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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

       |X|           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                            THE SECURITIES EXCHANGE ACT OF 1934
              FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                   OR
       | |         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                            THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE TRANSITION PERIOD FROM TO


                         Commission file number 1-15081

                             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 94104-1302
              (Address and zip code of principal executive offices)

                  Registrant's telephone number: (415) 765-2969

           Securities registered pursuant to Section 12(b) of the Act:
                          Common Stock, no stated value
                              (Title of each class)

                             New York Stock Exchange
                   (Name of each exchange on which registered)

           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. | |

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes X  No
                                      ---    ---

     As of June 28, 2002,  the aggregate  market value of voting and  non-voting
common equity held by non-affiliates of the registrant was  $2,443,293,746.  The
aggregate market value was computed by reference to the last sales price of such
stock.

     As of January 31, 2003, the number of shares outstanding of the
registrant's Common Stock was 150,694,382.

                       DOCUMENTS INCORPORATED BY REFERENCE

INCORPORATED DOCUMENT                                      LOCATION IN FORM 10-K
Portions of the Proxy Statement for the April 23, 2003            Part III
Annual Meeting of Shareholders

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                                      INDEX

                                                                      PAGE
                                                                      ----
PART I
  ITEM 1. BUSINESS..................................................... 2
     General........................................................... 2
     Banking........................................................... 3
     Employees......................................................... 4
     Competition....................................................... 4
     Monetary Policy................................................... 4
     Supervision and Regulation........................................ 4
  ITEM 2. PROPERTIES................................................... 7
  ITEM 3. LEGAL PROCEEDINGS............................................ 7
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......... 8
  ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT........................ 8
PART II
  ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
     MATTERS........................................................... 10
  ITEM 6. SELECTED FINANCIAL DATA...................................... 11, F-1
  ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS......................................... 11, F-1
  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.. 11, F-36
  ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................. 11, F-47
   ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
     AND FINANCIAL DISCLOSURE.......................................... 11
PART III
  ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 11
  ITEM 11. EXECUTIVE COMPENSATION...................................... 11
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
     MANAGEMENT AND RELATED STOCKHOLDER MATTERS........................ 11
  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 12
PART IV
  ITEM 14. CONTROLS AND PROCEDURES..................................... 12
  ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
     FORM 8-K.......................................................... 12
SIGNATURES............................................................. II-1
CERTIFICATIONS......................................................... II-4

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                                     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. We may make
forward-looking  statements  in other  United  States  Securities  and  Exchange
Commission (SEC) 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.
We do not  undertake  to update  forward-looking  statements  to reflect  facts,
circumstances,   assumptions   or  events   that   occur   after  the  date  the
forward-looking statements are made.

     There are numerous risks and uncertainties that could and will cause actual
results  to  differ  materially  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, and results of operations or prospects.  Such risks and uncertainties
include,  but are not  limited  to,  the  following  factors:  adverse  economic
conditions  in  California,  global  political and general  economic  conditions
related to the  terrorist  attacks on September 11, 2001,  and their  aftermath,
adverse  economic  conditions  affecting  certain  industries,  including  power
companies, fluctuations in interest rates, the controlling interest in us of The
Bank of  Tokyo-Mitsubishi,  Ltd.  (BTM),  which is a wholly-owned  subsidiary of
Mitsubishi Tokyo Financial  Group,  Inc.,  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" located near the end
of the section  entitled  "Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operation."

     All reports that we file  electronically with the SEC, including the Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, and current reports on Form
8-K, as well as any  amendments to those  reports,  are accessible at no cost on
our internet website at  WWW.UBOC.COM.  These filings are also accessible on the
SEC's website at WWW.SEC.GOV.

GENERAL

     UnionBanCal   Corporation  and  its  banking  subsidiary,   Union  Bank  of
California,  N.A.,  were 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.

     Since November 1999, we have announced stock repurchase plans totaling $400
million.  We  repurchased  $131  million,  $108 million and $86 million in 2000,
2001, and 2002, respectively,  as part of these repurchase plans. As of December
31, 2002, $59 million of common stock is authorized for repurchase. In addition,
on August 27, 2002,  we announced  that we purchased  $300 million of our common
stock  from  our  majority   owner,   BTM.  At  December  31,  2002,  BTM  owned
approximately 65 percent of our outstanding common stock.

     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.

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BANKING

     Our operations are divided into four primary segments,  which are described
more fully in our  Management's  Discussion and Analysis of Financial  Condition
and Results of Operation and Note 23 to our  Consolidated  Financial  Statements
included in this Form 10-K.

     THE COMMUNITY BANKING AND INVESTMENT  SERVICES GROUP. This group offers its
customers a broad spectrum of financial products under one convenient  umbrella.
With a broad  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 265 full-service branches,  primarily in California,  as
well as in Oregon and Washington.  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 and 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 group also
includes a registered  broker-dealer and a registered investment advisor,  which
provide  investment  advisory  services  and manage a  proprietary  mutual  fund
family.

     In the fourth quarter of 2001, we acquired the Fullerton,  California-based
Armstrong/Robitaille,  Inc. This regional insurance broker,  founded in 1979, is
one of the top 100 insurance  brokers in the United States. In December 2002, we
acquired the San Diego,  California-based  John Burnham & Company. This regional
insurance broker,  founded in 1891, is one of San Diego's oldest locally founded
companies  and  through  affiliates,  the firm  provides  a range  of  insurance
services  to  its  clients,  including  risk  management,   liability,  employee
benefits,  surety,  workers' compensation,  group medical and life, and personal
lines.  With offices in California and Oregon,  these  acquisitions  allow us to
offer  an  extensive  array  of  cost-effective  risk  management  services  and
insurance products to business and retail customers.

     During 2002,  we acquired the Simi Valley,  California-based  First Western
Bank  and  Santa  Clarita,   California-based   Valencia  Bank  &  Trust.  These
acquisitions  added $490 million in assets to our balance sheet and 12 branches.
The  integration  of these two banks  expanded our  geographic  footprint in the
greater Los Angeles area and provides us the  opportunity  to both  increase our
prospect  opportunities and offer our existing consumer and commercial  customer
relationships a fuller range of financial services.

     The  Armstrong/Robitaille,  Inc., First Western Bank, Valencia Bank & Trust
and John  Burnham & Company  transactions  are  examples  of our  commitment  to
expansion through targeted acquisitions,  and are consistent with our strategies
to diversify earnings and broaden our branch network.

     THE COMMERCIAL  FINANCIAL  SERVICES  GROUP.  This group offers a variety of
commercial financial services, including commercial loans and project financing,
real  estate  financing,  asset-based  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  various  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 options. The group trades money market and fixed

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income  securities in the secondary market and serves  institutional  investment
needs.  The  group  also  manages  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, 2003, we had 9,472 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 our subsidiaries or us.

     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 federal funds market 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, the  Mitsubishi  Tokyo  Financial  Group,  Inc.  and BTM 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  exceptions,  to banking,  the
business of managing  or  controlling  banks,  and other  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
restrictions under a formula imposed by the OCC unless express approval is given
to exceed these  limitations.  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)
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 capital ratios above the minimum
regulatory requirements for "well-capitalized"  institutions for both Union Bank
of California, N.A. and us. Management believes that, at

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December 31, 2002, Union Bank of California, N.A. and we met the requirements of
"well-capitalized" institutions.

     Furthermore,  the activities of HighMark Capital Management,  Inc. and UBOC
Investment  Services,  Inc.  are  subject  to the rules and  regulations  of the
Securities and Exchange Commission as well as state securities regulators.  UBOC
Investment  Services,  Inc. is also subject to the rules and  regulations of the
National Association of Securities Dealers (NASD).

     Armstrong/Robitaille,  Inc.  and John  Burnham  &  Company,  both  indirect
subsidiaries  of Union Bank of  California,  N.A.,  are subject to the rules and
regulations  of the  California  Department of  Insurance,  as well as insurance
regulators of other states.

     Deposits of Union Bank of  California,  N.A.  are insured up to  regulatory
limits by the Federal Deposit Insurance  Corporation (FDIC),  and,  accordingly,
are subjected to deposit  insurance  assessments  to maintain the Bank Insurance
Fund (BIF)  administered by the FDIC. Union Bank of California,  N.A.  currently
pays no insurance  assessments on these  deposits under the FDIC's  risk-related
assessment  system.  Although  there are no definite  plans to raise  assessment
rates in 2003, we can give no assurance as to the future level of such insurance
premiums.

     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.  Union Bank of  California,  N.A. is subject to certain
fair lending  requirements  and reporting  obligations  involving  home mortgage
lending  operations and is also subject to the 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,  including engaging in new activities or acquisitions of other
banks or companies.

     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 BTM's controlling ownership of us, 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.

     The  Gramm-Leach-Bliley  (GLB) Act  allows  "financial  holding  companies"
(FHCs) 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
(BHCs)  such  as we may  elect  to  become  an FHC  if all of  their  subsidiary
depository institutions are well-capitalized and well-managed. Under current FRB
interpretations,  a foreign bank, such as BTM, which owns a subsidiary U.S. bank
holding company, must make the election on 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 BTM will make an FHC 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,  Union Bank of California,  N.A. filed a "Financial
Subsidiary Certification" with the OCC indicating that the applicable conditions
were met at that time. Although 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 decided to do
so.  Under the GLB Act,  national  banks (as well as  FDIC-insured  state banks,
subject to various

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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 ours does, it must have an issue of outstanding  long-term
debt, which we presently do not, rated in one of the 3 highest rating categories
by an  independent  rating  agency.  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.

     The  terrorist  attacks in  September,  2001,  have  impacted the financial
services  industry and have already led to federal  legislation that attempts to
address certain issues involving  financial  institutions.  On October 26, 2001,
President  Bush  signed  into  law the  Uniting  and  Strengthening  America  by
Providing  Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (the USA Patriot Act).

     Part of the USA Patriot Act is the International Money Laundering Abatement
and  Financial  Anti-Terrorism  Act of 2001  (IMLAFATA).  Among its  provisions,
IMLAFATA  requires each  financial  institution  to: (i) establish an anti-money
laundering  program;  (ii)  establish due  diligence  policies,  procedures  and
controls with respect to its private banking accounts and correspondent  banking
accounts  involving  foreign  individuals and certain  foreign banks;  and (iii)
avoid  establishing,   maintaining,  administering,  or  managing  correspondent
accounts in the United States for, or on behalf of, a foreign bank that does not
have a physical  presence  in any  country.  In  addition,  IMLAFATA  contains a
provision  encouraging  cooperation  among  financial  institutions,  regulatory
authorities  and  law  enforcement  authorities  with  respect  to  individuals,
entities and organizations  engaged in, or reasonably  suspected of engaging in,
terrorist   acts  or  money   laundering   activities.   IMLAFATA   expands  the
circumstances  under which funds in a bank account may be forfeited and requires
covered  financial  institutions  to  respond  under  certain  circumstances  to
requests  for  information  from  federal  banking  agencies  within  120 hours.
IMLAFATA  also  amends the BHCA and the Bank  Merger Act to require  the federal
banking  agencies to consider  the  effectiveness  of a financial  institution's
anti-money laundering activities when reviewing an application under these acts.

     Pursuant to IMLAFATA,  the Secretary of the Treasury,  in consultation with
the  heads of other  government  agencies,  has  adopted  and  proposed  special
measures  applicable to banks,  bank holding  companies,  and/or other financial
institutions.  These  measures  include  enhanced  record  keeping and reporting
requirements  for  certain  financial  transactions  that are of  primary  money
laundering  concern,  due  diligence  requirements   concerning  the  beneficial
ownership of certain types of accounts,  and  restrictions  or  prohibitions  on
certain types of accounts with foreign financial institutions.

     On July 30, 2002, in response to various high profile  corporate  scandals,
the  United  States  Congress  enacted  the  Sarbanes-Oxley  Act  of  2002.  The
Sarbanes-Oxley  Act aims to restore  the  credibility  lost as a result of these
scandals by addressing,  among other issues, corporate governance,  auditing and
accounting,  executive  compensation,  and  enhanced  and timely  disclosure  of
corporate  information.  The New York Stock  Exchange  has  proposed  additional
corporate  governance  rules that have been  presented to the SEC for review and
approval. The proposed changes are intended to allow stockholders to more easily
and effectively monitor the performance of companies and directors.

     Among other provisions,  Section 302(a) of the  Sarbanes-Oxley Act requires
that our Chief Executive  Officer and Chief  Financial  Officer certify that our
quarterly and annual  reports do not contain any untrue  statement of a material
fact. Specific requirements of the certifications  include having these officers
confirm that they are  responsible for  establishing,  maintaining and regularly
evaluating the  effectiveness  of our disclosure  controls and procedures;  they
have made certain  disclosures  to our auditors  and Audit  Committee  about our
internal  controls;  and they have  included  information  in our  quarterly and
annual reports about their  evaluation  and whether there have been  significant
changes in our internal  controls or in other  factors that could  significantly
affect internal controls subsequent to their evaluation.

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     In  response  to  these  requirements,  we have  established  a  Disclosure
Committee  to  monitor  compliance  with  these  new  rules.  Membership  of the
Disclosure  Committee is  comprised of senior  management  from  throughout  the
organization who we believe collectively  provide an extensive  understanding of
our corporate operations.

     UnionBanCal  Corporation  and  Union  Bank of  California,  N.A.  cannot be
certain of the effect,  if any, of the foregoing  legislation on their business.
Future 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  our  Consolidated  Financial  Statements  starting  on page  F-47  for
specific financial information on UnionBanCal Corporation and its subsidiaries.

ITEM 2.  PROPERTIES

     At December 31, 2002, we operated 259 full service  branches in California,
6 full service branches in Oregon and Washington,  and 18 international offices.
In addition,  we have another 44 limited  service  branches,  including 5 Cash &
Save facilities,  and 3 Private Bank offices. We own the property occupied by 92
of the domestic  offices and lease the remaining  properties for periods of five
to twenty years.

     We own two administrative  facilities in San Francisco, two 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 is described in
Note 5 to our Consolidated Financial Statements included in this Form 10-K.

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.

     Union Bank of California,  our major  subsidiary (the Bank), has been named
in two suits  pending  in the  United  States  District  Court  for the  Central
District  of  California,  Christensen  v.  Union Bank of  California  (formerly
captioned as Rockoff v Union Bank of California et al)(filed  December 21, 2001)
and Neilson v Union Bank of California et al (filed September 4, 2002), in which
the plaintiffs seek in excess of $250 million alleged to have been lost by those
who invested money in various investment arrangements conducted by an individual
named Reed Slatkin.  Mr.  Slatkin is alleged to have been operating a fraudulent
investment  scheme commonly  referred to as a "Ponzi" scheme.  The plaintiffs in
the Christensen case are various investors in the arrangements  conducted by Mr.
Slatkin and the  plaintiffs  in the Neilson case include both  investors and the
trustee of Mr. Slatkin's  bankruptcy estate. A substantial majority of those who
invested with Mr. Slatkin had no  relationship  with the Bank. A small minority,
comprising less than five percent of the investors,  had custodial accounts with
the Bank. The Neilson case seeks to impose liability upon the Bank and two other
financial institutions for both the losses suffered by those custodial customers
as well as investors who had no relationship with the Bank.

     The Bank has also been named in a suit,  which is  pending in the  Superior
Court for Alameda County,  California,  entitled  Grafton  Partners L.P. et al v
Union Bank of California  (filed March 12, 2003).  The Plaintiffs in this action
allege that they are the victims of a Ponzi scheme perpetrated by the management
of PinnFund,  USA and that they have suffered losses of $235 million. This Ponzi
scheme is not related to the Slatkin Ponzi scheme.  The  Plaintiffs  assert that
the Bank improperly opened and administered  deposit accounts which were used by
PinnFund, USA in furtherance of the fraud.

     Although these claims are in the preliminary  stages, the Bank has numerous
legal defenses,  which it will invoke.  Based on our evaluation to date of these
claims,  management  believes  that they will not result in a  material  adverse
effect on our  financial  position or results of  operations.  In  addition,  we
believe that the disposition of all other claims currently pending will also not
have a  material  adverse  effect  on  our  financial  position  or  results  of
operations.

                                       7

<PAGE>


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

     None.

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

     The following information pertains to our executive officers as of December
31, 2002:


EXECUTIVE OFFICER     AGE  PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS
--------------------- ---  -----------------------------------------------------
Kaoru Hayama.........  68  Mr. Hayama  has  served  as  Chairman of  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.  Mr.  Hayama  has served as a Director  of
                           UnionBanCal Corporation and Union Bank of California,
                           N.A. since September 1998.
Norimichi Kanari.....  56  Mr.  Kanari  has  served  as  President  and  Chief
                           Executive  Officer  of  UnionBanCal  Corporation  and
                           Union Bank of  California,  N.A.  since July 2001 and
                           served as Vice  Chairman of  UnionBanCal  Corporation
                           and Union Bank of California,  N.A. from July 2000 to
                           July 2001.  From May 1999 to July 2000,  he served as
                           General Manager of the Corporate  Banking Division in
                           the  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.  He has
                           served as a Director of The Bank of Tokyo-Mitsubishi,
                           Ltd.  since June 1997. Mr. Kanari has been a Director
                           of   UnionBanCal   Corporation   and  Union  Bank  of
                           California, N.A. since July 2000.
Takaharu Saegusa.....  50  Mr.  Saegusa  has  served  as  Deputy  Chairman  of
                           UnionBanCal Corporation and Union Bank of California,
                           N.A.  since March 2001 and served as  Executive  Vice
                           President of UnionBanCal  Corporation  and Union Bank
                           of California, N.A. from February 2001 to March 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 Shimo-Akatsuka  Branch. Mr.
                           Saegusa   has   been  a   Director   of   UnionBanCal
                           Corporation and Union Bank of California,  N.A. since
                           March 2001.
Richard C. Hartnack..  57  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.  Mr. Hartnack has served as a Director
                           of UnionBanCal Corporation since June 1991.
Robert M. Walker.....  61  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.  Mr.  Walker has served as a
                           Director of UnionBanCal Corporation since July 1992.

                                       8

<PAGE>

EXECUTIVE OFFICER     AGE  PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS
--------------------- ---  -----------------------------------------------------
Linda Betzer.........  56  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.
Paul E. Fearer.......  59  Mr. Fearer  has served as  Executive  Vice  President
                           and  Director  of  Human  Resources  for  UnionBanCal
                           Corporation and Union Bank of California,  N.A. since
                           April 1996.
Philip B. Flynn......  45  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.
Katsuyoshi Hamahashi.  53  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.
Ronald H. Kendrick...  61  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 Southern  California Area Executive for
                           Union  Bank of  California,  N.A.  from March 1994 to
                           December 2000.
David I. Matson......  58  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.
John H. McGuckin, Jr.  56  Mr. McGuckin has served as Executive Vice  President,
                           General   Counsel  and  Secretary   for   UnionBanCal
                           Corporation and Union Bank of California,  N.A. since
                           September 2000. He served as Executive Vice President
                           and General Counsel of UnionBanCal  Corporation  from
                           January  1998  to   September   2000  and  served  as
                           Executive Vice President and General Counsel of Union
                           Bank  of  California,  N.A.  from  April  1996  until
                           September 2000.
Magan C. Patel.......  65  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.
Charles L. Pedersen..  59  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.

                                       9

<PAGE>

EXECUTIVE OFFICER     AGE  PRINCIPAL OCCUPATIONS FOR THE PAST FIVE YEARS
--------------------- ---  -----------------------------------------------------
Osamu Uno............  50  Mr. Uno has served  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. since March 2001.
                           He  served  as  General  Manager,  Corporate  Banking
                           Credit Division of The Bank of Tokyo-Mitsubishi, Ltd.
                           from  July  2000  to  February  2001  and  Co-General
                           Manager,  Credit  Supervision  Division  No. 2 of The
                           Bank of  Tokyo-Mitsubishi,  Ltd.  from  April 1996 to
                           June 2000.


     The term of office  of the  executive  officer  extends  until the  officer
resigns, is removed, retires, or is otherwise disqualified for service. There is
no family relationship among the executive 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,  2003,  our common stock was held by  approximately  2,457
registered  shareholders.  At December 31, 2002,  The Bank of  Tokyo-Mitsubishi,
Ltd. (BTM) held  approximately  65 percent of our common stock.  During 2001 and
2002,  the average  daily trading  volume of our common stock was  approximately
418,531 shares and 443,032 shares, respectively.  At December 31, 2000, 2001 and
2002, our common stock closed at $24.06 per share,  $38.00 per share, and $39.27
per share, respectively.  The following table presents stock quotations for each
quarterly period for the two years ended December 31, 2001 and 2002.

                                               2001                  2002
                                       _________________     _________________
                                        HIGH       LOW        HIGH       LOW
                                       ______     ______     ______     ______
First quarter...................       $30.26     $24.81     $44.02     $34.98
Second quarter..................        34.67      26.38      49.60      43.30
Third quarter...................        38.70      32.15      48.40      38.70
Fourth quarter..................        39.14      28.92      44.40      35.65


     The following  table presents  quarterly per share cash dividends  declared
for 2001 and 2002:


                                                                 2001      2002
                                                                _____     _____
First quarter.............................................      $0.25     $0.25
Second quarter............................................       0.25      0.28
Third quarter.............................................       0.25      0.28
Fourth quarter............................................       0.25      0.28


     On October 23,  2002,  our Board of Directors  approved a quarterly  common
stock  dividend  of $0.28 per  share  for the  fourth  quarter  of 2002.  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  purchase  plan  that  allows
shareholders to reinvest  dividends in our common stock at market price. BTM did
not participate in the plan during 2001 and 2002. For further  information about
these plans, see Note 13 to our Consolidated  Financial  Statements  included in
this Form 10-K.

     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 included in this Form 10-K.





                                       10

<PAGE>


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-45 of this Form 10-K.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See pages F-36 through F-39 of this Form 10-K.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See pages F-46 through F-96 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 the  information  contained  in the sections  entitled
"Election of Directors" and "Compliance  with Section 16 of the 1934 Act" of our
Proxy  Statement  for the April 23,  2003  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 December 31, 2002, is included in Part I above in
accordance with Instruction 3 to Item 401(b) of Regulation S-K.

ITEM 11.  EXECUTIVE COMPENSATION

     Information  concerning executive compensation is incorporated by reference
from  the  text  under  the  captions  "Executive  Compensation"  and  "Director
Compensation"  in the Proxy  Statement for the April 23, 2003 Annual  Meeting of
Shareholders.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

     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  "Security  Ownership  by
Management"  in the Proxy  Statement  for the April 23, 2003  Annual  Meeting of
Shareholders.









                                       11

<PAGE>


     The  following   table   provides   information   relating  to  our  equity
compensation plans as of December 31, 2002:


<TABLE>
<CAPTION>
                                                                                          Number of securities remaining
                                                                                          available for future issuance
                                  Number of securities to be   Weighted-average exercise    under equity compensation
                                   issued upon exercise of       price of outstanding     plans (excluding securities
                                     outstanding options               options               reflected in column a)
                                              (a)                        (b)                          (c)
                                 ----------------------------  -------------------------  -----------------------------
<S>                                         <C>                       <C>                          <C>
Equity compensation approved by
     shareholders ..............            8,515,469                 $ 34.71                      2,890,182
Equity compensation not approved
     by shareholders ...........                 -                        -                             -
                                  ---------------------------  -------------------------  -----------------------------
                                            8,515,469                 $ 34.71                      2,890,182
                                  ===========================  =========================  =============================
</TABLE>


     All equity  compensation  plans have been approved by the shareholders.  At
December 31, 2002,  there were  2,890,182  shares of common stock  available for
future  issuance as either  stock  options or  restricted  stock under the Stock
Plans. For additional  information concerning our equity compensation plans, see
Note 14 to our Consolidated Financial Statements included in this Form 10-K.


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  23,  2003  Annual  Meeting  of
Shareholders.

                                     PART IV



ITEM 14.  CONTROLS AND PROCEDURES

     (a)  EVALUATION  OF  DISCLOSURE  CONTROLS  AND  PROCEDURES.  Based on their
evaluation  as of  December  31,  2002,  our  principal  executive  officer  and
principal  financial  officer have concluded  that our  disclosure  controls and
procedures  (as defined in Rules  13a-14(c) and 15d-14(c)  under the  Securities
Exchange Act of 1934  (Exchange  Act)) are effective to ensure that  information
required to be  disclosed  by us in reports we file or submit under the Exchange
Act is recorded,  processed,  summarized,  and reported  within the time periods
specified in Securities and Exchange Commission (SEC) rules and forms.

     (b) CHANGES IN INTERNAL  CONTROLS.  These officers have also concluded that
there were no significant  changes in our internal  controls or in other factors
that could  significantly  affect these controls subsequent to the date of their
evaluation  and  that  there  were  no  significant   deficiencies  or  material
weaknesses  in such  controls,  and therefore  there were no corrective  actions
taken.

ITEM 15.  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-47  through  F-98.  (See
index on page F-46).

(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.

                                       12

<PAGE>

(A)(3) EXHIBITS

 NO.                                 DESCRIPTION
----       ---------------------------------------------------------------------
 3.1       Restated Articles of Incorporation of the Registrant, as amended(1)
 3.2       By-laws of the Registrant, as amended December 4, 2002(2)
10.1       UnionBanCal Corporation 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, N.A. 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       1997 UnionBanCal Corporation Performance Share Plan, as amended. (As
           amended, effective January 1, 2001)*(5)
10.9       Service Agreement Between Union Bank of California and The Bank of
           Tokyo-Mitsubishi Ltd. (Effective October 1, 1997)*(3)
10.10      Year 2000 UnionBanCal Corporation Management Stock Plan. (As restated
           effective January 1, 2000)*(8)
10.11      Union Bank of California, N.A. Supplemental Retirement Plan for
           Policy Making Officers (Effective November 1, 1999)(9)
10.12      Philip B. Flynn Employment Agreement (Effective September 21, 2000)*
           (10)
10.13      David I. Matson Employment Agreement (Effective January 1, 1998)*(2)
12.1       Computation of Ratio of Earnings to Combined Fixed Charges and
           Preferred Stock Dividend Requirements(2)
21.1       Subsidiaries of the Registrant(2)
23.1       Consent of Deloitte & Touche LLP(2)
24.1       Power of Attorney(2)
24.2       Resolution of Board of Directors(2)
__________
(1)  Incorporated by reference to the UnionBanCal  Corporation  Annual Report on
     Form 10-K for the year ended December 31, 1998.
(2)  Filed herewith.
(3)  Incorporated by reference to the UnionBanCal  Corporation  Annual Report on
     Form 10-K for the year ended December 31, 1997.
(4)  Incorporated by reference to the UnionBanCal  Corporation  Annual Report on
     Form 10-K for the year ended December 31, 1996.
(5)  Incorporated by reference to the UnionBanCal  Corporation  Definitive Proxy
     Statement on Form 14A filed on March 27, 2001.
(6)  Incorporated by reference to the UnionBanCal  Corporation  Quarterly Report
     on Form 10-Q for the quarter ended September 30, 1998.
(7)  Incorporated by reference to the UnionBanCal  Corporation Current Report on
     Form 8-K dated April 1, 1996.
(8)  Incorporated by reference to the UnionBanCal  Corporation  Quarterly Report
     on Form 10-Q for the quarter ended June 30, 1999.
(9)  Incorporated by reference to the UnionBanCal  Corporation  Quarterly Report
     on Form 10-Q for the quarter ended June 30, 2000.
(10) Incorporated by reference to the UnionBanCal  Corporation  Annual Report on
     Form 10-K for the year ended December 31, 2001.
*    Management contract or compensatory plan, contract or arrangement.

(B) REPORTS ON FORM 8-K

     We filed a report on Form 8-K on October 17, 2002,  reporting  under Item 5
thereof that UnionBanCal  Corporation issued a press release concerning earnings
for the third quarter of 2002.

                                       13

<PAGE>

     We filed a report on Form 8-K on November 13, 2002,  reporting under Item 9
thereof,  which  included  the  written  certification  statements  of our chief
executive  officer and chief  financial  officer with  respect to our  quarterly
report on Form 10-Q for the period ended September 30, 2002,  filed with the SEC
on November 13, 2002,  as required by section 906 of the  Sarbanes-Oxley  Act of
2002  (18  U.S.C.  section  1350).

                                       14

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA


                                                       AS OF AND FOR THE YEARS ENDED DECEMBER 31,
                                    _______________________________________________________________________________
(DOLLARS IN THOUSANDS,
 EXCEPT PER SHARE DATA)                 1998             1999            2000             2001             2002
______________________________      ____________     ____________    ____________     ____________     ____________
<S>                                 <C>              <C>             <C>              <C>              <C>
RESULTS OF OPERATIONS:
  Net interest income(1)......      $  1,322,655     $  1,419,019    $  1,587,008     $  1,526,099     $  1,564,556
  Provision for credit losses.            45,000           65,000         440,000          285,000          175,000
  Noninterest income..........           533,531          586,759         647,180          716,404          735,976
  Noninterest expense.........         1,135,218        1,281,973       1,130,185        1,240,174        1,347,666
                                    ____________     ____________    ____________     ____________     ____________
  Income before income taxes(1)          675,968          658,805         664,003          717,329          777,866
  Taxable-equivalent adjustment            4,432            3,186           2,568            2,057            2,587
  Income tax expense..........           205,075          213,888         221,535          233,844          247,376
                                    ____________     ____________    ____________     ____________     ____________
  Net income..................      $    466,461     $    441,731    $    439,900     $    481,428     $    527,903
                                    ============     ============    ============     ============     ============

PER COMMON SHARE:
  Net income (basic)..........      $       2.66     $       2.65    $       2.72     $       3.05     $       3.41
  Net income (diluted)........              2.65             2.64            2.72             3.04             3.38
  Dividends(2)................              0.61             0.82            1.00             1.00             1.09
  Book value (end of period)..             17.45            18.18           20.17            22.66            24.94
  Common shares outstanding
    (end of period).............     175,259,919      164,282,622     159,234,454      156,483,511      150,702,363
  Weighted average common
    shares outstanding (basic)..     175,127,487      166,382,074     161,604,648      157,844,745      154,757,817
  Weighted average common
    shares outstanding (diluted)     175,737,303      167,149,207     161,989,388      158,623,454      156,414,940
BALANCE SHEET (END OF PERIOD):
  Total assets................      $ 32,276,316     $ 33,684,776    $ 35,162,475     $ 36,038,746     $ 40,169,773
  Total loans.................        24,296,111       25,912,958      26,010,398       24,994,030       26,438,083
  Nonperforming assets........            89,850          169,780         408,304          492,482          337,404
  Total deposits..............        24,507,879       26,256,607      27,283,183       28,556,199       32,840,815
  Medium and long-term debt...           298,000          298,000         200,000          399,657          418,360
  Trust preferred securities..                --          350,000         350,000          363,928          365,696
  Shareholders' equity........         3,058,244        2,987,468       3,211,565        3,546,242        3,758,189
BALANCE SHEET (PERIOD AVERAGE):
  Total assets................      $ 30,523,806     $ 32,141,497    $ 33,672,058     $ 34,619,222     $ 36,108,496
  Total loans.................        23,215,504       25,024,777      26,310,420       25,951,021       25,807,190
  Earning assets..............        27,487,390       29,017,122      30,379,730       31,291,782       32,983,371
  Total deposits..............        22,654,714       23,893,045      25,527,547       26,542,312       28,753,185
  Shareholders' equity........         2,845,964        2,939,591       3,139,844        3,467,719        3,739,530
FINANCIAL RATIOS:
  Return on average assets....              1.53%            1.37%           1.31%            1.39%            1.46%
  Return on average
    shareholders' equity........           16.39            15.03           14.01            13.88            14.12
  Efficiency ratio(3).........             61.31            63.98           50.59            55.30            58.57
  Net interest margin(1)......              4.81             4.89            5.22             4.87             4.74
  Dividend payout ratio.......             22.93            30.94           36.76            32.79            31.96
  Tangible equity ratio.......              9.30             8.70            9.01             9.62             8.93
  Tier 1 risk-based capital
    ratio.......................            9.64             9.94           10.24            11.47            11.18
  Total risk-based capital
    ratio.......................           11.61            11.79           12.07            13.35            12.93
  Leverage ratio..............              9.38            10.10           10.19            10.53             9.75
  Allowance for credit losses
    to total loans..............            1.89             1.82            2.36             2.54             2.30
  Allowance for credit losses
    to nonaccrual loans.........          585.50           281.00          153.48           129.00           180.94
  Net loans charged off to
    average total loans.........            0.15             0.22            1.13             1.02             0.80
  Nonperforming assets to
    total loans, distressed
    loans held for sale, and
    foreclosed assets...........            0.37             0.66            1.57             1.97             1.28
  Nonperforming assets to
    total assets................            0.28             0.50            1.16             1.37             0.84
<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.
(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  $(2.8)  million,  $(1.3)  million,  $(0.1)  million,  $(0.0)
     million, and $0.1 million for 1998 through 2002, 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. WE MAY MAKE
FORWARD-LOOKING  STATEMENTS  IN OTHER  UNITED  STATES  SECURITIES  AND  EXCHANGE
COMMISSION (SEC) 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.
WE DO NOT  UNDERTAKE  TO UPDATE  FORWARD-LOOKING  STATEMENTS  TO REFLECT  FACTS,
CIRCUMSTANCES,   ASSUMPTIONS   OR  EVENTS   THAT   OCCUR   AFTER  THE  DATE  THE
FORWARD-LOOKING STATEMENTS ARE MADE.

     THERE ARE NUMEROUS RISKS AND UNCERTAINTIES THAT COULD AND WILL CAUSE ACTUAL
RESULTS  TO  DIFFER  MATERIALLY  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, AND RESULTS OF OPERATIONS OR PROSPECTS.  SUCH RISKS AND UNCERTAINTIES
INCLUDE,  BUT ARE NOT  LIMITED  TO,  THE  FOLLOWING  FACTORS:  ADVERSE  ECONOMIC
CONDITIONS  IN  CALIFORNIA,  GLOBAL  POLITICAL AND GENERAL  ECONOMIC  CONDITIONS
RELATED TO THE  TERRORIST  ATTACKS ON SEPTEMBER 11, 2001,  AND THEIR  AFTERMATH,
ADVERSE  ECONOMIC  CONDITIONS  AFFECTING  CERTAIN  INDUSTRIES,  INCLUDING  POWER
COMPANIES, FLUCTUATIONS IN INTEREST RATES, THE CONTROLLING INTEREST IN US OF THE
BANK OF  TOKYO-MITSUBISHI,  LTD.  (BTM),  WHICH IS A WHOLLY-OWNED  SUBSIDIARY OF
MITSUBISHI TOKYO FINANCIAL  GROUP,  INC.,  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" LOCATED NEAR THE END
OF THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION."

