UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|ý                                                        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|-------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|For the quarterly period ended March 31, 2008           
|OR                                                      
|o                                                        |  | 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)

|Delaware                 |  | 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

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 ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

|Large accelerated filer ý                                            |  | Accelerated filer o        
|-------------------------------------------------------------------- |  | ---------------------------
|Non-accelerated filer o(Do not check if a smaller reporting company) |  | Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes o    No ý

Number of shares of Common Stock outstanding at April 30, 2008: 137,992,221



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UnionBanCal Corporation and Subsidiaries        TABLE OF CONTENTS

|                      |                                                                                                | Page Number                                                                   
|--------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------
|PART I                |                                                                                                |                                                                               
|Financial Information |                                                                                                |                                                                               
|                      | Condensed Consolidated Financial Highlights                                                    |                                                                               
|                      | ITEM 1. FINANCIAL STATEMENTS:                                                                  |                                                                               
|                      |                                                                                                | Condensed Consolidated Statements of Income                                   
|                      |                                                                                                | Condensed Consolidated Balance Sheets                                         
|                      |                                                                                                | Condensed Consolidated Statements of Changes in Stockholders' Equity          
|                      |                                                                                                | Condensed Consolidated Statements of Cash Flows                               
|                      |                                                                                                | Notes to Condensed Consolidated Financial Statements:                         
|                      |                                                                                                | Note 1Basis of Presentation and Nature of Operations                         
|                      |                                                                                                | Note 2Recently Issued Accounting Pronouncements                              
|                      |                                                                                                | Note 3Discontinued Operations                                                
|                      |                                                                                                | Note 4Goodwill and Intangible Assets                                         
|                      |                                                                                                | Note 5Employee Pension and Other Postretirement Benefits                     
|                      |                                                                                                | Note 6Management Stock Plans                                                 
|                      |                                                                                                | Note 7Fair Value of Financial Instruments                                    
|                      |                                                                                                | Note 8Derivative Instruments and Other Financial Instruments Used For Hedging
|                      |                                                                                                | Note 9Earnings Per Share (EPS)                                               
|                      |                                                                                                | Note 10Accumulated Other Comprehensive Income (Loss)                         
|                      |                                                                                                | Note 11Commitments, Contingencies and Guarantees                             
|                      |                                                                                                | Note 12Business Segments                                                     
|                      |                                                                                                | Note 13Subsequent Event                                                      
|                      | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: |                                                                               
|                      |                                                                                                | Introduction                                                                  
|                      |                                                                                                | Executive Overview                                                            
|                      |                                                                                                | Discontinued Operations                                                       
|                      |                                                                                                | Critical Accounting Policies                                                  
|                      |                                                                                                | Financial Performance                                                         
|                      |                                                                                                | Net Interest Income                                                           
|                      |                                                                                                | Noninterest Income and Noninterest Expense                                    
|                      |                                                                                                | Income Tax Expense                                                            
|                      |                                                                                                | Loans                                                                         
|                      |                                                                                                | Cross-Border Outstandings                                                     
|                      |                                                                                                | Provision for Credit Losses                                                   
|                      |                                                                                                | Allowances for Credit Losses                                                  
|                      |                                                                                                | Nonperforming Assets                                                          
|                      |                                                                                                | Loans 90 Days or More Past Due and Still Accruing                             
|                      |                                                                                                | Quantitative and Qualitative Disclosures About Market Risk                    
|                      |                                                                                                | Liquidity Risk                                                                
|                      |                                                                                                | Regulatory Capital                                                            
|                      |                                                                                                | Business Segments                                                             
|                      |                                                                                                | Regulatory Matters                                                            

2

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|                  | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  |  | 66
|----------------- | ------------------------------------------------------------------- |  | --
|                  | ITEM 4. CONTROLS AND PROCEDURES                                     |  | 66
|PART II           |                                                                     | 
|Other Information |                                                                     | 
|                  | ITEM 1. LEGAL PROCEEDINGS                                           |  | 67
|                  | ITEM 1A. RISK FACTORS                                               |  | 67
|                  | ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |  | 68
|                  | ITEM 6. EXHIBITS                                                    |  | 69
|                  | SIGNATURES                                                          |  | 70

3

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements, which include forecasts of our financial results and condition, expectations for our operations and business, and
our assumptions for those forecasts and expectations. Do not rely unduly on forward-looking statements. Actual results might differ significantly compared to our forecasts and expectations. See
Part I, Item 1A. "Risk Factors," and the other risks described in this report for factors to be considered when reading any forward-looking statements in this filing.

This
document includes forward-looking statements, which are 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 our Securities and Exchange Commission (SEC) filings, press releases, news articles, conference calls with
analysts and stockholders 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," "target," "anticipate," "intend," "plan," "seek," "estimate," "potential," "project," or words of similar meaning, or future or
conditional verbs such as "will," "would," "should," "could," "might," 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 to us at the date of these statements. 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.

In
this document, for example, we make forward-looking statements, which discuss our expectations about:



4

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There
are numerous risks and uncertainties that could and will cause actual results to differ materially compared to 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 those listed in Item 1A. "Risk Factors" of Part II and Item 2 "Management's Discussion and Analysis of Financial Condition and
Results of Operations" of Part I of this Form 10-Q.

Readers
of this document should not rely unduly on forward-looking information and should consider all uncertainties and risks disclosed throughout this document and in our other reports
to the SEC, including, but not limited to, those discussed below. Any factor described in this report could by itself, or together with one or more other factors, adversely affect our business, future
prospects, results of operations or financial condition.

5

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PART I. FINANCIAL INFORMATION  UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Financial Highlights  (Unaudited)

|                                |                                                           | As of and for the
Three Months Ended |   |             |       
|------------------------------- | --------------------------------------------------------- | ------------------------------------ | - | ----------- | ------
|
|Results of operations:          |                                                           |                                      |   |             |       
|                                | Net interest income(1)                                    |                                      | $ | 429,337     |       
|                                | Provision for loan losses                                 |                                      |   | 4,000       |       
|                                | Noninterest income                                        |                                      |   | 210,858     |       
|                                | Noninterest expense                                       |                                      |   | 410,866     |       
|                                |                                                           |                                      |   |             |       
|                                | Income before income taxes(1)                             |                                      |   | 225,329     |       
|                                | Taxable-equivalent adjustment                             |                                      |   | 2,115       |       
|                                | Income tax expense                                        |                                      |   | 74,693      |       
|                                |                                                           |                                      |   |             |       
|                                | Income from continuing operations                         |                                      |   | 148,521     |       
|                                | Income (loss) from discontinued operations, net of taxes  |                                      |   | 1,090       |       
|                                |                                                           |                                      |   |             |       
|                                | Net income                                                |                                      | $ | 149,611     |       
|                                |                                                           |                                      |   |             |       
|Per common share:               |                                                           |                                      |   |             |       
|                                | Basic earnings:                                           |                                      |   |             |       
|                                |                                                           | From continuing operations           |   | $           | 1.08  
|                                |                                                           | Net income                           |   |             | 1.08  
|                                | Diluted earnings:                                         |                                      |   |             |       
|                                |                                                           | From continuing operations           |   |             | 1.06  
|                                |                                                           | Net income                           |   |             | 1.07  
|                                | Dividends(2)                                              |                                      |   | 0.47        |       
|                                | Book value (end of period)                                |                                      |   | 32.98       |       
|                                | Common shares outstanding (end of period)(3)(4)           |                                      |   | 138,117,370 |       
|                                | Weighted average common shares outstandingbasic(3)(4)    |                                      |   | 137,942,320 |       
|                                | Weighted average common shares outstandingdiluted(3)(4)  |                                      |   | 139,729,681 |       
|Balance sheet (end of period):  |                                                           |                                      |   |             |       
|                                | Total assets(5)                                           |                                      | $ | 54,616,849  |       
|                                | Total loans                                               |                                      |   | 37,251,950  |       
|                                | Nonperforming assets                                      |                                      |   | 41,744      |       
|                                | Total deposits                                            |                                      |   | 43,685,706  |       
|                                | Stockholders' equity                                      |                                      |   | 4,555,439   |       
|Balance sheet (period average): |                                                           |                                      |   |             |       
|                                | Total assets                                              |                                      | $ | 52,962,611  |       
|                                | Total loans                                               |                                      |   | 38,458,014  |       
|                                | Earning assets                                            |                                      |   | 48,354,950  |       
|                                | Total deposits                                            |                                      |   | 41,365,182  |       
|                                | Stockholders' equity                                      |                                      |   | 4,510,205   |       
|Financial ratios(6):            |                                                           |                                      |   |             |       
|                                | Return on average assets(7):                              |                                      |   |             |       
|                                |                                                           | From continuing operations           |   |             | 1.14  
|                                |                                                           | Net income                           |   |             | 1.15  
|                                | Return on average stockholders' equity(7):                |                                      |   |             |       
|                                |                                                           | From continuing operations           |   |             | 13.35 
|                                |                                                           | Net income                           |   |             | 13.45 
|                                | Efficiency ratio(8)                                       |                                      |   | 64.02       |       
|                                | Net interest margin(1)                                    |                                      |   | 3.57        |       
|                                | Dividend payout ratio                                     |                                      |   | 43.52       |       
|                                | Tangible equity ratio                                     |                                      |   | 7.53        |       
|                                | Tier 1 risk-based capital ratio(5)                        |                                      |   | 8.42        |       
|                                | Total risk-based capital ratio(5)                         |                                      |   | 11.38       |       
|                                | Leverage ratio(5)                                         |                                      |   | 8.12        |       
|                                | Allowance for loan losses to:(9)                          |                                      |   |             |       
|                                |                                                           | Total loans                          |   |             | 0.89  
|                                |                                                           | Nonaccrual loans                     |   |             | 799.52
|                                | Allowance for credit losses to:(10)                       |                                      |   |             |       
|                                |                                                           | Total loans                          |   |             | 1.11  
|                                |                                                           | Nonaccrual loans                     |   |             | 997.48
|                                | Net loans charged off to average total loans(7)           |                                      |   | 0.03        |       
|                                | Nonperforming assets to total loans and foreclosed assets |                                      |   | 0.11        |       
|                                | Nonperforming assets to total assets(5)                   |                                      |   | 0.08        |       

---

nm=
not meaningful

6

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Item 1.   Financial Statements

UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Statements of Income  (Unaudited)

|                                                           |                                                                         | For the Three Months
Ended March 31,                |        
|---------------------------------------------------------- | ----------------------------------------------------------------------- | --------------------------------------------------- | -------
|
|
|Interest Income                                            |                                                                         |                                                     |        
|                                                           | Loans                                                                   |                                                     | $      
|                                                           | Securities                                                              |                                                     |        
|                                                           | Interest bearing deposits in banks                                      |                                                     |        
|                                                           | Federal funds sold and securities purchased under resale agreements     |                                                     |        
|                                                           | Trading account assets                                                  |                                                     |        
|                                                           |                                                                         |                                                     |        
|                                                           |                                                                         | Total interest income                               |        
|                                                           |                                                                         |                                                     |        
|Interest Expense                                           |                                                                         |                                                     |        
|                                                           | Deposits                                                                |                                                     |        
|                                                           | Federal funds purchased and securities sold under repurchase agreements |                                                     |        
|                                                           | Commercial paper                                                        |                                                     |        
|                                                           | Medium- and long-term debt                                              |                                                     |        
|                                                           | Trust notes                                                             |                                                     |        
|                                                           | Other borrowed funds                                                    |                                                     |        
|                                                           |                                                                         |                                                     |        
|                                                           |                                                                         | Total interest expense                              |        
|                                                           |                                                                         |                                                     |        
|Net Interest Income                                        |                                                                         |                                                     | 427,222
|                                                           | Provision for loan losses                                               |                                                     |        
|                                                           |                                                                         |                                                     |        
|                                                           |                                                                         | Net interest income after provision for loan losses |        
|                                                           |                                                                         |                                                     |        
|Noninterest Income                                         |                                                                         |                                                     |        
|                                                           | Service charges on deposit accounts                                     |                                                     |        
|                                                           | Trust and investment management fees                                    |                                                     |        
|                                                           | Insurance commissions                                                   |                                                     |        
|                                                           | Merchant banking fees                                                   |                                                     |        
|                                                           | Trading account activities                                              |                                                     |        
|                                                           | Brokerage commissions and fees                                          |                                                     |        
|                                                           | Card processing fees, net                                               |                                                     |        
|                                                           | Securities gains (losses), net                                          |                                                     |        
|                                                           | Other                                                                   |                                                     |        
|                                                           |                                                                         |                                                     |        
|                                                           |                                                                         | Total noninterest income                            |        
|                                                           |                                                                         |                                                     |        
|Noninterest Expense                                        |                                                                         |                                                     |        
|                                                           | Salaries and employee benefits                                          |                                                     |        
|                                                           | Net occupancy                                                           |                                                     |        
|                                                           | Outside services                                                        |                                                     |        
|                                                           | Equipment                                                               |                                                     |        
|                                                           | Software                                                                |                                                     |        
|                                                           | Professional services                                                   |                                                     |        
|                                                           | Communications                                                          |                                                     |        
|                                                           | Foreclosed asset expense                                                |                                                     |        
|                                                           | Provision for losses on off-balance sheet commitments                   |                                                     |        
|                                                           | Other                                                                   |                                                     |        
|                                                           |                                                                         |                                                     |        
|                                                           |                                                                         | Total noninterest expense                           |        
|                                                           |                                                                         |                                                     |        
|                                                           | Income from continuing operations before income taxes                   |                                                     |        
|                                                           | Income tax expense                                                      |                                                     |        
|                                                           |                                                                         |                                                     |        
|Income from Continuing Operations                          |                                                                         |                                                     | 148,521
|                                                           |                                                                         |                                                     |        
|                                                           | Income (loss) from discontinued operations before income taxes          |                                                     |        
|                                                           | Income tax expense (benefit)                                            |                                                     |        
|                                                           |                                                                         |                                                     |        
|Income (Loss) from Discontinued Operations                 |                                                                         |                                                     | 1,090  
|                                                           |                                                                         |                                                     |        
|Net Income                                                 |                                                                         | $                                                   | 149,611
|                                                           |                                                                         |                                                     |        
|Income from continuing operations per common sharebasic   |                                                                         | $                                                   | 1.08   
|                                                           |                                                                         |                                                     |        
|Net Income per common sharebasic                          |                                                                         | $                                                   | 1.08   
|                                                           |                                                                         |                                                     |        
|Income from continuing operations per common sharediluted |                                                                         | $                                                   | 1.06   
|                                                           |                                                                         |                                                     |        
|Net Income per common sharediluted                        |                                                                         | $                                                   | 1.07   
|                                                           |                                                                         |                                                     |        
|Weighted average common shares outstandingbasic           |                                                                         |                                                     | 137,942
|                                                           |                                                                         |                                                     |        
|Weighted average common shares outstandingdiluted         |                                                                         |                                                     | 139,730
|                                                           |                                                                         |                                                     |        

