expense(1).....      742,477      760,163      721,907    250,651    284,680   299,963     58,650     52,275    55,558
Credit expense (income)....       63,854       53,410       48,582     73,329     98,916   120,619     14,086     13,948     7,268
                              ----------   ----------   ----------   --------   --------  --------   --------   --------   -------
Income (loss) before income      231,797      254,457      373,449    248,110    346,480   471,709     36,464     33,802    32,655
   tax expense (benefit)...
Income tax expense (benefit)      91,583       98,375      142,844     96,268    127,175   168,137     13,684     12,927    12,491
                              ----------   ----------   ----------   --------   --------  --------   --------   --------   -------
Net income.................   $  140,214   $  156,082   $  230,605   $151,842   $219,305  $303,572   $ 22,780   $ 20,875   $20,164
                              ==========   ==========   ==========   ========   ========  ========   ========   ========   =======
Total assets (DOLLARS IN
   MILLIONS):..............   $   10,604   $    9,148   $    9,441   $ 13,543    $17,420   $18,259   $  1,717   $  1,555    $1,571
                              ==========   ==========   ==========   ========   ========  ========   ========   ========   =======
<CAPTION>


                                         GLOBAL                                                         UNIONBANCAL
                                      MARKETS GROUP                     OTHER                           CORPORATION
                                YEARS ENDED DECEMBER 31,        YEARS ENDED DECEMBER 31,             YEARS ENDED DECEMBER 31,
                               ---------------------------   --------------------------------   ------------------------------------
                                 1998      1999      2000       1998        1999        2000         1998         1999         2000
                               ------    -------   -------   --------   --------   ----------   ----------   ----------   ----------
<S>                            <C>       <C>       <C>       <C>        <C>         <C>         <C>          <C>          <C>

RESULTS OF OPERATIONS
   (DOLLARS
IN THOUSANDS):
Net interest income.......     $41,972   $60,884   $42,976   $ 57,747   $  17,930   $  55,392   $1,318,223   $1,415,833   $1,584,440
Noninterest income........      18,614    15,954    (7,083)    14,003       9,693       8,625      533,531      586,759      647,180

Total revenue.............      60,586    76,838    35,893     71,750      27,623      64,017    1,851,754    2,002,592    2,231,620
Noninterest expense(1)....      24,709    20,826    15,757     58,731     164,029      37,000    1,135,218    1,281,973    1,130,185
Credit expense (income)...          --        --        --   (106,269)   (101,274)    263,531       45,000       65,000      440,000

Income (loss) before            35,877    56,012    20,136    119,288     (35,132)   (236,514)     671,536      655,619      661,435
   income tax expense
   (benefit)..............
Income tax expense              13,958    21,517     7,702    (10,418)    (46,106)   (109,639)     205,075      213,888      221,535
   (benefit)..............

Net income................     $21,919   $34,495   $12,434   $129,706   $  10,974   $(126,875)  $  466,461   $  441,731     $439,900

Total assets (DOLLARS IN       $ 4,479   $ 3,776   $ 4,662   $  1,933   $   1,786   $   1,229   $   32,276   $   33,685   $   35,162
   MILLIONS):.............

-----------
<FN>

(1)      "Other" includes 3rd quarter 1999  restructuring  charge of $85.0 million  ($55.2 million,  net of tax) and 2000
         restructuring credits of $19.0 million ($11.8 million, net of taxes).

</FN>
</TABLE>



                                      F-86


<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 24--CONDENSED UNIONBANCAL CORPORATION UNCONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS


                                                                                               DECEMBER 31,
                                                                                        --------------------------
(DOLLARS IN THOUSANDS)                                                                     1999            2000
--------------------------------------------------------------------------------        ----------      ----------
<S>                                                                                     <C>             <C>
ASSETS
   Cash and cash equivalents....................................................          $167,171        $126,371
   Investment in and advances to subsidiaries...................................         3,510,326       3,778,355
   Loans........................................................................                --           4,074
   Other assets.................................................................            17,072          10,311
                                                                                        ----------      ----------
      Total assets..............................................................        $3,694,569      $3,919,111
                                                                                        ==========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
   Commercial paper.............................................................           $97,985         $99,969
   Other liabilities............................................................            48,291          46,752
   Subordinated capital notes...................................................           200,000         200,000
   Junior subordinated debt payable to subsidiary grantor trust.................           360,825         360,825
                                                                                        ----------      ----------
      Total liabilities.........................................................           707,101         707,546
   Shareholders' equity.........................................................         2,987,468       3,211,565
                                                                                        ----------      ----------
      Total liabilities and shareholders' equity................................        $3,694,569      $3,919,111
                                                                                        ==========      ==========
</TABLE>












                                      F-87


<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 24--CONDENSED UNIONBANCAL CORPORATION UNCONSOLIDATED FINANCIAL STATEMENTS
         (CONTINUED)