     ALL REPORTS THAT WE FILE  ELECTRONICALLY WITH THE SEC, INCLUDING THE ANNUAL
REPORT ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q, AND CURRENT REPORTS ON FORM
8-K, AS WELL AS ANY  AMENDMENTS TO THOSE  REPORTS,  ARE ACCESSIBLE AT NO COST ON
OUR INTERNET WEBSITE AT  WWW.UBOC.COM.  THESE FILINGS ARE ALSO ACCESSIBLE ON THE
SEC'S WEBSITE AT WWW.SEC.GOV.

     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,  2000,  2001 and 2002  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 incorporated in
California,  with consolidated  assets of $40.2 billion at December 31, 2002. At
year-end 2002, Union Bank of California,  N.A. (the Bank) was the fourth largest
commercial  bank in  California,  based on total  assets and total  deposits  in
California.

     UnionBanCal   Corporation  and  its  banking  subsidiary,   Union  Bank  of
California,  N.A.,  were 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.

     Since November 1999, we have announced stock repurchase plans totaling $400
million.  We  repurchased  $131  million,  $108 million and $86 million in 2000,
2001, and 2002, respectively,  as part of these repurchase plans. As of December
31,  2002,  $59 million of our common stock is  authorized  for  repurchase.  In
addition, on August 27, 2002, we announced that we purchased $300 million of our
common

                                      F-2

<PAGE>

stock  from  our  majority   owner,   BTM.  At  December  31,  2002,  BTM  owned
approximately 65 percent of our outstanding common stock.

CRITICAL ACCOUNTING POLICIES

GENERAL

     UnionBanCal Corporation's consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America  (US  GAAP) and the  general  practices  of the  banking  industry.  The
financial  information  contained  within our  statements  is, to a  significant
extent,  financial  information  that is based on  approximate  measures  of the
financial  effects of  transactions  and events that have  already  occurred.  A
variety of factors could affect the ultimate value that is obtained  either when
earning  income,  recognizing  an expense,  recovering  an asset or  relieving a
liability.  In many instances, we use a discount factor to determine the present
value of assets and liabilities.  A change in the discount factor could increase
or decrease the values of those assets and  liabilities  and such a change would
result in either a beneficial or adverse impact to our financial results. We use
historical  loss  factors,  adjusted for current  conditions,  to determine  the
inherent loss that may be present in our loan and lease portfolio. Actual losses
could differ  significantly  from the loss factors that we use. Other  estimates
that we use are employee turnover factors for pension purposes,  residual values
in our leasing  portfolio,  fair value of our  derivatives  and  securities  and
expected  useful  lives of our  depreciable  assets.  We enter  into  derivative
contracts to accommodate our customers and for our own risk management purposes.
The derivative contracts are generally foreign exchange,  interest rate swap and
interest  rate  option  contracts,  although  we could enter into other types of
derivative  contracts.  We value these  contracts at fair value,  using  readily
available,   market  quoted  prices.  We  have  not  historically  entered  into
derivative contracts for our customers or for ourselves, which relate to credit,
equity, commodity, energy, or weather-related indices. We are subject to US GAAP
that may  change  from one  previously  acceptable  method  to  another  method.
Although the  economics  of our  transactions  would be the same,  the timing of
events that would impact our transactions could change.

     Our most significant  estimates are approved by our Chief Executive Officer
Forum,  which  is  comprised  of our most  senior  officers.  At each  financial
reporting  period,  a review of these  estimates is then  presented to the Audit
Committee of our Board of Directors.

     As of December 31, 2002, we have not created any special  purpose  entities
to securitize assets or to obtain  off-balance  sheet funding.  Although we have
sold a number of loans in the past three  years,  those  loans have been sold to
third  parties  without  recourse,  subject  to  customary  representations  and
warranties.  Please see our disclosure  regarding  contractual  obligations  and
commitments entitled,  "Off-Balance Sheet Arrangements and Aggregate Contractual
Obligations and Commitments."

ALLOWANCE FOR CREDIT LOSSES

     The  allowance  for credit  losses is an estimate of the losses that may be
sustained  in our  loan  and  lease  portfolio.  The  allowance  is based on two
principles of accounting: (1) Statement of Financial Accounting Standards (SFAS)
No. 5,  "Accounting  for  Contingencies,"  which requires that losses be accrued
when  they are  probable  of  occurring  and  estimable;  and (2) 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,"
which requires that losses be accrued based on the differences between the value
of collateral,  present value of future cash flows or values that are observable
in the secondary market and the loan balance.

     Our  allowance  for  credit  losses  has  three  components:   the  formula
allowance,  the specific allowance and the unallocated allowance.  Each of these
components is determined  based upon  estimates  that can and do change when the
actual  events  occur.  The formula  allowance  uses a model based,  in part, on
historical  losses as an  indicator  of future  losses and,  as a result,  could
differ  from the loss  incurred in the future.  However,  since this  history is
updated  with the most  recent  loss  information,  the  differences  that might
otherwise occur are mitigated.  Moreover, management adjusts the historical loss
estimates for current  conditions in order to more

                                      F-3

<PAGE>

accurately  assess  probable  losses  inherent in the  portfolio.  The  specific
allowance uses various  techniques to arrive at an estimate of loss.  Historical
loss  information,  discounted  cash flows,  fair market value of collateral and
secondary market  information are all used to estimate those losses.  The use of
these values is inherently  subjective and our actual losses could be greater or
less than the estimates.  The  unallocated  allowance  captures  losses that are
attributable to various  economic events,  industry or geographic  sectors whose
impact on the  portfolio  have  occurred but have yet to be recognized in either
the formula or specific  allowances.  We have  recorded an allowance  for credit
losses of $609 million as of December 31, 2002, based upon our assessment of the
probability of loss. We estimate, based on our review of our portfolio, that the
range of loss in our total  allowance  for credit  losses at December  31, 2002,
could be $437 million to $644  million.  For further  information  regarding our
allowance for credit losses, see page F-23.

FINANCIAL SUMMARY

     Net income was $527.9  million,  or $3.38 per diluted common share, in 2002
compared with $481.4  million,  or $3.04 per diluted common share, in 2001. This
increase in diluted  earnings  per share of $0.34,  or 11 percent,  was due to a
$110.0 million, or 39 percent,  decrease in provision for credit losses, a $19.6
million, or 3 percent, increase in noninterest income, and a $38.5 million, or 3
percent, increase in net interest income (on a taxable-equivalent basis), partly
offset by a $107.5 million, or 9 percent, increase in noninterest expense. Other
highlights in 2002 include:

     o    Net  interest  income,  on a  taxable-equivalent  basis,  was $1,564.6
          million in 2002, an increase of $38.5 million over 2001.  Net interest
          margin in 2002 was 4.74  percent,  a decrease of 13 basis  points from
          2001.

     o    A provision for credit losses of $175.0  million was recorded in 2002,
          compared with $285.0 million in 2001.

     o    Noninterest  income was $736.0  million in 2002,  an increase of $19.6
          million,  or 3 percent,  from 2001.  Noninterest  income,  excluding a
          $20.7 million gain recognized on the exchange of our STAR System stock
          and a $10.9 million gain on the sale of our Guam and Saipan  branches,
          both in the prior year,  increased $51.2 million,  or 7 percent.  This
          growth was mainly  attributable to a $30.7 million increase in service
          charges on deposit accounts and $26.3 million in insurance commissions
          and    fees    mainly    associated    with   our    acquisition    of
          Armstrong/Robitaille,  Inc., partly offset by a $10.1 million decrease
          in trust and investment  management fees. In 2002,  securities losses,
          net were  $3.8  million  compared  to  securities  gains,  net of $8.7
          million in 2001. In addition,  we had residual value writedowns in our
          auto  lease  portfolio  of $9.0  million in 2002  compared  with $28.3
          million in 2001.

     o    Noninterest  expense  was  $1,347.7  million in 2002,  an  increase of
          $107.5  million,  or 9 percent,  over 2001.  Excluding the effect of a
          $15.3 million  amortization  adjustment related to the standardization
          of our  accounting  for  low-income  housing  tax  credit  investments
          (LIHC),  noninterest  expense increased $92.2 million, or 7.4 percent.
          Salaries and employee benefits increased $71.3 million, or 11 percent,
          primarily   attributable  to  higher  personnel  expenses  related  to
          acquisitions, higher incentives, merit increases, and increasing heath
          care costs.

     o    Income tax expense in 2002 was $247.4 million,  a 32 percent effective
          income tax rate,  which  included a  reduction  in income tax  expense
          resulting from a tax credit  adjustment of $9.8 million related to the
          standardization of our accounting for low-income housing credit (LIHC)
          investments  and a $3.3  million net  reduction  in income tax expense
          resulting from a change in California  state tax law  concerning  loan
          loss reserves. For 2001, the effective income tax rate was 33 percent.

     o    Return on average assets increased to 1.46 percent in 2002 compared to
          1.39  percent  in 2001.  Our return on  average  shareholders'  equity
          increased to 14.12 percent in 2002 compared to 13.88 percent in 2001.


                                      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  page.
The results show the financial performance of our major business units.

     The  risk-adjusted  return on  capital  (RAROC)  methodology  used 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 equity
prices.  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.  Also,  the tables  have been  expanded  to include
performance center earnings.  A performance center is a special unit of the Bank
whose income generating activities,  unlike typical profit centers, are based on
other business segment units' customer base. The revenues generated and expenses
incurred for those  transactions  entered into to accommodate  our customers are
allocated to other business segments where the customer  relationships reside. A
performance   center's   purpose  is  to  foster  cross  selling  with  a  total
profitability  view of the products and  services it manages.  For example,  the
Global Markets  Trading and Sales unit,  within the Global  Markets Group,  is a
performance  center that manages the foreign  exchange,  derivatives,  and fixed
income  securities  activities  within the Global Markets  organization.  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.  Our 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. The
business  units  are  assigned  the  costs of  products  and  services  directly
attributable to their business  activity  through  standard unit cost accounting
based on volume of usage. All other corporate  expenses  (overhead) are assigned
to the business units based on a predetermined percentage of usage.

                                      F-5

<PAGE>

     We have  restated  the  business  units'  results for the prior  periods to
reflect  changes in the  transfer  pricing  methodology  and any  reorganization
changes that may have occurred.

<TABLE>
<CAPTION>


                                                        COMMUNITY BANKING                           COMMERCIAL FINANCIAL
                                                  AND INVESTMENT SERVICES GROUP                        SERVICES GROUP
                                                     YEARS ENDED DECEMBER 31,                      YEARS ENDED DECEMBER 31,
                                             ____________________________________________   ____________________________________
                                                2000           2001           2002            2000         2001          2002
                                             __________     __________     __________       _________    _________     _________
<S>                                          <C>            <C>            <C>              <C>          <C>           <C>
RESULTS OF OPERATIONS AFTER
  PERFORMANCE CENTER EARNINGS
  (DOLLARS IN THOUSANDS):
  Net interest income.............           $  738,709     $  704,258     $  797,592       $ 764,370    $ 697,533     $ 656,902
  Noninterest income..............              412,199        432,012        445,569         173,140      158,459       195,546
                                             __________     __________     __________       _________    _________     _________
  Total revenue...................            1,150,908      1,136,270      1,243,161         937,510      855,992       852,448
  Noninterest expense(1)..........              722,525        750,908        790,508         303,210      316,890       347,148
  Credit expense..................               48,655         41,725         33,692         120,670      149,522       190,337
                                             __________     __________     __________       _________    _________     _________
  Income before income tax expense              379,728        343,637        418,961         513,630      389,580       314,963
  Income tax expense..............              145,246        131,441        160,253         184,172      131,565       101,304
                                             __________     __________     __________       _________    _________     _________
  Net income (loss)...............           $  234,482     $  212,196     $  258,708       $ 329,458    $ 258,015     $ 213,659
                                             ==========     ==========     ==========       =========    =========     =========
PERFORMANCE CENTER EARNINGS
  (dollars in thousands):
  Net interest income.............           $    1,079     $      873     $      816       $  (1,927)   $  (1,269)    $  (1,234)
  Noninterest income..............                9,398        (10,609)       (42,567)          8,453       27,966        55,091
  Noninterest expense.............                1,879         (7,223)       (32,824)             66        9,119        28,665
  Net Income......................                5,208         (1,659)        (5,617)          4,183       11,035        15,754
  Total loans (dollars in millions)                  25             19             26             (49)         (38)          (44)
AVERAGE BALANCES (DOLLARS IN
  MILLIONS):
  Total loans(2)..................           $    8,114     $    8,899     $   10,095       $  16,778    $  15,635     $  14,102
  Total assets....................                9,040          9,861         10,986          18,577       17,481        15,806
  Total deposits(2)...............               14,155         14,256         15,733           6,394        7,173         8,729
FINANCIAL RATIOS:
  Risk adjusted return on capital.                   41%            37%            45%             20%          14%           14%
  Return on average assets........                 2.59           2.15           2.35            1.77         1.48          1.35
  Efficiency ratio(3).............                 62.8           66.1           63.6            32.3         37.0          40.7

<CAPTION>
                                                          INTERNATIONAL
                                                          BANKING GROUP
                                                     YEARS ENDED DECEMBER 31,
                                             ______________________________________
                                               2000           2001           2002
                                             ________       ________       ________
<S>                                          <C>            <C>            <C>
RESULTS OF OPERATIONS AFTER
  PERFORMANCE CENTER EARNINGS
  (DOLLARS IN THOUSANDS):
  Net interest income.............           $ 34,987       $ 39,498       $ 38,196
  Noninterest income..............             60,114         59,022         68,049
                                             ________       ________       ________
  Total revenue...................             95,101         98,520        106,245
  Noninterest expense(1)..........             54,299         57,364         63,005
  Credit expense..................              7,008          4,424          1,904
                                             ________       ________       ________
  Income before income tax expense             33,794         36,732         41,336
  Income tax expense..............             12,926         14,050         15,811
                                             ________       ________       ________
  Net income (loss)...............           $ 20,868       $ 22,682       $ 25,525
                                             ========       ========       ========
PERFORMANCE CENTER EARNINGS
  (dollars in thousands):
  Net interest income.............           $     --       $     --       $     --
  Noninterest income..............                134            372          4,256
  Noninterest expense.............                669            471          3,396
  Net Income......................              (331)           (61)            531
  Total loans (dollars in millions)                --             --             --
AVERAGE BALANCES (DOLLARS IN
  MILLIONS):
  Total loans(2)..................           $    959       $    987       $  1,175
  Total assets....................              1,489          1,342          1,500
  Total deposits(2)...............              1,029          1,419          1,492
FINANCIAL RATIOS:
  Risk adjusted return on capital.                 22%            27%            38%
  Return on average assets........               1.40           1.69           1.70
  Efficiency ratio(3).............               57.1           58.2           59.3
</TABLE>


<TABLE>
<CAPTION>

                                                        GLOBAL
                                                    MARKETS GROUP                                 OTHER
                                                YEARS ENDED DECEMBER 31,                 YEARS ENDED DECEMBER 31,
                                           ________________________________         __________________________________
                                             2000        2001        2002             2000          2001        2002
                                           ________     ________   ________         _________     ________    ________
<S>                                        <C>          <C>        <C>              <C>           <C>         <C>
RESULTS OF OPERATIONS AFTER
  PERFORMANCE CENTER EARNINGS
  (DOLLARS IN THOUSANDS):
  Net interest income.............         $ (8,850)    $ 16,505   $(18,478)        $  55,224     $ 66,248    $ 87,757
  Noninterest income..............           (7,083)      19,633     10,104             8,810       47,278      16,708
                                           ________     ________   ________         _________     ________    ________
  Total revenue...................          (15,933)      36,138     (8,374)           64,034      113,526     104,465
  Noninterest expense (1).........           15,757       24,064     15,548            34,394       90,948     131,457
  Credit expense (income).........               --          200        200           263,667       89,129     (51,133)
                                           ________     ________   ________         _________     ________    ________
  Income (loss) before income tax
  expense (benefit)...............          (31,690)      11,874    (24,122)         (234,027)     (66,551)     24,141
  Income tax expense (benefit)....          (12,122)       4,542     (9,227)         (108,687)     (47,754)    (20,765)
                                           ________     ________   ________         _________     ________    ________
  Net income (loss)...............         $(19,568)      $7,332   $(14,895)        $(125,340)    $(18,797)   $ 44,906
                                           ========     ========   ========         =========     ========    ========
PERFORMANCE CENTER EARNINGS
  (DOLLARS IN THOUSANDS):
  Net interest income.............         $     --     $     --   $     --         $     848     $    396    $    418
  Noninterest income..............          (23,741)     (25,347)   (30,242)            5,756        7,618      13,462
  Noninterest expense.............           (2,860)      (4,914)    (5,422)              246        2,547       6,185
  Net Income......................          (12,894)     (12,617)   (15,326)            3,834        3,302       4,658
  Total loans (dollars in millions)              --           --         --                24           19          18
AVERAGE BALANCES (DOLLARS IN
  MILLIONS):
  Total loans(2)..................         $     --     $     80   $    113         $     459     $    350    $    322
  Total assets....................            3,740        5,210      7,000               826          725         816
  Total deposits(2)...............            3,235        2,928      1,810               715          766         989
FINANCIAL RATIOS:
  Risk adjusted return on capital.              (13)%          2%        (2)%              na           na          na
  Return on average assets........            (0.56)        0.12      (0.22)               na           na          na
  Efficiency ratio(3).............            (98.9)        66.6     (185.7)               na           na          na

<CAPTION>

                                                               UNIONBANCAL
                                                               CORPORATION
                                                         YEARS ENDED DECEMBER 31,
                                           ________________________________________________
                                               2000               2001               2002
                                           __________         __________         __________
<S>                                        <C>                <C>                <C>
RESULTS OF OPERATIONS AFTER
  PERFORMANCE CENTER EARNINGS
  (DOLLARS IN THOUSANDS):
  Net interest income.............         $1,584,440         $1,524,042         $1,561,969
  Noninterest income..............            647,180            716,404            735,976
                                           __________         __________         __________
  Total revenue...................          2,231,620          2,240,446          2,297,945
  Noninterest expense (1).........          1,130,185          1,240,174          1,347,666
  Credit expense (income).........            440,000            285,000            175,000
                                           __________         __________         __________
  Income (loss) before income tax
  expense (benefit)...............            661,435            715,272            775,279
  Income tax expense (benefit)....            221,535            233,844            247,376
                                           __________         __________         __________
  Net income (loss)...............         $  439,900         $  481,428         $  527,903
                                           ==========         ==========         ==========
PERFORMANCE CENTER EARNINGS
  (DOLLARS IN THOUSANDS):
  Net interest income.............         $       --         $       --         $       --
  Noninterest income..............                 --                 --                 --
  Noninterest expense.............                 --                 --                 --
  Net Income......................                 --                 --                 --
  Total loans (dollars in millions)                --                 --                 --
AVERAGE BALANCES (DOLLARS IN
  MILLIONS):
  Total loans(2)..................         $   26,310            $25,951            $25,807
  Total assets....................             33,672             34,619             36,108
  Total deposits(2)...............             25,528             26,542             28,753
FINANCIAL RATIOS:
  Risk adjusted return on capital.                 na                 na                 na
  Return on average assets........               1.31%              1.39%              1.46%
  Efficiency ratio(3).............               50.6               55.3               58.6

<FN>
__________
     (1)  "Other"  includes  the 2000  restructuring  credits  of $19.0  million
          ($11.8 million, net of taxes).
     (2)  Represents   loans  and  deposits  for  each  business  segment  after
          allocation  between the segments of loans and deposits  originated  in
          one segment but managed by another segment.
     (3)  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 $(0.1)
          million in 2000, $(0.0) million in 2001 and 0.1 million for 2002.
     na   = not applicable
</FN>
</TABLE>

                                      F-6
<PAGE>


     COMMUNITY BANKING AND INVESTMENT SERVICES GROUP

     The Community  Banking and Investment  Services  Group  provides  financial
products  including  a set of  credit,  deposit,  trust,  risk  management,  and
insurance products delivered through branches,  relationship  managers,  private
bankers,  trust  administrators,  and insurance  agents to individuals and small
businesses.

     In 2002, net income  increased  $46.5 million,  or 22 percent,  compared to
2001. Total revenue increased $106.9 million, or 9.4 percent, compared to a year
earlier.   Increased   asset  and  deposit   volumes  offset  the  effect  of  a
significantly  lower interest rate  environment  leading to an increase of $93.3
million,  or 13 percent,  in net interest income over the prior year.  Excluding
auto lease  residual  writedowns of $28.3 million and $9.0 million,  in 2001 and
2002, respectively,  and a $10.9 million gain on the sale of our Guam and Saipan
branches  in 2001 and the impact of  performance  center  earnings,  noninterest
income was $37.1 million, or 8 percent, higher than the prior year primarily due
to our  acquisition  of  Armstrong/Robitaille,  Inc. and higher  deposit-related
service fees. Noninterest expense increased $39.6 million, or 5 percent, in 2002
compared to 2001 with the majority of that increase being attributable to higher
salaries  and  employee  benefits  mainly  related to deposit  gathering,  small
business growth, acquisitions and residential loan growth over 2001.

     In 2002,  the Community  Banking and Investment  Services Group  emphasized
growth in the consumer asset portfolio,  expanding wealth  management  services,
extending  the small  business  franchise,  expanding  the branch  network,  and
expanding cross selling activities throughout the bank. The strategy for growing
the  consumer  asset  portfolio  primarily  focused on mortgage  and home equity
products that may be originated  through the branch network,  as well as through
channels such as wholesalers,  correspondents,  and whole loan purchases.  As of
December 31, 2002,  residential loans have grown by $1.6 billion, or 33 percent,
from the prior  year.  The Wealth  Management  division is focused on becoming a
growing provider of banking and investment products for affluent  individuals in
geographic  areas  already  served by us.  We seek to  provide  quality  service
superior  to that of our  competitors  and offer  our  customers  an  attractive
product  suite.  Core elements of the  initiative  to extend our small  business
franchise include improving our sales force,  increasing  marketing  activities,
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.  During 2002, we completed our acquisitions
of Valencia  Bank and Trust,  a commercial  bank with $266 million in assets and
five  branches,  and First Western Bank, a commercial  bank with $224 million in
assets and seven branches.

     The Community  Banking and  Investment  Services  Group is comprised of six
major divisions:  Community Banking,  Wealth Management,  Institutional Services
and Asset Management,  Consumer Asset Management,  Government and Not-For-Profit
Markets, and Insurance Services.

     COMMUNITY BANKING serves its customers through 259 full-service branches in
California,  6 full-service branches in Oregon and Washington,  and a network of
520 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 merchant services.

     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 consumer financing;

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

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

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


                                      F-7
<PAGE>

     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 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  deposit  and credit  products.  A key  strategy of The
          Private Bank is to expand its  business by  leveraging  existing  Bank
          client relationships.  Through 13 existing locations, The Private Bank
          relationship   managers  offer  all  of  our  available  products  and
          services.

     o    Our  brokerage   products  and  services  are  provided  through  UBOC
          Investment  Services,   Inc.,  a  registered   broker/dealer  offering
          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 institutional  clients and
          mutual  funds,  including  the  affiliated  HighMark  Funds.  It  also
          provides advisory services to Union Bank of California, N.A. trust and
          agency clients, including corporations, pension funds and individuals.
          HighMark  Capital  Management,  Inc. also provides mutual fund support
          services.  HighMark Capital  Management Inc.'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    Institutional   Services  provides   custody,   corporate  trust,  and
          retirement plan services.  Custody Services provides both domestic and
          international   safekeeping/settlement   services   in   addition   to
          securities lending.  Corporate Trust acts as trustee for corporate and
          municipal debt issues.  Retirement  Services  provides a full range of
          defined  benefit and  defined  contribution  administrative  services,
          including trustee services, administration, investment management, and
          401(k) valuation services.  The client base of Institutional  Services
          includes financial  institutions,  corporations,  government agencies,
          unions,  insurance companies,  mutual funds,  investment managers, and
          non-profit  organizations.  Institutional  Services'  strategy  is  to
          continue to leverage and expand our position in our target markets. As
          we announced on April 30, 2002, we acquired a  substantial  portion of
          the trust and  institutional  custody  business  of a bank  located in
          Southern California.

     CONSUMER  ASSET  MANAGEMENT is the  centralized  underwriting,  processing,
servicing,   collection  and   administration   for  consumer  assets  including
residential loans and merchant bank cards.

     o    Consumer Asset Management is centralized in two California  sites, one
          in San Diego and one in Brea, and

     o    provides  customer and credit  management  services for consumer  loan
          products.

     GOVERNMENT  AND  NOT-FOR-PROFIT  MARKETS  provides a full range of treasury
management,   investment,   and  trust  services  to  government   entities  and
not-for-profit organizations.

     The  division,  which  primarily  focuses  on  local,  state,  and  federal
agencies,  includes  an  expanding  product  offering  to  the  Native  American
government  market.  Niche markets have been developed that service colleges and
universities,   trade  associations,   cultural   institutions,   and  religious
non-profit  organizations.  The  division's  strategy  is to expand  its  market
presence by  continued  delivery of cash  management  products,  internet  based
technology solutions,  and expanding its tax-exempt lending capabilities to meet
existing clients' needs.

                                      F-8
<PAGE>

     INSURANCE  SERVICES  provides  a range  of  risk  management  services  and
insurance products to business and retail customers.

     o    The group,  which  includes  our fourth  quarter 2001  acquisition  of
          Armstrong/Robitaille,  Inc.,  a  regional  insurance  broker,  and our
          fourth quarter 2002 acquisition of John Burnham & Company,  offers its
          risk management and insurance  products  through offices in California
          and Oregon.

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

     The group  competes  with larger  banks by  attempting  to provide  service
quality superior to that of its major competitors.  The group's primary means of
competing with community  banks include its branch network and its technology to
deliver banking  services.  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,  Citibank,
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  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 focus  specialized  financing  expertise  to  specific
geographic markets and industry segments such as energy, entertainment, and real
estate. Relationship managers in the Commercial Financial Services Group provide
credit services,  including commercial loans,  accounts receivable 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 cash management  services  delivered through deposit managers with experience
in cash management solutions for businesses.

     In 2002, net income  decreased  $44.4 million,  or 17 percent,  compared to
2001.  Net interest  income  decreased  $40.6 million,  or 6 percent,  primarily
attributable  to the lower  interest  rate  environment,  wherein our  wholesale
liabilities  are closely tied to the effects of the lower  treasury  bill rates.
The impact on earnings of decreasing  earning asset  balances was mitigated by a
significantly  lower  cost of funds  resulting  from this  lower  interest  rate
environment.  Excluding lower net losses in the private equity portfolio of $3.4
million in 2002, noninterest income increased $33.6 million, or 19 percent. This
19 percent increase was mainly  attributable to higher  deposit-related  service
fees. Noninterest expense increased $30.3 million, or 10 percent,  compared to a
year  earlier due to higher  expenses  to support  increased  product  sales and
deposit  volume.  Credit expense  increased $40.8 million due to a refinement in
the RAROC credit metrics that were implemented in late 2001 and not reflected in
our first, second and third quarters 2001 results.

     The group's  initiatives during 2002 included  expanding  wholesale deposit
activities  and  increasing  domestic trade  financing.  Loan growth  strategies
included  originating,  underwriting  and  syndicating  loans in core competency
markets, such as the California  middle-market,  commercial real estate, energy,
entertainment,   equipment  leasing  and  commercial  finance.   The  Commercial
Financial Services Group provides strong processing services, including services
such as check  processing,  front-end item  processing,  cash vault services and
digital imaging.

     The  Commercial  Financial  Services  Group is comprised  of the  following
business units:

     o    the Commercial Banking Division, which serves California middle-market
          and  large  corporate   companies  with  commercial   lending,   trade
          financing, and asset-based loans;


                                      F-9
<PAGE>


     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  limited
          merchant and investment banking related products and services;

     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, nationwide; and

     o    the National  Banking  Division,  which provides  custom  financing to
          middle-market and large corporate clients in their defined  industries
          and geographic markets.

     The group  competes with other banks  primarily on the basis of the quality
of its relationship  managers, the delivery of quality customer service, and its
reputation as a "business bank."

     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 US  corporate  clients in  selected  countries  where we have
branches,  including Hong Kong, Japan, Korea, the Philippines and Taiwan. In the
US, the group serves mostly  subsidiaries  and affiliates of non-Japanese  Asian
companies and US branches/agencies of foreign banks. The majority of the revenue
generated by the International Banking Group is from customers domiciled outside
of the US.

     In 2002,  net income  increased  $2.8 million,  or 13 percent,  compared to
2001.  Total revenue in 2002 increased $7.7 million,  or 8 percent,  compared to
2001.  Net interest  income  decreased  $1.3 million,  or 3 percent,  from 2001,
mainly due to the lower interest rate environment.  Noninterest  income was $9.0
million, or 15 percent,  higher than 2001, mainly attributable to higher foreign
remittance  and  collection  commissions,  reflecting a strategic  focus on this
business,  and merchant card activity in the current year.  Noninterest  expense
increased $5.6 million,  or 10 percent,  compared to 2001,  with the majority of
that increase  attributable to merchant card activity.  Also contributing to the
group's overall increase in net income was a reduction in credit expense of $2.5
million,  or 57 percent,  compared to 2001. The  International  Banking  Group's
business revolves around short-term,  trade financing, mostly to banks, which we
believe  tends to result in  significantly  lower  credit risk when  compared to
other lending activities and service-related income.

     The group has a long and stable history of providing  correspondent banking
and trade-related products and services to international financial institutions.
We believe the group continues to be a market leader,  achieving strong customer
loyalty in the correspondent  banking market.  The International  Banking Group,

                                      F-10
<PAGE>


headquartered in San Francisco,  also maintains  representative  offices in 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  contracts
and interest rate swaps and options. It trades money market, government, agency,
and other securities to meet investment needs of our  institutional and business
clients.  Another  primary  area of the  group is  treasury  management  for our
company,  which encompasses wholesale funding,  liquidity  management,  interest
rate risk management,  including  securities portfolio  management,  and hedging
activities.

     In 2002, net loss was $14.9 million  compared to net income of $7.3 million
in 2001. Total revenue in 2002 decreased $44.5 million, or 123 percent, compared
to 2001,  resulting from a $35.0 million  decrease in net interest  income and a
$9.5 million, or 49 percent, decrease in noninterest income. The decrease in net
interest income from 2001 was mainly  attributable to a declining  interest rate
environment, offset in part by reduced volume and costs of wholesale funding and
increased income from hedged positions. Compared to 2001, the noninterest income
decrease was mainly attributable to lower net gains on the sale of securities in
our securities  portfolio of $7.7 million in 2002 and to higher  distribution of
performance  center earnings to other business segments of the bank during 2002.
Compared to 2001,  noninterest expense decreased $8.5 million, or 35 percent, as
higher expenses were recorded in the prior year at the adoption of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."

     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
          amortization  for periods prior to January 1, 2002,  and certain other
          nonrecurring  items such as merger and  integration  expense,  certain
          parent company non-bank subsidiaries, and the elimination of the fully
          taxable-equivalent basis amount;

     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  Pacific  Rim  Corporate  Group,  which  offers a range of credit,
          deposit, and investment  management products and services to companies
          in the US, which are affiliated with companies headquartered in Japan;
          and

     o    the residual costs of support groups.

     Net income for "Other" in 2002 was $44.9 million. The results were impacted
by the following factors:

     o    Credit expense  (income) of ($51.1)  million was due to the difference
          between the $175.0  million in provision for credit losses  calculated
          under our US GAAP  methodology  and the  $226.1  million  in  expected
          losses for the reportable business segments,  which utilizes the RAROC
          methodology;

     o    Net  interest  income  of  $87.8  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  deposits in the Pacific Rim  Corporate
          Group;

     o    Noninterest income of $16.7 million; and

     o    Noninterest  expense of $131.5  million that  included a $15.3 million
          amortization   adjustment  related  to  the   standardization  of  our
          accounting for LIHC investments.

                                      F-11
<PAGE>

     Net loss for "Other" in 2001 was $18.8  million.  The results were impacted
by the following factors:

     o    Credit  expense of $89.1  million  due to the  difference  between the
          $285.0 million in provision for credit losses  calculated under our US
          GAAP  methodology  and the $195.9  million in expected  losses for the
          reportable  business  segments,  which utilizes the RAROC methodology;
          offset by

     o    Net  interest  income  of  $66.2  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  deposits in the Pacific Rim  Corporate
          Group;

     o    Noninterest  income of $47.3  million  included a $20.7  million  gain
          recognized  when our stock  holding in STAR System was  exchanged  for
          Concord  EFS  stock,  a net  gain of  $13.9  million  from the sale of
          securities  obtained from the sale of  collateral,  and a $6.1 million
          gain on the sale of a distressed loan held for sale; and

     o    Noninterest expense of $90.9 million.