See accompanying notes to condensed consolidated financial statements.

7

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UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Balance Sheets

|(Dollars in thousands)                                                                                                                      |                                                                                                                                                                       | (Unaudited)
March 31,
2007                 |            | December 31,
2007 |            | (Unaudited)
March 31,
2008 |           
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ----------------- | ---------- | -------------------------- | ----------
|Assets                                                                                                                                      |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|Cash and due from banks                                                                                                                     |                                                                                                                                                                       | $                                          | 1,913,937  |                   | $          | 2,106,930                  |           
|Interest bearing deposits in banks                                                                                                          |                                                                                                                                                                       |                                            | 1,008,327  |                   |            | 104,528                    |           
|Federal funds sold and securities purchased under resale agreements                                                                         |                                                                                                                                                                       |                                            | 2,747,300  |                   |            | 310,178                    |           
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            |                                                                                                                                                                       | Total cash and cash equivalents            |            |                   | 5,669,564  |                            |           
|Trading account assets                                                                                                                      |                                                                                                                                                                       |                                            | 297,998    |                   |            | 603,333                    |           
|Securities available for sale:                                                                                                              |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            | Securities pledged as collateral                                                                                                                                      |                                            |            | 62,026            |            |                            | 685,123   
|                                                                                                                                            | Held in portfolio                                                                                                                                                     |                                            |            | 8,524,615         |            |                            | 7,770,048 
|Loans (net of allowance for loan losses: March 31, 2007, $332,679; December 31, 2007, $402,726; March 31, 2008, $462,943)                   |                                                                                                                                                                       |                                            | 36,919,271 |                   |            | 40,801,462                 |           
|Due from customers on acceptances                                                                                                           |                                                                                                                                                                       |                                            | 18,099     |                   |            | 16,482                     |           
|Premises and equipment, net                                                                                                                 |                                                                                                                                                                       |                                            | 489,553    |                   |            | 490,197                    |           
|Intangible assets                                                                                                                           |                                                                                                                                                                       |                                            | 24,321     |                   |            | 18,568                     |           
|Goodwill                                                                                                                                    |                                                                                                                                                                       |                                            | 453,489    |                   |            | 448,718                    |           
|Other assets                                                                                                                                |                                                                                                                                                                       |                                            | 2,146,638  |                   |            | 2,364,577                  |           
|Assets of discontinued operations to be disposed or sold                                                                                    |                                                                                                                                                                       |                                            | 11,275     |                   |            | 7,604                      |           
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            |                                                                                                                                                                       | Total assets                               |            | $                 | 54,616,849 |                            | $         
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|Liabilities                                                                                                                                 |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            | Noninterest bearing                                                                                                                                                   |                                            | $          | 16,175,360        |            | $                          | 13,802,640
|                                                                                                                                            | Interest bearing                                                                                                                                                      |                                            |            | 27,510,346        |            |                            | 28,877,551
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            |                                                                                                                                                                       | Total deposits                             |            |                   | 43,685,706 |                            |           
|Federal funds purchased and securities sold under repurchase agreements                                                                     |                                                                                                                                                                       |                                            | 549,545    |                   |            | 1,631,602                  |           
|Commercial paper                                                                                                                            |                                                                                                                                                                       |                                            | 1,424,401  |                   |            | 1,266,656                  |           
|Other borrowed funds                                                                                                                        |                                                                                                                                                                       |                                            | 892,349    |                   |            | 1,875,623                  |           
|Trading account liabilities                                                                                                                 |                                                                                                                                                                       |                                            | 162,613    |                   |            | 351,057                    |           
|Acceptances outstanding                                                                                                                     |                                                                                                                                                                       |                                            | 18,099     |                   |            | 16,482                     |           
|Other liabilities                                                                                                                           |                                                                                                                                                                       |                                            | 1,130,090  |                   |            | 1,132,103                  |           
|Medium- and long-term debt                                                                                                                  |                                                                                                                                                                       |                                            | 2,071,263  |                   |            | 1,913,622                  |           
|Junior subordinated debt payable to subsidiary grantor trust                                                                                |                                                                                                                                                                       |                                            | 14,772     |                   |            | 14,432                     |           
|Liabilities of discontinued operations to be extinguished or assumed                                                                        |                                                                                                                                                                       |                                            | 112,572    |                   |            | 107,999                    |           
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            |                                                                                                                                                                       | Total liabilities                          |            |                   | 50,061,410 |                            |           
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|Commitments, contingencies and guaranteesSee Note 11                                                                                       |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|Stockholders' Equity                                                                                                                        |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|Preferred stock:                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            | Authorized 5,000,000 shares; no shares issued or outstanding as of March 31, 2007, December 31, 2007 and March 31, 2008                                               |                                            |            |                  |            |                            |          
|Common stock, par value $1 per share:                                                                                                       |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            | Authorized 300,000,000 shares; issued 156,832,956 shares as of March 31, 2007, 157,559,521 shares as of December 31, 2007 and 157,670,426 shares as of March 31, 2008 |                                            |            | 156,833           |            |                            | 157,559   
|Additional paid-in capital                                                                                                                  |                                                                                                                                                                       |                                            | 1,109,817  |                   |            | 1,153,737                  |           
|Treasury stock18,715,586 shares as of March 31, 2007, 19,723,453 shares as of December 31, 2007 and 19,725,529 shares as of March 31, 2008 |                                                                                                                                                                       |                                            | (1,150,090 | )                 |            | (1,202,584                 | )         
|Retained earnings                                                                                                                           |                                                                                                                                                                       |                                            | 4,669,590  |                   |            | 4,912,392                  |           
|Accumulated other comprehensive loss                                                                                                        |                                                                                                                                                                       |                                            | (230,711   | )                 |            | (283,123                   | )         
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            |                                                                                                                                                                       | Total stockholders' equity                 |            |                   | 4,555,439  |                            |           
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           
|                                                                                                                                            |                                                                                                                                                                       | Total liabilities and stockholders' equity |            | $                 | 54,616,849 |                            | $         
|                                                                                                                                            |                                                                                                                                                                       |                                            |            |                   |            |                            |           

See accompanying notes to condensed consolidated financial statements.

8

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UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Statements of Changes in Stockholders' Equity  (Unaudited)

|(In thousands, except shares)                                                   |                                                      | Number of shares                                                 |  | Common stock |         | Additional paid-in capital |   | Treasury stock |   | Retained earnings |            | Accumulated other comprehensive income (loss) |   | Total stock-
holders' equity |        
|------------------------------------------------------------------------------- | ---------------------------------------------------- | ---------------------------------------------------------------- |  | ------------ | ------- | -------------------------- | - | -------------- | - | ----------------- | ---------- | --------------------------------------------- | - | ---------------------------- | -------
|BALANCE DECEMBER 31, 2006                                                       |                                                      | 156,460,057                                                      |  | $            | 156,460 |                            | $ | 1,083,649      |   | $                 | (1,064,606 | )                                             | $ | 4,655,272                    |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|Comprehensive income                                                            |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                | Net incomeFor the three months ended March 31, 2007 |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              | 149,611
|                                                                                | Other comprehensive income, net of tax:              |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Net change in unrealized losses on cash flow hedges              |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Net change in unrealized losses on securities available for sale |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Foreign currency translation adjustment                          |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Net change in pension and other benefits                         |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|Total comprehensive income                                                      |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|FIN No. 48 adjustment(1)                                                        |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   | (49,300                      | )      
|FSP FAS 13-2 adjustment(2)                                                      |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   | (20,803                      | )      
|Stock options exercised                                                         |                                                      | 370,626                                                          |  |              | 371     |                            |   | 14,457         |   |                   |            |                                               |   |                              |        
|Restricted stock granted, net of forfeitures                                    |                                                      | 940                                                              |  |              | 1       |                            |   | (1             | ) |                   |            |                                               |   |                              |        
|Performance share units vested                                                  |                                                      | 1,333                                                            |  |              | 1       |                            |   | (1             | ) |                   |            |                                               |   |                              |        
|Excess tax benefitstock-based compensation                                     |                                                      |                                                                  |  |              |         |                            |   | 2,862          |   |                   |            |                                               |   |                              |        
|Compensation expensestock options                                              |                                                      |                                                                  |  |              |         |                            |   | 4,448          |   |                   |            |                                               |   |                              |        
|Compensation expenserestricted stock                                           |                                                      |                                                                  |  |              |         |                            |   | 3,760          |   |                   |            |                                               |   |                              |        
|Compensation expenseperformance share units and other share-based awards       |                                                      |                                                                  |  |              |         |                            |   | 643            |   |                   |            |                                               |   |                              |        
|Common stock repurchased(3)                                                     |                                                      |                                                                  |  |              |         |                            |   |                |   |                   | (85,484    | )                                             |   |                              |        
|Dividends declared on common stock, $0.47 per share(4)                          |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   | (65,190                      | )      
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|Net change                                                                      |                                                      |                                                                  |  |              | 373     |                            |   | 26,168         |   |                   | (85,484    | )                                             |   | 14,318                       |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|BALANCE MARCH 31, 2007                                                          |                                                      | 156,832,956                                                      |  | $            | 156,833 |                            | $ | 1,109,817      |   | $                 | (1,150,090 | )                                             | $ | 4,669,590                    |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|BALANCE DECEMBER 31, 2007                                                       |                                                      | 157,559,521                                                      |  | $            | 157,559 |                            | $ | 1,153,737      |   | $                 | (1,202,584 | )                                             | $ | 4,912,392                    |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|Comprehensive income                                                            |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                | Net incomeFor the three months ended March 31, 2008 |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              | 108,590
|                                                                                | Other comprehensive income (loss), net of tax:       |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Net change in unrealized gains on cash flow hedges               |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Net change in unrealized losses on securities available for sale |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Foreign currency translation adjustment                          |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      | Net change in pension and other benefits                         |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|Total comprehensive income                                                      |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|EITF 06-4 adjustment(5)                                                         |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   | (236                         | )      
|Stock options exercised                                                         |                                                      | 109,767                                                          |  |              | 110     |                            |   | 4,014          |   |                   |            |                                               |   |                              |        
|Restricted stock granted, net of forfeitures                                    |                                                      | 1,138                                                            |  |              | 1       |                            |   | (1             | ) |                   |            |                                               |   |                              |        
|Excess tax benefitstock-based compensation                                     |                                                      |                                                                  |  |              |         |                            |   | 545            |   |                   |            |                                               |   |                              |        
|Compensation expensestock options                                              |                                                      |                                                                  |  |              |         |                            |   | 3,387          |   |                   |            |                                               |   |                              |        
|Compensation expenserestricted stock                                           |                                                      |                                                                  |  |              |         |                            |   | 4,445          |   |                   |            |                                               |   |                              |        
|Compensation expenseperformance share units and other share-based compensation |                                                      |                                                                  |  |              |         |                            |   | 1,264          |   |                   |            |                                               |   |                              |        
|Common stock repurchased(3)                                                     |                                                      |                                                                  |  |              |         |                            |   |                |   |                   | (101       | )                                             |   |                              |        
|Dividends declared on common stock, $0.52 per share(4)                          |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   | (71,706                      | )      
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|Net change                                                                      |                                                      |                                                                  |  |              | 111     |                            |   | 13,654         |   |                   | (101       | )                                             |   | 36,648                       |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        
|BALANCE MARCH 31, 2008                                                          |                                                      | 157,670,426                                                      |  | $            | 157,670 |                            | $ | 1,167,391      |   | $                 | (1,202,685 | )                                             | $ | 4,949,040                    |        
|                                                                                |                                                      |                                                                  |  |              |         |                            |   |                |   |                   |            |                                               |   |                              |        

---

See accompanying notes to condensed consolidated financial statements.