<TABLE>
<CAPTION>

CONDENSED STATEMENTS OF INCOME


                                                                                                   YEARS ENDED DECEMBER 31,
                                                                                             -----------------------------------
(DOLLARS IN THOUSANDS)                                                                          1998          1999         2000
---------------------------------------------------------------------------------------      --------      --------     --------
<S>                                                                                          <C>           <C>          <C>
INCOME:
   Dividends from bank subsidiary......................................................       $98,159      $227,099     $283,471
   Dividends from nonbank subsidiaries.................................................        23,000            --       10,000
   Interest income on advances to subsidiaries and deposits in bank....................        11,744        15,120       18,850
   Other income........................................................................           404         1,292          458
                                                                                             --------      --------     --------
      Total income.....................................................................       133,307       243,511      312,779
                                                                                             --------      --------     --------
EXPENSE:
   Interest expense....................................................................        15,573        41,736       47,172
   Other expense, net..................................................................         2,706         3,203        3,313
                                                                                             --------      --------     --------
   Total expense.......................................................................        18,279        44,939       50,485
                                                                                             --------      --------     --------
   Income before income taxes and equity in undistributed net income of subsidiaries...       115,028       198,572      262,294
   Provision for credit losses.........................................................            --            --          (25)
   Income tax benefit..................................................................        (2,346)      (11,266)     (11,935)
                                                                                             --------      --------     --------
   Income before equity in undistributed net income of subsidiaries....................       117,374       209,838      274,204
   Equity in undistributed net income (loss) of subsidiaries:
      Bank subsidiary..................................................................       360,738       208,699      138,105
      Nonbank subsidiaries(1)..........................................................       (11,651)       23,194       27,591
                                                                                             --------      --------     --------
NET INCOME.............................................................................      $466,461      $441,731     $439,900
                                                                                             ========      ========     ========
-----------
<FN>
(1)      In 1998, the amount represents dividends distributed by nonbank
         subsidiaries in excess of their 1998 net income.
</FN>
</TABLE>



                                      F-88

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000


NOTE 24--CONDENSED UNIONBANCAL CORPORATION UNCONSOLIDATED FINANCIAL STATEMENTS
         (CONTINUED)

<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS



                                                                                                  YEARS ENDED DECEMBER 31,
                                                                                        ----------------------------------------
(DOLLARS IN THOUSANDS)                                                                    1998            1999            2000
---------------------------------------------------------------------------------       --------        --------        --------
<S>                                                                                     <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income....................................................................       $466,461        $441,731        $439,900
   Adjustments to reconcile net income to net cash provided by operating
      activities:
      Equity in undistributed net income of subsidiaries.........................       (349,087)       (231,893)       (165,696)
      Provision for credit losses................................................             --              --              25
      Other, net.................................................................         (6,007)            839           7,953
                                                                                        --------        --------        --------
        Net cash provided by operating activities................................        111,367         210,677         282,182
                                                                                        --------        --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Advances to subsidiaries......................................................        (34,747)        (79,370)        (43,704)
   Repayment of advances to subsidiaries.........................................         18,088           8,766          11,903
                                                                                        --------        --------        --------
        Net cash used by investing activities....................................        (16,659)        (70,604)        (31,801)
                                                                                        --------        --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net increase (decrease) in short term borrowings..............................         99,958          (1,973)          1,984
   Maturity and redemption of subordinated capital notes and long term debt......        (50,000)             --              --
   Proceeds from issuance of junior subordinated debt payable to subsidiary
      grantor trust..............................................................             --         360,825              --
   Payments of cash dividends....................................................        (98,160)       (127,119)       (162,575)
   Repurchase of common stock....................................................             --        (328,662)       (130,642)
   Other, net....................................................................         10,598              51              52
                                                                                        --------        --------        --------
        Net cash used by financing activities....................................        (37,604)        (96,878)       (291,181)
                                                                                        --------        --------        --------
Net increase (decrease) in cash and due from banks...............................         57,104          43,195         (40,800)
Cash and due from banks at beginning of year.....................................         66,872         123,976         167,171
                                                                                        --------        --------        --------
Cash and due from banks at end of year...........................................       $123,976        $167,171        $126,371
                                                                                        ========        ========        ========
CASH PAID (RECEIVED) DURING THE YEAR FOR:
   Interest......................................................................       $ 16,056        $ 35,828        $ 44,327
   Income taxes..................................................................         (4,836)            137          26,704
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Dividends declared but unpaid.................................................       $ 33,300        $ 41,172        $ 39,824
</TABLE>


                                      F-89

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1999, AND 2000

NOTE 25--SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         Unaudited quarterly results are summarized as follows:

<TABLE>
<CAPTION>


                                                                                    1999 QUARTERS ENDED
                                                                   -----------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                      MARCH 31      JUNE 30        SEPTEMBER 30       DECEMBER 31
------------------------------------------------------------       --------     --------        ------------       -----------
<S>                                                                <C>          <C>                <C>               <C>
Interest income.............................................       $521,167     $530,978           $550,277          $572,348
Interest expense............................................        181,346      183,815            190,264           203,512
                                                                   --------     --------           --------          --------
Net interest income.........................................        339,821      347,163            360,013           368,836
Provision for credit losses.................................          5,000       10,000             20,000            30,000
Noninterest income..........................................        139,308      144,798            148,349           154,304
Noninterest expense.........................................        301,164      305,229            384,298           291,282
                                                                   --------     --------           --------          --------
Income before income taxes..................................        172,965      176,732            104,064           201,858
Income tax expense..........................................         54,470       62,005             32,483            64,930
                                                                   --------     --------           --------          --------
Net income..................................................       $118,495     $114,727           $ 71,581          $136,928
                                                                   ========     ========           ========          ========
Net income per common share--basic..........................       $   0.69     $   0.70           $   0.43          $   0.83
                                                                   ========     ========           ========          ========
Net income per common share--diluted........................       $   0.69     $   0.69           $   0.43          $   0.83
                                                                   ========     ========           ========          ========
Dividends per share(1)......................................       $   0.19     $   0.19           $   0.19          $   0.25
                                                                   ========     ========           ========          ========
</TABLE>



<TABLE>
<CAPTION>


                                                                                     2000 QUARTERS ENDED
                                                                   -----------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                      MARCH 31      JUNE 30        SEPTEMBER 30       DECEMBER 31
------------------------------------------------------------       --------     --------        ------------       -----------
<S>                                                                <C>          <C>                <C>               <C>
Interest income.............................................       $597,816     $626,383           $640,481          $636,400
Interest expense............................................        212,294      230,091            236,496           237,759
                                                                   --------     --------           --------          --------
Net interest income.........................................        385,522      396,292            403,985           398,641
Provision for credit losses.................................         40,000       70,000             80,000           250,000
Noninterest income..........................................        152,010      173,070            168,928           153,172
Noninterest expense.........................................        256,038      282,319            291,378           300,450
                                                                   --------     --------           --------          --------
Income before income taxes..................................        241,494      217,043            201,535             1,363
Income tax expense (benefit)................................         83,023       75,628             69,959            (7,075)
                                                                   --------     --------           --------          --------
Net income..................................................       $158,471     $141,415           $131,576            $8,438
                                                                   ========     ========           ========          ========
Net income per common share--basic..........................       $   0.97     $   0.87           $   0.82          $   0.05
                                                                   ========     ========           ========          ========
Net income per common share--diluted........................       $   0.96     $   0.87           $   0.82          $   0.05
                                                                   ========     ========           ========          ========
Dividends per share(1)......................................       $   0.25     $   0.25           $   0.25          $   0.25
                                                                   ========     ========           ========          ========
-----------
<FN>
(1)      Dividends per share are based on the Company's common stock outstanding
         as of the declaration date.
</FN>
</TABLE>



                                      F-90

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                              MANAGEMENT STATEMENT



         The  management  of  UnionBanCal  Corporation  is  responsible  for the
preparation,  integrity,  and  fair  presentation  of  its  published  financial
statements  and all other  information  presented  in this  annual  report.  The
financial statements have been prepared in accordance with accounting principles
generally  accepted  in the  United  States of America  (US GAAP) and,  as such,
include amounts based on informed judgments and estimates made by management.

         We  maintain  a system  of  internal  accounting  controls  to  provide
reasonable  assurance  that assets are  safeguarded  and that  transactions  are
executed in accordance with management's  authorization and recorded properly to
permit the  preparation  of financial  statements  in  accordance  with US GAAP.
Management  recognizes that even a highly effective  internal control system has
inherent risks,  including the possibility of human error and the  circumvention
or overriding of controls,  and that the  effectiveness  of an internal  control
system can change with  circumstances.  However,  management  believes  that the
internal   control  system   provides   reasonable   assurance  that  errors  or
irregularities  that could be  material  to the  financial  statements  would be
prevented or detected on a timely basis and corrected  through the normal course
of  business.  As of December 31, 2000,  management  believes  that the internal
controls are in place and operating effectively.

         The Audit Committee of the Board of Directors is comprised  entirely of
outside  directors who are  independent of our management;  it includes  members
with banking or related  financial  management  expertise  and who are not large
customers of Union Bank of  California,  N.A. The Audit  Committee has access to
outside  counsel.  The Audit  Committee is responsible  for  recommending to the
Board of Directors the selection of independent  auditors. It meets periodically
with management,  the independent auditors,  and the internal auditors to ensure
that they are carrying out their  responsibilities.  The Audit Committee is also
responsible  for  performing an oversight  role by reviewing and  monitoring our
financial,  accounting,  and auditing  procedures  in addition to reviewing  our
financial reports.  The independent auditors and internal auditors have full and
free access to the Audit Committee,  with or without the presence of management,
to discuss the adequacy of internal  controls for  financial  reporting  and any
other matters which they believe should be brought to the attention of the Audit
Committee.