FINANCIAL PERFORMANCE GOALS

     In connection with our strategic initiatives, we have established long-term
financial  performance  goals,  which  serve as a tool for  measuring  long-term
success  of our  operating  strategies.  Presently,  these  long-term  financial
performance goals include:


PERFORMANCE RATIO                                                     GOAL
_______________________________________________________________   ____________
o  Return on average shareholders' equity......................     15% to 17%
o  Earnings per share growth...................................     10% to 12%
o  Efficiency ratio............................................     54% to 56%
o  Tangible shareholders' equity to assets.....................   7.5% to 8.5%


     Achievement of our long-term financial performance goals is subject to many
risks and uncertainties,  including those described under "Certain Business Risk
Factors"  beginning  on  page  F-41.  In  particular,  our  achievement  of  the
efficiency ratio goal has been adversely impacted by the significant  reductions
in  interest  rates.  Beginning  in 2000,  these rate  changes  have  negatively
impacted our annual efficiency ratio by as little as 300 basis points to as much
as 400 basis points,  which will continue to be felt in 2003.  Absent the impact
on net interest income from the lower interest rate  environment,  we would have
met or  exceeded  our  financial  performance  goals for our  efficiency  ratio.
Additionally, over the past three years, we have shifted our focus to increasing
the growth rate of fee-oriented  and  deposit-related  businesses and to growing
the share of earnings streams from businesses with diversified credit exposures.
The  resulting  business mix has produced  less  volatility  in our earnings and
credit risk, but is accompanied by higher labor costs.  Though these  businesses
have resultant higher efficiency ratios,  their year over year efficiency ratios
are declining as these  businesses take advantage of scale and other back office
consolidations. We continue to look for opportunities to reduce our expenses and
increase our revenues in order to meet all of our  financial  performance  goals
during these challenging times.

     We  periodically  re-evaluate  the various  elements of our strategic plan,
including our long-term financial performance goals. We expect to engage in such
re- evaluation of these goals over the course of 2003 and  continuing  into 2004
as we develop  the next phase of our  strategic  plan.  Accordingly,  such goals
could well change as a result of this  process and may change from  time-to-time
thereafter.

                                      F-12

<PAGE>

NET INTEREST INCOME

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

<TABLE>
<CAPTION>

                                                                   YEARS ENDED DECEMBER 31,
                                       _______________________________________________________________________
                                                      2000                                     2001
                                       __________________________________    _________________________________
                                                      INTEREST    AVERAGE                   INTEREST   AVERAGE
                                         AVERAGE      INCOME/      YIELD/      AVERAGE      INCOME/     YIELD/
(DOLLARS IN THOUSANDS)                   BALANCE      EXPENSE(1)   RATE(1)     BALANCE     EXPENSE(1)   RATE(1)
__________________________________     ___________    __________  ________   ___________   __________  _______
<S>                                    <C>            <C>            <C>     <C>           <C>           <C>
ASSETS
Loans:(2)
  Domestic........................     $25,260,924    $2,170,653     8.59%   $24,898,011   $1,828,004     7.34%
  Foreign(3)......................       1,049,496        71,812     6.84      1,053,010       56,030     5.32
Securities--taxable...............       3,426,164       221,606     6.47      4,669,695      290,019     6.21
Securities--tax-exempt............          68,759         6,772     9.85         53,334        5,768    10.81
Interest bearing deposits in banks         174,769         9,126     5.22         70,510        2,850     4.04
Federal funds sold and securities
  purchased under resale agreements        131,449         8,160     6.21        217,369        6,844     3.15
Trading account assets............         268,169        15,519     5.79        329,853        7,853     2.38
                                       ___________    __________             ___________   __________
    Total earning assets..........      30,379,730     2,503,648     8.24     31,291,782    2,197,368     7.02

Allowance for credit losses.......        (509,653)                             (635,063)
Cash and due from banks...........       2,140,369                             2,203,075
Premises and equipment, net.......         429,668                               487,842
Other assets......................       1,231,944                             1,271,586
                                       ___________                           ___________
Total assets......................     $33,672,058                           $34,619,222
                                       ===========                           ===========
LIABILITIES
Domestic deposits:
  Interest bearing................     $ 6,039,773       163,446     2.71     $6,211,821      138,457     2.23
  Savings and consumer time.......       3,371,948       119,910     3.56      3,421,933      106,177     3.10
  Large time......................       4,550,938       274,052     6.02      4,432,365      200,852     4.53
Foreign deposits(3)...............       1,924,839       107,183     5.57      1,931,190       69,830     3.62
                                       ___________    __________             ___________   __________
  Total interest bearing deposits.      15,887,498       664,591     4.18     15,997,309      515,316     3.22
                                       ___________    __________             ___________   __________
Federal funds purchased and
  securities sold under repurchase
  agreements......................       1,548,730        96,606     6.24      1,243,933       52,153     4.19
Commercial paper..................       1,521,614        94,905     6.24      1,287,603       52,439     4.07
Other borrowed funds..............         314,425        16,709     5.31        464,033       20,180     4.35
Medium and long-term debt.........         255,426        17,617     6.90        217,534       10,445     4.80
UnionBanCal Corporation-obligated
  mandatorily redeemable preferred
  securities of subsidiary grantor
  trust...........................         350,000        26,212     7.49        352,345       20,736     5.88
                                       ___________    __________             ___________   __________
  Total borrowed funds............       3,990,195       252,049     6.32      3,565,448      155,953     4.37
                                       ___________    __________             ___________   __________
  Total interest bearing liabilities    19,877,693       916,640     4.61     19,562,757      671,269     3.43

Noninterest bearing deposits......       9,640,049                            10,545,003
Other liabilities.................       1,014,472                             1,043,743
                                       ___________                           ___________
    Total liabilities.............      30,532,214                            31,151,503
SHAREHOLDERS' EQUITY
Common equity.....................       3,139,844                             3,467,719
                                       ___________                           ___________
    Total shareholders' equity....       3,139,844                             3,467,719
                                       ___________                           ___________
    Total liabilities and
      shareholders' equity........     $33,672,058                           $34,619,222
                                       ===========                           ===========
Net interest income/margin
  (taxable-equivalent basis)......                     1,587,008     5.22%                1,526,099     4.87%
Less: taxable-equivalent adjustment                        2,568                              2,057
                                                      __________                         __________
Net interest income...............                    $1,584,440                         $1,524,042
                                                      ==========                         ==========

<CAPTION>

                                              YEARS ENDED DECEMBER 31,
                                       _____________________________________
                                                      2002
                                       __________________________________
                                                      INTEREST    AVERAGE
                                         AVERAGE      INCOME/      YIELD/
(DOLLARS IN THOUSANDS)                   BALANCE      EXPENSE(1)   RATE(1)
__________________________________     ___________    __________  ________
<S>                                    <C>              <C>          <C>
ASSETS
Loans:(2)
  Domestic........................     $24,634,530      $1,487,767    6.04%
  Foreign(3)......................       1,172,660          32,285    2.75
Securities--taxable...............       5,858,193         313,232    5.35
Securities--tax-exempt............          37,835           3,968   10.49
Interest bearing deposits in banks         124,023           2,806    2.26
Federal funds sold and securities
  purchased under resale agreements        840,320          13,895    1.65
Trading account assets............         315,810           4,606    1.46
                                       ___________      __________
    Total earning assets..........      32,983,371       1,858,559    5.63

Allowance for credit losses.......        (635,057)
Cash and due from banks...........       1,928,821
Premises and equipment, net.......         498,454
Other assets......................       1,332,907
                                       ___________
Total assets......................     $36,108,496
                                       ===========

LIABILITIES
Domestic deposits:
  Interest bearing................      $8,159,892          89,952    1.10
  Savings and consumer time.......       3,632,748          60,758    1.67
  Large time......................       2,958,162          64,428    2.18
Foreign deposits(3)...............       1,535,837          21,110    1.37
                                       ___________      __________
  Total interest bearing deposits.      16,286,639         236,248    1.45
                                       ___________      __________
Federal funds purchased and
  securities sold under repurchase
  agreements......................         427,610           6,030    1.41
Commercial paper..................         997,543          16,645    1.67
Other borrowed funds..............         469,877          10,111    2.15
Medium and long-term debt.........         399,769           9,344    2.34
UnionBanCal Corporation-obligated
  mandatorily redeemable preferred
  securities of subsidiary grantor
  trust...........................         352,106          15,625    4.44
                                       ___________      __________
  Total borrowed funds............       2,646,905          57,755    2.18
                                       ___________      __________
  Total interest bearing liabilities    18,933,544         294,003    1.55

Noninterest bearing deposits......      12,466,546
Other liabilities.................         968,876
                                       ___________
    Total liabilities.............      32,368,966
SHAREHOLDERS' EQUITY
Common equity.....................       3,739,530
                                       ___________
    Total shareholders' equity....       3,739,530
                                       ___________
    Total liabilities and
      shareholders' equity........     $36,108,496
                                       ===========
Net interest income/margin
  (taxable-equivalent basis)......                     1,564,556      4.74%
Less: taxable-equivalent adjustment                        2,587
                                                      __________
Net interest income...............                    $1,561,969
                                                      ==========
<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.
</FN>
</TABLE>


                                      F-13

<PAGE>

     Net interest income, on a taxable-equivalent basis, was $1,564.6 million in
2002, compared with $1,526.1 million in 2001. This increase of $38.5 million, or
3 percent,  was attributable  primarily to the impact of the decreasing interest
rate  environment  throughout  the prior year on interest  bearing  liabilities,
increasing  average  noninterest  bearing  deposits,  and higher earning assets,
partly offset by  significantly  lower yields on our earning assets.  Decreasing
market rates resulted in lower rates on our interest bearing  liabilities of 188
basis points on average balances of $18.9 billion,  which was partly offset by a
lower  average  yield of 139 basis  points on  average  earning  assets of $33.0
billion, which was favorably impacted by higher interest rate derivatives income
of $64.4 million.  Mitigating the impact of the lower interest rate  environment
on our net  interest  margin was an increase in average  earning  assets of $1.7
billion,  primarily  in  securities,  funded by a $1.9  billion,  or 18 percent,
increase in average noninterest bearing deposits.  The resulting impact of these
changes on our net  interest  margin was a decrease  of 13 basis  points to 4.74
percent.

     Average  earning  assets were $33.0  billion in 2002,  compared  with $31.3
billion in 2001. This growth was attributable to a $1.2 billion,  or 25 percent,
increase in average securities, partly offset by a $143.8 million, or 1 percent,
decrease  in average  loans.  The  increase  in average  securities,  which were
comprised  primarily of fixed rate securities,  reflected liquidity and interest
rate risk management  actions.  The decline in average loans was mostly due to a
$1.9 billion decrease in average commercial loans mainly  attributable to slower
loan  growth due to economic  conditions,  loan  sales,  and a reduction  in our
exposure to  nonrelationship  syndicated loans. The decrease in commercial loans
was partly  offset by an  increase  in  average  residential  mortgages  of $1.5
billion,  which was a result of a strategic  portfolio  shift from more volatile
commercial  loans.  Other  loan  activities  included  an  increase  in  average
commercial  mortgages of $442.1 million and a decrease in average consumer loans
and lease financing of $233.6 million and $149.5 million, respectively.

     Deposit growth,  especially in our title and escrow industries,  has been a
continued  strength,  contributing  significantly  to our  lower  cost of  funds
year-over-year.  Average  noninterest  bearing deposits were $1.9 billion, or 18
percent,  higher in 2002 over the prior  year,  which  included  a $0.7  billion
increase in average title and escrow deposits.

                                      F-14

<PAGE>

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 for 2002 and 2001.  The  changes  in net
interest income between  periods have been reflected as  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,
                                      _______________________________________________________________________________________
                                               2001 VERSUS 2000                              2002 VERSUS 2001
                                      _________________________________________      ________________________________________
                                            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.........................   $ (31,174)      $(311,475)      $(342,649)     $(19,340)     $(320,897)      $(340,237)
  Foreign(1).......................         240         (16,022)        (15,782)        6,365        (30,110)        (23,745)
Securities--taxable................      80,456         (12,043)         68,413        73,806        (50,593)         23,213
Securities--tax-exempt.............      (1,519)            515          (1,004)       (1,675)          (125)         (1,800)
Interest bearing deposits in banks.      (5,442)           (834)         (6,276)        2,162         (2,206)            (44)
Federal funds sold and securities
  purchased under resale agreements       5,336          (6,652)         (1,316)       19,623        (12,572)          7,051
Trading account assets.............       3,572         (11,238)         (7,666)         (334)        (2,913)         (3,247)
                                      _________       _________       _________      ________      _________       __________
    Total earning assets...........      51,469        (357,749)       (306,280)       80,607       (419,416)       (338,809)
                                      _________       _________       _________      ________      _________       __________
CHANGES IN INTEREST EXPENSE
Domestic deposits:
  Interest bearing.................       4,663         (29,652)        (24,989)       43,442        (91,947)        (48,505)
  Savings and consumer time........       1,779         (15,512)        (13,733)        6,535        (51,954)        (45,419)
  Large time.......................      (7,138)        (66,062)        (73,200)      (66,781)       (69,643)       (136,424)
Foreign deposits(1)................         354         (37,707)        (37,353)      (14,312)       (34,408)        (48,720)
                                      _________       _________       _________      ________      _________       __________
  Total interest bearing deposits          (342)       (148,933)       (149,275)      (31,116)      (247,952)       (279,068)
                                      _________       _________       _________      ________      _________       __________
Federal funds purchased and
  securities sold under repurchase
  agreements.......................     (19,019)        (25,434)        (44,453)      (34,204)       (11,919)        (46,123)
Commercial paper...................     (14,602)        (27,864)        (42,466)      (11,805)       (23,989)        (35,794)
Other borrowed funds...............       7,944          (4,473)           3,471          254        (10,323)        (10,069)
Medium and long-term debt..........      (2,615)         (4,557)         (7,172)        8,747         (9,848)         (1,101)
UnionBanCal Corporation-obligated
  mandatorily redeemable preferred
  securities of subsidiary grantor
  trust............................         176          (5,652)         (5,476)          (14)        (5,097)         (5,111)
                                      _________       _________       _________      ________      _________       __________
    Total borrowed funds...........     (28,116)        (67,980)        (96,096)      (37,022)       (61,176)        (98,198)
                                      _________       _________       _________      ________      _________       __________
  Total interest bearing liabilities    (28,458)       (216,913)       (245,371)      (68,138)      (309,128)       (377,266)
                                      _________       _________       _________      ________      _________       __________
  Changes in net interest income      $  79,927       $(140,836)      $ (60,909)     $148,745      $(110,288)      $  38,457
                                      =========       =========       =========      ========      =========       ==========
<FN>
__________
(1)  Foreign loans and deposits are those loans and deposits originated in
     foreign branches.
</FN>
</TABLE>

                                      F-15

<PAGE>
<TABLE>
<CAPTION>

NONINTEREST INCOME

                                                                                              INCREASE (DECREASE)
                                                                               _______________________________________________
                                                                                            YEARS ENDED DECEMBER 31,
                                                                               _______________________________________________
                                                  YEARS ENDED DECEMBER 31,       2001 VERSUS 2000           2002 VERSUS 2001
                                           _______________________________     ____________________       ____________________
(DOLLARS IN THOUSANDS)                       2000        2001       2002        AMOUNT      PERCENT        AMOUNT      PERCENT
______________________________________     ________    ________   ________     ________     _______       ________     _______
<S>                                        <C>         <C>        <C>          <C>              <C>       <C>               <C>
Service charges on deposit accounts        $210,257    $245,116   $275,820     $ 34,859         17%       $ 30,704          13%
Trust and investment management fees        154,387     154,092    143,953         (295)         --        (10,139)         (7)
Merchant transaction processing fees         73,521      80,384     87,961        6,863           9          7,577           9
International commissions and fees..         71,189      71,337     76,956          148          --          5,619           8
Brokerage commissions and fees......         35,755      36,317     36,301          562           2            (16)         --
Merchant banking fees...............         48,985      33,532     32,314      (15,453)        (32)        (1,218)         (4)
Foreign exchange trading gains, net          28,057      26,565     28,548       (1,492)         (5)         1,983           7
Insurance commissions...............             --         920     27,208          920          nm         26,288          nm
Gain on exchange of STAR System stock            --      20,700         --       20,700          nm        (20,700)       (100)
Securities gains (losses), net......          8,784       8,654     (3,796)        (130)         (1)       (12,450)         nm
Other...............................         16,245      38,787     30,711       22,542         139         (8,076)        (21)
                                           ________    ________   ________     ________                   ________
  Total noninterest income..........       $647,180    $716,404   $735,976     $ 69,224          11%      $ 19,572           3%
                                           ========    ========   ========     ========                   ========
<FN>
__________
nm = not meaningful
</FN>
</TABLE>

     In 2002,  noninterest  income  was $736.0  million,  an  increase  of $19.6
million, or 3 percent,  over 2001. Excluding a $20.7 million gain when our stock
holding in STAR System was  exchanged  for Concord EFS stock and a $10.9 million
gain on the  sale of our  Guam  and  Saipan  branches  both in the  prior  year,
noninterest  income  increased  $51.2 million,  or 7 percent.  This increase was
mainly  attributable  to a $30.7 million  increase in service charges on deposit
accounts,  incremental  insurance  commissions  of $26.3 million  related to our
insurance agency acquisitions, lower residual value writedowns in our auto lease
portfolio  of $19.3  million,  a $7.6 million  increase in merchant  transaction
processing fees, and a $5.6 million  increase in  international  commissions and
fees,  partly  offset  by a $10.1  million  decrease  in  trust  and  investment
management fees. In addition, securities losses, net, were $3.8 million in 2002,
compared to securities gains, net, of $8.7 million in 2001.

     o    Revenue from service  charges on deposit  accounts was $275.8 million,
          an increase  of 13 percent  over 2001.  This  increase  was  primarily
          attributable to an 18 percent  increase in average demand deposits and
          reductions in the earnings credit rates,  caused by the lower interest
          rate  environment  on analyzed  deposit  accounts,  which  resulted in
          customers  paying fees for services  rather than  increasing  required
          deposit balances.

     o    Trust and investment  management fees were $144.0 million,  a decrease
          of 7 percent over 2001.  This  decrease is  attributable  to declining
          market  conditions and their impact on asset-based  fees. Assets under
          management  declined to $133.3  billion,  a decline of 5 percent  from
          2001.

     o    Merchant  transaction  processing fees were $88.0 million, an increase
          of 9 percent over 2001. This increase was primarily attributable to an
          increase in the volume of credit card drafts  deposited  by  merchants
          and increased consumer usage of our enhanced Gold and Platinum version
          of our standard  MasterMoney  Card (debit  card) aimed at  stimulating
          consumer usage for higher dollar purchases.

     o    Insurance  commissions were $27.2 million  representing a full year of
          revenue    from   our   fourth    quarter    2001    acquisition    of
          Armstrong/Robitaille, Inc.

     o    Securities  losses,  net,  were $3.8  million  compared to  securities
          gains,  net, of $8.7 million in the prior year.  In 2002,  we recorded
          permanent  writedowns on private  capital  securities of $11.9 million
          and a $1.0 million  writedown  on a  collateralized  loan  obligation,
          partly offset by realized gains on private capital  securities of $7.1
          million and a gain on the securities in our  securities  available for
          sale  portfolio  of  $2.0  million,  which  were  sold  as part of our
          asset/liability management strategy. In 2001, we had

                                      F-16

<PAGE>

          realized gains of $29.9 million including gains of $9.8 million on the
          securities in our securities available for sale portfolio,  which were
          sold  as  part  of our  asset/liability  management  strategy,  a $9.5
          million gain on the sale of our Concord EFS stock, and $6.0 million in
          realized gains on venture capital and equity  investments,  which were
          partially offset by permanent writedowns on venture capital and equity
          investments of $21.3 million.

     o    Other noninterest income was $30.7 million, a decrease of $8.1 million
          over 2001.  Excluding a $10.9 million gain on the sale of our Guam and
          Saipan branches in the prior year, other noninterest  income increased
          $2.8 million.  This increase was mainly attributable to lower residual
          value  writedowns in our auto lease  portfolio of $9.0 million in 2002
          compared to $28.3  million in 2001,  which was partly offset by higher
          unrealized  losses on private  capital  securities of $11.7 million in
          the current  year  compared to an  unrealized  loss of $4.7 million in
          2001, and $5.0 million in higher valuation  reserve for loans held for
          sale in the current year.

<TABLE>
<CAPTION>

NONINTEREST EXPENSE


                                                                                              INCREASE (DECREASE)
                                                                           _________________________________________________
                                                                                            YEARS ENDED DECEMBER 31,
                                                                           _________________________________________________
                                         YEARS ENDED DECEMBER 31,             2001 VERSUS 2000            2002 VERSUS 2001
                                ______________________________________     ______________________       ____________________
(DOLLARS IN THOUSANDS)             2000          2001          2002          AMOUNT       PERCENT        AMOUNT      PERCENT
_____________________________   __________    __________    __________     ___________    _______       ________     _______
<S>                             <C>           <C>           <C>               <C>             <C>       <C>              <C>
Salaries and other
  compensation..........        $  517,459    $  547,549    $  599,617         $30,090         6%       $ 52,068          10%
Employee benefits.......            83,003       112,291       131,549          29,288        35          19,258          17
                                __________    __________    __________         _______                  ________
  Salaries and employee
  benefits..............           600,462       659,840       731,166          59,378        10          71,326          11
Net occupancy...........            92,567        95,152       106,592           2,585         3          11,440          12
Equipment...............            63,290        64,357        66,160           1,067         2           1,803           3
Merchant transaction
  processing............            49,609        52,789        55,767           3,180         6           2,978           6
Communications..........            43,744        50,439        53,382           6,695        15           2,943           6
Professional services...            42,042        38,480        44,851          (3,562)       (8)          6,371          17
Software................            24,037        31,766        42,850           7,729        32          11,084          35
Advertising and public
  relations.............            29,125        37,710        37,510           8,585        29            (200)         (1)
Data processing.........            34,803        35,732        32,589             929         3          (3,143)         (9)
Intangible asset
  amortization..........            15,061        16,012         5,485             951         6         (10,527)        (66)
Foreclosed asset income.               (80)          (13)          146              67        nm             159          nm
Restructuring credit....           (19,000)           --            --          19,000        nm              --          --
Other...................           154,525       157,910       171,168           3,385         2          13,258           8
                                __________    __________    __________        ________                  ________
Total noninterest expense       $1,130,185    $1,240,174    $1,347,666        $109,989        10%       $107,492           9%
                                ==========    ==========    ==========        ========                  ========
<FN>
__________
nm = not meaningful
</FN>
</TABLE>

     In 2002,  noninterest  expense  was $1.3  billion,  an  increase  of $107.5
million,  or 9 percent,  over 2001.  This  increase was primarily due to a $71.3
million increase in salaries and employee benefits, an $11.4 million increase in
net occupancy expense, a $6.4 million increase in professional services expense,
and a $13.2 million increase in other noninterest expense.  These increases were
partly offset by an $10.5  million  decrease in  intangible  asset  amortization
expense mostly  attributable  to the adoption,  in the first quarter of 2002, of
SFAS No. 142,  "Goodwill and Other  Intangible  Assets,"  which  eliminated  the
amortization of goodwill.

     o    Salaries and employee benefits were $731.2 million,  an increase of 11
          percent  over  2001.  This  increase  was  primarily  attributable  to
          increases in staff  necessary to achieve our strategic goals to expand
          key businesses (including  acquisitions),  higher incentive expense of
          $20.2  million,  higher  other  benefit  expenses  of  $11.1  million,
          including heath care costs, and merit increases.

     o    Net occupancy  expense was $106.6  million,  an increase of 12 percent
          over 2001. This increase was primarily attributable to higher building
          rent,  depreciation,  leasehold  amortization,   maintenance


                                      F-17
<PAGE>


          expenses primarily associated with the opening of new branches and our
          bank and  insurance  agency  acquisitions  and a $2.7  million  charge
          related to an initiative  to tighten our business  focus in Oregon and
          Washington.

     o    Professional  services  expense was $44.9  million,  an increase of 17
          percent over 2001. This increase was primarily  attributable to higher
          consulting expenses related to process improvement projects.

     o    Software  expense was $42.9  million,  an increase of 35 percent  over
          prior  year.   This  increase  was  primarily  from  higher   software
          depreciation and software maintenance contract expenses related to the
          implementation  of  customer  relationship   management   productivity
          projects and other automation initiatives.

     o    Intangible asset amortization  expense was $5.5 million, a decrease of
          66 percent from 2001. This decrease reflected the adoption of SFAS No.
          142 in the first quarter of 2002, which eliminated the amortization of
          goodwill,  offset by the amortization of identifiable  assets acquired
          in our most recent acquisitions.

     o    Other noninterest expense was $171.2 million, an increase of 8 percent
          from 2001.  This increase was mainly  attributable  to a $15.3 million
          amortization   adjustment  related  to  the   standardization  of  our
          accounting for LIHC investments, partly offset by the recognition of a
          $6.2  million loss at the  adoption of SFAS  No.133,  "Accounting  for
          Derivative   Instruments   and   Hedging   Activities,"   and   higher
          derivative-related  expenses  of $3.7  million  due to  changes in the
          value of a portion of the interest  rate  options  that were  excluded
          from hedge  accounting  under SFAS No. 133, both of which  occurred in
          the prior year.

     We maintain the Union Bank of California,  N.A. Retirement Plan (the Plan),
which is a  noncontributory  defined benefit plan covering  substantially all of
our  employees.  We  estimate  the  2003  net  periodic  pension  cost  will  be
approximately $13.6 million,  assuming a 2003 contribution of $100 million.  The
primary  reason for the  increase  from 2002 net  periodic  pension  cost is the
decrease in the assumed  discount  rate from 7.25 percent to 6.75  percent.  The
2003 estimate for net periodic  pension cost was actuarially  determined using a
discount rate of 6.75 percent and an expected return of 8.25 percent. A 25 basis
point  increase in either the  discount  rate or expected  return on plan assets
would  decrease  2003  periodic  pension  cost  by $4  million  and $2  million,
respectively.  A 25 basis point decrease in either the discount rate or expected
return on plan assets would  increase 2003  periodic  pension cost by $4 million
and $2 million, respectively.


INCOME TAX EXPENSE

                                                  YEARS ENDED DECEMBER 31,
                                            ___________________________________
(DOLLARS IN THOUSANDS)                        2000          2001         2002
________________________________________    ________      ________     ________
Income before income taxes..............    $661,435      $715,272     $775,279
Income tax expense......................     221,535       233,844      247,376
Effective tax rate......................         33%           33%          32%


     Income  tax  expense  in 2002 was $247.4  million,  a 32 percent  effective
income tax rate, which included a tax credit  adjustment of $9.8 million related
to the standardization of our accounting for LIHC investments and a $3.3 million
net reduction in income tax expense  resulting from a change in California state
tax law concerning  loan loss reserves.  In 2001, the effective  income tax rate
was 33  percent.  We filed  our 2000 and  2001,  and  intend  to file our  2002,
California franchise tax returns on a worldwide unitary basis, incorporating the
financial  results  of  BTM  and  its  worldwide   affiliates.   For  additional
information  regarding  income  tax  expense,  see  Note 9 to  our  Consolidated
Financial Statements included in this Form 10-K.


                                      F-18
<PAGE>


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 the
borrower's ability and willingness to repay us 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 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  chaired  by the Chief
Credit Officer and composed of the Chief  Executive  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  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 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  appropriately  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.

                                      F-19

<PAGE>

LOANS

     The  following  table  shows  loans  outstanding  by  loan  type  and  as a
percentage of total loans for 1998 through 2002.

<TABLE>
<CAPTION>

                                                                           DECEMBER 31,
                                          __________________________________________________________________________________
(DOLLARS IN MILLIONS)                          1998             1999             2000             2001             2002
___________________________________       ______________   ______________   ______________   ______________   ______________
<S>                                       <C>        <C>   <C>        <C>   <C>        <C>   <C>         <C>  <C>        <C>
Domestic:
  Commercial, financial and
    industrial.....................       $13,120     54%  $14,177     55%  $13,749     53%  $11,476     46%  $10,339     39%
  Construction.....................           440      2       648      3       939      4     1,060      4     1,285      5
  Mortgage:
    Residential....................         2,628     11     2,581     10     3,295     13     4,788     19     6,382     24
    Commercial.....................         2,975     12     3,572     14     3,348     13     3,591     15     4,150     16
                                          _______          _______          _______          _______          _______
      Total mortgage...............         5,603     23     6,153     24     6,643     26     8,379     34    10,532     40
Consumer:
  Installment......................         1,985      8     1,922      7     1,656      6     1,200      5       910      3
  Revolving lines of credit........           818      4       728      3       755      3       859      3     1,103      4
                                          _______          _______          _______          _______          _______
      Total consumer...............         2,803     12     2,650     10     2,411      9     2,059      8     2,013      7
Lease financing....................         1,032      4     1,149      4     1,134      4       979      4       813      3
                                          _______          _______          _______          _______          _______
      Total loans in domestic offices      22,998     95    24,777     96    24,876     96    23,953     96    24,982     94
Loans originated in foreign branches        1,298      5     1,136      4     1,134      4     1,041      4     1,456      6
                                          _______          _______          _______          _______          _______
      Total loans..................       $24,296    100%  $25,913    100%  $26,010    100%  $24,994    100%  $26,438    100%
                                          =======          =======          =======          =======          =======
</TABLE>

     Our  lending  activities  are  predominantly   domestic,  with  such  loans
comprising  94 percent of the total loan  portfolio at December 31, 2002.  Total
loans at December 31, 2002, were $26.4 billion,  an increase of 6 percent,  from
December 31, 2001.  The increase was mainly  attributable  to an increase in the
residential mortgage portfolio of $1.6 billion and an increase in the commercial
mortgage  portfolio  of  $559  million,  partly  offset  by  a  decline  in  the
commercial,  financial  and  industrial  loan  portfolio  of $1.1  billion and a
decline in the consumer loan portfolio of $46 million.

COMMERCIAL, FINANCIAL AND INDUSTRIAL LOANS

     Commercial,  financial and  industrial  loans  represent one of the largest
categories  in the loan  portfolio.  These  loans are  extended  principally  to
corporations,  middle-market businesses, and small businesses,  with no industry
concentration  exceeding 10 percent of total loans.  This  portfolio  has a high
degree of geographic  diversification  based upon our customers'  revenue bases,
which we believe 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,  among  other  sectors,  the oil  and  gas,  communications,  media,
entertainment, retailing and financial services industries.

     The commercial,  financial and industrial loan portfolio was $10.3 billion,
or 39 percent of total loans, at December 31, 2002, compared with $11.5 billion,
or 46 percent of total  loans,  at  December  31,  2001.  The  decrease  of $1.1
billion,  or 10  percent,  from the prior  year was  primarily  attributable  to
current  economic  conditions,  loan sales,  and  reductions  in our exposure in
nonrelationship  syndicated loans. The reduction in commercial,  financial,  and
industrial  loans is consistent with our strategy to reduce our exposure to more
volatile  commercial  loans and increase the percentage of more stable  consumer
loans (including  residential  mortgages).  We expect to continue  pursuing this
strategy into 2004.

                                      F-20

<PAGE>

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.

     The construction loan portfolio totaled $1.3 billion, or 5 percent of total
loans, at December 31, 2002,  compared with $1.1 billion,  or 4 percent of total
loans,  at December 31, 2001. This growth of $225 million,  or 21 percent,  from
the prior  year was  primarily  attributable  to a  reasonably  stable  Southern
California housing market during 2002, despite the slowdown in the economy.

     Commercial  mortgages were $4.2 billion,  or 16 percent of total loans,  at
December 31, 2002,  compared with $3.6 billion,  or 15 percent,  at December 31,
2001. The mortgage loan portfolio consists of loans on commercial and industrial
projects primarily in California.  The increase in commercial  mortgages of $559
million,  or 16 percent,  from December 31, 2001, was primarily due to demand in
the Southern California real estate market.

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 we periodically purchase loans in our market area.

     Residential  mortgages were $6.4 billion,  or 24 percent of total loans, at
December 31, 2002,  compared with $4.8 billion, or 19 percent of total loans, at
December 31, 2001. The increase in residential  mortgages of $1.6 billion, or 33
percent,  from  December 31, 2001,  continues to be  influenced by our strategic
decision  to increase  our  residential  mortgage  portfolio  through  increased
in-house production and additional wholesale and correspondent  channels.  While
we hold most of the loans we originate,  we sell most of our 30-year, fixed rate
residential mortgage loans.

CONSUMER LOANS

     We originate  consumer loans,  such as auto loans and home equity loans and
lines,  through our branch  network.  Consumer loans totaled $2.0 billion,  or 7
percent of total loans, at December 31, 2002,  compared with $2.1 billion,  or 8
percent of total loans, at December 31, 2001. The decrease of $46 million,  or 2
percent,  was primarily  attributable  to exiting the automobile  dealer lending
business in the third quarter of 2000,  partially  offset by an increase in home
equity loans.

LEASE FINANCING

     We enter into direct  financing and leveraged  leases through our Equipment
Leasing Division.  Lease financing  totaled $0.8 billion,  or 3 percent of total
loans, at December 31, 2002,  compared with $1.0 billion,  or 4 percent of total
loans,  at December 31, 2001. As we previously  announced,  effective  April 20,
2001, we discontinued  our auto leasing  activity.  As of December 31, 2002, our
remaining auto lease portfolio was $279 million,  reflecting  writedowns of auto
lease  residuals of $48 million.  Included in our lease  portfolio are leveraged
leases of $514 million,  which are, net of  non-recourse  debt of  approximately
$1.2 billion.  We utilize a number of special purpose entities for our leveraged
leases.  These  entities  serve legal and tax  purposes  and do not  function as
vehicles to shift  liabilities to other parties or to  deconsolidate  affiliates
for financial  reporting  purposes.  As allowed by US GAAP and by law, the gross
lease  receivable is offset by the  qualifying  non-recourse  debt. In leveraged
lease transactions, the third-party lender may only look to the collateral value
of the  leased  assets for  repayment.

                                      F-21

<PAGE>

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.

     Loans originated in foreign branches totaled $1.5 billion,  or 6 percent of
total loans, at December 31, 2002,  compared with $1.0 billion, or 4 percent, at
December 31, 2001. The increase in loans  originated in foreign branches of $415
million,  or 40 percent,  from December 31, 2001, was primarily  attributable to
increased  lending to financial  institutions  during periods of low US interest
rates, which made financing of trade transactions more attractive.

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, 2000, 2001 and 2002, for any 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  exclude local currency  outstandings.  For any country 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
                                                        FINANCIAL    SECTOR  CORPORATIONS AND     TOTAL
(DOLLARS IN MILLIONS)                                 INSTITUTIONS  ENTITIES  OTHER BORROWERS  OUTSTANDINGS
________________________________________________      ____________  ________ ________________  ____________
<S>                                                        <C>         <C>        <C>              <C>
December 31, 2000
  Korea.........................................           $507        $--        $46              $553
December 31, 2001
  Korea.........................................           $468        $--        $46              $514
December 31, 2002
  Korea.........................................           $599        $--        $75              $674

</TABLE>


PROVISION FOR CREDIT LOSSES

     We recorded a $175 million  provision for credit  losses in 2002,  compared
with a $285 million  provision for credit losses in 2001.  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-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-20.