9

---





UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Statements of Cash Flows  (Unaudited)

|                                                                     |                                                                                                    | For the Three Months
Ended March 31,                                      |                  
|-------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | -----------------
|
|
|Cash Flows from Operating Activities:                                |                                                                                                    |                                                                           |                  
|                                                                     | Net income                                                                                         |                                                                           | $                
|                                                                     |                                                                                                    | Income (loss) from discontinued operations, net of taxes                  |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     |                                                                                                    | Income from continuing operations, net of taxes                           |                  
|                                                                     | Adjustments to reconcile net income to net cash provided by (used in) operating activities:        |                                                                           |                  
|                                                                     |                                                                                                    | Provision for allowance for loan losses                                   |                  
|                                                                     |                                                                                                    | Provision for losses on off-balance sheet commitments                     |                  
|                                                                     |                                                                                                    | Depreciation, amortization and accretion                                  |                  
|                                                                     |                                                                                                    | Stock-based compensationstock options and other share-based compensation |                  
|                                                                     |                                                                                                    | Provision for deferred income taxes                                       |                  
|                                                                     |                                                                                                    | (Gains) losses on sales of securities available for sale, net             |                  
|                                                                     |                                                                                                    | Net decrease in accrued expenses                                          |                  
|                                                                     |                                                                                                    | Net (increase) decrease in trading account assets                         |                  
|                                                                     |                                                                                                    | Net increase (decrease) in trading account liabilities                    |                  
|                                                                     |                                                                                                    | Net increase in prepaid expenses                                          |                  
|                                                                     |                                                                                                    | Net (increase) decrease in fees and other receivables                     |                  
|                                                                     |                                                                                                    | Net incease (decrease) in other liabilities                               |                  
|                                                                     |                                                                                                    | Net increase in other assets                                              |                  
|                                                                     |                                                                                                    | Loans originated for resale                                               |                  
|                                                                     |                                                                                                    | Net proceeds from sale of loans originated for resale                     |                  
|                                                                     |                                                                                                    | Excess tax benefitstock-based compensation                               |                  
|                                                                     |                                                                                                    | Other, net                                                                |                  
|                                                                     |                                                                                                    | Discontinued operations, net                                              |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           | Total adjustments
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     | Net cash provided by (used in) operating activities                                                |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|Cash Flows from Investing Activities:                                |                                                                                                    |                                                                           |                  
|                                                                     | Proceeds from sales of securities available for sale                                               |                                                                           |                  
|                                                                     | Proceeds from matured and called securities available for sale                                     |                                                                           |                  
|                                                                     | Purchases of securities available for sale                                                         |                                                                           |                  
|                                                                     | Purchases of premises and equipment                                                                |                                                                           |                  
|                                                                     | Net increase in loans                                                                              |                                                                           |                  
|                                                                     | Other, net                                                                                         |                                                                           |                  
|                                                                     | Discontinued operations, net                                                                       |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     | Net cash used in investing activities                                                              |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|Cash Flows from Financing Activities:                                |                                                                                                    |                                                                           |                  
|                                                                     | Net increase in deposits                                                                           |                                                                           |                  
|                                                                     | Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements |                                                                           |                  
|                                                                     | Net increase (decrease) in commercial paper and other borrowed funds                               |                                                                           |                  
|                                                                     | Proceeds from issuance of long-term debt                                                           |                                                                           |                  
|                                                                     | Common stock repurchased                                                                           |                                                                           |                  
|                                                                     | Payments of cash dividends                                                                         |                                                                           |                  
|                                                                     | Stock options exercised                                                                            |                                                                           |                  
|                                                                     | Other, net                                                                                         |                                                                           |                  
|                                                                     | Discontinued operations, net                                                                       |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     | Net cash provided by financing activities                                                          |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|Net increase (decrease) in cash and cash equivalents                 |                                                                                                    |                                                                           | 1,688,089        
|Cash and cash equivalents at beginning of period                     |                                                                                                    |                                                                           | 3,981,438        
|Effect of exchange rate changes on cash and cash equivalents         |                                                                                                    |                                                                           | 37               
|                                                                     |                                                                                                    |                                                                           |                  
|Cash and cash equivalents at end of period                           |                                                                                                    | $                                                                         | 5,669,564        
|                                                                     |                                                                                                    |                                                                           |                  
|Cash Paid During the Period For:                                     |                                                                                                    |                                                                           |                  
|                                                                     | Interest                                                                                           |                                                                           | $                
|                                                                     | Income taxes, net                                                                                  |                                                                           |                  
|Supplemental Schedule of Noncash Investing and Financing Activities: |                                                                                                    |                                                                           |                  
|                                                                     | Loans transferred to foreclosed assets (OREO)                                                      |                                                                           | $                

See accompanying notes to condensed consolidated financial statements.

10

---





UnionBanCal Corporation and Subsidiaries        Notes to Condensed Consolidated Financial Statements        (Unaudited)

Note 1Basis of Presentation and Nature of Operations

The unaudited condensed consolidated financial statements of UnionBanCal Corporation and subsidiaries have been prepared in accordance with accounting principles
generally accepted in the United States of America (US GAAP) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission (SEC). However, they do not include all of the disclosures necessary for annual financial
statements in conformity with US GAAP. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.
The results of operations for the period ended March 31, 2008 are not necessarily indicative of the operating results anticipated for the full year. Accordingly, these unaudited condensed
consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in UnionBanCal Corporation's Annual Report on Form 10-K
for the year ended December 31, 2007 (2007 Form 10-K). The preparation of financial statements in conformity with US GAAP also 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
revenue and expense during the reporting period. Actual results could differ compared to those estimates.

UnionBanCal
Corporation is a commercial bank holding company whose major subsidiary, Union Bank of California, N.A. (the Bank), is a commercial 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,
as well as nationally and internationally.

Under
a previously announced stock repurchase program, the Company was authorized to repurchase $512 million of the Company's common stock as of March 31, 2008. The Company
repurchased $0.1 million of common stock in the first quarter of 2008, compared to $85.5 million in the first quarter of 2007. The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), which
is a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc., owned approximately 65 percent of the Company's outstanding common stock at March 31, 2008.

Note 2Recently Issued Accounting Pronouncements



In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, "Fair Value Measurements." The Statement defines fair value,
establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. Fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy ranks the quality and
reliability of information used to determine fair values with the highest priority given to quoted prices in active markets and the lowest priority given to model values that include inputs based on
unobservable data. The Statement applies whenever other accounting standards require or permit assets or liabilities to be measured at fair value. The Statement was effective January 1, 2008.
However, on February 12, 2008, the FASB issued FSP FAS 157-2, "Effective Date of FASB Statement 157" which allows companies to delay for one year the effective date of SFAS
No. 157 for all nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis. The Company has elected to delay the effective date of the Statement for its
nonfinancial assets and liabilities, including goodwill and intangible assets. Effective

11

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 2Recently Issued Accounting Pronouncements (Continued)

January 1,
2008, the Company adopted SFAS No.157 for its financial assets and liabilities measured and reported at fair value. At adoption, there was no impact on the Company's financial
position or results of operations. For detailed information on the Company's fair value measurements, see Note 7 to these condensed consolidated financial statements.



In September 2006, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 06-4, "Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements." The guidance requires that an agreement by the employer to share a portion of the proceeds of a life insurance
policy with the employee during the postretirement period is a postretirement benefit arrangement for which a liability must be recorded. The Company adopted EITF 06-4 on
January 1, 2008. At adoption, the Company's retained earnings were reduced by $0.2 million and there was no impact on the Company's results of operations.



In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB
Statement No. 115." The Statement permits entities to choose to measure many financial instruments and certain other assets and liabilities at fair value on an
instrument-by-instrument basis, with changes in fair value recognized in earnings each reporting period. An entity may elect the fair value option for existing assets and
liabilities at the date of initial adoption and when first recognizing eligible instruments. The Statement was effective January 1, 2008. Management did not make the fair value option election,
and therefore there was no impact on the Company's financial position or results of operations.



In June 2007, the EITF reached a consensus on EITF Issue No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based Payment
Awards." The EITF requires that the tax benefit related to dividend equivalents paid on restricted stock and restricted stock units, which are expected to vest, be recorded as an increase to
additional paid-in-capital. Prior to the issuance of this EITF, the Company recorded this tax benefit as a reduction to income tax expense. The EITF was effective for all tax
benefits on dividends declared by the Company after January 1, 2008, with early application permitted as of the beginning of the fiscal year. At adoption, there was no impact on the Company's
financial position or results of operations.



In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations," which replaces SFAS No. 141. The Statement requires that all business
combinations be accounted for under the "acquisition method." The Statement requires that the assets, liabilities and noncontrolling interests of a business combination be measured at fair value at
the acquisition date. The acquisition date is defined as the date an acquirer obtains control of the entity, which is typically the closing date. The Statement requires that all acquisition and
restructuring related costs be expensed as incurred and that any contingent consideration be measured at fair value and recorded as either equity or a liability with the liability remeasured at fair
value in

12

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 2Recently Issued Accounting Pronouncements (Continued)

subsequent
periods. The Statement is effective January 1, 2009. Management is currently evaluating the impact this Statement may have on the Company's financial position and results of
operations related to future acquisitions.



In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statementsan amendment to ARB
No. 51." The Statement requires that a noncontrolling interest (formerly minority interest) be measured at fair value at the acquisition date and be presented in the equity section on the
balance sheet. The Statement requires that purchases or sales of equity interests that do not result in a change in control be accounted for as equity transactions with no resulting gain or loss. If
control is lost, the noncontrolling interest is remeasured to fair value and a gain or loss is recorded. The Statement is effective January 1, 2009. Management believes that adopting this
Statement will not have a material impact on the Company's financial position or results of operations.



In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activitiesan amendment of FASB Statement
No. 133." The Statement requires expanded qualitative, quantitative and credit-risk disclosures of derivative instruments and hedging activities. These disclosures include more
detailed information about gains and losses, location of derivative instruments in financial statements, and credit-risk-related contingent features in derivative instruments.
The Statement also clarifies that derivative instruments are
subject to concentration of credit risk disclosures under SFAS No. 107, "Disclosure About Fair Value of Financial Instruments." The Statement, which applies only to disclosures, is effective
January 1, 2009.

Note 3Discontinued Operations

The Company's discontinued operations consist of two separate businesses: international correspondent banking and retirement recordkeeping services. In 2005, the
Bank sold its international correspondent banking business (ICBB) to Wachovia Bank, N.A. for $245 million and an additional $4.0 million in 2006 as a contingent purchase price
adjustment. This business consisted of international payment and trade processing along with related lending activities. As of March 31, 2007, substantially all of the assets and liabilities
related to this discontinued operation were liquidated.

Although
ICBB's operations had substantially ended in 2006, the Bank was responsible for past violations of the Bank Secrecy Act and other anti-money laundering laws and
regulations (BSA/AML) associated with ICBB. As a result of the past violations, the Bank entered into a Deferred Prosecution Agreement (DPA) with the United States Department of Justice (DOJ) in the
third quarter of 2007 and paid $21.6 million to the DOJ. For additional information, refer to Note 11 to these condensed consolidated financial statements.

In
the fourth quarter of 2007, the Company sold its retirement recordkeeping business (RRB) to Prudential Retirement, a subsidiary of Prudential Financial, Inc., for
$103.0 million. The Company recorded a pre-tax gain of $94.7 million, net of $2.1 million in transaction costs and a $6.2 million elimination of intangible
assets, consisting of goodwill of $4.8 million and other intangibles of $1.4 million attributed to this business. The RRB was previously included in the Retail Banking reportable
business segment.

13

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 3Discontinued Operations (Continued)

Both
transactions have been accounted for as discontinued operations. All prior period financial statements, except where specifically mentioned, have been restated to reflect this
accounting treatment. The assets and liabilities of the discontinued operations have been separately identified on the condensed
consolidated balance sheet and the assets are shown as "held for sale" at the lower of cost or fair value less costs to dispose. The average net assets or liabilities of our discontinued operations
are reflected in our analysis of net interest margin. Interest expense (income) was attributed to discontinued operations based on average net assets (liabilities).