         The  financial  statements  have been audited by Deloitte & Touche LLP,
independent  auditors,  who were  given  unrestricted  access  to all  financial
records and related data, including minutes of all meetings of shareholders, the
Board of Directors  and  committees of the Board.  Management  believes that all
representations  made to the independent  auditors during their audit were valid
and appropriate. The independent auditors' report is presented on page F-92.


                                        /s/ TAKAHIRO MORIGUCHI
                                        -------------------------------------
                                        Takahiro Moriguchi
                                        PRESIDENT AND CHIEF EXECUTIVE OFFICER


                                        /s/ YOSHIHIKO SOMEYA
                                        -------------------------------------
                                        Yoshihiko Someya
                                        DEPUTY CHAIRMAN OF THE BOARD


                                        /s/ DAVID I. MATSON
                                        -------------------------------------
                                        David I. Matson
                                        EXECUTIVE VICE PRESIDENT AND
                                        CHIEF FINANCIAL OFFICER


                                        /s/ DAVID A. ANDERSON
                                        -------------------------------------
                                        David A. Anderson
                                        SENIOR VICE PRESIDENT AND CONTROLLER






                                      F-91


<PAGE>


                          INDEPENDENT AUDITORS' REPORT



To the Shareholders and Directors of UnionBanCal Corporation:

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
UnionBanCal  Corporation and  subsidiaries as of December 31, 1999 and 2000, and
the related consolidated  statements of income, changes in shareholders' equity,
and cash flows for each of the three  years in the  period  ended  December  31,
2000. These financial  statements are the  responsibility  of the  Corporation's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

         In our opinion, such consolidated  financial statements present fairly,
in all material respects, the financial position of UnionBanCal  Corporation and
subsidiaries  as of  December  31,  1999  and  2000,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting  principles  generally accepted
in the United States of America.

/s/ DELOITTE & TOUCHE LLP
-------------------------
Deloitte & Touche LLP

San Francisco, California
January 22, 2001




                                      F-92

<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, UnionBanCal Corporation has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.



                                        UNIONBANCAL CORPORATION
                                             (Registrant)


                                        By:/s/ TAKAHIRO MORIGUCHI
                                           -------------------------------------
                                           Takahiro Moriguchi
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER


                                        By:/s/ DAVID I. MATSON
                                           -------------------------------------
                                           David I. Matson
                                           EXECUTIVE VICE PRESIDENT AND
                                           CHIEF FINANCIAL OFFICER


                                        By:/s/ DAVID A. ANDERSON
                                           -------------------------------------
                                           David A. Anderson
                                           SENIOR VICE PRESIDENT AND CONTROLLER


                                        Dated:  March 20, 2001


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report  has been  signed  below by the  following  persons  on  behalf  of
UnionBanCal Corporation and in the capacities and on the date indicated below.


SIGNATURE                                       TITLE
---------                                       -----



                *
---------------------------------               Director
David R. Andrews



---------------------------------               Director
L. Dale Crandall


                *
----------------------------------              Director
Richard D. Farman


                *
----------------------------------              Director
Stanley F. Farrar





                                      II-1


<PAGE>



SIGNATURE                                       TITLE
---------                                       -----


                *
----------------------------------              Director
Herman E. Gallegos


                *
----------------------------------              Director
Jack L. Hancock


                *
----------------------------------              Director
Richard C. Hartnack


                *
---------------------------------               Director
Kaoru Hayama


                *
----------------------------------              Director
Norimichi Kanari


                *
----------------------------------              Director
Satoru Kishi



----------------------------------              Director
Monica C. Lozano


                *
----------------------------------              Director
Mary S. Metz



----------------------------------              Director
Raymond E. Miles


                *
----------------------------------              Director
Takahiro Moriguchi



----------------------------------              Director
J. Fernando Niebla


                *
----------------------------------              Director
Sidney R. Petersen


                *
----------------------------------              Director
Carl W. Robertson




                                      II-2

<PAGE>



SIGNATURE                                       TITLE
---------                                       -----




----------------------------------              Director
Yoshihiko Someya


                *
----------------------------------              Director
Henry T. Swigert


                *
----------------------------------              Director
Robert M. Walker




----------------------------------              Director
Kenji Yoshizawa




* By /s/ JOHN H. MCGUCKIN, JR.
  ----------------------------
         John H. McGuckin, Jr.
         Attorney-in-Fact




Dated:  March 20, 2001




                                      II-3