<TABLE>
<CAPTION>

                                                                         DECEMBER 31,
                                   _________________________________________________________________________________________
(DOLLARS IN THOUSANDS)                   1998                1999              2000             2001                2002
__________________________________ _________________  ________________  ________________  _______________   ________________
<S>                                <C>         <C>    <C>        <C>    <C>        <C>    <C>       <C>     <C>        <C>
Domestic:
  Commercial, financial and
  industrial...................... $145,100    1.11%  $238,200   1.68%  $452,400   3.29%  $399,900  3.48%   $314,873   3.05%
  Construction....................    5,500    1.25     10,000   1.54     10,200   1.09     12,300  1.16      24,900   1.94
   Mortage:
    Residential...................    1,100    0.04        800   0.03      1,000   0.03      1,400  0.03       1,900   0.03
    Commercial....................   17,500    0.59     21,900   0.61     19,100   0.57     21,100  0.59      28,519   0.69
                                   ________           ________          ________          ________          ________
      Total mortgage..............   18,600    0.33     22,700   0.37     20,100   0.30     22,500  0.27      30,419   0.29
Consumer:
  Installment.....................   20,900    1.05     14,900   0.78     17,500   1.06     13,600  1.13      13,800   1.52
  Revolving lines of credit.......    3,800    0.46        900   0.12      1,000   0.13        900  0.10         700   0.06
                                   ________           ________          ________          ________          ________
      Total consummer.............   24,700    0.88     15,800   0.60     18,500   0.77     14,500  0.70      14,500   0.72
Lease financing...................    3,800    0.37      4,600   0.40      7,900   0.70     12,000  1.23      28,690   3.53
                                   ________           ________          ________          ________          ________
      Total domestic allowance....  197,700    0.86    291,300   1.18    509,100   2.05    461,200  1.93     413,382   1.65
Foreign allowance.................   47,000    3.62     17,200   1.51      3,400   0.30      1,800  0.17       1,400   0.10
Unallocated.......................  214,628            161,878           101,402           171,509           194,408
                                   ________           ________          ________          ________          ________
      Total allowance for credit
        losses                     $459,328    1.89%  $470,378   1.82%  $613,902   2.36%  $634,509  2.54%   $609,190   2.30%
                                   ========           ========          ========          ========          ========
</TABLE>

     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,  leases and commitments.  Changes in risk grades 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    pass graded loss factors for  commercial,  financial,  and  industrial
          loans,  as well as all problem  graded loan loss factors,  are derived
          from a migration  model that tracks  historical  losses over a period,
          which we believe captures the inherent losses in our loan portfolio;

     o    pass  graded  loss  factors  for  commercial  real  estate  loans  and
          construction loans are based on the average annual net charge-off rate
          over a period reflective of a full economic cycle; and

     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,  home  equity,
          residential mortgage loans and automobile leases.

     We believe  that an  economic  cycle is a period in which both  upturns and
downturns in the economy have been  reflected.  We calculate loss factors over a
time   interval   that  spans  what  we  believe   constitutes  a  complete  and
representative economic cycle.

                                      F-23

<PAGE>

     Specific   allowances  are  established  in  cases  where   management  has
identified  significant  conditions  or  circumstances  related to a credit or a
portfolio segment that management  believes indicate the probability that a loss
has been incurred.  This amount may be determined  either by a method prescribed
by SFAS No. 114,  "Accounting by Creditors for Impairment of a Loan," or methods
that  include  a range of  probable  outcomes  based  upon  certain  qualitative
factors.

     The unallocated allowance is based on management's evaluation of conditions
that are not directly reflected 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 may not be 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 economic cycle;

     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 conditions
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 and
pass  graded  commercial,  financial,  and  industrial  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 an  economic  cycle,  the  methodology  is  designed to take into
account our recent loss  experience  for  commercial  real estate  mortgages and
construction  loans.  Pooled loan loss factors are adjusted quarterly  primarily
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.

                                      F-24

<PAGE>

     COMPARISON OF THE TOTAL ALLOWANCE AND RELATED PROVISION FOR CREDIT LOSSES

     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
nonaccrual  loans.  At December 31, 2001, our total  allowance for credit losses
was $635 million, or 2.54 percent of the total loan portfolio and 129 percent of
total  nonaccrual  loans.  At December 31, 2002, our total  allowance for credit
losses was $609  million or 2.30  percent  of the total loan  portfolio  and 181
percent of total nonaccrual loans. 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,
2000,  total  impaired loans were $400 million,  and the  associated  impairment
allowance  was  $118  million,  compared  with  $492  million  and $98  million,
respectively,   at  December  31,  2001  and  $337  million  and  $121  million,
respectively,  at December 31, 2002.  The  impairment  allowance at December 31,
2002,  reflected a refinement of methodology for estimating  losses for impaired
loans.  The  December  31,  2000 and 2001  impairment  allowances  have not been
restated.

     During 2000, 2001 and 2002, 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 for a refinement
of our allowance  estimations  for impaired  loans during the second  quarter of
2002. 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.

     As a result of management's assessment of factors,  including the continued
slow US economy,  uncertainty in the  communications/media,  power, real estate,
airlines,  and other sectors in domestic markets in which we operate, and growth
and changes in the composition of the loan portfolio, we recorded a $175 million
provision in 2002. This compares favorably to our $285 million provision in 2001
and our $440 million provision in 2000.

     The following table sets forth the allowance for credit losses.

                                                              DECEMBER 31,
                                                         _____________________
(DOLLARS IN MILLIONS)                                     2000    2001    2002
____________________________________________________     _____   _____   _____
Allocated allowance:
  Formula...........................................      $380    $325    $294
  Specific..........................................       133     138     121
                                                         _____   _____   _____
    Total allocated allowance.......................       513     463     415
Unallocated allowance...............................       101     172     194
                                                         _____   _____   _____
Total allowance for credit losses...................      $614    $635    $609
                                                         =====   =====   =====


     CHANGES IN THE FORMULA AND SPECIFIC ALLOWANCES

     At December 31, 2002, the formula  allowance  decreased by $31 million from
the prior year.  At December 31,  2001,  the formula  allowance  declined by $55
million  from the prior year.  The  declining  levels of formula  allowance  are
primarily due to a higher level of charge-offs,  improving  migration within the
criticized range, and lower default loss rates.

     At December 31, 2002, the specific allowance decreased by $17 million.  The
decline was primarily due to charge-offs  recognized  year-to-date  as well as a
refinement  in  our  estimated  losses  for  impaired  loans  and a  decline  in
nonaccrual loans. At December 31, 2001, the specific  allowance  increased by $5
million from the prior year as impaired loans continued to rise. At December 31,
2002, the specific  allowance  includes $18 million related to off-balance sheet
exposures of criticized creditors.

                                      F-25

<PAGE>

     At December 31, 2002,  the  allocated  portion of the  allowance for credit
losses included $304 million related to special mention and classified  credits,
compared to $345 million at December 31, 2001,  and $346 million at December 31,
2000.  Special mention and classified credits are those that are internally risk
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.

     CHANGES IN THE UNALLOCATED ALLOWANCE

     At December 31, 2002, the unallocated  allowance was $194 million  compared
to $172 million at December 31, 2001,  an increase of $22 million.  The increase
primarily  reflected the continued  weak,  uncertain  economy and the heightened
concerns for borrowers in the power and airline sectors.

     At December 31, 2001, the unallocated  allowance was $172 million  compared
to $101 million at December 31, 2000, an increase of $71 million.  This increase
reflected the uncertainties in the economic  environment and the impact it might
have had on our borrowers.

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

<TABLE>
<CAPTION>

                                      DECEMBER 31, 2000                DECEMBER 31, 2001                DECEMBER 31, 2002
                               _____________________________    _____________________________    _____________________________
(DOLLARS IN MILLIONS)
CONCENTRATION                  COMMITMENTS(1)    LOW    HIGH    COMMITMENTS(1)    LOW    HIGH    COMMITMENTS(1)    LOW    HIGH
____________________________   ______________    ___    ____    ______________    ___    ____    ______________    ___    ____
<S>                                    <C>       <C>     <C>            <C>       <C>    <C>            <C>        <C>    <C>
Power Companies/
Utilities...................           $3,401    $17    $ 31            $3,767    $ 4    $ 10          $  3,805    $25    $ 50
Communications/Media........            2,713     21      35             2,006     20      46             1,907     18      40
Real Estate.................               na     --      --             5,086     16      32             6,186     16      32
Foreign.....................              823      5      10             1,347     10      19               620      9      19
Leasing.....................              471      1       3               590      6      12               662      8      16
Retail......................            1,906      6      13             1,719     17      34             1,668      8      16
Technology..................            1,547      4       7             1,169      5       9               782      5      10
Other.......................            1,980      4       9             2,651     10      22            11,676      8      17
                                                 ___    ____                      ___    ____                      ___    ____
Total Attributed............                     $58    $108                      $88    $184                      $97    $200
                                                 ===    ====                      ===    ====                      ===    ====
<FN>
__________
(1)    Includes loans outstanding and unused commitments.
na = not applicable to this assessment
</FN>
</TABLE>

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

     o    With  respect  to  the   communications/media   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 retail 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.

                                      F-26

<PAGE>

     o    With respect to cross-border  loans and acceptances to certain foreign
          countries,  management  considered the lingering  effects of the Asian
          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.

     In  our  assessment  as  of  December  31,  2001,  management  focused,  in
particular, on the following factors:

     o    With  respect  to  the   communications/media   industry,   management
          considered the continued  adverse  effects of changes in the economic,
          regulatory and technology environments, which could be in the range of
          $20 million to $46 million.

     o    With respect to the retail sector,  management  considered the adverse
          effects of the  economic  recession  and  slowing  trends in  consumer
          spending, which could be in the range of $17 million to $34 million.

     o    With  respect to the real estate  sector,  management  considered  the
          general  weakening  in real  estate  markets  as well as the  specific
          deterioration in Northern  California,  which could be in the range of
          $16 million to $32 million.

     o    With  respect  to  cross-border   loans  and  acceptances  to  certain
          Asia/Pacific  Rim  countries,   management  considered  the  weakening
          economic  conditions  in that  region  and  the  reduced  strength  of
          Japanese corporate parents, which could be in the range of $10 million
          to $19 million.

     o    With respect to utilities,  management  considered the well-publicized
          problems  of the large  public  utilities  and the  independent  power
          producers in California,  which,  although improving,  could be in the
          range of $4 million to $10 million.

     o    With respect to the  technology  industry,  management  considered the
          adverse effects of declining  product life cycles and a slowing demand
          for personal  computers,  which could be in the range of $5 million to
          $9 million.

     In  our  assessment  as  of  December  31,  2002,  management  focused,  in
particular, on the following factors:

     o    With respect to power companies and utilities,  management  considered
          the adverse  effects of declining  wholesale  power prices,  continued
          accounting  concerns,  and  uncertainties   regarding  the  course  of
          deregulation on borrowers in the power industry, which could be in the
          range of $25 million to $50 million.

     o    With  respect  to  the   communications/media   industry,   management
          considered the continued  adverse  effects of changes in the economic,
          regulatory and technology environments, which could be in the range of
          $18 million to $40 million.

     o    With  respect to the real estate  sector,  management  considered  the
          general  weakening in commercial  real estate markets  reflecting weak
          demand, as well as the specific  deterioration in Northern California,
          which could be in the range of $16 million to $32 million.

     o    With  respect  to  cross-border   loans  and  acceptances  to  certain
          Asia/Pacific  Rim countries,  management  considered the weak economic
          conditions  in  that  region  and the  reduced  strength  of  Japanese
          corporate  parents,  which  could be in the range of $8 million to $16
          million.

     o    With respect to leasing, management considered the growing problems of
          the airline industry including  weakness in financial  performance and
          in collateral values, which could be in the range of $8 million to $16
          million.

                                      F-27

<PAGE>

     o    With respect to the retail sector,  management  considered the adverse
          effects  of the  weak  economy  and the  expected  fallout  from  poor
          Christmas sales results,  which could be in the range of $8 million to
          $16 million.

     o    With respect to the  technology  industry,  management  considered the
          adverse effects of continuing excess capacity and cyclical weak demand
          for personal computers and other products, which could be in the range
          of $5 million to $10 million.

     There  can be no  assurance  that  the  adverse  impact  of  any  of  these
conditions on us will not be in excess of the ranges set forth above.

     Although in certain  instances the  downgrading  of a loan  resulting  from
these effects was reflected in the formula allowance,  management  believes that
in most  instances  the  impact  of these  events on the  collectibility  of the
applicable loans may not have been 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-28

<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)                                                  1998       1999        2000       2001       2002
______________________________________________________________        ________   ________    ________   ________   ________
<S>                                                                   <C>        <C>         <C>        <C>        <C>
Balance, beginning of period..................................        $451,692   $459,328    $470,378   $613,902   $634,509
Loans charged off:
  Commercial, financial and industrial........................          38,219     48,597     302,152    300,521    212,675
  Construction................................................               3         --          --        567         --
  Mortgage....................................................           6,547        747         174      5,113      1,591
  Consumer....................................................          29,312     15,009      11,760     12,667     11,220
  Lease financing.............................................           2,709      3,232       2,925      3,601     19,856
  Foreign(1)..................................................              --     14,100       5,352         --         --
                                                                      ________   ________    ________   ________   ________
    Total loans charged off...................................          76,790     81,685     322,363    322,469    245,342
RECOVERIES OF LOANS PREVIOUSLY CHARGED OFF:
  Commercial, financial and industrial........................          23,762     17,851      16,440     48,321     34,075
  Construction................................................               3         --          --         --         40
  Mortgage....................................................           2,857        521       2,394         32        405
  Consumer....................................................          14,021      8,356       6,882      4,289      4,436
  Lease financing.............................................             501        811         581        754        590
  Foreign(1)..................................................              --         --          --      4,974         --
                                                                      ________   ________    ________   ________   ________
    Total recoveries of loans previously charged off..........          41,144     27,539      26,297     58,370     39,546
                                                                      ________   ________    ________   ________   ________
    Net loans charged off.....................................          35,646     54,146     296,066    264,099    205,796
Provision for credit losses...................................          45,000     65,000     440,000    285,000    175,000
Transfer of reserve for trading account assets................          (1,911)        --          --         --         --
Foreign translation adjustment and other net additions
  (deductions)................................................             193        196        (410)      (294)     5,477
                                                                      ________   ________    ________   ________   ________
Balance, end of period........................................        $459,328   $470,378    $613,902   $634,509   $609,190
                                                                      ========   ========    ========   ========   ========

Allowance for credit losses to total loans....................            1.89%      1.82%       2.36%      2.54%      2.30%
Provision for credit losses to net loans charged off..........          126.24     120.05      148.62     107.91      85.04
Net loans charged off to average total loans..................            0.15       0.22        1.13       1.02       0.80

<FN>
__________
(1)  Foreign loans are those loans originated in foreign branches.

</FN>
</TABLE>

     Total loans  charged off in 2002 declined by $77 million from 2001, as loan
quality improved. Charge-offs reflect the realization of losses in the portfolio
that were  recognized  previously  through  provisions for credit losses.  Loans
charged off in 2001 were relatively  unchanged compared to 2000. Loan recoveries
in 2002  decreased  by $19  million  from 2001,  while loan  recoveries  in 2001
increased by $32 million over 2000. Due to our higher sales of troubled credits,
we expect  recoveries to be a lower  percentage of charge-offs than in the prior
years.  At December 31, 2002,  the allowance for credit losses  exceeded the net
loans  charged off during 2002,  reflecting  management's  belief,  based on the
foregoing analysis, that there are additional losses inherent in the portfolio.

     At December 31, 2000, our average annual net  charge-offs for the past five
years were $106  million,  compared  with $144  million at December 31, 2001 and
$171 million at December 31, 2002.  These net  charge-offs  represent 5.8 years,
4.4 years and 3.6 years of losses based on the level of the allowance for credit
losses at  December  31,  2000,  2001 and  2002,  respectively.  Historical  net
charge-offs are not necessarily indicative of the amount of net charge-offs that
we will realize in the future.

                                      F-29

<PAGE>

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 included in this Form 10-K.

     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)                                              1998         1999          2000          2001         2002
______________________________________________________________    ________     ________      ________      ________     ________
<S>                                                               <C>          <C>           <C>           <C>          <C>
Commercial, financial and industrial..........................    $ 60,703     $159,479      $385,263      $471,509     $276,415
Construction..................................................       4,359        4,286         3,967            --           --
Mortgage--Commercial...........................................      8,254        3,629        10,769        17,430       23,980
Lease financing...............................................          --           --            --         2,946       36,294
Other.........................................................       5,134           --            --            --           --
                                                                  ________     ________      ________      ________     ________
  Total nonaccrual loans......................................      78,450      167,394       399,999       491,885      336,689
Foreclosed assets.............................................      11,400        2,386         1,181           597          715
Distressed loans held for sale................................          --           --         7,124            --           --
                                                                  ________     ________      ________      ________     ________
  Total nonperforming assets..................................    $ 89,850     $169,780      $408,304      $492,482     $337,404
                                                                  ========     ========      ========      ========     ========
Allowance for credit losses...................................    $459,328     $470,378      $613,902      $634,509     $609,190
                                                                  ========     ========      ========      ========     ========


Nonaccrual loans to total loans...............................        0.32%        0.65%         1.54%         1.97%        1.27%
Allowance for credit losses to nonaccrual loans...............      585.50       281.00        153.48        129.00       180.94
Nonperforming assets to total loans, distressed loans held for
  sale, and foreclosed assets.................................        0.37         0.66          1.57          1.97         1.28
Nonperforming assets to total assets..........................        0.28         0.50          1.16          1.37         0.84

</TABLE>

     At December 31, 2002,  nonaccrual loans totaled $337 million, a decrease of
$155 million,  or 31 percent,  from December 31, 2001. Our nonperforming  assets
are concentrated in our non-agented  syndicated loan portfolio and approximately
59  percent  of our total  nonaccrual  loans are  syndicated  loans.  Also,  our
nonaccrual loans included $34 million related to aircraft  leases.  The decrease
in nonaccrual loans was primarily due to moderate  inflows of nonaccrual  loans,
coupled  with  pay-downs,  charge-offs,  and loan  sales.  During 2001 and 2002,
respectively,  we sold $425  million and $220 million of loan  commitments  with
discounts related to credit quality.

     Nonaccrual  loans as a  percentage  of total  loans  were 1.27  percent  at
December   31,  2002,   compared   with  1.97  percent  at  December  31,  2001.
Nonperforming  assets as a percentage of total loans,  distressed loans held for
sale, and foreclosed assets decreased to 1.28 percent at December 31, 2002, from
1.97  percent at December  31, 2001.  At December  31,  2002,  approximately  82
percent of nonaccrual loans were related to commercial, financial and industrial
counterparties.

                                      F-30

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                           DECEMBER 31,
                                                                       ________________________________________________________
(DOLLARS IN THOUSANDS)                                                  1998        1999         2000        2001        2002
________________________________________________________________       _______     _______       ______     _______      ______
<S>                                                                    <C>         <C>           <C>        <C>          <C>
Commercial, financial and industrial............................       $   913     $ 2,729       $1,713     $26,571      $1,705
Construction....................................................            --          --           --          --         679
Mortgage:
  Residential...................................................         9,338       5,830        2,699       4,854       3,211
  Commercial....................................................        13,955         442           --       2,356         506
                                                                       _______     _______       ______     _______      ______
    Total mortgage..............................................        23,293       6,272        2,699       7,210       3,717
Consumer and other..............................................         7,292       2,932        2,921       2,579       2,072
                                                                       _______     _______       ______     _______      ______
  Total loans 90 days or more past due and still accruing.......       $31,498     $11,933       $7,333     $36,360      $8,173
                                                                       =======     =======       ======     =======      ======
</TABLE>

CASH-BASIS INTEREST ON NONACCRUAL LOANS

     After designation as a nonaccrual loan, we recognized  interest income on a
cash basis of $5.4 million and $10.8  million for loans that were on  nonaccrual
status at December 31, 2001 and December 31, 2002, respectively.

SECURITIES

     The following tables summarize the composition of the securities  portfolio
and the gross  unrealized  gains and losses within the portfolio.  Substantially
all  of  our  equity  securities   represent   investments  in  venture  capital
activities, with no single company holding exceeding 5% of that company's shares
outstanding.  We also have  commitments to invest  additional  funds. The amount
unfunded as of December 31, 2001 was approximately $55 million,  and $59 million
as of December 31, 2002.

SECURITIES AVAILABLE FOR SALE

<TABLE>
<CAPTION>

                                                                          DECEMBER 31,
                              ___________________________________________________________________________________________________
                                  2000                       2001                                        2002
                              __________  __________________________________________  ___________________________________________
                                                       GROSS      GROSS                             GROSS      GROSS
                                 FAIR      AMORTIZED UNREALIZED UNREALIZED    FAIR     AMORTIZED  UNREALIZED UNREALIZED    FAIR
(DOLLARS IN THOUSANDS)           VALUE       COST       GAINS    LOSSES      VALUE       COST       GAINS     LOSSES      VALUE
_____________________________ __________  __________  ________   _______  __________  __________  ________    _______  __________
<S>                           <C>         <C>         <C>        <C>      <C>         <C>         <C>         <C>      <C>
U.S. Treasury................ $  440,097  $  214,249  $  7,957   $    --  $  222,206  $  332,169  $ 12,220    $    --  $  344,389
Other U.S. government........  1,273,755   1,902,001    91,315       303   1,993,013   2,560,420   126,886         --   2,687,306
Mortgage-backed securities...  2,151,032   3,293,857    48,138    14,127   3,327,868   3,902,879   115,738         80   4,018,537
State and municipal..........     61,789      40,116     5,897        80      45,933      42,917     6,182          8      49,091
Corporate debt securities....     98,723     129,314        --     4,152     125,162     181,345        19     25,565     155,799
Equity securities............     95,647      78,810       133        --      78,943      73,559     3,598        241      76,916
Foreign securities...........      6,627       5,883        92        18       5,957       6,425        94         57       6,462
                              __________  __________  ________   _______  __________  __________  ________    _______  __________
  Total securities available
  for sale................... $4,127,670  $5,664,230  $153,532   $18,680  $5,799,082  $7,099,714  $264,737    $25,951  $7,338,500
                              ==========  ==========  ========   =======  ==========  ==========  ========    =======  ==========
</TABLE>

     At January 1, 2001, all of our securities held to maturity were transferred
to securities  available for sale in  conjunction  with the adoption of SFAS No.
133.

     Management of the securities  portfolio involves the maximization of return
while  maintaining  prudent levels of quality,  market risk,  and liquidity.  At
December 31, 2002,  approximately 96 percent of total securities were investment
grade.

                                      F-31

<PAGE>

ANALYSIS OF SECURITIES AVAILABLE FOR SALE

     The following table shows the remaining contractual maturities and expected
yields of the securities available for sale at December 31, 2002.


<TABLE>
<CAPTION>

SECURITIES AVAILABLE FOR SALE


                                                                               MATURITY
                                     ____________________________________________________________________________________________
                                                                OVER ONE YEAR         OVER FIVE YEARS
                                           ONE YEAR                THROUGH                THROUGH                    OVER
                                           OR LESS                FIVE YEARS             TEN YEARS                TEN YEARS
                                     ___________________    _____________________   ___________________    ______________________
(DOLLARS IN THOUSANDS)                 AMOUNT     YIELD(4)     AMOUNT      YIELD(4)  AMOUNT      YIELD(4)     AMOUNT      YIELD(4)
__________________________________   ________     ______    __________     ______   ________     ______    __________     _______
<S>                                  <C>            <C>     <C>              <C>    <C>           <C>      <C>             <C>
U.S. Treasury.....................   $ 61,063       6.65%   $  271,106       3.86%  $     --         --%   $       --         --%
Other U.S. government.............    186,715       6.82     2,373,705       5.02         --         --            --         --
Mortgage-backed securities(1).....    280,707       1.84        56,817       6.49    216,659       5.62     3,348,696       5.24
State and municipal(2)............      2,359       9.53        15,225       7.51     13,992      10.67        11,341      10.51
Corporate debt securities.........      7,398       3.58        39,733       5.00     64,950       5.09        69,264       5.09
Equity securities(3)..............         --         --            --         --         --         --            --         --
Foreign securities................         64       2.05         6,361       1.92         --         --            --         --
                                     ________               __________              ________               __________
  Total securities available for
  sale............................   $538,306       4.17%   $2,762,947       4.94%  $295,601       5.74%   $3,429,301       5.25%
                                     ========               ==========              ========               ==========
<CAPTION>
                                            TOTAL
                                        AMORTIZED COST
                                     _____________________
                                         AMOUNT     YIELD(4)
                                     __________     ______

<S>                                  <C>              <C>
U.S. Treasury.....................   $  332,169       4.37%
Other U.S. government.............    2,560,420       5.15
Mortgage-backed securities(1).....    3,902,879       5.03
State and municipal(2)............       42,917       9.44
Corporate debt securities.........      181,345       5.01
Equity securities(3)..............       73,559         --
Foreign securities................        6,425       1.92
                                     __________
  Total securities available for
  sale............................   $7,099,714       5.07%
                                     ==========
<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-32

<PAGE>

<TABLE>
<CAPTION>

LOAN MATURITIES

     The following table presents our loans by maturity.

                                                                                  DECEMBER 31, 2002
                                                            ______________________________________________________________
                                                                                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....................  $3,263,616       $5,894,239      $ 1,180,653       $10,338,508
  Construction............................................     805,308          463,445           16,451         1,285,204
  Mortgage:
    Residential...........................................         638           11,488        6,370,101         6,382,227
    Commercial............................................     279,004        1,549,742        2,321,432         4,150,178
                                                            __________       __________      ___________       ___________
      Total mortgage......................................     279,642        1,561,230        8,691,533        10,532,405
   Consumer:
     Installment..........................................      11,827          206,521          691,439           909,787
     Home equity..........................................     994,659          108,112               --         1,102,771
                                                            __________       __________      ___________       ___________
      Total consumer......................................   1,006,486          314,633          691,439         2,012,558
  Lease financing.........................................     113,327          152,384          547,207           812,918
                                                            __________       __________      ___________       ___________
      Total loans in domestic offices.....................   5,468,379        8,385,931       11,127,283        24,981,593
Loans originated in foreign branches......................   1,455,033              113            1,344         1,456,490
                                                            __________       __________      ___________       ___________
      Total loans.........................................  $6,923,412       $8,386,044      $11,128,627        26,438,083
                                                            ==========       ==========      ===========
        Allowance for credit losses.......................                                                         609,190
                                                                                                               ___________
      Loans, net..........................................                                                     $25,828,893
                                                                                                               ===========
Total fixed rate loans due after one year.................                                                      $8,976,749
Total variable rate loans due after one year..............                                                      10,537,922
                                                                                                               ___________
      Total loans due after one year......................                                                     $19,514,671
                                                                                                               ===========

</TABLE>


CERTIFICATES OF DEPOSIT OF $100,000 AND OVER

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


                                                           DECEMBER 31,
(DOLLARS IN THOUSANDS)                                        2002
________________________________________________________    __________
Three months or less....................................    $1,516,086
Over three months through six months....................       269,327
Over six months through twelve months...................       385,265
Over twelve months......................................       109,579
                                                            __________
  Total domestic certificates of deposit of
   $100,000 and over....................................    $2,280,257
                                                            ==========

     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.

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


                                      F-33

<PAGE>

BORROWED FUNDS

     The following table presents information on our borrowed funds.
<TABLE>
<CAPTION>

                                                                                                      DECEMBER 31,
                                                                                       __________________________________________
(DOLLARS IN THOUSANDS)                                                                     2000            2001            2002
_________________________________________________________________________________      __________      __________      __________
<S>                                                                                     <C>            <C>             <C>
Federal funds purchased and securities sold under repurchase agreements with
  weighted average interest rates of 6.52%, 1.41% and 0.88% at December 31, 2000,
  2001 and 2002, respectively....................................................      $1,387,667      $  418,814      $  334,379
Commercial paper, with weighted average interest rates of 6.49%, 1.89%, and 1.21%
  at December 31, 2000, 2001 and 2002, respectively..............................       1,385,771         830,657       1,038,982
Other borrowed funds, with weighted average interest rates of 5.64% 2.96% and
  2.25% at December 31, 2000, 2001 and 2002, respectively........................         249,469         700,403         267,047
                                                                                       __________      __________      __________
Total borrowed funds.............................................................      $3,022,907      $1,949,874      $1,640,408
                                                                                       ==========      ==========      ==========


Federal funds purchased and securities sold under repurchase agreements:
  Maximum outstanding at any month end...........................................      $2,095,868      $1,575,938        $428,808
  Average balance during the year................................................       1,548,730       1,243,933         427,610
  Weighted average interest rate during the year.................................            6.24%           4.19%           1.41%
Commercial paper:
  Maximum outstanding at any month end...........................................      $1,525,932      $1,572,029      $1,107,578
  Average balance during the year................................................       1,521,614       1,287,603         997,543
  Weighted average interest rate during the year.................................            6.24%           4.07%           1.67%
Other borrowed funds:
  Maximum outstanding at any month end...........................................        $507,782        $702,511        $942,627
  Average balance during the year................................................         314,425         464,033         469,877
  Weighted average interest rate during the year.................................            5.31%           4.35%           2.15%

</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.  Since  November 1999, we announced  stock  repurchase
plans totaling $400 million.  We repurchased $131 million,  $108 million and $86
million in 2000, 2001 and 2002, respectively, as part of these repurchase plans.
As of  December  31,  2002,  $59  million  of  common  stock is  authorized  for
repurchase. In addition, on August 27, 2002, we announced that we purchased $300
million of our common stock from our majority owner, BTM.

     Total  shareholders'  equity was $3.8  billion at  December  31,  2002,  an
increase of $212 million from  December  31, 2001.  This change was  primarily a
result of $528 million of net income for 2002,  exercised  stock  options of $75
million,  stock issued in bank acquisitions of $55 million, net unrealized gains
on securities  available for sale of $64 million,  and net  unrealized  gains on
cash flow hedges of $42  million,  partially  offset by  dividends on our common
stock of $168 million and repurchases of our common stock of $386 million.

     We offer a dividend  reinvestment plan that allows shareholders to reinvest
dividends in our common stock at market price. During 2002 and 2001, BTM did not
participate in this 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-34

<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)               1998             1999              2000              2001             2002      REQUIREMENT
________________________         ___________      ___________       ___________       ___________      ___________   ___________
<S>                              <C>              <C>               <C>               <C>              <C>                 <C>
CAPITAL COMPONENTS
Tier 1 capital..........         $ 2,965,865      $ 3,308,912       $ 3,471,289       $ 3,661,231      $ 3,667,237
Tier 2 capital..........             604,938          616,772           620,102           598,812          573,858
                                 ___________      ___________       ___________       ___________      ___________
Total risk-based capital         $ 3,570,803      $ 3,925,684       $ 4,091,391       $ 4,260,043      $ 4,241,095
                                 ===========      ===========       ===========       ===========      ===========
Risk-weighted assets....         $30,753,030      $33,288,167       $33,900,404       $31,906,438      $32,811,441
                                 ===========      ===========       ===========       ===========      ===========
Quarterly average assets         $31,627,022      $32,765,347       $34,075,813       $34,760,203      $37,595,002
                                 ===========      ===========       ===========       ===========      ===========
CAPITAL RATIOS
Total risk-based capital               11.61%           11.79%            12.07%            13.35%           12.93%        8.0%
Tier 1 risk-based capital               9.64             9.94             10.24             11.47            11.18         4.0
Leverage ratio(1).......                9.38            10.10             10.19             10.53             9.75         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 regulations of
the federal banking agencies,  including minimum capital  requirements.  We both
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, 2001,  our Tier 1 risk-based  capital ratio at
December  31,  2002,  decreased  29 basis  points  to 11.18  percent,  our total
risk-based  capital ratio  decreased 42 basis points to 12.93  percent,  and our
leverage  ratio  decreased 78 basis points to 9.75 percent.  The decrease in our
capital  ratios was  primarily  attributable  to an  increase  in  risk-weighted
assets,  partly  offset by an increase  in  shareholders'  equity (as  described
above).

     As of December 31, 2002,  management  believes the capital  ratios of Union
Bank of California,  N.A. met all regulatory  requirements of "well-capitalized"
institutions,  which are 10 percent for the total  risk-based  capital  ratio, 6
percent for the Tier 1 risk-based  capital  ratio and 5 percent for the leverage
ratio.

COMPARISON OF FINANCIAL RESULTS OF 2000 TO 2001

     Reported net income was $481.4 million,  or $3.04 per diluted common share,
in 2001,  compared with $439.9  million,  or $2.72 per diluted common share,  in
2000.  Excluding the effect of $19.0  million of  restructuring  credits  ($11.8
million net of tax),  2000  earnings were $428.1  million,  or $2.64 per diluted
common  share.  The  increase in 2001  diluted  earnings per share of 15 percent
above the prior year's diluted  earnings per share,  excluding the effect of the
restructuring  credits in 2000, was mainly  attributable to a $155.0 million, or
35 percent,  decrease in the provision for credit losses and a $69.2 million, or
11 percent, increase in noninterest income, partially offset by a $91.0 million,
or 8 percent, increase in noninterest expense and a $60.9 million, or 4 percent,
decrease  in  net  interest  income  (on  a  taxable-equivalent   basis).  Other
highlights of 2001 include:

     o    Net  interest  income,  on a  taxable-equivalent  basis,  was $1,526.1
          million in 2001, a decrease of $60.9 million,  or 4 percent,  from the
          prior year. Net interest  margin in 2001 was 4.87 percent,  a decrease
          of 35 basis  points from the prior year,  reflecting  the  compression
          caused by lower interest rates.

     o    A provision for credit losses of $285.0  million was recorded in 2001,
          compared  with $440.0  million in the prior year.  This  resulted from
          management's  regular  assessment  of  overall  credit  quality,  loan
          portfolio composition and business and economic conditions in relation
          to the level of the allowance for credit losses.