At March 31 and December 31, 2007 and March 31, 2008, the assets and liabilities identified as the RRB discontinued operations consisted of
the following:

|(Dollars in thousands)                                               |  | March 31,
2007 |         | December 31,
2007 |   | March 31,
2008
|-------------------------------------------------------------------- |  | -------------- | ------- | ----------------- | - | --------------
|Assets                                                               |  |                |         |                   |   |               
|Premises and equipment                                               |  | $              | 1,535   |                   | $ | 1,086         
|Intangible assets                                                    |  |                | 2,366   |                   |   |              
|Other assets                                                         |  |                | 7,374   |                   |   | 6,518         
|                                                                     |  |                |         |                   |   |               
|Assets of discontinued operations to be disposed or sold             |  | $              | 11,275  |                   | $ | 7,604         
|                                                                     |  |                |         |                   |   |               
|Liabilities                                                          |  |                |         |                   |   |               
|Noninterest bearing deposits                                         |  | $              | 2       |                   | $ |              
|Interest bearing deposits                                            |  |                | 112,216 |                   |   | 98,516        
|Other liabilities                                                    |  |                | 354     |                   |   | 9,483         
|                                                                     |  |                |         |                   |   |               
|Liabilities of discontinued operations to be extinguished or assumed |  | $              | 112,572 |                   | $ | 107,999       
|                                                                     |  |                |         |                   |   |               

The $10.3 million increase in other liabilities from March 31, 2007 to March 31, 2008 was mainly due to severance accruals
recorded in December 2007.

The
components of income from the RRB discontinued operations for the three months ended March 31, 2007 and 2008 are:

|                                                               |  | For the Three Months
Ended March 31, |       
|-------------------------------------------------------------- |  | ------------------------------------ | ------
|
|
|Net interest income                                            |  | $                                    | 1,290 
|Noninterest income                                             |  |                                      | 11,700
|Noninterest expense                                            |  |                                      | 11,225
|                                                               |  |                                      |       
|Income (loss) from discontinued operations before income taxes |  |                                      | 1,765 
|Income tax expense (benefit)                                   |  |                                      | 675   
|                                                               |  |                                      |       
|Income (loss) from discontinued operations                     |  | $                                    | 1,090 
|                                                               |  |                                      |       

14

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 3Discontinued Operations (Continued)

The RRB's net interest income for the three months ended March 31, 2007 and 2008 included the allocation of interest income (based on its
average net liabilities) of $1.4 million and $0.9 million, respectively. Noninterest income for the three months ended March 31, 2007 and 2008 included trust fees of
$11.7 million and $3.3 million, respectively. Noninterest income for the three months ended March 31, 2008 also included $7.7 million in servicing revenues from Prudential,
which will continue until all customers are migrated onto Prudential's accounting systems. For the three months ended March 31, 2007 and 2008, noninterest expense included salaries and benefits
expense of $6.7 million and $6.6 million, respectively.

Note 4Goodwill and Intangible Assets

The table below reflects the Company's identifiable intangible assets and accumulated amortization on a continuing operations basis at March 31, 2007 and
2008. The identifiable intangible assets related to the discontinued operations of the retirement recordkeeping business have been excluded from this table.

|                            |       | March 31, 2007 |        | March 31, 2008
|--------------------------- | ----- | -------------- | ------ | --------------
|
|Core Deposit Intangibles(1) |       | $              | 51,698 |               
|Rights-to-Expiration        |       |                | 36,608 |               
|                            |       |                |        |               
|                            | Total |                | $      | 88,306        
|                            |       |                |        |               

---

Total amortization expense for the three months ended March 31, 2007 and 2008 was $2.2 million and $1.3 million,
respectively.

The
table below reflects the Company's expected identifiable intangible amortization expense, after March 31, 2008, on a continuing operations basis.

|(Dollars in thousands)                               |                | Core Deposit Intangibles |       | Rights-to-Expiration |   | Total Identifiable Intangibles
|---------------------------------------------------- | -------------- | ------------------------ | ----- | -------------------- | - | ------------------------------
|Estimated amortization expense for the years ending: |                |                          |       |                      |   |                               
|                                                     | Remaining 2008 |                          | $     | 2,011                |   | $                             
|                                                     | 2009           |                          |       | 1,571                |   |                               
|                                                     | 2010           |                          |       | 800                  |   |                               
|                                                     | 2011           |                          |       | 443                  |   |                               
|                                                     | 2012           |                          |       | 336                  |   |                               
|                                                     | 2013           |                          |       | 240                  |   |                               
|                                                     | thereafter     |                          |       | 387                  |   |                               
|                                                     |                |                          |       |                      |   |                               
|Total amortization expense after March 31, 2008      |                | $                        | 5,788 |                      | $ | 11,433                        
|                                                     |                |                          |       |                      |   |                               

15

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 4Goodwill and Intangible Assets (Continued)

The changes in the carrying amount of goodwill, which is reported on a consolidated Company basis, during the three months ended March 31,
2007 and 2008 are shown below.

|(Dollars in thousands) |  | 2007 |         | 2008 |  
|---------------------- |  | ---- | ------- | ---- | -
|Balance, January 1,    |  | $    | 453,489 |      | $
|Impairment writedown   |  |      |        |      |  
|                       |  |      |         |      |  
|Balance, March 31,     |  | $    | 453,489 |      | $
|                       |  |      |         |      |  

As a result of softening in the insurance market and declining fair value, the Company performed a goodwill impairment test as of March 31,
2008 on its insurance brokerage business, a component of the Wholesale Banking reportable segment. As required by SFAS No. 142, "Goodwill and Other Intangible Assets," the Company determined
that the value of the net assets was greater than the fair value of the insurance brokerage business, which was based on indicative prices for insurance agencies. Consequently, the Company recorded an
$18.7 million goodwill impairment charge in other noninterest expense in the first quarter of 2008. For a discussion of the Company's pending sale of its insurance brokerage business, see
Note 13 to these condensed consolidated financial statements.

Note 5Employee Pension and Other Postretirement Benefits

The following table summarizes the components of net periodic benefit cost for the three months ended March 31, 2007 and 2008.

|                                        |                                 | Pension Benefits |         | Other Benefits |  
|--------------------------------------- | ------------------------------- | ---------------- | ------- | -------------- | -
|
|
|
|Components of net periodic benefit cost |                                 |                  |         |                |  
|Service cost                            |                                 | $                | 12,186  |                | $
|Interest cost                           |                                 |                  | 17,516  |                |  
|Expected return on plan assets          |                                 |                  | (31,579 | )              |  
|Amortization of prior service cost      |                                 |                  | 64      |                |  
|Amortization of transition amount       |                                 |                  |        |                |  
|Recognized net actuarial loss           |                                 |                  | 3,506   |                |  
|                                        |                                 |                  |         |                |  
|                                        | Total net periodic benefit cost |                  | $       | 1,693          |  
|                                        |                                 |                  |         |                |  

For further discussion of the Company's employee pension and other postretirement benefits, see Note 9 to the Consolidated Financial
Statements in the Company's 2007 Form 10-K.

Note 6Management Stock Plans

The Company has two management stock plans. The Year 2000 UnionBanCal Corporation Management Stock Plan, as amended (the 2000 Stock Plan), and the UnionBanCal
Corporation Management Stock Plan, restated effective June 1, 1997 (the 1997 Stock Plan), have 20.0 million and 6.6 million shares, respectively, of the Company's common stock
authorized to be awarded to key employees, outside directors and consultants of the Company at the discretion of the Executive Compensation and Benefits Committee of the Board of

16

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 6Management Stock Plans (Continued)

Directors
(the Committee). Employees on rotational assignment from BTMU are not eligible for stock awards. For further discussion of the Company's stock plans, see Note 16 to the Consolidated
Financial Statements in the Company's 2007 Form 10-K.

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 plans may not
be less than the fair market value on the date the option is granted. The value of options is recognized as compensation expense over the vesting period during which the employees are required to
provide service. The value of the restricted stock at the date of grant is recognized as compensation expense over its vesting period with a corresponding credit adjustment to additional
paid-in capital. All cancelled or forfeited options and restricted stock become available for future grants.

Under
the 2000 Stock Plan, the Company grants stock options and restricted stock. Additionally, under this plan, the Company issues shares of common stock upon the vesting and settlement
of performance shares settled in common stock and restricted stock units, as well as upon the settlement of stock units. Under the 1997 Stock Plan, the Company issues shares of common stock upon
exercise of outstanding stock options. The Company issues new shares of common stock for all awards under the stock plans. A total of 1,076,252 shares were available for future grants under the 2000
Stock Plan at March 31, 2008. These available shares have taken into account the outstanding number of shares of stock options and restricted stock, as well as the maximum number of shares that
may be issued upon the vesting and settlement of outstanding performance shares settled in common stock and restricted stock units, and upon the settlement of outstanding stock units. The remaining
shares under the 1997 Stock Plan are not available for future grants.



The following is a summary of stock option transactions under the stock plans for the three months ended March 31, 2008.

|                                                |           | For the Three Months Ended March 31, 2008
|----------------------------------------------- | --------- | -----------------------------------------
|
|Options outstanding, beginning of the period(1) |           | 9,673,146                                
|                                                | Granted   |                                          
|                                                | Exercised |                                          
|                                                | Forfeited |                                          
|                                                |           |                                          
|Options outstanding, end of the period(1)       |           | 9,577,782                                
|                                                |           |                                          
|Options exercisable, end of the period          |           | 6,387,595                                
|                                                |           |                                          

---

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option
pricing model uses tranches based on expected terms that result in ranges of input assumptions. Expected volatilities are based on historical data and implied volatilities compared to trade options on
the Company's stock, and other factors. The Company uses historical data to estimate option

17

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 6Management Stock Plans (Continued)

exercise
and employee terminations within the valuation model. The expected term of an option granted is derived from the output of the option valuation model, which is based on historical data and
represents the period of time that the option granted is expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury
yield curve in effect at the time of grant based on the expected term.

|                                      |  | For the Three Months Ended March 31, 2008 |     
|------------------------------------- |  | ----------------------------------------- | ----
|Weighted-average fair valueper share |  | $                                         | 6.27
|Risk-free interest rate               |  |                                           | 3.3 
|Expected volatility                   |  |                                           | 22.2
|Expected term (in years)              |  |                                           | 4.4 
|Expected dividend yield               |  |                                           | 4.8 

The total intrinsic value of options exercised during the three months ended March 31, 2007 and 2008 was $8.4 million and
$1.3 million, respectively, with a corresponding tax benefit of $3.0 million and $0.5 million, respectively. The total fair value of options vested during the three months ended
March 31, 2007 and 2008 was $0.5 million and $0.1 million, respectively.

The
Company recognized $4.5 million and $3.4 million of compensation cost for share-based payment arrangements related to stock option awards with a $1.7 million and
$1.3 million corresponding tax benefit during the three months ended March 31, 2007 and 2008, respectively. As of March 31, 2008, the total unrecognized compensation cost related
to nonvested stock option awards was $14.4 million and the weighted-average period over which the cost is expected to be recognized was 1.1 years.



In general, restricted stock awards are granted under the 2000 Stock Plan to key employees, and in 2005, to non-employee directors. The awards of
restricted stock granted to employees 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. Generally, they vest earlier if the employee dies, is permanently and totally disabled, retires under certain grant, age, and service conditions or
terminates employment under certain conditions. Restricted stockholders have the right to vote their restricted shares and receive dividends. The grant date fair value of awards is equal to the
closing price on date of grant.

The
following is a summary of the Company's nonvested restricted stock awards as of March 31, 2008 and changes during the three months ended March 31, 2008.

|                                                     |           | For the Three Months
Ended March 31, 2008
|---------------------------------------------------- | --------- | -----------------------------------------
|
|Nonvested restricted awards, beginning of the period |           | 881,117                                  
|                                                     | Granted   |                                          
|                                                     | Vested    |                                          
|                                                     | Forfeited |                                          
|                                                     |           |                                          
|Nonvested restricted awards, end of the period       |           | 876,877                                  
|                                                     |           |                                          

18

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 6Management Stock Plans (Continued)

The
total fair value of the restricted stock awards vested during the three months ended March 31, 2007 and 2008, was $0.6 million, and $0.3 million, respectively,
with a corresponding tax benefit of $0.2 million and $0.1 million, respectively.

The
Company recognized $3.8 million and $4.4 million of compensation cost for share-based payment arrangements related to restricted stock awards with a $1.4 million
and $1.7 million corresponding tax benefit during the three months ended March 31, 2007 and 2008, respectively. At March 31, 2008, the total unrecognized compensation cost related
to nonvested restricted awards was $36.6 million and the weighted-average period over which it is expected to be recognized was 1.5 years.



Starting in July 2006, the Company granted restricted stock units to non-employee directors. These restricted stock units consist of an annual grant,
and in the case of new non-employee directors, an annual grant and an initial grant. In general, the annual grant vests in full on the first anniversary of the grant date, and the initial
grant vests in three equal installments on each of the first three anniversaries of the grant date. The grant date fair value of awards is equal to the closing price on date of grant. There were no
restricted stock units granted, vested or forfeited during the three months ended March 31, 2008. The Company recognized $0.2 million and $0.3 million of compensation cost with a
corresponding $0.1 million and $0.1 million tax benefit related to these grants during the three months ended March 31, 2007 and 2008, respectively. As of March 31, 2008,
the total unrecognized compensation cost related to restricted stock units was $0.7 million and the weighted-average period over which it is expected to be recognized was 9 months.