                                      F-35

<PAGE>

     o    Noninterest  income was $716.4  million in 2001,  an increase of $69.2
          million, or 11 percent, over the prior year.

     o    Noninterest  expense  was $1.2  billion in 2001,  an increase of $91.0
          million,   or  8  percent,   over  the  prior  year,   excluding   the
          restructuring credits in 2000.

     o    Income  tax  expense  in 2001 was $233.8  million,  representing  a 33
          percent  effective income tax rate. For 2000, the effective income tax
          rate was also 33 percent.

     o    Reported return on average assets  increased to 1.39 percent from 1.27
          percent a year earlier,  adjusting for the effect of the restructuring
          credits in 2000, and reported return on average  shareholders'  equity
          increased  to  13.88  percent  from  13.63  percent  a  year  earlier,
          adjusting for the effect of the restructuring credits in 2000.

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 attributable 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 UnionBanCal Corporation executives.  ALCO meets monthly 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,  investing,  and hedging strategies  designed to manage this risk. On a
day-to-day  basis,  the  monitoring  of market risk takes place at a centralized
level  within the Market Risk  Monitoring  unit (MRM).  MRM is  responsible  for
measuring risks to ensure  compliance with all market risk limits and guidelines
incorporated within the policies and procedures established by ALCO. MRM reports
monthly to ALCO on trading risk  exposures and on compliance  with interest rate
risk,  securities  portfolio and  derivatives  policy  limits.  MRM also reports
quarterly to ALCO on the effectiveness of our hedging  activities.  In addition,
periodic reviews by internal audit and regulators  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 primary
purposes of managing the  sensitivity of net interest income (NII) to changes in
interest  rates within limits  established  by the Board and  maintaining a risk
profile that is consistent with management's strategic objectives.

                                      F-36

<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  investment  securities
and  derivative  instruments  such as interest rate swaps,  floors,  and caps to
hedge our interest rate exposures.

     Our unhedged NII remains  inherently  asset  sensitive,  as it was in 2001,
meaning that our assets  generally  reprice  more quickly than our  liabilities,
particularly our core deposits. Since the NII associated with an asset sensitive
balance sheet tends to decrease  when  interest  rates decline and increase when
interest rates rise, hedges and the securities portfolio are used to manage this
risk. In 2002, as in the past, we entered into  derivative  hedges to offset the
adverse impact that declining  interest rates would have on the interest  income
generated by our variable rate  commercial  loans,  resulting in an  essentially
neutral risk profile for the hedged balance sheet. (For a further  discussion of
derivative  instruments  and our hedging  strategies,  see Note  16--"Derivative
Instruments" of the Notes to Consolidated  Financial Statements included in this
Form 10-K).  In addition,  we increased the size of our securities  portfolio in
response to strong  growth in core  deposits,  which tend to reprice more slowly
than wholesale liabilities.

     We use a variety  of  techniques  to  quantify  the  sensitivity  of NII to
changes in interest  rates.  Our  official  NII policy  measure,  adopted by the
Finance  and  Capital  Committee  of the  Board in  December  2002,  involves  a
simulation  of  "Earnings-at-Risk"  (EaR) in which we  estimate  the impact that
gradual,  ramped-on  parallel shifts in the yield curve would have on NII over a
12-month  horizon.  As directed by ALCO, NII is adjusted in the risk modeling to
incorporate  the effect of certain  noninterest  expense items related to demand
deposit accounts that are  nevertheless  sensitive to changes in interest rates.
Under the Board's policy limits,  the negative change in simulated NII in either
the up or down 200 basis point shock  scenarios  may not exceed 4 percent of NII
as measured in the flat rate, or no change,  scenario.  The following table sets
forth  the  simulation  results  in both the up and down 200  basis  point  ramp
scenarios as of December 31, 2002:


(DOLLARS IN MILLIONS)                                   DECEMBER 31, 2002
_____________________________________________________   _________________
+200 basis points....................................        $16.9
as a percentage of flat rate scenario NII............         1.13%
!200 basis points....................................       $(17.4)
as a percentage of flat rate scenario NII............         1.16%


     EaR in the down 200 basis point  scenario  was $17.4  million,  or 1.16% of
flat rate NII, well within the Board's guidelines.

     Prior  to  December,  our  official  policy  measure  was  based on a shock
simulation  methodology,  in which  the  12-month  impact  on  Adjusted  NII was
measured with respect to instantaneous,  rather than gradual, parallel shifts in
the yield curve.  By policy,  the negative change in simulated NII in either the
up or down 200 basis  point  scenarios  could not  exceed 8 percent of flat rate
NII.  Although  the shock  simulations  will no longer have a policy  role,  the
simulation  results will  continue to be reported to ALCO on a monthly basis and
used by management as a key decision-making tool. The following table sets forth
the shock sensitivity  results in both the up and down 200 basis point scenarios
as of December 31, 2001 and December 31, 2002.


(DOLLARS IN MILLIONS)                             DECEMBER 31,  DECEMBER 31,
________________________________________________  ____________  ____________
+200 basis points instantaneous shock...........    $15.0            $29.2
as a percentage of flat rate scenario NII.......     0.99%            1.96%
!200 basis points instantaneous shock...........   $(81.1)          $(20.8)
as a percentage of flat rate scenario NII.......     5.35%            1.39%


     Asset  sensitivity in the minus 200 basis point shock simulation  decreased
in 2002,  primarily as a result of derivative  hedges executed in the second and
third  quarters,  including  $1  billion in  floors,  $1 billion in "zero  cost"
collars and $1 billion in  receive-fixed  swaps.  All three types of hedges will
generate income in a declining

                                      F-37

<PAGE>

interest rate environment,  thereby  offsetting the reduction in interest income
from our LIBOR-based  commercial loans.  However, the floors and collars,  which
involve  the   simultaneous   purchase  of  at-the-money   floors  and  sale  of
out-of-the-money  caps,  have less of a negative  impact on interest income than
swaps when interest  rates rise.  Overall,  the flattening of the yield curve in
the second and third quarters of 2002, and the associated increase in prepayment
activity  in  our  residential  loan,   mortgage-backed   securities  (MBS)  and
collateralized  mortgage obligations (CMO) portfolios,  had a negative effect on
our NII.  However,  our NII sensitivity  profile  indicates that our exposure to
further  acceleration of prepayment speeds has diminished.  With Treasury yields
nearing  all-time  lows,  the  prepayment  levels  projected by our model do not
increase  significantly  from current  levels,  even if interest  rates  decline
further.  Consequently, the assumed loss of income from reinvesting prepaid cash
flows at lower rates decreased.  However,  in formulating our interest rate risk
management  strategy we will continue to closely monitor prepayment  activity in
our  securities  and  residential   mortgage   portfolios  and  test  our  model
assumptions against actual data.

     With  federal  funds and LIBOR rates at the end of 2002  already  below two
percent,  a  downward  shock  scenario  of 200  basis  points  would  result  in
short-term  rate  levels  below zero  percent.  As a result,  we believe  that a
downward shock scenario of 100 basis points provides a more  reasonable  measure
of asset sensitivity in a falling interest rate environment.  As of December 31,
2002, the difference between flat rate Adjusted NII and Adjusted NII after a 100
basis point downward  shock was plus $5.1 million,  or .34% percent of flat rate
NII, in the ramp simulation, and plus $8.7 million, or .58% of flat rate NII, in
the shock  simulation.  In the shock  simulation,  this  represents  a favorable
change of $29 million from 2001, when the difference was ($20.3) million, and is
due to the  execution  of $3  billion in  interest  rate  derivative  hedges and
slowing prepayment speeds, described previously.

     Management's goal in the NII simulations is to capture the risk embedded in
the balance sheet. As a result,  asset and liability  balances are kept constant
throughout the analysis horizon. Two exceptions are non-maturity deposits, which
vary with levels of interest rates  according to  statistically  derived balance
equations,  and  discretionary  derivative  hedges and fixed income  portfolios,
which  are  allowed  to run off.  Additional  assumptions  are made to model the
future behavior of deposit rates and loan spreads based on statistical analysis,
management's outlook, and historical experience. The prepayment risks related to
residential  loans and  mortgage-backed  securities  are measured using industry
estimates of prepayment speeds. The sensitivity of the simulation results to the
underlying  assumptions  is  tested as a  regular  part of the risk  measurement
process  by  running  simulations  with  different  assumptions.   In  addition,
management  supplements the official risk measures based on the constant balance
sheet assumption with volume-based  simulations based on forecasted balances. We
believe that,  together,  these simulations provide management with a reasonably
comprehensive  view of the  sensitivity  of our operating  results to changes in
interest  rates,  at least over the measurement  horizon.  However,  as with any
financial model, the underlying assumptions are inherently uncertain and subject
to refinement as modeling  techniques  and theory  improve and  historical  data
becomes more readily  accessible.  Consequently,  our  simulation  models cannot
predict with  certainty  how rising or falling  interest  rates might impact net
interest  income.  Actual and  simulated  NII results  will differ to the extent
there are differences between actual and assumed interest rate changes,  balance
sheet volumes, and management strategies, among other factors.

     TRADING ACTIVITIES

     We  enter  into  trading  account  activities   primarily  as  a  financial
intermediary  for  customers,  and, to a minor 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


                                      F-38
<PAGE>

of all positions to market, daily profit and loss statements,  position reports,
and independent verification of all inventory pricing. Additionally, MRM 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 MRM 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
or rates 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.

<TABLE>
<CAPTION>

                                                                   DECEMBER 31,
                                        _______________________________________________________________
                                                      2001                              2002
                                        ______________________________      ___________________________
                                        AVERAGE      HIGH       LOW         AVERAGE    HIGH        LOW
(DOLLARS IN THOUSANDS)                    VAR        VAR        VAR           VAR      VAR         VAR
_________________________________       _______      ____       ___         _______    ____        ___
<S>                                       <C>        <C>         <C>         <C>       <C>         <C>
Foreign exchange.................         $205       $552        $70         $256      $546        $88
Securities.......................          292        556        108          213       543         45

</TABLE>

     Consistent  with our  business  strategy of focusing on the sale of capital
markets  products  to  customers,  we  manage  our  trading  risk  exposures  at
conservative  levels,  well below the trading risk policy limits  established by
the Board. As a result,  our foreign exchange  business  continues to derive the
bulk of its  revenue  from  customer-related  transactions.  We take  inter-bank
trading  positions  only on a  limited  basis  and we do not take  any  large or
long-term  strategic  positions in the market for the Bank's own  portfolio.  In
2002, we continued to grow our customer-related  foreign exchange business while
maintaining an essentially unchanged inter-bank trading risk profile as measured
under our VaR methodology.

     The Securities Trading & Institutional  Sales group serves the fixed income
needs of our  institutional  clients and acts as the fixed income wholesaler for
our broker/dealer subsidiary, UBOC Investment Services, Inc. As with our foreign
exchange  business,  we continue to generate the vast majority of our securities
income from customer-related transactions.

     Our interest rate derivative  contracts  include $4.2 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 major
dealers, thus neutralizing the related market risk.

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.  Additionally,  ALCO  conducts  monthly  ongoing  reviews of our liquidity
situation.  Liquidity  is managed  through this ALCO  coordination  process on a
Bank-wide basis, encompassing all major business units. The operating management
of liquidity is implemented through the funding and investment  functions of the
Global Markets Group.  Our liquidity  management draws upon the strengths of our
extensive retail and commercial core deposit franchise, coupled with the ability
to obtain  funds for various  terms in a variety of domestic  and  international
money  markets.  Our  securities  portfolio  represents a significant  source of
additional liquidity.

                                      F-39

<PAGE>

     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,  savings,  and consumer time  deposits,  combined with
average common shareholders'  equity,  funded 78 percent of average total assets
of $36.1  billion for the year ended  December 31, 2002.  Most of the  remaining
funding  was  provided  by  short-term  borrowings  in the  form  of  negotiable
certificates of deposit,  large time deposits,  foreign deposits,  federal funds
purchased,  securities sold under repurchase  agreements,  commercial paper, and
other  borrowings.  In the fourth  quarter of 2001,  we issued  $200  million in
medium-term  notes,  the  proceeds  of which  were  used for  general  corporate
purposes.  The  securities  portfolio  provides  additional  enhancement  to our
liquidity  position,  which may be created through either  securities  sales, or
repurchase agreements. Liquidity may also be provided by the sale or maturity of
assets. Such assets include  interest-bearing  deposits in banks,  federal funds
sold,  securities  purchased  under  resale  agreements,   and  trading  account
securities.  The aggregate of these assets  averaged  $1.3 billion  during 2002.
Additional liquidity may be provided through loan maturities and sales.

OFF-BALANCE  SHEET  ARRANGEMENTS  AND  AGGREGATE  CONTRACTUAL   OBLIGATIONS  AND
COMMITMENTS

     Off-balance sheet arrangements are any contractual  arrangement to which an
unconsolidated  entity is a party, under which we have: (1) any obligation under
a  guarantee  contract;   (2)  a  retained  or  contingent  interest  in  assets
transferred to an  unconsolidated  entity or similar  arrangement that serves as
credit, liquidity or market risk support to that entity for such assets; (3) any
obligation under certain derivative  instruments;  or (4) any obligation under a
material variable interest held by us in an unconsolidated  entity that provides
financing,  liquidity,  market risk or credit risk  support to us, or engages in
leasing, hedging or research and development services with us.

     Our  most  significant   off-balance  sheet  arrangements  are  limited  to
obligations under guarantee  contracts such as financial and performance standby
letters  of credit  for our  credit  customers,  commercial  letters  of credit,
unfunded commitments to lend, commitments to sell mortgage loans and commitments
to fund investments in various Community Redevelopment Act (CRA) investments and
venture  capital  investments.  To a lesser  extent,  we enter into  contractual
guarantees of agented sales of low-income  housing tax credit  investments  that
require  us  to  perform  under  those  guarantees  if  there  are  breaches  of
performance  of the  underlying  income-producing  properties.  As  part  of our
leasing  activities,  we may be lessor to special  purpose  entities to which we
provide financing for large equipment leasing projects.

     It is our belief that none of these  arrangements  expose us to any greater
risk of loss than is already  reflected on our balance sheet. We do not have any
off-balance  sheet  arrangements  in which we have any  retained  or  contingent
interest  (as we do not transfer or sell our assets to entities in which we have
a continuing  involvement),  any  exposure to  derivative  instruments  that are
indexed to stock indices nor any variable interests in any unconsolidated entity
to which we may be a party,  except  for those  leasing  arrangements  described
previously.

     The following table presents,  as of December 31, 2002, our significant and
determinable  contractual  obligations  by payment  date.  The  payment  amounts
represent  those amounts  contractually  due to the recipient and do not include
any unamortized  premiums or discounts,  hedge basis adjustment or other similar


                                      F-40
<PAGE>


carrying  value  adjustments.  For  further  information  on the  nature of each
obligation  type,  see  applicable  note  disclosure  in "Notes to  Consolidated
Financial Statements" included in this Form 10-K.

<PAGE>
<TABLE>
<CAPTION>


                                                                                DECEMBER 31, 2002
                                                     ________________________________________________________________________
                                                     LESS THAN     ONE THROUGH     FOUR TO FIVE      AFTER FIVE
(DOLLARS IN THOUSANDS)                                ONE YEAR     THREE YEARS         YEARS            YEARS         TOTAL
_________________________________________________    _________     ___________     ____________      __________    __________
<S>                                                    <C>            <C>              <C>             <C>         <C>
Medium and long-term debt........................      $    --        $218,584         $199,776        $     --    $  418,360
UnionBanCal Corporation-obligated mandatorily
  redeemable preferred securities of subsidiary
  grantor trust..................................           --              --               --         365,696       365,696
Other long-term liabiliities
  Operating leases (premises)....................       53,538          86,530           58,858          90,712       289,638
                                                       _______        ________         ________        ________    __________
Total long-term debt and operating leases........      $53,538        $305,114         $258,634        $456,408    $1,073,694
                                                       =======        ========         ========        ========    ==========
</TABLE>

     The following table presents our significant commitments as of December 31,
2002:


(DOLLARS IN THOUSANDS)                                  DECEMBER 31, 2002
___________________________________________________     _________________
Commitments to extend credit.......................         $12,872,063
Standby letters of credit..........................           2,483,871
Commercial letters of credit.......................             279,653
Commitments to fund principal investments..........              58,556


CERTAIN BUSINESS RISK FACTORS

     ADVERSE CALIFORNIA ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS

     A substantial majority of our assets, deposits and fee income 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.  Economic  conditions in California are subject to
various  uncertainties  at this  time,  including  the  long-term  impact of the
California  energy crisis and the decline in the technology  sector. If economic
conditions  in  California  continue  to  decline,  we expect  that our level of
problem assets could increase.

     THE CONTINUING WAR ON TERRORISM  CONTRIBUTES TO THE CONTINUING  DOWNTURN IN
       US ECONOMIC CONDITIONS

     On-going  acts or threats of terrorism and actions taken by the US or other
governments  as a result of such acts or threats,  including  possible  military
action in Iraq,  have  contributed  to the  continuing  downturn  in US economic
conditions and could further  adversely affect business and economic  conditions
in the US generally and in our  principal  markets.  For example,  the events of
September 11, 2001,  caused a decrease in air travel in the US, which  adversely
affected  the  airline  industry  and  many  other  travel-related   industries,
including those  operating in California.  The possibility of war with Iraq also
could contribute to adverse  economic  conditions and disruptions of the capital
markets with resultant adverse effects on our principal markets.

     ADVERSE  ECONOMIC  FACTORS  AFFECTING  CERTAIN  INDUSTRIES  COULD ADVERSELY
       AFFECT OUR BUSINESS

     We are subject to certain industry-specific  economic factors. For example,
a significant  and increasing  portion of our total loan portfolio is related to
residential real estate.  Accordingly, a downturn in the real estate and housing
industries  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 declining
portion of our total loan portfolio.  We ceased originating auto leases in April
2001;  however,  continued  deterioration  in the used car  market may result in
additional losses on the valuation of auto lease residuals on our remaining auto
leases.  We provide financing to


                                      F-41
<PAGE>

businesses in a number of other  industries that may be particularly  vulnerable
to  industry-specific   economic  factors,  including  the  communications/media
industry,  the retailing industry, the airlines industry, the power industry and
the  technology  industry.  Industry-specific  risks are beyond our  control and
could  adversely  affect our  portfolio  of loans,  potentially  resulting in an
increase in nonperforming loans or charge-offs.

     RISKS  ASSOCIATED  WITH CURTAILED  MARKET ACCESS OF POWER  COMPANIES  COULD
       AFFECT OUR PORTFOLIO CREDIT QUALITY

     The failure of Enron Corporation,  coupled with continued turbulence in the
energy markets, has significantly impacted debt ratings and equity valuations of
a broad  spectrum  of power  companies,  particularly  those  involved in energy
trading and in deregulated or non-regulated  markets.  These  developments  have
sharply  reduced  these  companies'  ability  to access  public  debt and equity
markets,  contributing to heightened liquidity pressures.  Should these negative
trends continue and/or intensify, the credit quality of certain of our borrowers
could be adversely affected.

     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  rates 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.

     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
or other  borrowings.  The  impact,  particularly  in a  falling  interest  rate
environment,  could  result in a decrease  in our  interest  income  relative to
interest expense.

     SHAREHOLDER  VOTES ARE CONTROLLED BY BTM; OUR INTERESTS MAY NOT BE THE SAME
AS BTM'S INTERESTS

     BTM, a wholly owned subsidiary of Mitsubishi  Tokyo Financial Group,  Inc.,
owns a  majority  (approximately  65  percent as of  December  31,  2002) of the
outstanding  shares of our common stock.  As a result,  BTM 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 other matters that
might be favorable to BTM.

     A majority of our  directors  are not officers or employees of  UnionBanCal
Corporation or any of our affiliates,  including BTM. However,  because of BTM's
control over the election of our directors,  BTM could change the composition of
our Board of  Directors  so that the Board  would not have a majority of outside
directors.  BTM'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.

     POSSIBLE  FUTURE SALES OF SHARES BY BTM COULD  ADVERSELY  AFFECT THE MARKET
       FOR OUR STOCK

     BTM may sell  shares of our common  stock in  compliance  with the  federal
securities  laws. By virtue of BTM's current control of us, BTM 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,  BTM
could sell shares of

                                      F-42
<PAGE>


our common stock without registration.  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 the market price of our common
stock. If BTM sells or transfers shares of our common stock as a block,  another
person or entity could become our controlling shareholder.

     BTM'S FINANCIAL CONDITION COULD ADVERSELY AFFECT OUR OPERATIONS

     Although  we fund  our  operations  independently  of BTM and  believe  our
business is not necessarily closely related to BTM's business or outlook,  BTM's
credit ratings may affect our credit ratings.  BTM is also subject to regulatory
oversight  and review by Japanese and US  regulatory  authorities.  Our business
operations  and  expansion  plans could be  negatively  affected  by  regulatory
concerns related to the Japanese financial system and BTM.

     POTENTIAL CONFLICTS OF INTEREST WITH BTM COULD ADVERSELY AFFECT US

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

     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,  Citibank,  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.

     Banks,  securities firms, and insurance  companies can now combine in a new
type of  financial  services  company  called  a  "financial  holding  company."
Financial holding  companies can offer virtually any type of financial  service,
including  banking,   securities   underwriting,   insurance  (both  agency  and
underwriting),  and merchant banking.  Recently,  a number of foreign banks have
acquired financial services companies in the US, further increasing  competition
in the US market.

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

     As a holding  company,  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
liquidate, 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.

                                      F-43

<PAGE>

     ADVERSE EFFECTS OF, OR CHANGES IN, BANKING OR OTHER LAWS AND REGULATIONS OR
       GOVERNMENTAL FISCAL OR MONETARY POLICIES 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,  including  accounting  standards and  interpretations,
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, including legislative
and  regulatory  reactions to the terrorist  attack on September  11, 2001,  and
future acts of terrorism,  and the Enron Corporation,  WorldCom,  Inc. and other
major US corporate  bankruptcies and reports of accounting  irregularities at US
public  companies,  including  various  large  and  publicly  traded  companies.
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 BTM'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.

     Additionally,  our  business  is affected  significantly  by the fiscal and
monetary  policies  of  the  federal   government  and  its  agencies.   We  are
particularly  affected by the policies of the Federal Reserve Board (FRB), which
regulates the supply of money and credit in the US. Under  long-standing  policy
of the FRB, 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.  Among the  instruments  of
monetary policy  available to the FRB are (a) conducting open market  operations
in US government  securities,  (b) changing the discount  rates of borrowings by
depository  institutions,  (c) imposing or changing reserve requirements against
certain  borrowings  by banks and their  affiliates.  These  methods are used in
varying degrees and  combinations  to directly  affect the  availability of bank
loans and deposits,  as well as the interest  rates charged on loans and paid on
deposits.  The policies of the FRB may have a material  effect on our  business,
results of operations and financial condition.

     WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR OPERATING STRATEGIES

     From time to time,  we develop  long-term  financial  performance  goals to
guide and  measure  the  success  of our  operating  strategies.  We can make no
assurances 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  expense,  including,  but not
          limited to, rising employee and healthcare costs;

     o    our inability to increase noninterest income;

     o    our inability to decrease reliance on revenues generated from assets;

     o    our ability to manage loan growth;

     o    our ability to find  acquisition  targets at valuation  levels we find
          attractive;

     o    regulatory and other impediments associated with making acquisitions;

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

                                      F-44

<PAGE>

     o    decreases in our net interest margin;

     o    increases in competition;

     o    adverse regulatory or legislative developments; and

     o    unexpected increases in costs related to acquisitions.

     RISKS   ASSOCIATED   WITH  POTENTIAL   ACQUISITIONS   OR   DIVESTITURES  OR
       RESTRUCTURING MAY ADVERSELY AFFECT US

     We may seek to acquire or invest in  companies,  technologies,  services or
products that complement our business. There can be no assurance that we will be
successful in completing any such  acquisition or investment as this will depend
on the availability of prospective  target companies at valuation levels we find
attractive and the competition  for such  opportunities  from other bidders.  In
addition,  we continue to evaluate the  performance of all of our businesses and
business  lines and may sell a business  or  business  line.  Any  acquisitions,
divestitures or restructuring may result in the issuance of potentially dilutive
equity securities,  significant write-offs,  including those 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 obtaining  any required
regulatory  approvals  and in the  assimilation  or  separation  of  operations,
services,  products and personnel,  the diversion of management's attention from
other  business  concerns,  higher than expected  deposit  attrition  (run-off),
divestitures required by regulatory authorities, the disruption of our business,
and the potential loss of key employees.  There can be no assurance that we will
be successful in overcoming these or any other significant risks encountered.

WRITTEN STATEMENTS UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     The written  statements of our chief executive  officer and chief financial
officer with respect to this report on Form 10-K,  as required by section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C.  section 1350), have been submitted to
the Securities and Exchange Commission as additional correspondence accompanying
this report.

                                      F-45

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                            PAGE
                                                                            ----
Consolidated Statements of Income for the Years Ended December 31,
  2000, 2001, and 2002....................................................  F-47
Consolidated Balance Sheets as of December 31, 2001 and 2002..............  F-48
Consolidated Statements of Changes in Shareholders' Equity for the
  Years Ended December 31, 2000, 2001, and 2002...........................  F-49
Consolidated Statements of Cash Flows for the Years Ended December
  31, 2000, 2001, and 2002................................................  F-50
Notes to Consolidated Financial Statements................................  F-51
Management Statement......................................................  F-97
Independent Auditors' Report..............................................  F-98

                                      F-46

<PAGE>
<TABLE>
<CAPTION>
                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME


                                                                                          YEARS ENDED DECEMBER 31,
                                                                                  __________________________________________
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)                                         2000            2001            2002
____________________________________________________________________________      __________      __________      __________
<S>                                                                               <C>             <C>             <C>
INTEREST INCOME
Loans.......................................................................      $2,242,182      $1,883,835      $1,518,918
Securities..................................................................         226,194         294,066         315,956
Interest bearing deposits in banks..........................................           9,126           2,850           2,806
Federal funds sold and securities purchased under resale agreements.........           8,160           6,844          13,895
Trading account assets......................................................          15,418           7,716           4,397
                                                                                  __________      __________      __________
  Total interest income.....................................................       2,501,080       2,195,311       1,855,972
                                                                                  __________      __________      __________
INTEREST EXPENSE
Domestic deposits...........................................................         557,408         445,486         215,138
Foreign deposits............................................................         107,183          69,830          21,110
Federal funds purchased and securities sold under repurchase
  agreements................................................................          96,606          52,153           6,030
Commercial paper............................................................          94,905          52,439          16,645
Medium and long-term debt...................................................          17,617          10,445           9,344
UnionBanCal Corporation-obligated mandatorily redeemable preferred
  securities of subsidiary grantor trust....................................          26,212          20,736          15,625
Other borrowed funds........................................................          16,709          20,180          10,111
                                                                                  __________      __________      __________
  Total interest expense....................................................         916,640         671,269         294,003
                                                                                  __________      __________      __________
NET INTEREST INCOME.........................................................       1,584,440       1,524,042       1,561,969
Provision for credit losses.................................................         440,000         285,000         175,000
                                                                                  __________      __________      __________
  Net interest income after provision for credit losses.....................       1,144,440       1,239,042       1,386,969
                                                                                  __________      __________      __________
NONINTEREST INCOME
Service charges on deposit accounts.........................................         210,257         245,116         275,820
Trust and investment management fees........................................         154,387         154,092         143,953
Merchant transaction processing fees........................................          73,521          80,384          87,961
International commissions and fees..........................................          71,189          71,337          76,956
Brokerage commissions and fees..............................................          35,755          36,317          36,301
Merchant banking fees.......................................................          48,985          33,532          32,314
Foreign exchange trading gains, net.........................................          28,057          26,565          28,548
Insurance commissions.......................................................              --             920          27,208
Securities gains (losses), net..............................................           8,784           8,654          (3,796)
Other.......................................................................          16,245          59,487          30,711
                                                                                  __________      __________      __________
  Total noninterest income..................................................         647,180         716,404         735,976
                                                                                  __________      __________      __________
NONINTEREST EXPENSE
Salaries and employee benefits..............................................         600,462         659,840         731,166
Net occupancy...............................................................          92,567          95,152         106,592
Equipment...................................................................          63,290          64,357          66,160
Merchant transaction processing.............................................          49,609          52,789          55,767
Communications..............................................................          43,744          50,439          53,382
Professional services.......................................................          42,042          38,480          44,851
Data processing.............................................................          34,803          35,732          32,589
Foreclosed asset expense (income)...........................................             (80)            (13)            146
Restructuring credit........................................................         (19,000)             --              --
Other.......................................................................         222,748         243,398         257,013
                                                                                  __________      __________      __________
  Total noninterest expense.................................................       1,130,185       1,240,174       1,347,666
                                                                                  __________      __________      __________
Income before income taxes..................................................         661,435         715,272         775,279
Income tax expense..........................................................         221,535         233,844         247,376
                                                                                  __________      __________      __________
NET INCOME..................................................................      $  439,900      $  481,428      $  527,903
                                                                                  ==========      ==========      ==========
NET INCOME PER COMMON SHARE--BASIC..........................................           $2.72           $3.05           $3.41
                                                                                  ==========      ==========      ==========
NET INCOME PER COMMON SHARE--DILUTED........................................           $2.72           $3.04           $3.38
                                                                                  ==========      ==========      ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING--BASIC...........................         161,605         157,845         154,758
                                                                                  ==========      ==========      ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING--DILUTED.........................         161,989         158,623         156,415
                                                                                  ==========      ==========      ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-47

<PAGE>

<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                                                                                          DECEMBER 31,
                                                                                                  _____________________________
(DOLLARS IN THOUSANDS)                                                                                2001              2002
_______________________________________________________________________________________________   ___________       ___________
<S>                                                                                               <C>               <C>
ASSETS
Cash and due from banks........................................................................   $ 2,682,392       $ 2,823,573
Interest bearing deposits in banks.............................................................        64,162           278,849
Federal funds sold and securities purchased under resale agreements............................       918,400         1,339,700
                                                                                                  ___________       ___________
    Total cash and cash equivalents............................................................     3,664,954         4,442,122
Trading account assets.........................................................................       229,697           276,021
Securities available for sale:
  Securities pledged as collateral.............................................................       137,922           157,823
  Held in portfolio............................................................................     5,661,160         7,180,677
Loans (net of allowance for credit losses: 2001, $634,509; 2002, $609,190).....................    24,359,521        25,828,893
Due from customers on acceptances..............................................................       182,440            62,469
Premises and equipment, net....................................................................       494,534           504,666
Intangible assets..............................................................................        16,176            38,518
Goodwill.......................................................................................        68,623           150,542
Other assets...................................................................................     1,223,719         1,528,042
                                                                                                  ___________       ___________
    Total assets...............................................................................   $36,038,746       $40,169,773
                                                                                                  ===========       ===========
LIABILITIES
Domestic deposits:
  Noninterest bearing..........................................................................   $12,314,150       $15,537,906
  Interest bearing.............................................................................    14,160,113        15,258,479
Foreign deposits:
  Noninterest bearing..........................................................................       404,708           583,836
  Interest bearing.............................................................................     1,677,228         1,460,594
                                                                                                  ___________       ___________
    Total deposits.............................................................................    28,556,199        32,840,815
Federal funds purchased and securities sold under repurchase agreements........................       418,814           334,379
Commercial paper...............................................................................       830,657         1,038,982
Other borrowed funds...........................................................................       700,403           267,047
Acceptances outstanding........................................................................       182,440            62,469
Other liabilities..............................................................................     1,040,406         1,083,836
Medium and long-term debt......................................................................       399,657           418,360
UnionBanCal Corporation-obligated mandatorily redeemable preferred securities
  of subsidiary grantor trust..................................................................       363,928           365,696
                                                                                                  ___________       ___________
    Total liabilities..........................................................................    32,492,504        36,411,584
                                                                                                  ___________       ___________
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock:
  Authorized 5,000,000 shares, no shares issued or outstanding at December 31,
    2001 or 2002...............................................................................            --                --
Common stock-- no stated value:
  Authorized 300,000,000 shares, issued 156,483,511 shares in 2001 and 150,702,363
    shares in 2002.............................................................................     1,181,925           926,460
Retained earnings..............................................................................     2,231,384         2,591,635
Accumulated other comprehensive income.........................................................       132,933           240,094
                                                                                                  ___________       ___________
    Total shareholders' equity.................................................................     3,546,242         3,758,189
                                                                                                  ___________       ___________
    Total liabilities and shareholders' equity.................................................   $36,038,746       $40,169,773
                                                                                                  ===========       ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-48

<PAGE>
<TABLE>
<CAPTION>

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

                                                                   YEARS ENDED DECEMBER 31,
                                     ___________________________________________________________________________________________
(DOLLARS IN THOUSANDS, EXCEPT PER
  SHARE DATA)                                  2000                            2001                             2002
_________________________________    __________________________      ___________________________      __________________________
<S>                                  <C>               <C>           <C>                <C>           <C>               <C>
COMMON STOCK
Balance, beginning of year......     $1,404,155                      $1,275,587                       $1,181,925
Dividend reinvestment plan......             52                              44                               99
Deferred compensation--restricted
  stock awards..................            238                             190                              255
Stock options exercised.........          1,784                          13,733                           75,311
Stock issued in bank acquisitions            --                              --                           54,830
Common stock repurchased(1).....       (130,642)                       (107,629)                        (385,960)
                                     __________                      __________                       __________
    Balance, end of year........     $1,275,587                      $1,181,925                         $926,460
                                     __________                      __________                       __________
RETAINED EARNINGS
Balance, beginning of year......     $1,625,263                      $1,906,093                       $2,231,384
Net income......................        439,900        $439,900         481,428         $481,428         527,903        $527,903
Dividends on common stock(2)....       (161,227)                       (157,736)                        (167,593)
Deferred compensation--restricted
  stock awards..................          2,157                           1,599                             (59)
                                     __________                      __________                       __________
Balance, end of year............     $1,906,093                      $2,231,384                       $2,591,635
                                     __________                      __________                       __________
ACCUMULATED OTHER COMPREHENSIVE
  INCOME (LOSS)
Balance, beginning of year......     $  (41,950)                     $   29,885                       $  132,933
Cumulative effect of accounting
  change (SFAS No.133)(3), net of
  tax expense of $13,754........                             --                           22,205                              --
Unrealized net gains on cash flow
  hedges, net of tax expense of
  $45,015 in 2001, and $70,195 in
  2002..........................                             --                           72,672                         113,322
Less: reclassification adjustment
  for net gains on cash flow
  hedges included in net income,
  net of tax expense of $19,844
  in 2001, and $44,472 in 2002                               --                          (32,037)                        (71,794)
                                                       ________                         ________                        ________
Net unrealized gains on cash flow
  hedges........................                             --                           62,840                          41,528
Unrealized holding gains arising
  during the year on securities
  available for sale, net of tax
  expense of $49,462 in 2000,
  $28,950 in 2001, and $38,303 in
  2002..........................                         79,851                           46,736                          61,835
Less: reclassification adjustment
  for losses (gains) on
  securities available for sale
  included in net income, net of
  tax expense (benefit) of $3,360
  in 2000, $3,310 in 2001, and
  $(1,452) in 2002..............                         (5,424)                          (5,344)                          2,344
                                                       ________                         ________                        ________
Net unrealized gains on
  securities available for sale.                         74,427                           41,392                          64,179
Foreign currency translation
  adjustment, net of tax expense
  (benefit) of $(1,535) in 2000,
  $(628) in 2001, and $964 in 2002                       (2,478)                          (1,014)                          1,556
Minimum pension liability
  adjustment, net of tax benefit
  of $71 in 2000, $105 in 2001,
  and $63 in 2002...............                           (114)                            (170)                           (102)
                                                       ________                         ________                        ________
Other comprehensive income......         71,835          71,835         103,048          103,048         107,161         107,161
                                     __________        ________      __________         ________      __________        ________
Total comprehensive income......                       $511,735                         $584,476                        $635,064
                                                       ========                         ========                        ========
  Balance, end of year..........     $   29,885                      $  132,933                       $  240,094
                                     __________                      __________                       __________
TOTAL SHAREHOLDERS' EQUITY......     $3,211,565                      $3,546,242                       $3,758,189
                                     ==========                      ==========                       ==========
<FN>
__________
(1)  Common stock repurchased includes commission costs.

(2)  Dividends per share were $1.00 in 2000,  $1.00 in 2001,  and $1.09 in 2002.
     Dividends are based on UnionBanCal  Corporation's  shares outstanding as of
     the declaration date.

(3)  Statement  of  Financial  Accounting  Standards  No. 133,  "Accounting  for
     Derivative Instruments and Hedging Activities".
</FN>
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-49

<PAGE>
<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                       YEARS ENDED DECEMBER 31,
                                                                              _________________________________________________
(DOLLARS IN THOUSANDS)                                                             2000               2001               2002
________________________________________________________________________      ___________        ___________        ___________
<S>                                                                           <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income............................................................      $   439,900        $   481,428        $   527,903
  Adjustments to reconcile net income to net cash provided by
    operating activities:
    Provision for credit losses.........................................          440,000            285,000            175,000
    Depreciation, amortization and accretion............................           72,710             81,487             87,040
    Provision for deferred income taxes.................................           13,709             58,655             38,448
    Loss (gain) on sales of securities available for sale, net..........           (8,784)            (8,654)             3,796
    Net increase in prepaid expenses....................................          (23,724)           (44,746)          (167,188)
    Net increase (decrease) in accrued expenses.........................          (85,537)           172,605            144,329
    Net (increase) decrease in trading account assets...................         (159,760)           109,998            (46,324)
    Other, net of acquisitions..........................................          (88,398)           (46,174)           288,369
                                                                              ___________        ___________        ___________
      Total adjustments.................................................          160,216            608,171            523,470
                                                                              ___________        ___________        ___________
Net cash provided by operating activities...............................          600,116          1,089,599          1,051,373
                                                                              ___________        ___________        ___________
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sales of securities available for sale..................          422,881            931,479            187,556
  Proceeds from matured and called securities available for sale........          847,158          1,007,273          1,472,573
  Purchases of securities available for sale............................       (2,056,594)        (3,510,621)        (3,116,001)
  Proceeds from matured and called securities held to maturity..........           23,003                 --                 --
  Net purchases of premises and equipment...............................         (163,716)           (95,041)           (87,521)
  Net decrease (increase) in loans......................................         (391,672)           766,089         (1,917,646)
  Net cash received in acquisitions.....................................               --                 --             86,590
  Other, net............................................................            5,433              7,313             12,425
                                                                              ___________        ___________        ___________
  Net cash used in investing activities.................................       (1,313,507)          (893,508)        (3,362,024)
                                                                              ___________        ___________        ___________
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in deposits..............................................        1,026,576          1,273,016          3,852,835
  Net increase (decrease) in federal funds purchased and securities sold
  under repurchase agreements...........................................          230,868           (968,853)           (84,435)
  Net increase (decrease) in commercial paper and other borrowed funds..           34,441           (104,180)          (225,031)
  Proceeds from issuance of medium-term debt............................               --            200,000                 --
  Maturity and redemption of subordinated debt..........................          (98,000)                --                 --
  Common stock repurchased..............................................         (130,642)          (107,629)          (385,960)
  Payments of cash dividends............................................         (162,575)          (158,406)          (164,440)
  Stock options exercised...............................................            1,784             13,733             75,311
  Other, net............................................................           (2,426)            11,577              1,655
                                                                              ___________        ___________        ___________
  Net cash provided by financing activities.............................          900,026            159,258          3,069,935
                                                                              ___________        ___________        ___________
Net increase in cash and cash equivalents...............................          186,635            355,349            759,284
Cash and cash equivalents at beginning of year..........................        3,158,133          3,322,979          3,664,954
Effect of exchange rate changes on cash and cash equivalents............          (21,789)           (13,374)            17,884
                                                                              ___________        ___________        ___________
Cash and cash equivalents at end of year................................      $ 3,322,979        $ 3,664,954        $ 4,442,122
                                                                              ===========        ===========        ===========
CASH PAID DURING THE YEAR FOR:
  Interest..............................................................      $   883,706        $   747,271        $   311,299
  Income taxes..........................................................          260,117             99,735            166,875
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
  Acquisitions:
    Fair value of assets acquired.......................................               --                 --        $   571,065
      Purchase price:
  Cash..................................................................               --                 --            (52,524)
  Stock issued..........................................................               --                 --            (54,830)
                                                                              ___________        ___________        ___________
    Fair value of liabilities assumed...................................      $        --        $        --        $   463,711
                                                                              ===========        ===========        ===========
  Loans transferred to foreclosed assets (OREO) and/or distressed
    loans held for sale.................................................      $     9,924        $     1,677        $       826
  Securities transferred from held to maturity to available for sale....               --             23,529                 --
  Debt assumed in purchase of building..................................           47,955                 --                 --

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-50

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 2000, 2001, AND 2002

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

     INTRODUCTION

     UnionBanCal  Corporation is a commercial  bank holding  company and has, as
its major subsidiary, a banking subsidiary,  Union Bank of California, N.A. (the
Bank). UnionBanCal Corporation and its subsidiaries (the Company) provide 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.

     Since  November  1999,  the Company has announced  stock  repurchase  plans
totaling $400 million.  The Company  repurchased $131 million,  $108 million and
$86 million in 2000, 2001, and 2002,  respectively,  as part of these repurchase
plans.  As of December 31, 2002,  $59 million of the  Company's  common stock is
authorized  for  repurchase.  In  addition,  on August  27,  2002,  the  Company
announced  that it purchased  $300 million of its common stock from its majority
owner,  The  Bank of  Tokyo-Mitsubishi,  Ltd.  (BTM),  which  is a  wholly-owned
subsidiary of Mitsubishi Tokyo Financial  Group,  Inc. At December 31, 2002, BTM
owned approximately 65 percent of the Company's outstanding common stock.

     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,
and 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 using a method that 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

                                      F-51

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

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  on  the  sale  of  and   other-than-temporary
impairment  charges on available for sale securities are included in noninterest
income as securities gains (losses),  net. The specific identification method is
used to calculate realized gains or losses.

     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 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.


                                      F-52
<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

     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,
the specific allowance and the unallocated allowance.

     The formula allowance is calculated by applying loss factors to outstanding
loans and 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 all commercial  loans
from a loss  migration  model  and  for  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.


                                      F-54
<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

     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 ten 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  undiscounted
future cash flows of a long-lived  asset,  if lower,  and its carrying value. In
the event of an  impairment,  the Company  recognizes a loss for the  difference
between the  carrying  amount and the  estimated  value of the asset as measured
using a quoted  market  price or, in the  absence of a quoted  market  price,  a
discounted  cash flow analysis.  The impairment loss is reflected in noninterest
expense.

     OTHER ASSETS

     As of January 1, 2002 with the  adoption  of SFAS No.  142,  "Goodwill  and
Other Intangible  Assets," goodwill is no longer  amortized,  but instead tested
for  impairment  at least  annually.  Prior to  January 1,  2002,  goodwill  was
amortized using the  straight-line  method over its estimated period of benefit,
generally fifteen years.


                                      F-54

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

     Intangible assets are amortized either using the straight-line  method or a
method  that  patterns  the manner in which the  economic  benefit is  consumed.
Intangible  assets are amortized over their estimated  period of benefit ranging
from six to fifteen years. The Company periodically evaluates the recoverability
of intangible assets and takes into account events or circumstances that warrant
revised estimates of useful lives or that indicate that impairment exists. As of
December 31, 2002, intangible assets are subject to amortization.

     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  represent  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 loans' 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 and 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, i.e., hedging instruments,  are evaluated in order to
determine  if they qualify for hedge  accounting.  With the adoption of SFAS No.
133, "Accounting for Derivative  Instruments and Hedging Activities," on January
1, 2001, the hedging instrument must be highly effective in achieving offsetting
changes in the hedge  instrument and hedged item  attributable to the risk being
hedged. Any ineffectiveness,  which arises during the hedging  relationship,  is
recognized  in  noninterest  expense  in the  period  in  which it  arises.  All
qualifying hedges are valued at fair value and included in other assets or other
liabilities.  For fair value hedges of interest  bearing assets or  liabilities,
the change in the fair value of the hedged  item and the hedging  instrument  to
the extent  effective is recognized in net interest  income.  For all other fair
value  hedges,  the  changes in the fair value of the hedged item and changes in
fair value of the derivative are recognized in noninterest income. For cash flow
hedges,  the  unrealized  changes  in fair  value to the  extent  effective  are
recognized in other comprehensive  income.  Amounts realized on cash flow


                                      F-55

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

hedges related to variable rate loans are  recognized in net interest  income in
the period when the cash flow from the hedged item is  realized.  The fair value
of cash  flow  hedges  related  to  forecasted  transactions  is  recognized  in
noninterest expense in the period when the forecasted transaction occurs.

     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 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 are a common stock equivalent.
See discussion under "Stock-Based Compensation-Transition and Disclosure," which
follows below and Note 19.

     STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE

     In December 2002, the Financial  Accounting  Standards  Board (FASB) issued
SFAS  No.  148,   "Accounting  for  Stock-Based   Compensation--Transition   and
Disclosure,"   which   amends  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation."  This Statement provides  alternative methods of transition for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.  It also amends the disclosure  requirements  to require
prominent  disclosure in both annual and interim financial  statements about the
method of accounting for stock-based employee compensation and the effect of the
method  used  on  reported  results.  The  disclosure  requirements  under  this
Statement are effective for financial statements issued after December 15, 2002.

     As  allowed  under  the  provisions  of  SFAS  No.  123,   "Accounting  for
Stock-Based  Compensation,"  as  amended,  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 (APB) No. 25,
"Accounting  for Stock Issued to Employees" and related  Interpretations.  Under
the intrinsic value-based method, 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.


                                      F-56

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

     At December 31, 2002, the Company has two stock-based employee compensation
plans,  which are described more fully in Note 14. Only restricted  stock awards
have been  reflected in  compensation  expense,while  all options  granted under
those plans had an exercise  price equal to the market  value of the  underlying
common stock on the date of grant.

     The following  table  illustrates the effect on net income and earnings per
share if the Company had applied the fair value  recognition  provisions of SFAS
No. 123 to stock-based employee compensation.

<TABLE>
<CAPTION>


                                                                        YEAR ENDED DECEMBER 31,
                                                                  ___________________________________
(DOLLARS IN THOUSANDS)                                              2000          2001         2002
________________________________________________________________  ________      ________     ________
<S>                                                               <C>           <C>          <C>
As reported net income..........................................  $439,900      $481,428     $527,903
Stock-based employee compensation expense (determined
  under fair value based method for all awards, net
  of taxes).....................................................   (10,170)      (16,678)     (23,844)
                                                                  ________      ________     ________
Pro forma net income, after stock-based employee
  compensation expense.....................                       $429,730      $464,750     $504,059
                                                                  ========      ========     ========
Earnings per share--basic
                                                 As reported         $2.72         $3.05        $3.41
                                                   Pro forma         $2.66         $2.94        $3.26
Earnings per share--diluted
                                                 As reported         $2.72         $3.04        $3.38
                                                   Pro forma         $2.65         $2.93        $3.22
</TABLE>


     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.
Compensation  expense  related to  restricted  stock  awards for the years ended
December 31, 2000, 2001, and 2002 was not significant.

     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.

     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


                                      F-57

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

business unit are assigned to that business.  Economic  capital is attributed to
each business unit 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.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS

     In June 2001, the FASB issued Statement of Financial  Accounting  Standards
(SFAS) No. 141,  "Business  Combinations," and SFAS No. 142, "Goodwill and Other
Intangible  Assets."  SFAS No. 141 requires  that all business  combinations  be
accounted for by a single method--the purchase method. This Statement eliminates
the  pooling-of-interests  method but carries forward without reconsideration of
the guidance in  Accounting  Principles  Board (APB)  Opinion No. 16,  "Business
Combinations," and SFAS No. 38, "Accounting for Preacquisition  Contingencies of
Purchased  Enterprises,"  related to the  application of the purchase  method of
accounting.  The  provisions of SFAS No. 141 apply to all business  combinations
initiated after June 30, 2001, and all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001, or later.
Goodwill and intangible assets acquired in transactions completed after June 30,
2001 are accounted for in accordance with the amortization  and  nonamortization
provisions of SFAS No. 142. SFAS No. 142  significantly  changes the  accounting
for  goodwill  and  other   intangible   assets   subsequent  to  their  initial
recognition. This Statement requires that goodwill and some intangible assets no
longer be amortized,  but tested for  impairment at least  annually by comparing
the fair value of those assets with their  recorded  amounts.  Note 4 includes a
summary of the  Company's  goodwill and other  intangible  assets as well as the
impact of the adoption of SFAS No. 142.


                                      F-58

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

     ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS

     In June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
Retirement  Obligations." This Statement addresses the financial  accounting and
reporting for obligations  associated with the retirement of tangible long-lived
assets  and the  associated  asset  retirement  costs.  It  applies to the legal
obligations associated with the retirement of long-lived assets that result from
the  acquisition,  construction,  development,  and/or the normal operation of a
long-lived  asset. A legal  obligation is an obligation that a party is required
to settle as a result of an  existing or enacted  law,  statute,  ordinance,  or
written or oral  contract,  or by legal  construction  of a  contract  under the
doctrine of promissory  estoppel.  This  Statement is effective for fiscal years
beginning after June 15, 2002.  Management  believes  adoption of this Statement
will not have a material impact on the Company's  financial  position or results
of operations.

     ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived Assets." This Statement supersedes SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed of," and the  accounting  and reporting  provisions of APB
Opinion No. 30,  "Reporting the Results of  Operations-Reporting  the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," for the disposal of a segment of a business.
SFAS No. 144 establishes a single  accounting model for long-lived  assets to be
disposed of by sale,  whether  previously held and used or newly acquired.  This
Statement  carries  over the  framework  established  in SFAS No.  121,  and was
adopted by the Company on January 1, 2002. The adoption of this Statement had no
material impact on the Company's financial position or results of operations.

     RESCISSION OF SFAS NO. 4, 44, AND 64, AMENDMENT OF SFAS NO.13

     In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS No. 4, 44,
and 64,  Amendment of SFAS No. 13, and Technical  Corrections."  This  Statement
rescinds SFAS No. 4, "Reporting Gains and Losses from  Extinguishment  of Debt,"
SFAS No. 44,  "Accounting for Intangible Assets of Motor Carriers," and SFAS No.
64,  "Extinguishments of Debt Made to Satisfy  Sinking-Fund  Requirements." This
Statement  amends  SFAS  No.  13,  "Accounting  for  Leases,"  to  eliminate  an
inconsistency  between the required  accounting for sale-leaseback  transactions
and the required  accounting for certain lease  modifications that have economic
effects that are similar to sale-leaseback transactions. This Statement requires
that capital leases that are modified so that the resulting  lease  agreement is
classified  as an  operating  lease be  accounted  for under the  sale-leaseback
provisions of SFAS No. 98,  "Accounting  for Leases." This Statement also amends
other  existing  authoritative  pronouncements  to make  technical  corrections,
clarify meanings, or describe their applicability under changed conditions.  The
provisions of this  Statement  related to the  rescission of SFAS No. 4 shall be
applied in fiscal years  beginning  after May 15, 2002.  The  provisions of this
Statement related to SFAS No. 13 are effective for transactions  occurring after
May 15, 2002. All other provisions of this Statement are effective for financial
statements issued on or after May 15, 2002, with early  application  encouraged.
The adoption of this  Statement did not have a material  impact on the Company's
financial position or results of operations.

     ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated  with Exit or  Disposal  Activities."  This  Statement  replaces  the
accounting and reporting  provisions of Emerging  Issues Task Force

                                      F-59

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

(EITF) Issue No. 94-3,  "Liability  Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity  (including  Certain Costs Incurred
in a Restructuring)." It requires that costs associated with an exit or disposal
activity be recognized  when a liability is incurred  rather than at the date an
entity commits to an exit plan.  This Statement is effective  after December 31,
2002.  Management believes that adopting this Statement will not have a material
impact on the Company's financial position or results of operations.

     ACCOUNTING FOR ACQUISITIONS OF CERTAIN FINANCIAL INSTITUTIONS

     In October  2002,  the FASB issued SFAS No. 147,  "Acquisitions  of Certain
Financial  Institutions."  This Statement  amended SFAS No. 72,  "Accounting for
Certain  Acquisitions  of  Banking  or  Thrift   Institutions,"  SFAS  No.  144,
"Accounting   for  the  Impairment  or  Disposal  of  Long-Lived   Assets,"  and
Interpretation  No. 9,  "Applying APB Opinion No. 16 and 17, "When a Savings and
Loan Association or a Similar Institution Is Acquired in a Business  Combination
Accounted  for by the  Purchase  Method."  The  requirement  in  paragraph  5 of
Statement 72 to recognize  any excess of the fair value of  liabilities  assumed
over the fair value of tangible and identifiable  intangible  assets acquired as
an unidentifiable  intangible asset no longer applies to acquisitions within the
scope  of  this  Statement.  The  acquisition  of all  or  part  of a  financial
institution  that  meets  the  definition  of a  business  combination  shall be
accounted for by the purchase method in accordance with SFAS No. 141,  "Business
Combinations."  In addition,  this Statement  amends SFAS No. 144, to include in
its  scope  long-term  customer-relationship   intangible  assets  of  financial
institutions such as depositor and  borrower-relationship  intangible assets and
credit cardholder  intangible  assets. As a result,  those intangible assets are
now subject to the impairment test in accordance with the provisions in SFAS No.
144. The  provisions of this  Statement  that relate to the  application  of the
purchase   method  of  accounting   apply  to  all   acquisitions  of  financial
institutions,  except transactions between two or more mutual enterprises.  This
Statement  was  effective  October  1,  2002 and had no  material  impact on the
Company's financial position or results of operations.

     ACCOUNTING  FOR  GUARANTORS AND  DISCLOSURE  REQUIREMENTS  FOR  GUARANTEES,
       INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS

     In November  2002,  the FASB issued  FASB  Interpretation  No. 45 (FIN 45),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of Indebtedness of Others." The  Interpretation  expands on
the  accounting  guidance  of  Statements  No. 5, 57,  and 107 and  incorporates
without  change the  provisions  of FASB  Interpretation  No. 34, which is being
superseded.   The   Interpretation   elaborates   on  the  existing   disclosure
requirements  for most  guarantees  and  requires  that  guarantors  recognize a
liability  for the  fair  value  of  guarantees  at  inception.  The  disclosure
requirements  of this  Interpretation  are effective  for  financial  statements
periods ending after December 15, 2002. The initial  recognition and measurement
provisions of this  Interpretation  are to be applied on a prospective  basis to
guarantees  issued or modified after December 31, 2002.  Significant  guarantees
that have been entered into by the Company are disclosed in Note 21.  Management
believes that adopting the measurement  provisions of this  Interpretation  will
not have a material  impact on the  Company's  financial  position or results of
operations.

     CONSOLIDATION OF VARIABLE INTEREST ENTITIES

     In  January  2003,  the FASB  issued  FIN 46,  "Consolidation  of  Variable
Interest Entities." The purpose of this interpretation is to provide guidance on
how to identify a variable  interest entity (VIE) and determine when the assets,
liabilities,  noncontrolling  interests, and results of operations of a VIE need
to be included in a

                                      F-60

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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

company's  consolidated  financial  statements.  A company  that holds  variable
interests in an entity will need to consolidate that entity if
the  company's  interest  in the VIE is such  that  the  company  will  absorb a
majority of the VIE's  expected  losses  and/or  receive a majority of the VIE's
expected residual returns,  if they occur. New disclosure  requirements are also
prescribed by FIN 46. FIN 46 became effective upon its issuance.  As of December
31,  2002,  the  Company  does not  believe  it has any  VIE's  for  which  this
interpretation would be applicable.

NOTE 2--SECURITIES

     The amortized cost, gross unrealized gains,  gross unrealized  losses,  and
fair values of securities  are presented  below.  At January 1, 2001, all of our
securities held to maturity were transferred to securities available for sale in
conjunction with the adoption of SFAS No. 133, and therefore,  no information is
provided for December  31, 2001 or December 31, 2002 in the  securities  held to
maturity table.

<TABLE>
<CAPTION>

SECURITIES AVAILABLE FOR SALE



                                                                            DECEMBER 31,
                                    _____________________________________________________________________________________________
                                                        2001                                            2002
                                    _____________________________________________   _____________________________________________
                                                   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.....................  $  214,249   $  7,957    $    --   $  222,206   $  332,169   $ 12,220    $    --   $  344,389
Other U.S. government.............   1,902,001     91,315        303    1,993,013    2,560,420    126,886         --    2,687,306
Mortgage-backed securities........   3,293,857     48,138     14,127    3,327,868    3,902,879    115,738         80    4,018,537
State and municipal...............      40,116      5,897         80       45,933       42,917      6,182          8       49,091
Corporate debt securities.........     129,314         --      4,152      125,162      181,345         19     25,565      155,799
Equity securities.................      78,810        133         --       78,943       73,559      3,598        241       76,916
Foreign securities................       5,883         92         18        5,957        6,425         94         57        6,462
                                    __________   ________    _______   __________   __________   ________    _______   __________
  Total securities available for
    sale..........................  $5,664,230   $153,532    $18,680   $5,799,082   $7,099,714   $264,737    $25,951   $7,338,500
                                    ==========   ========    =======   ==========   ==========   ========    =======   ==========
</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.

                                      F-61

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 2--SECURITIES (CONTINUED)

MATURITY SCHEDULE OF SECURITIES



                                                            SECURITIES
                                                        AVAILABLE FOR SALE(1)
                                                     __________________________
                                                         DECEMBER 31, 2002
                                                     __________________________
                                                      AMORTIZED         FAIR
(DOLLARS IN THOUSANDS)                                  COST            VALUE
_________________________________________________    __________      __________
Due in one year or less..........................    $  538,306      $  543,794
Due after one year through five years............     2,762,947       2,900,345
Due after five years through ten years...........       295,601         286,489
Due after ten years..............................     3,429,301       3,530,956
Equity securities(2).............................        73,559          76,916
                                                     __________      __________
  Total securities...............................    $7,099,714      $7,338,500
                                                     ==========      ==========
__________
(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.

(2)  Equity securities do not have a stated maturity.

     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. In 2001,  proceeds from sales of securities  available for sale
were $931 million with gross  realized  gains of $31 million and gross  realized
losses of $22 million. In 2002, proceeds from sales of securities  available for
sale were  $188  million  with  gross  realized  gains of $9  million  and gross
realized losses of $13 million.

 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, 2001 and 2002, the Company had
no pledged  collateral  to secured  parties who are not  permitted  to resell or
repledge those securities.

     As of  December  31,  2001 and  2002,  the  Company  had not  accepted  any
collateral that it is permitted by contract to sell or repledge.

                                      F-62

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 3--LOANS AND ALLOWANCE FOR CREDIT LOSSES

     A summary of loans,  net of unearned  interest  and fees of $56 million and
$45 million, at December 31, 2001 and 2002, respectively, is as follows:


                                                        DECEMBER 31,
                                              _____________________________
(DOLLARS IN THOUSANDS)                            2001              2002
___________________________________________   ___________       ___________
Domestic:
  Commercial, financial and industrial.....   $11,476,361       $10,338,508
  Construction.............................     1,059,847         1,285,204
  Mortgage:
    Residential............................     4,788,219         6,382,227
    Commercial.............................     3,590,318         4,150,178
                                              ___________       ___________
      Total mortgage.......................     8,378,537        10,532,405
  Consumer:
    Installment............................     1,200,047           909,787
    Revolving lines of credit..............       859,021         1,102,771
                                              ___________       ___________
      Total consumer.......................     2,059,068         2,012,558
  Lease financing..........................       979,242           812,918
                                              ___________       ___________
      Total loans in domestic offices......    23,953,055        24,981,593
Loans originated in foreign branches.......     1,040,975         1,456,490
                                              ___________       ___________
      Total loans..........................    24,994,030        26,438,083
      Allowance for credit losses..........       634,509           609,190
                                              ___________       ___________
      Loans, net...........................   $24,359,521       $25,828,893
                                              ===========       ===========


     Changes in the allowance for credit losses were as follows:

<TABLE>
<CAPTION>

                                                                   YEARS ENDED DECEMBER 31,
                                                            ____________________________________
(DOLLARS IN THOUSANDS)                                         2000          2001         2002
_______________________________________________________     _________     _________    _________
<S>                                                         <C>           <C>          <C>
Balance, beginning of year.............................     $ 470,378     $ 613,902    $ 634,509
Loans charged off......................................      (322,363)     (322,469)    (245,342)
Recoveries of loans previously charged off.............        26,297        58,370       39,546
                                                            _________     _________    _________
    Total net loans charged off........................      (296,066)     (264,099)    (205,796)
Provision for credit losses............................       440,000       285,000      175,000
Foreign translation adjustment and other net
  additions (deductions)...............................          (410)         (294)       5,477
                                                            _________     _________    _________
Balance, end of year...................................     $ 613,902     $ 634,509    $ 609,190
                                                            =========     =========    =========
</TABLE>

     Nonaccrual loans totaled $492 million and $337 million at December 31, 2001
and 2002,  respectively.  There were no renegotiated  loans at December 31, 2001
and 2002.

                                      F-63

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

     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)                                               2000          2001         2002
_____________________________________________________________      ________      ________     ________
<S>                                                                <C>           <C>          <C>
Impaired loans with an allowance.............................      $318,418      $383,967     $306,693
Impaired loans without an allowance(1).......................        81,581       107,918       29,996
                                                                   ________      ________     ________
    Total impaired loans(2)..................................      $399,999      $491,885     $336,689
                                                                   ========      ========     ========
Allowance for impaired loans.................................      $118,378       $97,651     $120,682
Average balance of impaired loans during the year............      $257,650      $455,168     $399,703
Interest income recognized during the year on nonaccrual
  loans at December 31.......................................      $  1,221      $  5,442     $ 10,842
<FN>
__________
(1)  These loans do not require an  allowance  for credit  losses under SFAS No.
     114  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:  $361 million,  $452 million, and $300 million was evaluated using
     the present  value of the expected  future cash flows at December 31, 2000,
     2001 and 2002, respectively;  $13 million, $15 million, and $22 million was
     evaluated using the fair value of the collateral at December 31, 2000, 2001
     and 2002,  respectively;  and $26 million, $25 million, and $15 million was
     evaluated  using  historical  loss factors at December  31, 2000,  2001 and
     2002, 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,
2001,  related party loans outstanding to individuals who served as directors or
executive  officers at anytime during the year totaled $33 million,  as compared
to $28 million at December 31, 2002. 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 2001 and 2002,  there were no loans to related  parties  that
were charged  off.  Additionally,  at December 31, 2001 and 2002,  there were no
loans to related parties that were nonperforming.

     NOTE 4--GOODWILL AND OTHER INTANGIBLE ASSETS

     Upon  adoption  of SFAS No. 142 on January 1,  2002,  the  amortization  of
existing  goodwill  ceased and the carrying  amount of goodwill was allocated to
the  applicable  reporting  units.  The  allocation  was based on the sources of
previously  recognized  goodwill  as well as the  reporting  units to which  the
related  acquired net assets

                                      F-64

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 4--GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)

were assigned.  Management's expectations of which reporting units had benefited
from the synergies of acquired  businesses  were  considered  in the  allocation
process.  The Company performed a transitional  impairment test during May 2002,
measured  as of the date of  adoption.  The fair market  value of the  reporting
units tested for impairment  exceeded its carrying  value,  including  goodwill;
therefore, no impairment loss was recognized.  As of December 31, 2002, goodwill
was $151 million.

     Net income and earnings per share for the year ending December 31, 2000 and
2001,  were adjusted,  on a pro forma basis,  to exclude $14 million in goodwill
amortization  expense (net of taxes of $0.6 million) and $15 million in goodwill
amortization expense (net of taxes of $0.6 million) for the years ended December
31, 2000 and 2001, respectively, as follows:

<TABLE>
<CAPTION>


                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                      ___________________________________
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)           2000          2001         2002
__________________________________________________    ________      ________     ________
<S>                                                   <C>           <C>          <C>
NET INCOME:
As reported.......................................    $439,900      $481,428     $527,903
Goodwill amortization, net of income tax..........      13,723        14,788           --
As adjusted.......................................    $453,623      $496,216     $527,903

BASIC EARNINGS PER SHARE:
As reported.......................................       $2.72         $3.05        $3.41
Goodwill amortization.............................         .09           .09           --
As adjusted.......................................       $2.81         $3.14        $3.41

DILUTED EARNINGS PER SHARE:
As reported.......................................       $2.72         $3.04        $3.38
Goodwill amortization.............................         .08           .09           --
As adjusted.......................................       $2.80         $3.13        $3.38
</TABLE>

     On May 13, 2002,  the Company  completed its  acquisition  of First Western
Bank and recorded  approximately $24 million of goodwill and $11 million of core
deposit  intangible.  The  core  deposit  intangible  is being  amortized  on an
accelerated basis over an estimated life of 12.5 years.

     On November 1, 2002, the Company completed its acquisition of Valencia Bank
& Trust and  recorded  approximately  $37 million of goodwill  and $9 million of
core deposit  intangible.  The core deposit  intangible is being amortized on an
accelerated basis over an estimated life of 6 years.

     On December 18, 2002, the Company completed its acquisition of John Burnham
& Company, and recorded  approximately $18 million of goodwill and $8 million of
rights-to-expiration.   The   rights-to-expiration   will  be  amortized  on  an
accelerated basis over its useful economic life.

                                      F-65

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 4--GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)

     INTANGIBLE ASSETS SUBJECT TO AMORTIZATION

     Intangible  assets  amortization  expense  for  2002,  was $5  million.  No
residual  value is expected  for these  intangible  assets.  The  components  of
intangible assets were as follows:

<TABLE>
<CAPTION>
                                                               DECEMBER 31, 2002
                                              ______________________________________________
                                              GROSS CARRYING     ACCUMULATED    NET CARRYING
(DOLLARS IN MILLIONS)                              AMOUNT       AMORTIZATION       AMOUNT
__________________________________________    _______________   ____________    ____________
<S>                                                 <C>              <C>            <C>
Rights-to-expiration......................          $22.9           $ 3.1           $19.8
Core deposit intangible...................           28.2             9.5            18.7
                                                    _____           _____           _____
Total identifiable intangible assets......          $51.1           $12.6           $38.5
                                                    =====           =====           =====
</TABLE>

     Amortization  expense  for  the net  carrying  amount  of all  identifiable
intangible  assets with  definite  lives for the years ending  December 31, 2003
through 2007 is approximately $9 million,  $8 million,  $6 million,  $4 million,
and $3 million, respectively.

NOTE 5--PREMISES AND EQUIPMENT

     Premises and equipment are carried at cost, less  accumulated  depreciation
and amortization. As of December 31, 2001 and 2002, the amounts were:

<TABLE>
<CAPTION>

                                                              DECEMBER 31,
                           _________________________________________________________________________________
                                      2001                                          2002
                           _______________________________________     _____________________________________
                                        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..................     $   65,834       $     --     $ 65,834      $   67,050       $     --    $ 67,050
Premises..............        328,366        115,485      212,881         353,213        131,820     221,393
Leasehold improvements        189,438        123,241       66,197         204,980        140,992      63,988
Furniture, fixtures
  and equipment.......        541,187        391,565      149,622         583,225        430,990     152,235
                           __________       ________     ________      __________       ________    ________
    Total.............     $1,124,825       $630,291     $494,534      $1,208,468       $703,802    $504,666
                           ==========       ========     ========      ==========       ========    ========
</TABLE>

     Rental and depreciation and amortization expenses were as follows:
<TABLE>
<CAPTION>

                                                                    YEARS ENDED DECEMBER 31,
                                                                _______________________________
(DOLLARS IN THOUSANDS)                                            2000        2001        2002
____________________________________________________________    ________    _______     _______
<S>                                                             <C>         <C>         <C>
Rental expense of premises..................................    $52,085     $48,482     $53,595
Less: rental income.........................................     15,464      19,343      18,505
                                                                _______     _______     _______
    Net rental expense......................................    $36,621     $29,139     $35,090
                                                                =======     =======     =======
Other net rental income, primarily for equipment............    $(1,300)    $(1,570)    $(1,576)
                                                                =======     =======     =======
Depreciation and amortization of premises and equipment.....    $66,503     $74,786     $77,426
                                                                =======     =======     =======
</TABLE>

                                      F-66

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 5--PREMISES AND EQUIPMENT (CONTINUED)

     Future minimum lease payments are as follows:


(DOLLARS IN THOUSANDS)                           DECEMBER 31, 2002
_______________________________________________  _________________
Years ending December 31,
  2003.........................................       $ 53,908
  2004.........................................         46,795
  2005.........................................         40,648
  2006.........................................         34,877
  2007.........................................         25,166
  Later years..................................         88,214
                                                      ________
Total minimum operating lease payments.........       $289,608
                                                      ========
Minimum rental income due in the future under
  noncancellable subleases.....................        $58,068
                                                      ========

     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, and escalation clauses.