The
restricted stock unit participants do not have voting or other stockholder rights. However, the participants' stock unit accounts receive dividend equivalents, reflecting the
aggregate dividends earned based on the total number of restricted stock units outstanding, in the form of additional restricted stock units. Participants may elect to defer the delivery of vested
shares of common stock at predetermined
dates as defined in the plan agreements. The Company will issue new shares under the 2000 Stock Plan upon vesting and settlement of these grants, which are redeemable only in shares.

Non-employee
directors may irrevocably elect to defer all or a portion of the cash retainer and/or fees payable to them for services on the Board of Directors and its
committees in the form of stock units. At the time of deferral, a bookkeeping account is established on behalf of the director and credited with a number of fully vested stock units. The director will
receive a number of stock units equal to the number of shares of common stock when the deferred compensation is payable. Dividend equivalents are credited to the stock unit accounts. Stock units have
no voting rights. The Company will issue new shares under the 2000 Stock Plan upon settlement of the stock units.



Effective January 1, 1997, the Company established a Performance Share Plan. At the discretion of the Committee, eligible participants may earn performance
share awards to be redeemed in cash and/or shares three years after the date of grant. Performance shares are linked to stockholder 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 plan was
amended in 2004 increasing the total number of shares that can be granted under the plan to 2.6 million shares. Beginning in 2006, the Committee determined that performance share awards granted
were to be

19

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 6Management Stock Plans (Continued)

redeemed
in shares. The following is a summary of shares granted and available for future grants under the Performance Share Plan.

|                    |                                           | For the Three Months Ended March 31, 2008
|------------------- | ----------------------------------------- | -----------------------------------------
|Performance shares: |                                           |                                          
|                    | Granted                                   |                                          
|                    | Available for future grant, end of period |                                          



All performance shares granted prior to 2006 are redeemable in cash and therefore are accounted for as liabilities. The value of a performance share under the
liability method is equal to the average month-end closing price of the Company's common stock for the final six months of the performance period. All cancelled or forfeited performance
shares become available for future grants. The following is a summary of performance shares that are redeemable in cash under the Performance Share Plan.

|                                                                       |  | For the Three Months Ended March 31,
|---------------------------------------------------------------------- |  | ------------------------------------
|
|
|Performance shares granted                                             |  |                                     
|Performance shares forfeited                                           |  |                                     
|Fair value of performance shares that vested                           |  | $                                   
|Cash payments made for performance shares that vested                  |  | $                                   
|Fair value of performance shares that vested and deferred              |  | $                                   
|Performance shares compensation expense                                |  | $                                   
|Tax benefit related to compensation expense                            |  | $                                   
|Liability for cash settlement of performance shares, end of the period |  | $                                   

The compensation cost related to these grants that are redeemable in cash was fully recognized as of March 31, 2008.



The following is a summary of performance shares that are redeemable in shares under the Performance Share Plan.

|                                                               |  | For the Three Months Ended March 31,
|-------------------------------------------------------------- |  | ------------------------------------
|
|
|Performance shares granted                                     |  |                                     
|Weighted average grant date fair valueper share               |  | $                                   
|Performance shares forfeited                                   |  |                                     
|Fair value of performance shares that vested during the period |  | $                                   
|Performance shares compensation expense                        |  | $                                   
|Tax benefit related to compensation expense                    |  | $                                   

20

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 6Management Stock Plans (Continued)

As of March 31, 2008, the total unrecognized compensation cost related to grants that are redeemable in shares was $3.8 million and
the weighted-average period over which it is expected to be recognized was 10 months. The Company issues new shares under the 2000 Stock Plan upon vesting and settlement of these grants that
are redeemable in shares.

Note 7Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements" for all financial assets and liabilities measured and
reported on a fair value basis. At adoption, there was no effect on the Company's financial position or results of operations.



As defined in SFAS No.157, fair value is the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly
transaction between market participants at the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect the Company's estimate about market data.
Based on the observability of the inputs used in the valuation techniques, the Company classifies its financial assets and liabilities measured and disclosed at fair value in accordance with the
three-level hierarchy established under SFAS No. 157. This hierarchy ranks the quality and reliability of the information used to determine fair values.



In
determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to SFAS No. 157. In certain cases, the inputs used
to measure fair value of an asset or liability may fall into different levels of the fair value hierarchy. The level within which the fair value measurement is categorized is based on the lowest level
input that is significant to the fair value measurement in its entirety. Therefore, an item may be classified in Level 3 even though there may be some significant inputs that are readily
observable.



The Company has an established and documented process for determining fair value for financial assets and financial liabilities within the scope of SFAS
No. 157. When available, quoted market prices are used to determine fair value. If quoted market prices are not available, fair value is based upon valuation techniques

21

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 7Fair Value of Financial Instruments (Continued)

that
use, where possible, current market-based or independently sourced parameters, such as interest rates, yield curves, foreign exchange rates, volatilities and credit curves. Valuation adjustments
may be made to ensure the financial instruments are recorded at fair value. These adjustments include amounts that reflect counterparty credit quality and, with the adoption of SFAS No. 157,
that consider the Company's creditworthiness in determining the fair value of its trading liabilities. A description of the valuation methodologies used for certain financial assets and financial
liabilities measured at fair value is as follows.



22

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 7Fair Value of Financial Instruments (Continued)



The following table presents financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2008, by caption on the
consolidated balance sheet and by SFAS No. 157 valuation hierarchy.

|                              |                   | March 31, 2008
|----------------------------- | ----------------- | --------------
|
|Assets                        |                   |               
|Trading account assets        |                   | $             
|Securities available for sale |                   |               
|Other assets(2)               |                   |               
|                              |                   |               
|                              | Total assets      |               
|                              |                   |               
|Liabilities                   |                   |               
|Trading account liabilities   |                   | $             
|Medium- and long-term debt    |                   |               
|                              |                   |               
|                              | Total liabilities |               
|                              |                   |               

---

23

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 7Fair Value of Financial Instruments (Continued)

The following table presents a reconciliation of the assets measured at fair value on a recurring basis using significant unobservable inputs
(Level 3) during the first quarter of 2008. Level 3 available for sale securities include CLOs. The CLOs were valued using broker quotes that are derived from pricing models whose
assumptions are based on observable inputs adjusted for unobservable liquidity spreads.

|(Dollars in thousands)                                                                                                   |                                             | For the Three Months Ended March 31, 2008 |          
|------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------- | ----------------------------------------- | ---------
|Balance, beginning of period                                                                                             |                                             | $                                         | 1,769,880
|                                                                                                                         | Total gains/(losses) (realized/unrealized): |                                           |          
|                                                                                                                         |                                             | Included in interest income               |          
|                                                                                                                         |                                             | Included in other comprehensive income    |          
|                                                                                                                         | Purchases, issuances and settlements        |                                           |          
|                                                                                                                         | Transfers in/out Level 3                    |                                           |          
|                                                                                                                         |                                             |                                           |          
|Balance, end of period                                                                                                   |                                             | $                                         | 1,497,916
|                                                                                                                         |                                             |                                           |          
|Changes in unrealized gains (losses) included in interest income for assets and liabilities still held at March 31, 2008 |                                             | $                                         | 29       



Certain financial assets may be measured at fair value on a nonrecurring basis. These assets are subject to fair value adjustments that result from the
application of the lower of cost or fair value accounting or write-downs of individual assets. The following table presents the carrying value of financial instruments by level within the fair value
hierarchy as of March 31, 2008, for which a nonrecurring change in fair value has been recorded during the period ended March 31, 2008.

|                    |       | March 31, 2008 |        |        |  
|------------------- | ----- | -------------- | ------ | ------ | -
|
|Loans held for sale |       | $              | 20,911 |        | $
|Other assets        |       |                | 1,102  |        |  
|                    |       |                |        |        |  
|                    | Total |                | $      | 22,013 |  
|                    |       |                |        |        |  

Loans held for sale include residential mortgage loans and a commercial loan measured at the lower of cost or fair value. The fair value of the
fixed-rate residential mortgage loans was determined using whole loan forward prices obtained from government sponsored enterprises. The fair value of the commercial loan was determined using market
pricing for similar assets, adjusted for management judgment. Other assets includes private equity investments that were written down to fair value during the period as a result of an impairment. The
fair value of private equity investments was estimated based on the company's current and projected financial performance.

Note 8Derivative Instruments and Other Financial Instruments Used For Hedging

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

24

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 8Derivative Instruments and Other Financial Instruments Used For Hedging (Continued)

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 and subordinated debt. The following describes the significant hedging strategies of the Company.



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, i.e., U.S. 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 are identical. Cash flow hedging strategies include the utilization of purchased floor, cap,
collars and corridor options and interest rate swaps. At March 31, 2008, the weighted average remaining life of the currently active (excluding any forward positions) cash flow hedges was
approximately 1.6 years.

The
Company uses purchased interest rate floors to hedge the variable cash flows associated with 1-month 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 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 or 3-month LIBOR indexed loans. Net payments to be received under
the collar contract offset the decline in loan interest income caused by the relevant LIBOR index falling below the collar's floor 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 or 3-month LIBOR indexed loans. Payments to be received (or paid)
under the swap contract 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 CDs. In
these hedging relationships, the Company hedges the LIBOR component of the CD rates, which is 3-month LIBOR, based on the CDs' 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.

The
Company uses interest rate cap corridors to hedge the variable cash flows associated with the forecasted issuance and rollover of short-term, fixed rate CDs. In these
hedging relationships, the Company hedges the LIBOR component of the CD rates, either 1-month, 3-month, or 6-month LIBOR, based on the original term to maturity of
the CDs, which reflects their repricing frequency. Net payments to be received

25

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 8Derivative Instruments and Other Financial Instruments Used For Hedging (Continued)

under
the cap corridor contract offset the increase in deposit interest expense caused by the relevant LIBOR index rising above the corridor's lower strike rate, but only to the extent the index rises
to the upper strike rate. The corridor will not provide protection from increases in the relevant LIBOR index to the extent it rises above the corridor's upper strike rate.

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 match 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. For the three months ended March 31, 2007 and 2008, the Company
recognized a net gain of $18 thousand and $249 thousand, respectively, due to ineffectiveness, which is recognized in other noninterest expense.



The Company engages in an interest rate hedging strategy in which one or more interest rate swaps are associated with a specified interest bearing liability, 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, U.S. dollar LIBOR.

The
fair value hedging transactions for the issuances of subordinated debt were structured at inception to mirror all of the provisions of the subordinated debt, which allows the Company
to assume that no ineffectiveness exists.



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 Company engages in an economic hedging strategy in which interest bearing CDs issued to customers, which are tied to the changes in the Standard and Poor's
500 Index, are exchanged for a fixed rate of interest. The Company accounts for the embedded derivative in the CD at fair value. A total return swap that encompasses the value of a series of options
that had individually hedged each CD is valued at fair value. The changes in the fair value of the embedded derivative and the hedge instrument are recognized as interest expense.

Note 9Earnings Per Share (EPS)

Basic EPS ratio 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, nonvested restricted stock, restricted stock units, stock units and performance shares are
common stock equivalents.

26

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 9Earnings Per Share (EPS) (Continued)

The
following table presents a reconciliation of basic and diluted EPS for the three months ended March 31, 2007 and 2008.

|                                                    |                                                         | For the Three Months Ended March 31, |        
|--------------------------------------------------- | ------------------------------------------------------- | ------------------------------------ | -------
|
|
|
|Income from continuing operations                   |                                                         | $                                    | 148,521
|Income (Loss) from discontinued operations          |                                                         |                                      | 1,090  
|                                                    |                                                         |                                      |        
|Net income                                          |                                                         | $                                    | 149,611
|                                                    |                                                         |                                      |        
|Weighted average common shares outstanding          |                                                         |                                      | 137,942
|Additional shares due to:                           |                                                         |                                      |        
|                                                    | Assumed conversion of dilutive share-based compensation |                                      |        
|                                                    |                                                         |                                      |        
|Adjusted weighted average common shares outstanding |                                                         |                                      | 137,942
|                                                    |                                                         |                                      |        
|Income from continuing operations per share         |                                                         | $                                    | 1.08   
|Income from discontinued operations per share       |                                                         |                                      |       
|                                                    |                                                         |                                      |        
|Net income per share                                |                                                         | $                                    | 1.08   
|                                                    |                                                         |                                      |        

The following table provides the number of options and the corresponding exercise prices for those options that were not included in the
computation of diluted earnings per share for the three months ended March 31, 2007 and 2008 because they were anti-dilutive.

|                          |  | For the Three Months Ended March 31,
|------------------------- |  | ------------------------------------
|
|Options outstanding       |  | 1,148,281                           
|Exercise price of options |  | $64.59 - $71.23                     

27

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 10Accumulated Other Comprehensive Income (Loss)

The following table presents the change in each of the components of other comprehensive income (loss) and the related tax effect of the change allocated to each
component.

|(Dollars in thousands)                                                             |                                                                                                         | Before
Tax Amount                   |          | Tax
Effect |       | Net
of Tax |        
|---------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ----------------------------------- | -------- | ---------- | ----- | ---------- | -------
|For the Three Months Ended March 31, 2007:                                         |                                                                                                         |                                     |          |            |       |            |        
|Cash flow hedge activities:                                                        |                                                                                                         |                                     |          |            |       |            |        
|                                                                                   | Unrealized net gains on hedges arising during the period                                                |                                     | $        | 2,787      |       | $          | (1,066 
|                                                                                   | Less: Reclassification adjustment for net losses on hedges included in net income                       |                                     |          | 9,502      |       |            | (3,635 
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in unrealized losses on hedges                                          |                                                                                                         |                                     | 12,289   |            |       | (4,701     | )      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Securities available for sale:                                                     |                                                                                                         |                                     |          |            |       |            |        
|                                                                                   | Unrealized holding gains arising during the period on securities available for sale                     |                                     |          | 30,238     |       |            | (11,566
|                                                                                   | Less: Reclassification adjustment for net gains on securities available for sale included in net income |                                     |          | (1,220     | )     |            | 467    
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in unrealized losses on securities available for sale                   |                                                                                                         |                                     | 29,018   |            |       | (11,099    | )      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Foreign currency translation adjustment                                            |                                                                                                         |                                     | 63       |            |       | (24        | )      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Reclassification adjustment for pension and other benefits included in net income: |                                                                                                         |                                     |          |            |       |            |        
|                                                                                   |                                                                                                         | Amortization of prior service costs |          |            | 573   |            |        
|                                                                                   |                                                                                                         | Amortization of transition amount   |          |            | (24   | )          |        
|                                                                                   |                                                                                                         | Recognized net actuarial loss       |          |            | 4,499 |            |        
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in pension and other benefits                                           |                                                                                                         |                                     | 5,048    |            |       | (1,931     | )      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in accumulated other comprehensive income (loss)                        |                                                                                                         | $                                   | 46,418   |            | $     | (17,755    | )      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|For the Three Months Ended March 31, 2008:                                         |                                                                                                         |                                     |          |            |       |            |        
|Cash flow hedge activities:                                                        |                                                                                                         |                                     |          |            |       |            |        
|                                                                                   | Unrealized net gains on hedges arising during the period                                                |                                     | $        | 132,005    |       | $          | (50,492
|                                                                                   | Less: Reclassification adjustment for net gains on hedges included in net income                        |                                     |          | (9,105     | )     |            | 3,483  
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in unrealized gains on hedges                                           |                                                                                                         |                                     | 122,900  |            |       | (47,009    | )      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Securities available for sale:                                                     |                                                                                                         |                                     |          |            |       |            |        
|                                                                                   | Unrealized holding losses arising during the period on securities available for sale                    |                                     |          | (248,267   | )     |            | 94,962 
|                                                                                   | Less: Reclassification adjustment for net gains on securities available for sale included in net income |                                     |          | (2         | )     |            | 1      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in unrealized losses on securities available for sale                   |                                                                                                         |                                     | (248,269 | )          |       | 94,963     |        
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Foreign currency translation adjustment                                            |                                                                                                         |                                     | (429     | )          |       | 164        |        
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Reclassification adjustment for pension and other benefits included in net income: |                                                                                                         |                                     |          |            |       |            |        
|                                                                                   |                                                                                                         | Amortization of prior service costs |          |            | 508   |            |        
|                                                                                   |                                                                                                         | Amortization of transition amount   |          |            | (25   | )          |        
|                                                                                   |                                                                                                         | Recognized net actuarial loss       |          |            | 3,716 |            |        
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in pension and other benefits                                           |                                                                                                         |                                     | 4,199    |            |       | (1,606     | )      
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        
|Net change in accumulated other comprehensive income (loss)                        |                                                                                                         | $                                   | (121,599 | )          | $     | 46,512     |        
|                                                                                   |                                                                                                         |                                     |          |            |       |            |        

28

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 10Accumulated Other Comprehensive Income (Loss) (Continued)

The following table presents accumulated other comprehensive income (loss) balances.

|(Dollars in thousands)     |  | Net Unrealized Gains (Losses) on Cash Flow Hedges |         | Net Unrealized Gains (Losses) on Securities Available For Sale |   | Foreign Currency Translation Adjustment |   | Pension and Other Benefits Adjustment |      | Accumulated Other Comprehensive Income (Loss) |  
|-------------------------- |  | ------------------------------------------------- | ------- | -------------------------------------------------------------- | - | --------------------------------------- | - | ------------------------------------- | ---- | --------------------------------------------- | -
|Balance, December 31, 2006 |  | $                                                 | (27,405 | )                                                              | $ | (57,878                                 | ) | $                                     | 223  |                                               | $
|Change during the period   |  |                                                   | 7,588   |                                                                |   | 17,919                                  |   |                                       | 39   |                                               |  
|                           |  |                                                   |         |                                                                |   |                                         |   |                                       |      |                                               |  
|Balance, March 31, 2007    |  | $                                                 | (19,817 | )                                                              | $ | (39,959                                 | ) | $                                     | 262  |                                               | $
|                           |  |                                                   |         |                                                                |   |                                         |   |                                       |      |                                               |  
|Balance, December 31, 2007 |  | $                                                 | 23,563  |                                                                | $ | (129,163                                | ) | $                                     | 740  |                                               | $
|Change during the period   |  |                                                   | 75,891  |                                                                |   | (153,306                                | ) |                                       | (265 | )                                             |  
|                           |  |                                                   |         |                                                                |   |                                         |   |                                       |      |                                               |  
|Balance, March 31, 2008    |  | $                                                 | 99,454  |                                                                | $ | (282,469                                | ) | $                                     | 475  |                                               | $
|                           |  |                                                   |         |                                                                |   |                                         |   |                                       |      |                                               |  

Note 11Commitments, Contingencies and Guarantees

The following table summarizes the Company's significant commitments.

|(Dollars in thousands)                                           |  | March 31, 2008
|---------------------------------------------------------------- |  | --------------
|Commitments to extend credit                                     |  | $             
|Standby letters of credit                                        |  |               
|Commercial letters of credit                                     |  |               
|Risk participations in bankers' acceptances                      |  |               
|Commitments to fund principal investments                        |  |               
|Commitments to fund low-income housing credit (LIHC) investments |  |               

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 transactions. Additionally, the Company enters into risk participations in bankers' acceptances wherein a fee is received to guarantee a portion of the credit risk on an
acceptance of another bank. The majority of these types of commitments have terms of one year or less. At March 31, 2008, the carrying value of the Company's risk participations in bankers'
acceptances, standby and commercial letters of credit totaled $5.3 million. Exposure to loss related to these commitments is covered by the allowance for losses on off-balance sheet
commitments. The carrying value of the standby and commercial letters of credit and the allowance for losses on off-balance sheet commitments are included in other liabilities on the
consolidated balance sheet.

29

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 11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 invests in either guaranteed or unguaranteed LIHC investments. The guaranteed LIHC investments carry a minimum rate of return guarantee by a creditworthy entity. The
unguaranteed LIHC investments carry partial guarantees covering the timely completion of projects, availability of tax credits and operating deficit thresholds from the issuer. For these LIHC
investments, the Company has committed to provide additional funding as stipulated by its investment participation.

The
Company is fund manager for LIHC investments. LIHC investments provide tax benefits to investors in the form of tax deductions from operating losses and tax credits. To facilitate
the sale of these LIHC investments, the Company guarantees a minimum rate of return throughout the investment term of over an eleven-year weighted average period. Additionally, the Company
receives guarantees which include the timely completion of projects, availability of tax credits and operating deficit thresholds from the limited liability partnerships/corporations issuing the LIHC
investments that reduce the Company's ultimate exposure to loss. As of March 31, 2008, the Company's maximum exposure to loss
under these guarantees is limited to a return of investor capital and minimum investment yield, or $179.9 million. The Company maintains a reserve of $6.9 million for these guarantees
included in other liabilities.

The
Company has guarantees that obligate it to perform if its affiliates are unable to discharge their obligations. These obligations include guarantees of commercial paper obligations
and leveraged lease transactions. The guarantee issued by the Bank for an affiliate's commercial paper program is done in order to facilitate the sale of the commercial paper. As of March 31,
2008, the Bank had a maximum exposure to loss under the commercial paper program guarantee of $1.3 billion. The Bank's guarantee has an average term of less than nine months and is fully
collateralized by a pledged deposit placed with the Bank. The Company guarantees its subsidiaries' leveraged lease transactions with terms ranging from fifteen to thirty years. Following the original
funding of these leveraged lease transactions, the Company does not have any material obligation to be satisfied. As of March 31, 2008, the Company did not have any exposure to loss for these
agreements.

The
Company conducts securities lending transactions for institutional customers as a fully disclosed agent. At times, securities lending indemnifications are issued to guarantee that a
security lending customer will be made whole in the event the borrower does not return the security subject to the lending agreement and collateral held is insufficient to cover the market value of
the security. All lending transactions are collateralized, primarily by cash. The amount of securities lent with indemnifications was $2.4 billion at March 31, 2008. The market value of
the associated collateral was $2.4 billion at March 31, 2008.

30

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 11Commitments, Contingencies and Guarantees (Continued)

The
Company occasionally enters into financial guarantee contracts where a premium is received from another financial institution counterparty to guarantee a portion of the credit risk
on interest rate swap or option contracts entered into between the financial institution and its customer. The Company becomes liable to pay the financial institution only if the financial institution
is unable to collect amounts owed to them by their customer. As of March 31, 2008, the maximum exposure to loss under these contracts totaled $56.4 million. At March 31, 2008, the
Company maintained a reserve of $1.1 million for losses related to these guarantees included in trading account liabilities.

The
Company is a member of the Visa USA network (Visa). Visa's bylaws obligate its members to indemnify Visa for losses in connection with the settlement of certain antitrust lawsuits.
The Company's indemnification obligation is limited to its proportionate share. Under FIN No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of OthersAn Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34," the Company had a liability of
$9.5 million and $4.5 million at December 31, 2007 and March 31, 2008, respectively, representing the estimated fair value of the Company's obligations under the indemnity
provisions. The reduction in this liability from December 31, 2007 to March 31, 2008 was primarily due to the establishment of an escrow account by Visa, during its initial public
offering in March 2008, to pay for settlements of its antitrust lawsuits. The Company's maximum exposure to loss for the pending Visa antitrust lawsuits is not determinable, as it is dependent on the
outcome of the litigation, but any loss will be limited to the Company's proportional ownership.

The
Company is subject to various pending and threatened legal actions that arise in the normal course of business. Reserves for losses from legal actions that are both probable and
estimable are recorded at the time of that determination. Management believes that the disposition of all claims currently pending will not have a material adverse effect on the Company's consolidated
financial condition, operating results or liquidity.

On
September 14, 2007, the Bank entered into a Stipulation and Consent to the Issuance of a Consent Order, and a Consent Order to a Civil Money Penalty and to Cease and Desist
(the Order) with the Office of the Comptroller of the Currency (OCC). The Order supersedes the March 2005 memorandum of understanding between the Bank and the OCC. The Order imposed a civil money
penalty of $10 million and requires the Bank to take actions to improve compliance with the Bank Secrecy Act and other anti-money laundering laws and regulations (BSA/AML). On the
same day, the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) executed an Assessment of Civil Money Penalty (the Assessment) in the amount of $10 million. The
Assessment provides that the $10 million penalty is deemed to be satisfied by the Bank's payment of the civil money penalty of $10 million to the OCC. On September 17, 2007, the
Bank entered into a Deferred Prosecution Agreement (DPA) with the Department of Justice (DOJ). Under the DPA, the DOJ has agreed to defer prosecution for past violations of BSA/AML that occurred in
the Bank's now discontinued international banking business, and to dismiss prosecution completely if the Bank meets the conditions of the Order for one year. Pursuant to the DPA, the Bank also paid
$21.6 million in the third quarter of 2007 to the DOJ.

Note 12Business Segments

The various operating segments reporting under the Chief Operating Officer and the Group Head of Pacific Rim Corporate Group have been aggregated into two
reportable business segments entitled "Retail Banking"

31

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 12Business Segments (Continued)

and
"Wholesale Banking" based upon the aggregation criteria prescribed in SFAS No. 131,Disclosures about Segments of an Enterprise and Related
Information.



The
information, set forth in the table that follows, reflects selected income statement and balance sheet items by reportable business segment. 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, within total assets,
are the amounts of goodwill for both reportable business segments as of March 31, 2007 and 2008.