NOTE 6--DEPOSITS

     At December  31, 2002,  the Company had $215  million in domestic  interest
bearing time deposits  with a remaining  term of greater than one year, of which
$110 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.


(DOLLARS IN THOUSANDS)                               DECEMBER 31, 2002
__________________________________________________   _________________
Due after one year through two years..............         $142,153
Due after two years through three years...........           43,680
Due after three years through four years..........           18,791
Due after four years through five years...........            9,345
Due after five years..............................              713
                                                           ________
   Total..........................................         $214,682
                                                           ========

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

NOTE 7--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  between the minimum required
and the  maximum  deductible  amount as allowed by the  Internal  Revenue  Code.
Contributions  are

                                      F-67

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 7--EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS
        (CONTINUED)

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,  securities and mutual funds. The
Plan contains no Company stock.

     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 to 50 percent,
depending on age and service  with the  Company.  Assets set aside to cover such
obligations are primarily invested in mutual funds.

     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 DECEMBER 31,    YEARS ENDED DECEMBER 31,
                                                      ________________________    ________________________
(DOLLARS IN THOUSANDS)                                   2001          2002           2001         2002
__________________________________________________    _________      _________    __________     _________
<S>                                                    <C>           <C>            <C>          <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation, beginning of year.............     $509,016      $595,736        $94,108     $123,720
Service cost......................................       21,889        25,810          3,844        5,262
Interest cost.....................................       38,931        43,316          7,267        9,546
Plan participants' contributions..................           --            --          1,386        1,615
Amendments(1).....................................           --            --             --       (8,544)
Actuarial (gain) loss.............................       45,393        82,720         25,249       36,896
Benefits paid.....................................      (19,493)      (21,483)        (8,134)     (10,538)
                                                       ________      ________       ________     ________
Benefit obligation, end of year...................      595,736       726,099        123,720      157,957
                                                       ________      ________       ________     ________
CHANGE IN PLAN ASSETS
Fair value of plan assets, beginning of year......      588,469       596,470         50,296       52,489
Actual return on plan assets......................      (35,273)      (54,847)        (2,518)     (10,850)
Employer contribution.............................       62,767       140,000         11,459       48,820
Plan participants' contributions..................           --            --          1,386        1,615
Benefits paid.....................................      (19,493)      (21,483)        (8,134)     (10,538)
                                                       ________      ________       ________     ________
Fair value of plan assets, end of year............      596,470       660,140         52,489       81,536
                                                       ________      ________       ________     ________
Funded status.....................................          734       (65,959)       (71,231)     (76,422)
Unrecognized transition amount....................           --            --         37,432       25,486
Unrecognized net actuarial gain...................       92,570       290,750         25,083       77,120
Unrecognized prior service cost...................        5,591         4,524         (1,441)      (1,345)
                                                       ________      ________       ________     ________
Prepaid (accrued) benefit cost....................     $ 98,895      $229,315       $(10,157)    $ 24,839
                                                       ========      ========       ========     ========
<FN>
__________
(1)  In 2002, the Company  changed its  postretirement  medical  benefit plan to
     increase the required  contributions  as a percentage of total cost paid by
     some future retirees.
</FN>
</TABLE>

                                      F-68

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 7--EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS
        (CONTINUED)

     The  following  tables  summarize  the  assumptions  used in computing  the
present value of the projected benefit obligations and the net periodic cost.

<TABLE>
<CAPTION>
                                                              PENSION BENEFITS           OTHER BENEFITS
                                                            ______________________    _____________________
                                                                YEARS ENDED              YEARS ENDED
                                                                DECEMBER 31,            DECEMBER 31,
                                                            ______________________    _____________________
                                                             2000     2001    2002     2000    2001    2002
                                                            ______   _____   _____    _____   _____   _____
<S>                                                          <C>      <C>     <C>      <C>     <C>     <C>
Discount rate in determining expense....................     7.75%    7.50%   7.25%    7.75%   7.50%   7.25%
Discount rate in determining benefit obligations at
  year end..............................................     7.50     7.25    6.75     7.50    7.25    6.75
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>

<TABLE>
<CAPTION>
                                                      PENSION BENEFITS                      OTHER BENEFITS
                                                ________________________________     ______________________________
                                                   YEARS ENDED DECEMBER 31,             YEARS ENDED DECEMBER 31,
                                                ________________________________     ______________________________
(DOLLARS IN THOUSANDS)                            2000         2001        2002        2000       2001        2002
__________________________________________      _______      _______     _______     _______    _______     _______
<S>                                             <C>          <C>         <C>         <C>        <C>         <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost..............................      $20,688      $21,889     $25,810     $ 3,024    $ 3,844     $ 5,262
Interest cost.............................       34,429       38,930      43,316       6,708      7,267       9,546
Expected return on plan assets............      (45,357)     (51,144)    (60,613)     (3,893)    (4,177)     (6,591)
Amortization of prior service cost........        1,067        1,067       1,067          --        (96)        (96)
Amortization of transition amount.........           --           --          --       3,455      3,216       3,403
Recognized net actuarial (gain) loss......       (1,077)          --          --        (858)        12       2,299
                                                _______      _______     _______     _______    _______     _______
  Net periodic benefit cost...............        9,750       10,742       9,580       8,436     10,066      13,823
Loss (gain) due to curtailment............           --           --          --       2,868     (1,828)         --
                                                _______      _______     _______     _______    _______     _______

  Total net periodic benefit cost.........      $ 9,750      $10,742     $ 9,580     $11,304    $ 8,238     $13,823
                                                =======      =======     =======     =======    =======     =======
</TABLE>

     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.

                                      F-69

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 7--EMPLOYEE BENEFIT AND INCENTIVE PLANS AND OTHER POSTRETIREMENT BENEFITS
        (CONTINUED)

     For 2001,  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
7.5 percent  annual rate of increase for the HMO plan. For future  periods,  the
rate for the indemnity plan was expected to gradually decrease from 9 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 7.5 percent to 5 percent in 2007
and remain at that level thereafter.

     For 2002, the Company  assumed an 10 percent annual rate of increase in the
per capita cost of postretirement  medical benefits for the indemnity plan and a
12 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 2008 and will remain at that level thereafter.  The rate for the
HMO plan was expected to gradually decrease from 12 percent to 5 percent in 2008
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 components.....         $2,150         $ (1,785)
Effect on postretirement benefit obligation............         14,789          (12,574)

</TABLE>

     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 $28 million at December 31, 2001 and $33 million
at  December  31,  2002.  The  Company's  expense  relating to the ESBP's was $2
million for the year ended  December  31,  2000,  and $3 million for each of the
years ended December 31, 2001 and 2002.

     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 are eligible to
participate  in the plan.  Employees  may  contribute  up to 25 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   Company's   annual   financial   performance.   All  employer
contributions are tax deductible by the Company. The Company's combined matching
contribution  expense was $6 million, $13 million, and $17 million for the years
ended December 31, 2000, 2001 and 2002, respectively.

                                      F-70

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 8--OTHER NONINTEREST EXPENSE

     The detail of other noninterest expense is as follows:

                                                   YEARS ENDED DECEMBER 31,
                                             ___________________________________
(DOLLARS IN THOUSANDS)                          2000          2001         2002
__________________________________________   ________      ________     ________
Software..................................   $ 24,037      $ 31,766     $ 42,850
Advertising and public relations..........     29,125        37,710       37,510
Intangible asset amortization.............     15,061        16,012        5,485
Other.....................................    154,525       157,910      171,168
                                             ________      ________     ________
Total other noninterest expenses..........   $222,748      $243,398     $257,013
                                             ========      ========     ========

NOTE 9--INCOME TAXES

     The components of income tax expense were as follows:

                                                  YEARS ENDED DECEMBER 31,
                                             ___________________________________
(DOLLARS IN THOUSANDS)                         2000          2001         2002
__________________________________________   ________      ________     ________
Taxes currently payable:
  Federal.................................   $202,427      $172,898     $173,310
  State...................................      3,595           326       31,622
  Foreign.................................      1,804         1,965        3,996
                                             ________      ________     ________
    Total currently payable...............    207,826       175,189      208,928
                                             ________      ________     ________
Taxes deferred:
  Federal.................................      9,300        49,163       58,586
  State...................................      3,998         9,905     (20,807)
  Foreign.................................        411         (413)          669
                                             ________      ________     ________
    Total deferred........................     13,709        58,655       38,448
                                             ________      ________     ________
    Total income tax expense..............   $221,535      $233,844     $247,376
                                             ========      ========     ========

                                      F-71

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 9--INCOME TAXES (CONTINUED)

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

                                                               DECEMBER 31,
(DOLLARS IN THOUSANDS)                                      2001         2002
_______________________________________________________   ________     ________
Deferred tax assets:
  Allowance for credit losses..........................   $239,110     $231,657
  Accrued income and expense...........................     45,224       62,190
  Tax credit carryforwards.............................         --       13,590
  Other................................................     13,144        6,353
                                                          ________     ________
    Total deferred tax assets..........................    297,478      313,790
Deferred tax liabilities:
  Leasing..............................................    425,169      462,525
  Unrealized gain on securities available for sale.....     51,581       91,335
  Pension liabilities..................................     40,813       69,541
  Unrealized net gains on cash flow hedges.............     38,925       64,649
                                                          ________     ________

    Total deferred tax liabilities.....................    556,488      688,050
                                                          ________     ________

      Net deferred tax liability.......................   $259,010     $374,260
                                                          ========     ========

     It is management's opinion that no valuation allowance is necessary because
the tax  benefits  from the  Company's  deferred  tax assets are  expected to be
utilized in future tax returns.

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

                                                       YEARS ENDED DECEMBER 31,
                                                       ________________________
                                                       2000      2001      2002
                                                       ____      ____      ____

Federal income tax rate..............................    35%       35%       35%
Net tax effects of:
  State income taxes, net of federal income tax
    benefit..........................................     1        1         1
  Tax credits........................................    (2)      (2)       (4)
  Other..............................................    (1)      (1)       --
                                                         __       __        __
    Effective tax rate...............................    33%      33%       32%
                                                         ==       ==        ==

     The  Company  has filed its 2000 and 2001,  and  intends  to file its 2002,
California franchise tax returns on a worldwide unitary basis, incorporating the
financial results of BTM and its worldwide affiliates.

     During 2002, the Company recognized a tax credit adjustment of $9.8 million
related to the  standardization  of our accounting for low-income housing credit
(LIHC)  investments  and a $3.3  million  net  reduction  in income tax  expense
resulting  from a change  in  California  state  tax law  concerning  loan  loss
reserves.

                                      F-72

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 10--BORROWED FUNDS

     The following is a summary of the major categories of borrowed funds:
<TABLE>
<CAPTION>

                                                                              DECEMBER 31,
                                                                      __________________________
(DOLLARS IN THOUSANDS)                                                    2001            2002
________________________________________________________________      __________      __________
<S>                                                                   <C>             <C>
Federal funds purchased and securities sold under repurchase
  agreements with weighted average interest rates of 1.41%
  and 0.88% at December 31, 2001 and 2002, respectively.........      $  418,814      $  334,379
Commercial paper, with weighted average interest rates of
  1.89% and 1.21% at December 31, 2001 and 2002, respectively...         830,657       1,038,982
Other borrowed funds, with weighted average interest rates of
  2.96% and 2.25% at December 31, 2001 and 2002, respectively...         700,403         267,047
                                                                      __________      __________
  Total borrowed funds..........................................      $1,949,874      $1,640,408
                                                                      ==========      ==========
Federal funds purchased and securities sold under repurchase
  agreements:
  Maximum outstanding at any month end..........................      $1,575,938      $  428,808
  Average balance during the year...............................       1,243,933         427,610
  Weighted average interest rate during the year................            4.19%           1.41%
Commercial paper:
  Maximum outstanding at any month end..........................      $1,572,029      $1,107,578
  Average balance during the year...............................       1,287,603         997,543
  Weighted average interest rate during the year................            4.07%           1.67%
Other borrowed funds:
  Maximum outstanding at any month end..........................      $  702,511      $  942,627
  Average balance during the year...............................         464,033         469,877
  Weighted average interest rate during the year................            4.35%           2.15%

</TABLE>

     Included  in other  borrowed  funds in 2001 and 2002 are  assumed  mortgage
notes  related to the  purchase  of the  Company's  administrative  facility  at
Monterey  Park,  California.  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:  $6.5  million in each of 2003 and 2004,  $5.3  million in
2005, $5.0 million in each of 2006 and 2007, and $24.4 million thereafter.

NOTE 11--MEDIUM AND LONG-TERM DEBT

     The  following is a summary of our  medium-term  senior debt and  long-term
subordinated debt.

                                                               DECEMBER 31,
                                                          _____________________
(DOLLARS IN THOUSANDS)                                      2001         2002
______________________________________________________    ________     ________
Medium-term debt, fixed rate 5.75% senior notes due
  December 2006.......................................    $199,931     $218,584
Long-term subordinated debt, 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..............................     199,726      199,776
                                                          ________     ________
Total medium and long-term debt.......................    $399,657     $418,360
                                                          ========     ========

                                      F-73

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 11--MEDIUM AND LONG-TERM DEBT (CONTINUED)

     On November 30, 2001, the Company issued $200 million of medium-term notes.
At December 31, 2002,  the weighted  average  interest  rate of the  medium-term
notes including the impact of the deferred issuance costs was 5.90 percent.  The
notes do not qualify as Tier 2  risk-based  capital  under the  Federal  Reserve
guidelines for assessing  regulatory capital and are not redeemable prior to the
stated  maturity.  The notes are senior  obligations and are ranked equally with
all existing or future unsecured senior debt.

     The Company has converted its 5.75 percent fixed rate to a floating rate of
interest  utilizing a $200 million notional  interest rate swap, which qualified
as a fair  value  hedge  at  December  31,  2002.  This  transaction  meets  the
qualifications  for  utilizing the shortcut  method for measuring  effectiveness
under SFAS No. 133. The market value  adjustment to the medium-term  debt was an
unrealized  loss  of $19  million,  and  the  fair  value  of the  hedge  was an
unrealized gain of $19 million.  The weighted average  interest rate,  including
the impact of the hedge and deferred issuance costs was 2.49 percent.

     The  long-term  subordinated  debt  qualifies 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, 2001 and 2002, the $200
million of notes qualified as risk-based capital.  The weighted average interest
rate of the notes as of December 31, 2002 was 2.19 percent.

     Provisions  of the  subordinated  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.

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  Company has  converted a portion of its 7 3/8 percent  fixed rate to a
floating  rate of interest by utilizing a $200 million  notional  interest  rate
swap,  which  qualified as a fair value hedge at December  31, 2002.  The

                                      F-74

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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

market value  adjustment to the preferred  securities was an unrealized  loss of
$15.7 million while the fair value of the hedge was an unrealized  gain of $14.0
million.  The weighted average interest rate,  including the impact of the hedge
and deferred  issuance  costs,  was 4.44 percent for the year ended December 31,
2002.

     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 a
liability in the accompanying consolidated financial statements.

NOTE 13--DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

     The  Company  has a  dividend  reinvestment  and  stock  purchase  plan for
shareholders.   Participating   shareholders   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 2000,  2001, and 2002,  449,064,  383,765,  and 367,713
shares, respectively, were required for dividend reinvestment purposes, of which
24,666,  20,402,  and 19,881 shares were  considered new issuances  during 2000,
2001, and 2002, respectively.  BTM did not participate in the plan in 2000, 2001
or 2002.

NOTE 14--MANAGEMENT STOCK PLAN

     The Company  has two  management  stock  plans.  The Year 2000  UnionBanCal
Corporation Stock Plan, effective January 1, 2000 (the 2000 Stock Plan), and the
UnionBanCal  Corporation  Management Stock Plan, restated effective June 1, 1997
(the 1997 Stock Plan),  have 16.0 million and 6.6 million shares,  respectively,
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).  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 2000,  2001 and  2002,  the  Company  granted  options  to  non-employee
directors and various key employees,  including policy-making officers under the
1997 and 2000 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 Plans.

                                      F-75

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 14--MANAGEMENT STOCK PLAN (CONTINUED)

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                          ______________________________________________________________________________________
                                                   2000                        2001                          2002
                                          ___________________________  ___________________________   ___________________________
                                          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 of
  year............................        3,281,273        $28.46      5,191,899         $28.47      7,939,271         $29.79
  Granted.........................        2,126,506         27.99      3,448,242          30.03      2,911,652          43.49
  Exercised.......................          (98,004)        13.18       (557,597)         19.02     (2,187,170)         28.57
  Forfeited.......................         (117,876)        32.04       (143,273)         29.91       (148,284)         34.05
                                          _________        ______      _________         ______     __________         ______
Options outstanding, end of year..        5,191,899        $28.47      7,939,271         $29.79      8,515,469         $34.71
                                          =========        ======      =========         ======     ==========         ======
Options exercisable, end of year..        2,135,228        $25.90      3,009,555         $29.53      3,031,478         $31.08
                                          =========        ======      =========         ======     ==========         ======

</TABLE>

     The weighted-average  fair value of options granted was $10.21 during 2000,
$10.38 during 2001, and $16.67 during 2002.

     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 2000,  2001 and 2002;  risk-free  interest
rates of 6.4  percent in 2000,  4.9  percent in 2001,  and 4.9  percent in 2002;
expected volatility of 44 percent in 2000, 45 percent in 2001, and 46 percent in
2002;  expected lives of 5 years for 2000, 2001, and 2002; and expected dividend
yields of 3.5 percent in 2000, 3.4 percent in 2001, and 2.3 percent in 2002.

     The following table summarizes information about stock options outstanding.

<TABLE>
<CAPTION>

                                                                                         OPTIONS EXERCISABLE AT
                                OPTIONS OUTSTANDING AT DECEMBER 31, 2002                    DECEMBER 31, 2002
                          ____________________________________________________      _______________________________
                                         WEIGHTED-AVERAGE
    RANGE OF                 NUMBER          REMAINING        WEIGHTED-AVERAGE        NUMBER       WEIGHTED-AVERAGE
 EXERCISE PRICES          OUTSTANDING    CONTRACTUAL LIFE      EXERCISE PRICE       EXERCISABLE     EXERCISE PRICE
______________________    ___________    ________________     ________________      ___________    ________________
<S>                        <C>                 <C>                    <C>            <C>                   <C>
$11.25 - 11.25........        33,000           2.3 years              $11.25            33,000             $11.25
 18.29 - 25.00........       314,392                 4.5               22.23           275,285              22.07
 27.56 - 38.04........     5,290,575                 7.1               30.81         2,648,693              31.84
 42.69 - 48.51........     2,877,502                 9.2               43.53            74,500              45.91
                           _________                                                 _________
                           8,515,469                                                 3,031,478
                           =========                                                 =========
</TABLE>

     In 2000,  2001, and 2002, the Company also granted 13,500,  6,000 and 6,000
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.

                                      F-76

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 14--MANAGEMENT STOCK PLAN (CONTINUED)

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

<TABLE>
<CAPTION>

                                                                            YEARS ENDED DECEMBER 31,
                                          _____________________________________________________________________________________
                                                      2000                           2001                          2002
                                          ___________________________   ___________________________  __________________________
                                                    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..        1,496,106         $14.05      1,506,162         $14.11     1,511,526       $14.19
  Granted.........................           13,500          25.00          6,000          37.10         6,000        45.00
  Cancelled.......................           (3,444)         31.66           (636)         37.47          (459        32.61
                                          _________                     _________                    _________
Restricted stock awards
  outstanding, end of year........        1,506,162         $14.11      1,511,526         $14.19     1,517,067       $14.31
                                          =========                     =========                    =========
Restricted stock awards vested,
  end of year.....................        1,408,696         $13.00      1,469,354         $13.66     1,503,305       $14.09
                                          =========                     =========                    =========
</TABLE>

     At December 31, 2000,  2001 and 2002,  8,969,424,  5,659,091  and 2,890,182
shares,  respectively,  were available for future grants as either stock options
or  restricted  stock under the Stock Plan.  The number of shares  available for
future  grants  at  December  31,  2002  does not  include  six  million  shares
authorized, but not registered, during 2002.

     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 equity,  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  31,500 shares in 2000,  68,000 shares in
2001, and 61,500 shares in 2002. No performance shares were forfeited in 2000 or
2002.  In  2001,  9,000  performance  shares  were  forfeited.  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, 2001 and 2002, 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 operations.

                                      F-77

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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

     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, liabilities, and off-balance sheet instruments held by the Company.

<TABLE>
<CAPTION>

                                                                                      DECEMBER 31,
                                                               ________________________________________________________________
                                                                            2001                               2002
                                                               _____________________________      _____________________________
                                                                 CARRYING            FAIR           CARRYING            FAIR
(DOLLARS IN THOUSANDS)                                             VALUE             VALUE            VALUE             VALUE
____________________________________________________________   ___________       ___________      ___________       ___________
<S>                                                            <C>               <C>              <C>               <C>
ASSETS
  Cash and cash equivalents.................................   $ 3,664,954       $ 3,664,954      $ 4,442,122       $ 4,442,122
  Trading account assets....................................       229,697           229,697          276,021           276,021
  Securities available for sale:
    Securities pledged as collateral........................       137,922           137,922          157,823           157,823
    Held in portfolio.......................................     5,661,160         5,661,160        7,180,677         7,180,677
  Loans, net of allowance for credit losses (1).............    23,392,279        23,774,330       25,044,665        25,007,245
LIABILITIES
   Deposits:
    Noninterest bearing.....................................    12,718,858        12,718,858       16,121,742        16,121,742
    Interest bearing........................................    15,837,341        15,869,729       16,719,073        16,800,871
                                                               ___________       ___________      ___________       ___________
  Total deposits............................................    28,556,199        28,588,587       32,840,815        32,922,613
  Borrowed funds............................................     1,949,874         1,967,333        1,640,408         1,639,100
  Medium and long-term debt.................................       399,657           398,051          418,360           415,333
  UnionBanCal Corporation-obligated mandatorily redeemable
  preferred securities of subsidiary grantor trust..........       363,928           348,600          365,696           354,060
OFF-BALANCE SHEET INSTRUMENTS
  Commitments to extend credit..............................        50,813            50,813           55,760            55,760
  Standby letters of credit.................................         8,239             8,239           10,552            10,552

<FN>
__________
(1)  Excludes lease financing, net of allowance.

</FN>
</TABLE>


     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-78

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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.

     MEDIUM AND LONG-TERM  DEBT: The fair value of the  fixed-rate  senior notes
was estimated using market quotes. The book value for variable-rate subordinated
capital notes is assumed to approximate fair market value.

     TRUST PREFERRED  SECURITIES:  The fair value of fixed-rate  trust preferred
securities was based upon market quotes for those traded securities. This amount
differs from the fair value of those  securities  under hedge accounting since a
hypothetical  value based on the  present  value of cash flows has been used for
that purpose.  It should be noted that the trust  preferred  securities  are not
callable until February 2004 and, therefore, cannot be settled for that price at
this time.

     OFF-BALANCE  SHEET  INSTRUMENTS:  The carrying value of  off-balance  sheet
instruments  represents the  unamortized fee income assessed based on the credit
quality and other covenants  imposed on the borrower.  Since the amount assessed
represents  the market rate that would be charged for  similar  agreements,  the
Company  believes that the fair value  approximates  the carrying value of these
instruments.

                                      F-79

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 16--DERIVATIVE INSTRUMENTS

     The  Company  is  a  party  to  certain   derivative  and  other  financial
instruments  that are used for trading  activities  of the Company,  to meet the
needs of customers,  and to change the impact on the Company's operating results
due to market fluctuations in currency or interest rates.

     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.  The
Company  utilizes  master netting  agreements in order to reduce its exposure to
credit risk.  Master netting  agreements  mitigate credit risk by permitting the
offset of  amounts  due from and to  individual  counterparties  in the event of
default. Market risk is the possibility that future changes in market conditions
may make the financial instrument less valuable.

     TRADING ACTIVITIES IN DERIVATIVE INSTRUMENTS

     Derivative instruments used for trading purposes are carried at fair value.
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 as an accommodation for customers. At December
31, 2001 and 2002,  the majority of the Company's  derivative  transactions  for
customers were essentially offset by contracts with other counterparties.

                                      F-80

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 16--DERIVATIVE INSTRUMENTS (CONTINUED)

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

<TABLE>
<CAPTION>

                                                                        DECEMBER 31,
                                     ____________________________________________________________________________________________
                                                    2001                                             2002
                                     _________________________________________         __________________________________________
                                     UNREALIZED      UNREALIZED      ESTIMATED         UNREALIZED      UNREALIZED       ESTIMATED
(DOLLARS IN THOUSANDS)                 GAINS           LOSSES        FAIR VALUE          LOSSES          LOSSES        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.......      $  2,521       $ (28,955)       $(26,434)         $ 36,508        $ (2,182)       $ 34,326
  Commitments to sell...........        33,476          (2,071)         31,405             1,655         (37,221)        (35,566)
Foreign exchange OTC options:
  Options purchased.............            --            (224)           (224)               --            (863)           (863)
  Options written...............           224              --             224               863              --             863
Currency swap agreements:
  Commitments to pay............         5,311              --           5,311             1,581              --           1,581
  Commitments to receive........            --          (5,257)         (5,257)               --          (1,548)         (1,548)
Interest rate contracts:
  Caps purchased................         4,567              --           4,567             5,514              --           5,514
  Floors purchased..............        20,027              --          20,027             4,459              --           4,459
  Caps written..................            --          (4,567)         (4,567)               --          (5,514)         (5,514)
  Floors written................            --         (20,027)        (20,027)               --          (4,459)         (4,459)
  Swap contracts:
    Pay fixed/receive variable..         4,843         (91,054)        (86,211)               --        (118,181)       (118,181)
    Pay variable/receive fixed..        96,764          (4,084)         92,680           126,058              --         126,058
                                      ________                                          ________
                                       167,733                                           176,638
Effect of master netting
  agreements....................       (48,762)                                          (92,803)
                                      ________                                          ________
Total credit exposure...........      $118,971                                           $83,835
                                      ========                                          ========
</TABLE>

     DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS USED FOR HEDGING

     On January 1, 2001,  the  Company  adopted  SFAS No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments embedded in other contracts. All derivatives,  whether designated as
a hedge, or not, are required to be recorded 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 be expected to be effective  throughout the life of the hedge.
Derivative  instruments  that do not qualify as either a fair value or cash flow
hedge are valued at fair value and classified as trading account assets with the
resultant gain or loss recognized in current  earnings.  At adoption of SFAS No.
133, the Company recognized a loss of $6 million ($4 million, net of tax), which
is included in noninterest

                                      F-81

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 16--DERIVATIVE INSTRUMENTS (CONTINUED)

expense.  Additionally,  the  adoption of SFAS No. 133  resulted in a cumulative
effect of a change in accounting  principle on accumulated  other  comprehensive
income, net of tax, of $22 million in unrealized gain.

     Derivative  positions are integral  components of the Company's  designated
asset and  liability  management  activities.  The Company  uses  interest  rate
derivatives to manage the  sensitivity  of the Company's net interest  income to
changes in interest  rates.  These  instruments are used to manage interest rate
risk  relating  to  specified  groups  of  assets  and  liabilities,   primarily
LIBOR-based   commercial  loans,   certificates  of  deposit,   trust  preferred
securities and medium-term notes.

     CASH FLOW HEDGES

     HEDGING STRATEGIES FOR VARIABLE RATE LOANS AND CERTIFICATES OF DEPOSIT

     The Company  engages in several types of cash flow hedging  strategies  for
which the hedged transactions are forecasted future loan interest payments,  and
the  hedged  risk is the  variability  in those  payments  due to changes in the
designated  benchmark  rate,  e.g., US dollar LIBOR.  In these  strategies,  the
hedging instruments are matched with groups of variable rate loans such that the
tenor  of the  variable  rate  loans  and  that  of the  hedging  instrument  is
identical.  Cash flow hedging  strategies  include the  utilization of purchased
floor, cap, corridor options and interest rate swaps. The maximum length of time
over which the Company is hedging these exposures is 6.75 years.

     The Company uses purchased  interest rate floors to hedge the variable cash
flows  associated  with 1-month LIBOR or 3-month LIBOR indexed  loans.  Payments
received  under the floor  contract  offset the decline in loan interest  income
caused by the relevant LIBOR index falling below the floor's strike rate.

     The Company uses interest  rate floor  corridors to hedge the variable cash
flows associated with 1-month LIBOR or 3-month LIBOR indexed loans. Net payments
to be received  under the floor  corridor  contracts  offset the decline in loan
interest  income caused by the relevant LIBOR index falling below the corridor's
upper  strike  rate,  but only to the extent the index falls to the lower strike
rate.  The corridor  will not provide  protection  from declines in the relevant
LIBOR index to the extent it falls below the corridor's lower strike rate.

     The Company uses  interest  rate  collars to hedge the variable  cash flows
associated with 1-month LIBOR or 3-month LIBOR indexed loans. Net payments to be
received under the collar  contracts  offset the decline in loan interest income
caused by the relevant LIBOR index falling below the collar's  strike rate while
net payments to be paid will reduce the increase in loan interest  income caused
by the LIBOR index rising above the collar's cap strike rate.

     The  Company  uses  interest  rate swaps to hedge the  variable  cash flows
associated  with 1-month LIBOR or 3-month LIBOR  indexed  loans.  Payments to be
received (or paid) under the swap contracts will offset the fluctuations in loan
interest  income caused by changes in the relevant LIBOR index.  As such,  these
instruments  hedge all  fluctuations  in the loans'  interest  income  caused by
changes in the relevant LIBOR index.

     The  Company  uses  purchased  interest  rate  caps to hedge  the  variable
interest  cash flows  associated  with the  forecasted  issuance and rollover of
short-term,  fixed  rate  negotiable  certificates  of deposit  (CDs).  In these
hedging  relationships,  the Company hedges the LIBOR component of the CD rates,
which is either 3-month LIBOR or 6-month LIBOR,  based on the CD's original term
to  maturity,  which  reflects  their  repricing  frequency.  Net payments to be
received under the cap contract  offset the increase in interest  expense caused
by the relevant LIBOR index rising above the cap's strike rate.

                                      F-82

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 16--DERIVATIVE INSTRUMENTS (CONTINUED)

     Hedging  transactions  are  structured  at  inception  so that the notional
amounts of the hedge are matched with an equal principal amount of loans or CDs,
the index and repricing  frequencies  of the hedge matches those of the loans or
CDs, and the period in which the designated hedged cash flows occurs is equal to
the term of the  hedge.  As such,  most of the  ineffectiveness  in the  hedging
relationship  results from the mismatch between the timing of reset dates on the
hedge  versus those of the loans or CDs. In 2002,  the Company  recognized a net
gain of $0.4 million due to ineffectiveness,  which is recognized in noninterest
expense, compared to a net gain of $0.5 million in 2001.

     For cash flow hedges,  based upon  amounts  included in  accumulated  other
comprehensive  income at December 31, 2002,  the Company  expects to recognize a
gross increase of $126.2 million in net interest income during 2003. This amount
could differ from amounts actually realized due to changes in interest rates and
the addition of other hedges subsequent to December 31, 2002.

     FAIR VALUE HEDGES

     HEDGING   STRATEGY  FOR  UNIONBANCAL   CORPORATION--OBLIGATED   MANDATORILY
REDEEMABLE  PREFERRED  SECURITIES OF SUBSIDIARY  GRANTOR TRUST (TRUST  PREFERRED
SECURITIES)

     The  Company  engages in an  interest  rate  hedging  strategy  in which an
interest rate swap is associated  with a specific  interest  bearing  liability,
UnionBanCal  Corporation's Trust Preferred  Securities,  in order to convert the
liability  from a fixed  rate  to a  floating  rate  instrument.  This  strategy
mitigates the changes in fair value of the hedged liability caused by changes in
the designated benchmark interest rate, US dollar LIBOR.

     Fair value  hedging  transactions  are  structured at inception so that the
notional  amounts of the swap match an associated  principal amount of the Trust
Preferred  Securities.  The interest payment dates, the expiration date, and the
embedded call option of the swap match those of the Trust Preferred  Securities.
The  ineffectiveness on the fair value hedges during 2002 was a net gain of $0.6
million, compared to a net loss of $0.1 million in 2001.

     HEDGING STRATEGY FOR MEDIUM-TERM NOTES

     The  Company  engages in an  interest  rate  hedging  strategy  in which an
interest rate swap is associated with a specified  interest  bearing  liability,
UnionBanCal  Corporation's  five-year,  medium-term  debt issuance,  in order to
convert the  liability  from a fixed rate to a floating  rate  instrument.  This
strategy  mitigates the changes in fair value of the hedged  liability caused by
changes in the designated benchmark interest rate, US dollar LIBOR.

     The fair value hedging transaction for the medium-term notes was structured
at inception to mirror all of the  provisions of the  medium-term  notes,  which
allows the Company to assume that no ineffectiveness exists.

     OTHER

     The Company uses foreign currency forward  contracts as a means of managing
foreign exchange rate risk associated with assets and/or liabilities denominated
in foreign  currencies.  The Company  values the forward  contracts,  the assets
and/or the liabilities at fair value, with the resultant gain or loss recognized
in noninterest income.