The
information in the table is derived from the internal management reporting system used by management to measure the performance of the individual segments and the Company overall.
The management reporting system assigns balance sheet and income statement items to each operating 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 an operating segment are assigned to that operating segment. 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 an operating segment based on a predetermined
percentage of usage. Under the Company's risk-adjusted return on capital (RAROC) methodology, credit expense is charged to an operating segment 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 certain non-bank subsidiaries of UnionBanCal Corporation, the elimination of the fully taxable-equivalent basis amount, the transfer pricing center,
the amount of the provision for credit losses

32

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 12Business Segments (Continued)

over/(under)
the RAROC expected loss for the period, the earnings associated with the unallocated equity capital and allowances for credit losses, and the residual costs of support groups. In
addition, "Other" includes Corporate Treasury, which is responsible for Asset-Liability Management (ALM), wholesale funding, and the ALM investment securities and derivatives hedging portfolios, and
the results of discontinued operations. Discontinued operations consists of two separate businesses: international correspondent banking and the retirement recordkeeping services. For further detail
on discontinued operations, see Note 3 to these condensed consolidated financial statements. Except as discussed above, none of the items in "Other" is significant to the Company's business.

The
Company reflects a "market view" perspective in measuring the business segments. The market view is a measurement of customer markets aggregated to show all revenues generated and
expenses incurred from all products and services sold to those customers regardless of where product areas organizationally report. Therefore, revenues and expenses are included in both the business
segment that provides the service and the business segment that manages the customer relationship. The duplicative results from this internal management accounting view are reflected in "Reconciling
Items."

33

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 12Business Segments (Continued)

The
reportable business segment results for prior periods have been restated to reflect changes in the transfer pricing methodology, the organizational changes that have occurred and
discontinued operations.

|                                                          |                                                                 | Retail Banking |   | Wholesale Banking
|--------------------------------------------------------- | --------------------------------------------------------------- | -------------- | - | -----------------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                                 |                |   |                  
|                                                          | Net interest income (expense)                                   |                | $ | 227,791          
|                                                          | Noninterest income (expense)                                    |                |   | 113,564          
|                                                          |                                                                 |                |   |                  
|                                                          | Total revenue                                                   |                |   | 341,355          
|                                                          | Noninterest expense (income)                                    |                |   | 226,551          
|                                                          | Credit expense (income)                                         |                |   | 6,274            
|                                                          |                                                                 |                |   |                  
|                                                          | Income (loss) from continuing operations before income taxes    |                |   | 108,530          
|                                                          | Income tax expense (benefit)                                    |                |   | 41,513           
|                                                          |                                                                 |                |   |                  
|                                                          | Income (loss) from continuing operations                        |                |   | 67,017           
|                                                          | Income (loss) from discontinued operations, net of income taxes |                |   |                 
|                                                          |                                                                 |                |   |                  
|                                                          | Net income (loss)                                               |                | $ | 67,017           
|                                                          |                                                                 |                |   |                  
|                                                          | Total assets, end of periodMarket View (dollars in millions):  |                | $ | 17,237           
|                                                          |                                                                 |                |   |                  

|
|

|                                                          |                                                                 | Other |   | Reconciling Items |   | UnionBanCal Corporation |        
|--------------------------------------------------------- | --------------------------------------------------------------- | ----- | - | ----------------- | - | ----------------------- | -------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                                 |       |   |                   |   |                         |        
|                                                          | Net interest income (expense)                                   |       | $ | (40,134           | ) | $                       | (28,139
|                                                          | Noninterest income (expense)                                    |       |   | 6,451             |   |                         | 14,318 
|                                                          |                                                                 |       |   |                   |   |                         |        
|                                                          | Total revenue                                                   |       |   | (33,683           | ) |                         | (13,821
|                                                          | Noninterest expense (income)                                    |       |   | 31,373            |   |                         | 33,686 
|                                                          | Credit expense (income)                                         |       |   | (27,317           | ) |                         | 28,434 
|                                                          |                                                                 |       |   |                   |   |                         |        
|                                                          | Income (loss) from continuing operations before income taxes    |       |   | (37,739           | ) |                         | (75,941
|                                                          | Income tax expense (benefit)                                    |       |   | (12,796           | ) |                         | (21,027
|                                                          |                                                                 |       |   |                   |   |                         |        
|                                                          | Income (loss) from continuing operations                        |       |   | (24,943           | ) |                         | (54,914
|                                                          | Income (loss) from discontinued operations, net of income taxes |       |   | 1,090             |   |                         | (162   
|                                                          |                                                                 |       |   |                   |   |                         |        
|                                                          | Net income (loss)                                               |       | $ | (23,853           | ) | $                       | (55,076
|                                                          |                                                                 |       |   |                   |   |                         |        
|                                                          | Total assets, end of periodMarket View (dollars in millions):  |       | $ | 11,859            |   | $                       | 8,774  
|                                                          |                                                                 |       |   |                   |   |                         |        

34

---



UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 13Subsequent Event

On April 22, 2008, the Company entered into a definitive agreement to sell its insurance subsidiary, UnionBanc Insurance Services, Inc., to a
wholly-owned subsidiary of BB&T Corporation. This transaction has been approved by the Company's Board of Directors, as well as BB&T Corporation's Board of Directors. Upon closing of the sale of this
business, which is expected in the second quarter of 2008, the Company will record a gain of approximately $11 million after tax. Commencing with the second quarter of 2008, the results of the
insurance brokerage business will be reported in discontinued operations and all prior periods will be restated to reflect this accounting treatment.

35

---





Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

This report includes forward-looking statements, which include forecasts of our financial results and condition,
expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not rely unduly on forward-looking statements. Actual results might differ significantly
compared to our forecasts and expectations. Please refer to Part II Item 1A "Risk Factors" of our Quarterly Report on Form 10-Q (this Form 10-Q) for
a discussion of some factors that may cause results to differ.

You
should read the following discussion and analysis of our condensed consolidated financial condition and results of operations for the period ended March 31, 2008 in this
Form 10-Q together with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for
the year ended December 31, 2007 (2007 Form 10-K). Averages, as presented in the following tables, are substantially all based upon daily average balances.

As
used in this Form 10-Q, the term "UnionBanCal" and terms such as "we," "us" and "our" refer to UnionBanCal Corporation, Union Bank of California, N.A., one or more
of their consolidated subsidiaries, or to all of them together.

Introduction

We are a California-based, bank holding company whose major subsidiary, Union Bank of California, N.A. (the Bank), is a commercial bank. We had consolidated
assets of $58 billion at March 31, 2008. At March 31, 2008, The Bank of Tokyo-Mitsubishi UFJ, Ltd., our majority owner, owned approximately 65 percent of our
outstanding common stock.

Executive Overview

We are providing you with an overview of what we believe are the most significant factors and developments that impacted our first quarter 2008 results and that
could impact our future results. Further detailed information can be found elsewhere in this Form 10-Q. In addition, we ask that you carefully read this entire document and any
other reports that we refer to in this Form 10-Q for more detailed information that will assist your understanding of trends, events and uncertainties that impact us.

In
the first quarter of 2008, our average total loans grew 11 percent from the first quarter of 2007 to $42.7 billion. This strong growth was spread across all major
categories, including commercial, residential and commercial real estate, due to increased loan demand.

During
the first quarter of 2008, we provided $80 million for our allowance for credit losses compared to $5 million in the first quarter of 2007. The increase was
primarily due to an increase in the reserves attributable to the homebuilder segment and strong loan growth. The higher reserves reflect negative risk grade trends in the homebuilder portfolio and
weakening operating conditions in the homebuilding industry. Despite the increase in the allowance for credit losses to reflect these adverse changes, there were no net charge offs for the homebuilder
portfolio in the first quarter of 2008. However, we anticipate an acceleration of charge offs during the remainder of 2008, as well as a recessionary environment, resulting in deterioration in our
loan portfolio. Consequently, management expects a significant increase in our full year provision for credit losses as compared to 2007. See further discussion below in "Allowances for Credit
Losses."

Our
nonperforming assets totaled $57 million and $132 million at December 31, 2007 and March 31, 2008, respectively. The increase in nonperforming assets was
primarily due to increases in the homebuilder portfolio of $42 million, commercial and industrial portfolio of $17 million, and commercial real estate of $11 million. Net charge
offs were $12 million in the first quarter of 2008, compared to $2 million in the first quarter of 2007.

36

---



At
December 31, 2007 and March 31, 2008, our allowances for credit losses as a percent of total loans were 1.20 percent and 1.29 percent, respectively. At
December 31, 2007 and March 31, 2008, our allowances for credit losses as a percent of nonaccrual loans were 885 percent and 445 percent, respectively.

In
the first quarter of 2008 our average noninterest bearing deposits declined 17 percent to $12.6 billion compared to the first quarter of 2007. The decline was primarily
due to lower commercial noninterest bearing deposits as a result of a mix shift toward interest bearing deposit accounts, and lower title and escrow deposits resulting from reduced residential real
estate activity. Average noninterest bearing deposits represented 28.9 percent of average total deposits in the first quarter of 2008, compared to 36.5 percent in the first quarter of
2007. In addition, the annualized average all-in-cost of funds improved to 2.26 percent, compared to 2.56 percent in the first quarter of 2007.

In
the first quarter of 2008, our net interest income increased 8 percent from the first quarter of 2007 to $460 million, primarily due to strong loan growth and lower
rates paid on interest bearing liabilities. Offsetting these positive impacts on our net interest income were lower yields on earning assets and a deposit mix shift from noninterest bearing and
low-cost deposits into higher-cost deposits.

In
the first quarter of 2008, our noninterest income grew 1 percent from the first quarter of 2007 to $213 million, primarily due to a $14.2 million
pre-tax gain on the partial redemption of Visa Inc. common stock related to the Visa initial public offering (IPO), as well as higher trust and investment management fees related to
an increase in trust assets. These increases in noninterest income were partially offset by lower gains on the sale of private capital investments and real property.

In
the first quarter of 2008, our noninterest expense grew 6 percent from the first quarter of 2007 to $437 million. The increase was primarily due to an
$18.7 million impairment charge related to the write-down of goodwill for the insurance brokerage business. (For additional information on this impairment, see Note 4 to the
condensed consolidated financial statements in this Form 10-Q.) The increase was also due to higher costs related to the provision for credit losses on off-balance sheet
commitments, partially offset by a reversal of a portion of the reserves for legal expense relating to our proportionate share of Visa litigation charges.

Our
effective tax rate was 33.5 percent in both of the first quarters of 2007 and 2008.

During
the first quarter of 2008, we declared $71.7 million in dividends, compared to $65.2 million in the first quarter of 2007. There were no significant repurchases of
our common stock in the first quarter of 2008. As of March 31, 2008, we had $512 million remaining under our current board authorization for the repurchase of our common stock.

On
April 22, 2008, we entered into a definitive agreement to sell our insurance subsidiary, UnionBanc Insurance Services, Inc., to a wholly-owned subsidiary of BB&T
Corporation. This transaction has been approved by our Board of Directors, as well as BB&T Corporation's Board of Directors. Upon closing of the sale of this business, which is expected in the second
quarter of 2008, we will record a gain of approximately $11 million after tax.

Discontinued Operations

Our discontinued operations consist of two separate businesses: retirement recordkeeping services (RRB) and international correspondent banking (ICBB). The ICBB
business was sold to Wachovia Bank, N.A. in 2005 for a pre-tax gain of $228.8 million. An additional pre-tax gain of $4.0 million was recorded in 2006. The
business consisted of international payment and trade processing along with related lending activities. The operations for ICBB substantially ended by December 31, 2006 and substantially all of
the assets and liabilities were settled in the first quarter of 2007.

Although
ICBB's operations had substantially ended in 2006, the Bank was responsible for past violations of the Bank Secrecy Act and other anti-money laundering laws and
regulations (BSA/AML) associated with ICBB. As a result of the past violations, the Bank entered into a Deferred Prosecution Agreement (DPA) with the

37

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United
States Department of Justice (DOJ) in the third quarter of 2007 and paid $21.6 million to the DOJ. For additional information, refer to "Regulatory Matters" in this
Form 10-Q.

In
the fourth quarter of 2007, we sold our retirement recordkeeping business (RRB) to Prudential Retirement, a subsidiary of Prudential Financial, Inc., for $103.0 million.
The Company recorded a pre-tax gain of $94.7 million, net of $2.1 million in transaction costs and a $6.2 million elimination of intangible assets, which includes
goodwill of $4.8 million attributed to this business. The RRB was previously included in the Retail Banking reportable business segment.

Both
transactions have been accounted for as discontinued operations and all prior period financial statements, except where specifically mentioned, have been restated to reflect this
accounting treatment. All of the assets and liabilities of the discontinued operations have been separately identified on our condensed consolidated balance sheet and the assets are shown at the lower
of cost or fair value less costs to dispose. The average net assets or liabilities of our discontinued operations are reflected in our analysis of net interest margin. For the detailed components of
our assets and liabilities of our discontinued operations, see Note 3 to the condensed consolidated financial statements in this Form 10-Q.