                                      F-83

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 16--DERIVATIVE INSTRUMENTS (CONTINUED)

     The Company uses To-Be-Announced (TBA) contracts to fix the price and yield
of anticipated  purchases or sales of  mortgage-backed  securities  that will be
delivered at an agreed upon date.  This strategy  hedges the risk of variability
in the cash flows to be paid or received upon settlement of the TBA contract.

     The  following  table  reflects  summary   information  on  our  derivative
contracts used to hedge or modify the Company's risk as of December 31, 2001 and
2002.

<TABLE>
<CAPTION>

                                                    DECEMBER 31, 2001                               DECEMBER 31, 2002
                                           ________________________________________     ________________________________________
                                           UNREALIZED      UNREALIZED     ESTIMATED     UNREALIZED      UNREALIZED    ESTIMATED
                                              GAINS          LOSSES      FAIR VALUE        GAINS          LOSSES      FAIR VALUE
                                           __________      __________    __________     __________      __________    __________
<S>                                        <C>             <C>             <C>          <C>              <C>           <C>
HELD FOR ASSET AND LIABILITY
  MANAGEMENT PURPOSES
Fair Value Hedges and Hedged
  Items:
Interest rate swap contracts:
  Pay variable/receive fixed....           $ 11,632        $    --         $ 11,632     $  14,041        $     --      $  14,041
  Trust preferred securities....                 --         (13,928)        (13,928)           --         (15,697)       (15,697)
  Medium-term debt interest rate
  swap..........................                 --              --              --        18,639              --         18,639
  Medium-term note..............                 --              --              --            --         (18,639)       (18,639)
  Currency swap agreements:
    Commitments to pay..........              2,179              --           2,179           508              --            508
  Foreign currency loan.........                 --          (2,184)         (2,184)           --            (507)          (507)
Cash Flow Hedges:
Interest rate option contracts:
  Caps purchased................              3,904              --           3,904            89              --             89
  Floors purchased..............             59,296              --          59,296            --            (443)          (443)
  Floors written................                 --         (14,987)        (14,987)       36,369              --         36,369
Interest rate swap contracts:
  Pay variable/receive fixed....             62,210          (5,350)         56,860       133,915              --        133,915
Other Hedges:
   Foreign exchange forward
    contracts
  Commitments to purchase.......                195          (1,728)         (1,533)        2,862             (11)         2,851
    Commitments to sell.........                126             (84)             42             6            (173)          (167)

</TABLE>

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  $240 million and $195 million for the years ended
December 31, 2001 and 2002, respectively.

     As of December  31, 2001 and 2002,  securities  carried at $1.5 billion and
$2.2  billion and loans of $6.5  billion and $6.4  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, 2002,
$89.9 million  remained  outstanding  on twelve Bankers  Commercial  Corporation
notes payable to the Bank. The respective notes were fully  collateralized  with
equipment leases pledged by Bankers Commercial Corporation.

                                      F-84

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

     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, 2002, the Bank could have declared
dividends aggregating $603 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,  2001 and  2002,  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, 2001 and 2002, 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  a minimum  total  risk-based  capital  ratio of 10  percent,  a Tier 1
risk-based capital ratio of 6 percent, and a Tier 1 leverage ratio of 5 percent.
There are no  conditions  or events  since  that  notification  that  management
believes have changed the Bank's category.

                                      F-85

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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, 2001:
Total capital (to risk-weighted assets).............................     $4,260,043    13.35%      >  $2,552,515  >  8.0%
                                                                                                   -              -
Tier 1 capital (to risk-weighted assets)............................      3,661,231     11.47      >   1,276,258  >  4.0
                                                                                                   -              -
Tier 1 capital (to quarterly average assets)(1).....................      3,661,231     10.53      >   1,390,408  >  4.0
                                                                                                   -              -
As of December 31, 2002:
Total capital (to risk-weighted assets).............................     $4,241,095    12.93%      >  $2,624,915  >  8.0%
                                                                                                   -              -
Tier 1 capital (to risk-weighted assets)............................      3,667,237     11.18      >   1,312,458  >  4.0
                                                                                                   -              -
Tier 1 capital (to quarterly average assets)(1).....................      3,667,237      9.75      >   1,503,800  >  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, 2001:
Total capital (to risk-weighted assets)...     $3,810,736       12.19%      > $2,501,701      >  8.0%     > $3,127,127     > 10.0%
                                                                            -                 -           -                -
Tier 1 capital (to risk-weighted assets)..      3,323,096       10.63       >  1,250,851      >  4.0      >  1,876,276     >  6.0
                                                                            -                 -           -                -
Tier 1 capital (to quarterly average
  assets)(1)..............................      3,323,096        9.69       >  1,371,305      >  4.0      >  1,714,131     >  5.0
                                                                            -                 -           -                -
As of December 31, 2002:
Total capital (to risk-weighted assets)...     $3,818,782       11.87%      > $2,572,884      >  8.0%     > $3,216,105     > 10.0%
                                                                            -                 -           -                -
Tier 1 capital (to risk-weighted assets)..      3,334,720       10.37       >  1,286,442      >  4.0      >  1,929,663     >  6.0
                                                                            -                 -           -                -
Tier 1 capital (to quarterly average
  assets)(1)..............................      3,334,720        9.01       >  1,480,773      >  4.0      >  1,850,966     >  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

                                      F-86

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

NOTE 19--EARNINGS PER SHARE

adjusted  for  common  stock  equivalents,  which  include  stock  options.  The
following table presents a reconciliation of basic and diluted EPS for the years
ended December 31, 2000, 2001 and 2002:

<TABLE>
<CAPTION>

                                                                                      DECEMBER 31,
                                                        ______________________________________________________________________
                                                                2000                    2001                    2002
                                                        ______________________  ______________________   _____________________
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)             BASIC       DILUTED     BASIC       DILUTED      BASIC      DILUTED
___________________________________________________     ________      ________  ________      ________   ________     ________
<S>                                                     <C>           <C>       <C>           <C>        <C>          <C>
Net income.......................................       $439,900      $439,900  $481,428      $481,428   $527,903     $527,903
Weighted average common shares outstanding.......        161,605       161,605   157,845       157,845    154,758      154,758
Additional shares due to:
Assumed conversion of dilutive stock options.....             --           384        --           778         --        1,657
                                                        ________      ________  ________      ________   ________     ________
Adjusted weighted average common shares outstanding      161,605       161,989   157,845       158,623    154,758      156,415
                                                        ________      ________  ________      ________   ________     ________
Net income per share.............................       $   2.72      $   2.72  $   3.05      $   3.04   $   3.41     $   3.38
                                                        ========      ========  ========      ========   ========     ========
</TABLE>

     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.  Options to purchase  2,234,080  shares of common  stock
with the range from $32.63 to $44.56 per share were outstanding but not included
in the computation of diluted EPS in 2001.  Options to purchase 2,869,052 shares
of common stock with the range from $43.25 to $48.51 per share were  outstanding
but not  included in the  computation  of diluted EPS in  2002.These  options to
purchase  shares were not included in the  computation of diluted EPS in each of
the years 2000, 2001, and 2002 because they were anti-dilutive.

                                      F-87

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 20--ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

<TABLE>
<CAPTION>

                                     NET UNREALIZED GAINS ON    NET UNREALIZED GAINS (LOSSES) ON                  FOREIGN
                                       CASH FLOW  HEDGES         SECURITIES AVAILABLE FOR SALE             CURRENCY TRANSLATION
                                    ___________________________  ______________________________   _______________________________
                                           YEARS ENDED                       YEARS ENDED                           YEARS ENDED
                                          DECEMBER 31,                       DECEMBER 31,                          DECEMBER 31,
                                    __________________________   ______________________________   _______________________________
(DOLLARS IN THOUSANDS)              2000      2001      2002       2000       2001       2002        2000       2001       2002
__________________________________  _____    _______  ________    _______    _______   ________   _________  _________  _________
<S>                                 <C>      <C>      <C>        <C>         <C>        <C>        <C>       <C>        <C>
Beginning balance.................  $  --    $    --  $ 62,840   $(32,548)   $41,879    $83,271    $(8,713)  $(11,191)  $(12,205)
Cumulative effect of accounting
  change, net of tax..............     --     22,205        --         --         --         --         --         --         --
Change during the year............     --     40,635    41,528     74,427     41,392     64,179     (2,478)    (1,014)     1,556
                                    _____    _______  ________   ________    _______   ________   _________  _________  _________
Ending balance....................  $  --    $62,840  $104,368   $ 41,879    $83,271   $147,450   $(11,191)  $(12,205)  $(10,649)
                                    =====    =======  ========   ========    =======   ========   =========  =========  =========
</TABLE>

<TABLE>
<CAPTION>

                                                           MINIMUM PENSION LIABILITY                ACCUMULATED OTHER
                                                                   ADJUSTMENT                  COMPREHENSIVE INCOME (LOSS)
                                                          ________________________________   ____________________________________
                                                                  YEARS ENDED                          YEARS ENDED
                                                                  DECEMBER 31,                        DECEMBER 31,
                                                          ________________________________   ____________________________________
(DOLLARS IN THOUSANDS)                                     2000       2001          2002         2000          2001         2002
_____________________________________________________     ______     ______       _______    _________      ________     ________
<S>                                                       <C>        <C>         <C>          <C>           <C>          <C>
Beginning balance....................................     $(689)     $(803)      $  (973)     $(41,950)     $ 29,885     $132,933
Cumulative effect of accounting change, net of tax...        --         --            --            --        22,205           --
Change during the year...............................      (114)      (170)         (102)       71,835        80,843      107,161
                                                          ______     ______      ________     ________      ________     ________
Ending balance.......................................     $(803)     $(973)      $(1,075)     $ 29,885      $132,933     $240,094
                                                          ======     ======      ========     ========      ========     ========
</TABLE>

NOTE 21--COMMITMENTS, CONTINGENCIES AND GUARANTEES

         The following table summarizes our significant commitments:

                                                           DECEMBER 31,
                                                   __________________________
(DOLLARS IN THOUSANDS)                                 2001           2002
_______________________________________________    ___________    ___________
Commitments to extend credit...................    $13,038,761    $12,872,063
Standby letters of credit......................      2,410,535      2,483,871
Commercial letters of credit...................        271,083        279,653
Commitments to fund principal investments......         54,598         58,556


     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  maintenance  of  compensatory  balances.  Since  many  of the
commitments  to extend  credit may expire  without  being drawn upon,  the total
commitment amounts do not necessarily represent future cash-flow requirements.

     Standby and commercial letters of credit are conditional commitments issued
to guarantee the performance of a customer to a third party.  Standby letters of
credit  generally  are  contingent  upon the failure of the  customer to perform
according to the terms of the  underlying  contract with the third party,  while
commercial  letters of credit are issued  specifically to facilitate  foreign or
domestic  trade  transaction.  The majority of these types of  commitments  have
terms of one year or less.

                                      F-88

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 21--COMMITMENTS, CONTINGENCIES AND GUARANTEES (CONTINUED)

     The credit  risk  involved  in issuing  loan  commitments  and  standby and
commercial  letters  of  credit  is  essentially  the same as that  involved  in
extending  loans to customers and is  represented by the  contractual  amount of
these  instruments.  Collateral  may be obtained  based on  management's  credit
assessment of the customer.

     Principal  investments  include  direct  investments  in private and public
companies and indirect  investments in private equity funds.  The Company issues
commitments  to provide  equity and mezzanine  capital  financing to private and
public  companies  through either direct  investments  in specific  companies or
through   investment  funds  and   partnerships.   The  timing  of  future  cash
requirements to fund such  commitments is generally  dependent on the investment
cycle. This cycle, the period over which privately-held  companies are funded by
private equity investors and ultimately sold, merged, or taken public through an
initial  offering,  can vary based on overall  market  conditions as well as the
nature and type of industry in which the companies operate.

     The  Company  has  contingent   consideration   agreements  that  guarantee
additional  payments to acquired insurance  agencies'  shareholders based on the
agencies  future  performance in excess of established  revenue and/or  earnings
before interest,  taxes,  depreciation and amortization (EBITDA) thresholds.  If
the insurance  agencies' future  performance  exceeds these thresholds  during a
three-year  period,  the  Company  will be  liable  to make  payments  to former
shareholders.  As of December  31, 2002,  the Company has a maximum  exposure of
$14.7 million for these agreements, which expire December 2005.

     The  Company is fund  manager for limited  liability  corporations  issuing
low-income  housing  investments.  Low-income  housing  investments  provide tax
benefits to investors in the form of tax deductions  from  operating  losses and
tax credits. To facilitate the sale of these investments, the Company guarantees
the timely  completion of projects and delivery of tax benefits  throughout  the
investment  term.   Guarantees  may  include  a  minimum  rate  of  return,  the
availability of tax credits,  and operating  deficit  thresholds over a ten-year
average period.  Additionally,  the Company receives project  completion and tax
credit   guarantees  from  the  limited  liability   corporations   issuing  the
investments that reduce the Company's  ultimate exposure to loss. As of December
31, 2002,  the  Company's  maximum  exposure to loss under these  guarantees  is
limited to a return of investor's  capital and minimum  investment yield, or $77
million. The Company maintains a reserve of $2.6 million for these guarantees.

     The  Company  has  rental  commitments  under  long-term   operating  lease
agreements. For detail of these commitments see Note 5.

     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 $1,513
million and $1,521  million at December  31,  2001 and 2002,  respectively.  The
market value of the associated  collateral was $1,552 million and $1,558 million
at December 31, 2001 and 2002, respectively.

     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.

                                      F-89

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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 2000, 2001 and 2002, 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.

     The Company has  guarantees  that obligate it to perform if its  affiliates
are unable to discharge their obligations.  These obligations  include guarantee
of trust preferred  securities (see Note 12),  commercial paper  obligations and
leveraged lease  transactions.  Guarantees issued by the Bank for an affiliate's
commercial  paper  program are done in order to  facilitate  their  sale.  As of
December  31,  2002,  the  Bank  had a  maximum  exposure  to loss  under  these
guarantees  of $1.0  billion,  which have an average term of less than one year.
The Bank's guarantee is fully  collateralized by a pledged deposit.  UnionBanCal
Corporation guarantees its subsidiaries leveraged lease transactions, which have
terms  ranging  from 15 to 30  years.  Following  the  original  funding  of the
leveraged lease transactions, UnionBanCal Corporation has no material obligation
to be satisfied.  As of December 31, 2002, UnionBanCal Corporation had a maximum
exposure to loss of $33.0 million for these agreements.

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 range of
          banking  services,  primarily  to  individuals  and small  businesses,
          delivered generally through a tri-state network of branches and ATM's.
          These services include commercial loans, mortgages,  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,  and risk management and
          insurance products for businesses and individuals.

     o    The  Commercial  Financial  Services  Group  provides  credit and cash
          management  services to large corporate and  middle-market  companies.
          Services include  commercial and project loans, real estate financing,
          asset-based  financing,  trade  finance and  letters of credit,  lease
          financing,  customized cash management  services and selected  capital
          markets products.

     o    The  International  Banking Group provides  correspondent  banking and
          trade-finance  products and services to  financial  institutions,  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  wholesale  funding
          needs,  securities  portfolio,  and interest rate and liquidity risks.
          The group also  offers a broad  range of risk  management  and trading
          products to institutional  and business clients of the Company through
          the businesses described above.


                                      F-90

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 23--BUSINESS SEGMENTS (CONTINUED)

     The  information,  set forth in the table on the following  page,  reflects
selected  income  statement  and  balance  sheet  items by  business  unit.  The
information  presented  does  not  necessarily  represent  the  business  units'
financial  condition and results of operations were they  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.  Included in
the tables are the amounts of goodwill  for each  reporting  unit as of December
31, 2002.  Prior to January 1, 2002,  most of the goodwill was  reflected at the
corporate level in "Other."

     The  information  in this table is  derived  from the  internal  management
reporting  system used by management to measure the  performance of the business
segments  and the Company  overall.  The  management  reporting  system  assigns
balance  sheet and income  statement  items to each  business  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 business  segment  are  assigned  to that  business.  Certain
indirect costs, such as operations and technology expense,  are allocated to the
segments based on studies of billable unit costs for product or data processing.
Other indirect costs, such as corporate overhead,  are allocated to the business
segments  based on a  predetermined  percentage  of usage.  Under the  Company's
risk-adjusted return on capital (RAROC)  methodology,  credit expense is charged
to business  segments  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  amortization for periods prior to January
1, 2002,  certain parent company non-bank  subsidiaries,  the elimination of the
fully  taxable-equivalent  basis amount,  the amount of the provision for credit
losses  (over)/under  the  RAROC  expected  loss for the  period,  the  earnings
associated with the unallocated  equity capital and allowance for credit losses,
and the residual costs of support  groups.  In addition,  it includes two units,
the Credit Management Group, which manages nonperforming assets, and the Pacific
Rim  Corporate  Group,   which  offers  financial   products  to  Japanese-owned
subsidiaries  located in the US. On an  individual  basis,  none of the items in
"Other" are significant to the Company's business.

     The business  units'  results for the prior  periods have been  restated to
reflect  changes in the  transfer  pricing  methodology  and any  reorganization
changes that may have occurred.

                                      F-91

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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,
                                     __________________________________   ____________________________  _________________________
                                        2000        2001        2002        2000      2001      2002     2000     2001     2002
                                     __________  __________  __________   ________  ________  ________  _______  _______ ________
<S>                                  <C>         <C>         <C>          <C>       <C>       <C>       <C>      <C>     <C>
RESULTS OF OPERATIONS (DOLLARS IN
  THOUSANDS):
Net interest income...............   $  738,709  $  704,258  $  797,592   $764,370  $697,533  $656,902  $34,987  $39,498 $ 38,196
Noninterest income................      412,199     432,012     445,569    173,140   158,459   195,546   60,114   59,022   68,049
                                     __________  __________  __________   ________  ________  ________  _______  _______ ________
Total revenue.....................    1,150,908   1,136,270   1,243,161    937,510   855,992   852,448   95,101   98,520  106,245
Noninterest expense(1)............      722,525     750,908     790,508    303,210   316,890   347,148   54,299   57,364   63,005
Credit expense (income)...........       48,655      41,725      33,692    120,670   149,522   190,337    7,008    4,424    1,904
                                     __________  __________  __________   ________  ________  ________  _______  _______ ________
Income (loss) before income tax
  expense (benefit)...............      379,728     343,637     418,961    513,630   389,580   314,963   33,794   36,732   41,336
Income tax expense (benefit)......      145,246     131,441     160,253    184,172   131,565   101,304   12,926   14,050   15,811
                                     __________  __________  __________   ________  ________  ________  _______  _______ ________
Net income (loss).................   $  234,482  $  212,196  $  258,708   $329,458  $258,015  $213,659  $20,868  $22,682 $ 25,525
                                     ==========  ==========  ==========   ========  ========  ========  =======  ======= ========
Total assets (dollars in millions):  $    9,463  $   10,376  $   12,125   $ 18,237  $ 16,342  $ 15,761  $ 1,568  $ 1,365 $  1,985
                                     ==========  ==========  ==========   ========  ========  ========  =======  ======= ========

</TABLE>
<TABLE>
<CAPTION>

                                               GLOBAL                                                     UNIONBANCAL
                                            MARKETS GROUP                     OTHER                       CORPORATION
                                     ____________________________   ____________________________  _________________________________
                                       YEARS ENDED DECEMBER 31,       YEARS ENDED DECEMBER 31,       YEARS ENDED DECEMBER 31,
                                     ____________________________   ____________________________  _________________________________
                                       2000       2001     2002       2000       2001     2002       2000        2001      2002
                                     ________   _______  ________   _________  ________ ________  __________  __________ __________

<S>                                  <C>        <C>      <C>        <C>        <C>      <C>       <C>         <C>        <C>
RESULTS OF OPERATIONS (DOLLARS IN
  THOUSANDS):
Net interest income...............   $ (8,850)  $16,505  $(18,478)  $  55,224  $ 66,248 $ 87,757  $1,584,440  $1,524,042 $1,561,969
Noninterest income................     (7,083)   19,633    10,104       8,810    47,278   16,708     647,180     716,404    735,976
                                     ________   _______  ________   _________  ________ ________  __________  __________ __________
Total revenue.....................    (15,933)   36,138    (8,374)     64,034   113,526  104,465   2,231,620   2,240,446  2,297,945
Noninterest expense(1)............     15,757    24,064    15,548      34,394    90,948  131,457   1,130,185   1,240,174  1,347,666
Credit expense (income)...........         --       200       200     263,667    89,129  (51,133)    440,000     285,000    175,000
                                     ________   _______  ________   _________  ________ ________  __________  __________ __________
Income (loss) before income tax
  expense (benefit)...............    (31,690)   11,874   (24,122)   (234,027)  (66,551   24,141     661,435     715,272    775,279
Income tax expense (benefit)......    (12,122)    4,542    (9,227)   (108,687)  (47,754  (20,765)    221,535     233,844    247,376
                                     ________   _______  ________   _________  ________ ________  __________  __________ __________
Net income (loss).................   $(19,568)  $ 7,332  $(14,895)  $(125,340) $(18,797 $ 44,906  $  439,900  $  481,428 $  527,903
                                     ========   =======  ========   =========  ======== ========  ==========  ========== ==========
Total assets (dollars in millions):  $  4,662   $ 6,983  $  9,086   $   1,232  $    973 $  1,213  $   35,162  $   36,039 $   40,170
                                     ========   =======  ========   =========  ======== ========  ==========  ========== ==========
<FN>
__________
(1)  "Other" includes restructuring credits of $19.0 million ($11.8 million, net
     of taxes) for the year ending December 31, 2000.

</FN>
</TABLE>


                                      F-92

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


NOTE 24--CONDENSED UNIONBANCAL CORPORATION UNCONSOLIDATED FINANCIAL STATEMENTS

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                           DECEMBER 31,
                                                                   __________________________
(DOLLARS IN THOUSANDS)                                                 2001            2002
_________________________________________________________________  __________      __________
<S>                                                                <C>             <C>
ASSETS
  Cash and cash equivalents......................................  $  435,513      $  477,825
  Investment in and advances to subsidiaries.....................   3,999,509       4,184,208
  Loans..........................................................       3,556           2,940
  Other assets...................................................      25,617          40,080
                                                                   __________      __________
    Total assets.................................................  $4,464,195      $4,705,053
                                                                   ==========      ==========


LIABILITIES AND SHAREHOLDERS' EQUITY
  Commercial paper...............................................  $   99,086      $   98,507
  Other liabilities..............................................      44,457          53,476
  Medium and long-term debt......................................     399,657         418,360
  Junior subordinated debt payable to subsidiary
    grantor trust................................................     374,753         376,521
                                                                   __________      __________
    Total liabilities............................................     917,953         946,864
  Shareholders' equity...........................................   3,546,242       3,758,189
                                                                   __________      __________
    Total liabilities and shareholders' equity...................  $4,464,195      $4,705,053
                                                                   ==========      ==========
</TABLE>


                                      F-93

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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

CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>


                                                                                              YEARS ENDED DECEMBER 31,
                                                                                      ___________________________________
(DOLLARS IN THOUSANDS)                                                                  2000          2001         2002
_______________________________________________________________________________       ________      ________     ________
<S>                                                                                   <C>           <C>          <C>
INCOME:
  Dividends from bank subsidiary...............................................       $283,471      $379,110     $486,300
  Dividends from nonbank subsidiaries..........................................         10,000         7,500       24,399
  Interest income on advances to subsidiaries and deposits in bank.............         18,850        17,700       11,909
  Other income.................................................................            458           882          188
                                                                                      ________      ________     ________
    Total income...............................................................        312,779       405,192      522,796
                                                                                      ________      ________     ________
EXPENSE:
  Interest expense.............................................................         47,172        35,890       27,443
  Other expense, net...........................................................          3,313         4,683          620
                                                                                      ________      ________     ________
  Total expense................................................................         50,485        40,573       28,063
                                                                                      ________      ________     ________
  Income before income taxes and equity in undistributed net income of
    subsidiaries...............................................................        262,294       364,619      494,733
  Provision for credit losses..................................................            (25)            6           (1)
  Income tax benefit...........................................................        (11,935)       (8,409)      (6,108)
                                                                                      ________      ________     ________
  Income before equity in undistributed net income of subsidiaries.............        274,204       373,034      500,840
Equity in undistributed net income of subsidiaries:
  Bank subsidiary..............................................................        138,105       100,361       61,164
  Nonbank subsidiaries.........................................................         27,591         8,033      (34,101)
                                                                                      ________      ________     ________
NET INCOME.....................................................................       $439,900      $481,428     $527,903
                                                                                      ========      ========     ========
</TABLE>

                                      F-94

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)


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

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                                  YEARS ENDED DECEMBER 31,
                                                                              ____________________________________
(DOLLARS IN THOUSANDS)                                                          2000          2001         2002
________________________________________________________________________      _________     _________    _________
<S>                                                                           <C>           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income............................................................      $ 439,900     $ 481,428    $ 527,903
  Adjustments to reconcile net income to net cash provided by
     operating activities:
    Equity in undistributed net income of subsidiaries..................       (165,696)     (108,394)     (27,063)
    Provision for credit losses.........................................             25           (6)            1
    Other, net..........................................................          7,953        11,357       86,723
                                                                              _________     _________    _________
    Net cash provided by operating activities...........................        282,182       384,385      587,564
                                                                              _________     _________    _________
CASH FLOWS FROM INVESTING ACTIVITIES:
  Advances to subsidiaries..............................................        (43,704)      (23,967)     (23,733)
  Repayment of advances to subsidiaries.................................         11,903        16,965       29,460
                                                                              _________     _________    _________
  Net cash (used in) provided by investing activities...................        (31,801)       (7,002)       5,727
                                                                              _________     _________    _________
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase (decrease) in short term borrowings......................          1,984          (883)        (579)
  Proceeds from issuance of medium-term debt............................             --       200,000           --
  Payments of cash dividends............................................       (162,575)     (158,406)    (164,440)
  Repurchase of common stock............................................       (130,642)     (107,629)    (385,960)
  Other, net............................................................             52        (1,323)          --
                                                                              _________     _________    _________
Net cash used in financing activities...................................       (291,181)      (68,241)    (550,979)
                                                                              _________     _________    _________
Net increase (decrease) in cash and due from banks......................        (40,800)      309,142       42,312
Cash and due from banks at beginning of year............................        167,171       126,371      435,513
                                                                              _________     _________    _________
Cash and due from banks at end of year..................................      $ 126,371     $ 435,513    $ 477,825
                                                                              =========     =========    =========
CASH PAID DURING THE YEAR FOR:
  Interest..............................................................      $  44,327     $  33,910    $  27,665
  Income taxes..........................................................         26,704          (271)       5,901

</TABLE>

                                      F-95

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  DECEMBER 31, 2000, 2001, AND 2002 (CONTINUED)

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

         Unaudited quarterly results are summarized as follows:
<TABLE>
<CAPTION>


                                                                                 2001 QUARTERS ENDED
                                                                __________________________________________________________
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                   MARCH 31      JUNE 30         SEPTEMBER 30       DECEMBER 31
____________________________________________________________    ________     ________           ________          ________
<S>                                                             <C>          <C>                <C>               <C>
Interest income.............................................    $608,692     $563,121           $536,001          $487,497
Interest expense............................................     221,431      184,398            157,910           107,530
                                                                ________     ________           ________          ________
Net interest income.........................................     387,261      378,723            378,091           379,967
Provision for credit losses.................................     100,000       65,000             50,000            70,000
Noninterest income..........................................     180,807      168,391            173,405           193,801
Noninterest expense.........................................     307,485      307,452            317,042           308,195
                                                                ________     ________           ________          ________
Income before income taxes..................................     160,583      174,662            184,454           195,573
Income tax expense..........................................      53,296       57,512             59,325            63,711
                                                                ________     ________           ________          ________
Net income..................................................    $107,287     $117,150           $125,129          $131,862
                                                                ========     ========           ========          ========
Net income per common share--basic..........................    $   0.68     $   0.74           $   0.79          $   0.84
                                                                ========     ========           ========          ========
Net income per common share--diluted........................    $   0.67     $   0.74           $   0.79          $   0.84
                                                                ========     ========           ========          ========
Dividends per share.........................................    $   0.25     $   0.25           $   0.25          $   0.25
                                                                ========     ========           ========          ========
<CAPTION>

                                                                                 2002 QUARTERS ENDED
                                                                __________________________________________________________
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                   MARCH 31      JUNE 30         SEPTEMBER 30       DECEMBER 31
____________________________________________________________    ________     ________           ________          ________
<S>                                                             <C>          <C>                <C>               <C>
Interest income.............................................    $462,380     $463,203           $463,113          $467,276
Interest expense............................................      81,940       77,442             71,011            63,610
                                                                ________     ________           ________          ________
Net interest income.........................................     380,440      385,761            392,102           403,666
Provision for credit losses.................................      55,000       50,000             40,000            30,000
Noninterest income..........................................     171,451      188,774            182,426           193,325
Noninterest expense.........................................     323,363      329,791            331,134           363,378
                                                                ________     ________           ________          ________
Income before income taxes..................................     173,528      194,744            203,394           203,613
Income tax expense..........................................      58,751       64,802             65,163            58,660
                                                                ________     ________           ________          ________
Net income..................................................    $114,777     $129,942           $138,231          $144,953
                                                                ========     ========           ========          ========
Net income per common share--basic..........................    $   0.73     $   0.83           $   0.89          $   0.96
                                                                ========     ========           ========          ========
Net income per common share--diluted........................    $   0.73     $   0.81           $   0.88          $   0.95
                                                                ========     ========           ========          ========
Dividends per share.........................................    $   0.25     $   0.28           $   0.28          $   0.28
                                                                ========     ========           ========          ========
<FN>
__________
(1)  Dividends per share  reflect  dividends  declared on the  Company's  common
     stock outstanding as of the declaration date.

</FN>
</TABLE>

                                      F-96

<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, 2002,  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 provide
a reasonable  basis for concluding  that the Audit Committee is carrying out its
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 the following
page.

                                                  /s/NORIMICHI KANARI
                                           _____________________________________
                                                     Norimichi Kanari
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER


                                                  /s/TAKAHARU SAEGUSA
                                           _____________________________________
                                                     Takaharu Saegusa
                                               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-97

<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 (the Company) as of December 31, 2001 and 2002, and
the related consolidated  statements of income,  shareholders'  equity, and cash
flows for each of the three years in the period ended  December 31, 2002.  These
financial  statements are the  responsibility of the Company'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,  2001  and  2002,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting  principles  generally accepted
in the United States of America.

     As discussed in Note 1 to the consolidated financial statements,  effective
January 1, 2002 the Company  changed  its method of  accounting  for  previously
recognized  goodwill  and other  intangible  assets to conform to  Statement  of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."

/s/DELOITTE & TOUCHE LLP
Deloitte & Touche LLP

San Francisco, California
January 15, 2003


                                      F-98

<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
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/NORIMICHI KANARI
                                           _____________________________________
                                                      Norimichi Kanari
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                               (Principal Executive Officer)


                                        By:        /s/DAVID I. MATSON
                                           _____________________________________
                                                      David I. Matson
                                              EXECUTIVE VICE PRESIDENT AND
                                                 CHIEF FINANCIAL OFFICER
                                              (Principal Financial Officer)


                                        By:        /s/DAVID A. ANDERSON
                                           _____________________________________
                                                      David A. Anderson
                                            SENIOR VICE PRESIDENT AND CONTROLLER
                                              (Principal Accounting Officer)


                                        Date:  March 14, 2003

     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


                                      II-1

<PAGE>

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


               *
_____________________________________
                                                         Director
        Stanley F. Farrar


               *
_____________________________________
                                                         Director
        Michael J. Gillfillan


               *
_____________________________________
                                                         Director
        Richard C. Hartnack


               *
_____________________________________
                                                         Director
        Kaoru Hayama


               *
_____________________________________
                                                         Director
        Norimichi Kanari



_____________________________________
                                                         Director
        Satori Kishi


               *
_____________________________________
                                                         Director
        Monica C. Lozano


               *
_____________________________________
                                                         Director
        Mary S. Metz


               *
_____________________________________
                                                         Director
        Raymond E. Miles


               *
_____________________________________
                                                         Director
        J. Fernando Niebla


               *
_____________________________________
                                                         Director
        Charles R. Rinehart



_____________________________________
                                                         Director
        Carl W. Robertson


               *
_____________________________________
                                                         Director
       Takaharu Saegusa

                                      II-2

<PAGE>

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


               *
_____________________________________
                                                         Director
       Robert M. Walker



_____________________________________
                                                         Director
        Kenji Yoshizawa





*By:       /s/JOHN H. MCGUCKIN, JR.
    ____________________________________
              John H. McGuckin, Jr.
                ATTORNEY-IN-FACT


Dated: February 26, 2003


                                      II-3

<PAGE>


CERTIFICATIONS

I, Norimichi Kanari, certify that:

1.   I have reviewed this annual report on Form 10-K of UnionBanCal  Corporation
     (the Registrant);

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this annual report;

4.   The  Registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  Registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the Registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The Registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  Registrant's  auditors  and the audit
     committee of  Registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  Registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  Registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  Registrant's  internal
          controls; and

6.   The  Registrant's  other  certifying  officer and I have  indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


                                       By:      /s/ NORIMICHI KANARI
                                          _____________________________________
                                                    Norimichi Kanari
                                          PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: March 14, 2003                           (Principal Executive Officer)


                                      II-4

<PAGE>


I, David I. Matson, certify that:

1.   I have reviewed this annual report on Form 10-K of UnionBanCal  Corporation
     (the Registrant);

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the Registrant as of, and for, the periods presented in this annual report;

4.   The  Registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  Registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the Registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The Registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  Registrant's  auditors  and the audit
     committee of  Registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  Registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  Registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  Registrant's  internal
          controls; and

6.   The  Registrant's  other  certifying  officer and I have  indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


                                       By:      /s/ DAVID I. MATSON
                                          _____________________________________
                                                    David I. Matson
                                          EXECUTIVE VICE PRESIDENT AND CHIEF
                                          FINANCIAL OFFICER
Date: March 14, 2003                         (Principal Financial Officer)


                                      II-5