The results of the RRB included in our net income for the three months ended March 31, 2007 and 2008, consisted of the following:

|                                                               |  | For the Three Months Ended March 31, |       
|-------------------------------------------------------------- |  | ------------------------------------ | ------
|
|
|Net interest income                                            |  | $                                    | 1,290 
|Noninterest income                                             |  |                                      | 11,700
|Noninterest expense                                            |  |                                      | 11,225
|                                                               |  |                                      |       
|Income (loss) from discontinued operations before income taxes |  |                                      | 1,765 
|Income tax expense (benefit)                                   |  |                                      | 675   
|                                                               |  |                                      |       
|Income (loss) from discontinued operations                     |  | $                                    | 1,090 
|                                                               |  |                                      |       

Net interest income for the three months ended March 31, 2007 and 2008 included the allocation of interest income from continuing
operations of $1.4 million and $0.9 million, respectively. Noninterest income for the three months ended March 31, 2007 and 2008 included trust fees of $11.7 million and
$3.3 million, respectively. Noninterest income for the three months ended March 31, 2008 also included $7.7 million in servicing revenues from Prudential, which will continue
until all customers are migrated onto Prudential's accounting systems. For the three months ended March 31, 2007 and 2008, noninterest expense included salaries and benefits expense of
$6.7 million and $6.6 million, respectively.

The
remaining discussion of our financial results is based on results from continuing operations, unless otherwise stated.

Critical Accounting Policies

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

38

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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 compared to the loss factors that we use. Other significant estimates that we use are employee turnover factors for pension purposes, residual
values in our leasing portfolio, fair value of our derivatives and securities, expected useful lives of our depreciable assets and assumptions regarding our effective income tax rates. We enter into
derivative contracts to accommodate our customers and for our own risk management purposes. The derivative contracts are generally swaps and option contracts indexed to energy commodities, interest
rates or foreign currencies, although we could enter into other types of derivative contracts. We value these contracts at fair value, using either readily available, market quoted prices or
information that can be extrapolated to approximate a market price. 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 (CEO Forum), which is comprised of our most senior officers. For each financial reporting period, a
review of these estimates is presented to and discussed with the Audit Committee of our Board of Directors.

Understanding
our accounting policies is fundamental to understanding our consolidated financial condition and consolidated results of operations. Accordingly, both our Critical
Accounting Policies and our significant accounting policies are discussed in detail in our 2007 Form 10-K filed with the Securities and Exchange Commission (the SEC) and as follows.



Effective January 1, 2008, we adopted Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements" for all financial assets
and liabilities measured and reported on a fair value basis. At adoption, there was no effect on our financial position or results of operations. For detailed information on our use of fair valuation
of financial instruments and our related valuation methodologies, see Note 7 to the condensed consolidated financial statements in this Form 10-Q.

As
defined in SFAS No. 157, fair value is the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction
between market participants at the measurement date. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect our estimate about market data. Based on the observability of
the inputs used in the valuation techniques, we classify our financial assets and liabilities measured and disclosed at fair value in accordance with the three-level hierarchy
(i.e., Level 1, Level 2 and Level 3) established under SFAS No. 157. This hierarchy ranks the quality and reliability of the information used to determine fair
values. The degree of management judgment increases with the higher the level of inputs.

Included
in the Level 3 category are collateralized loan obligations (CLOs), which are highly illiquid. The valuation of CLOs are based upon indicative broker quotes, that are
derived from pricing models whose assumptions are based upon observable inputs adjusted for unobservable liquidity spreads. The fair value of our CLOs declined by $271.6 million from
December 31, 2007 to $1.5 billion at March 31, 2008. Since no observable credit quality issues were present in our CLO portfolio at March 31, 2008, and we have the ability
and intent to hold the CLO securities until recovery of the carrying value, which could be maturity, we consider the unrealized loss to be temporary.

We
have an established and documented process for determining fair value. When available, quoted market prices are used to determine fair value. If quoted market prices are not
available, fair value is based upon valuation techniques that use, where possible, current market-based or independently sourced parameters, such as interest rates, yield curves, foreign exchange
rates, volatilities and credit curves. Valuation adjustments may be made to ensure the financial instruments are recorded at fair value. These adjustments

39

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include
amounts that reflect counterparty credit quality and, with the adoption of SFAS No. 157, that consider our creditworthiness in determining the fair value of our trading liabilities.

The
following table reflects financial instruments measured at fair value on a recurring basis as of March 31, 2008.

|                                                                  |                                                    | March 31, 2008 |  
|----------------------------------------------------------------- | -------------------------------------------------- | -------------- | -
|
|Financial instruments measured at fair value on a recurring basis |                                                    |                |  
|Assets:                                                           |                                                    |                |  
|                                                                  | Level 1                                            |                | $
|                                                                  | Level 2                                            |                |  
|                                                                  | Level 3                                            |                |  
|                                                                  | Netting Adjustment                                 |                |  
|                                                                  |                                                    |                |  
|                                                                  |                                                    | Total          |  
|                                                                  |                                                    |                |  
|                                                                  | As a percentage of the Company's total assets      |                |  
|                                                                  |                                                    |                |  
|Liabilities:                                                      |                                                    |                |  
|                                                                  | Level 1                                            |                | $
|                                                                  | Level 2                                            |                |  
|                                                                  | Level 3                                            |                |  
|                                                                  | Netting Adjustment                                 |                |  
|                                                                  |                                                    |                |  
|                                                                  |                                                    | Total          |  
|                                                                  |                                                    |                |  
|                                                                  | As a percentage of the Company's total liabilities |                |  
|                                                                  |                                                    |                |  

40

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Financial Performance

Summary of Financial Performance

|                                                               |                                                       |   |         |         |   | Increase (Decrease) |        
|-------------------------------------------------------------- | ----------------------------------------------------- | - | ------- | ------- | - | ------------------- | -------
|
|
|
|
|Results of Operations                                          |                                                       |   |         |         |   |                     |        
|Net interest income(1)                                         |                                                       | $ | 427,222 |         | $ | 459,798             |        
|Noninterest income                                             |                                                       |   |         |         |   |                     |        
|                                                               | Trust and investment management fees                  |   |         | 36,860  |   |                     | 43,388 
|                                                               | Insurance commissions                                 |   |         | 20,250  |   |                     | 17,393 
|                                                               | Merchant banking fees                                 |   |         | 9,077   |   |                     | 11,793 
|                                                               | Trading account activities                            |   |         | 14,840  |   |                     | 11,012 
|                                                               | Gains on private capital investments, net             |   |         | 9,095   |   |                     | 1,070  
|                                                               | Gain on the VISA IPO redemption                       |   |         |        |   |                     | 14,211 
|                                                               | Other noninterest income                              |   |         | 120,736 |   |                     | 113,751
|                                                               |                                                       |   |         |         |   |                     |        
|Total noninterest income                                       |                                                       |   | 210,858 |         |   | 212,618             |        
|                                                               |                                                       |   |         |         |   |                     |        
|Total revenue                                                  |                                                       |   | 638,080 |         |   | 672,416             |        
|Provision for loan losses                                      |                                                       |   | 4,000   |         |   | 72,000              |        
|Noninterest expense                                            |                                                       |   |         |         |   |                     |        
|                                                               | Salaries and employee benefits                        |   |         | 251,835 |   |                     | 253,429
|                                                               | Net occupancy                                         |   |         | 34,459  |   |                     | 37,011 
|                                                               | Intangible asset amortization                         |   |         | 1,926   |   |                     | 20,078 
|                                                               | Provision for losses on off-balance sheet commitments |   |         | 1,000   |   |                     | 8,000  
|                                                               | Other noninterest expense                             |   |         | 121,646 |   |                     | 118,484
|                                                               |                                                       |   |         |         |   |                     |        
|Total noninterest expense                                      |                                                       |   | 410,866 |         |   | 437,002             |        
|                                                               |                                                       |   |         |         |   |                     |        
|Income from continuing operations before income taxes          |                                                       |   | 223,214 |         |   | 163,414             |        
|Income tax expense                                             |                                                       |   | 74,693  |         |   | 54,662              |        
|                                                               |                                                       |   |         |         |   |                     |        
|Income from continuing operations                              |                                                       |   | 148,521 |         |   | 108,752             |        
|                                                               |                                                       |   |         |         |   |                     |        
|Income (loss) from discontinued operations before income taxes |                                                       |   | 1,765   |         |   | (231                | )      
|Income tax expense (benefit)                                   |                                                       |   | 675     |         |   | (69                 | )      
|                                                               |                                                       |   |         |         |   |                     |        
|Income (loss) from discontinued operations                     |                                                       |   | 1,090   |         |   | (162                | )      
|                                                               |                                                       |   |         |         |   |                     |        
|Net income                                                     |                                                       | $ | 149,611 |         | $ | 108,590             |        
|                                                               |                                                       |   |         |         |   |                     |        

---

nm =
not meaningful

The primary contributors to our financial performance for the first quarter of 2008 compared to the first quarter of 2007
are presented below.



41

---





The
increase in our noninterest income was due to several factors:



The
increase in noninterest expense was due to several factors:



42

---





Net Interest Income

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

|                                                                        |                                      | For the Three Months Ended                 |            | Increase (Decrease) in |           
|----------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------- | ---------------------- | ----------
|
|
|
|Assets                                                                  |                                      |                                            |            |                        |           
|Loans:(3)                                                               |                                      |                                            |            |                        |           
|                                                                        | Commercial, financial and industrial |                                            | $          | 14,684,098             |           
|                                                                        | Construction                         |                                            |            | 2,233,131              |           
|                                                                        | Residential mortgage                 |                                            |            | 12,386,306             |           
|                                                                        | Commercial mortgage                  |                                            |            | 6,064,169              |           
|                                                                        | Consumer                             |                                            |            | 2,542,507              |           
|                                                                        | Lease financing                      |                                            |            | 547,803                |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        | Total loans                          |                                            |            | 38,458,014             |           
|Securitiestaxable                                                      |                                      |                                            | 8,580,315  |                        |           
|Securitiestax-exempt                                                   |                                      |                                            | 57,654     |                        |           
|Interest bearing deposits in banks                                      |                                      |                                            | 79,562     |                        |           
|Federal funds sold and securities purchased under resale agreements     |                                      |                                            | 846,042    |                        |           
|Trading account assets                                                  |                                      |                                            | 333,363    |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total earning assets                       |            |                        | 48,354,950
|                                                                        |                                      |                                            |            |                        |           
|Allowance for loan losses                                               |                                      |                                            | (330,277   | )                      |           
|Cash and due from banks                                                 |                                      |                                            | 1,949,232  |                        |           
|Premises and equipment, net                                             |                                      |                                            | 491,449    |                        |           
|Other assets                                                            |                                      |                                            | 2,497,257  |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total assets                               |            | $                      | 52,962,611
|                                                                        |                                      |                                            |            |                        |           
|Liabilities                                                             |                                      |                                            |            |                        |           
|Deposits:                                                               |                                      |                                            |            |                        |           
|                                                                        | Transaction accounts                 |                                            | $          | 13,534,373             |           
|                                                                        | Savings and consumer time            |                                            |            | 4,297,383              |           
|                                                                        | Large time                           |                                            |            | 8,435,137              |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total interest bearing deposits            |            |                        | 26,266,893
|                                                                        |                                      |                                            |            |                        |           
|Federal funds purchased and securities sold under repurchase agreements |                                      |                                            | 1,046,439  |                        |           
|Net funding allocated from (to) discontinued operations(4)              |                                      |                                            | 107,715    |                        |           
|Commercial paper                                                        |                                      |                                            | 1,783,758  |                        |           
|Other borrowed funds                                                    |                                      |                                            | 1,309,102  |                        |           
|Medium and long-term debt                                               |                                      |                                            | 1,371,446  |                        |           
|Trust notes                                                             |                                      |                                            | 14,827     |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total borrowed funds                       |            |                        | 5,633,287 
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total interest bearing liabilities         |            |                        | 31,900,180
|                                                                        |                                      |                                            |            |                        |           
|Noninterest bearing deposits                                            |                                      |                                            | 15,098,289 |                        |           
|Other liabilities                                                       |                                      |                                            | 1,453,937  |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total liabilities                          |            |                        | 48,452,406
|Stockholders' Equity                                                    |                                      |                                            |            |                        |           
|Common equity                                                           |                                      |                                            | 4,510,205  |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total stockholders' equity                 |            |                        | 4,510,205 
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total liabilities and stockholders' equity |            | $                      | 52,962,611
|                                                                        |                                      |                                            |            |                        |           
|Net Interest Income/Margin                                              |                                      |                                            |            |                        |           
|Net interest income/margin (taxable-equivalent basis)                   |                                      |                                            |            |                        |           
|Less: taxable-equivalent adjustment                                     |                                      |                                            |            |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Net interest income                        |            |                        |           
|                                                                        |                                      |                                            |            |                        |           

|
|

|Average Assets and Liabilities of
Discontinued Operations for the
Three Months Ended: |  | March 31, 2007 |          | March 31, 2008 |   |          |  
|------------------------------------------------------------------------------------- |  | -------------- | -------- | -------------- | - | -------- | -
|Assets                                                                                |  | $              | 10,592   |                | $ | 7,440    |  
|Liabilities                                                                           |  | $              | 118,307  |                | $ | 116,796  |  
|Net assets                                                                            |  | $              | (107,715 | )              | $ | (109,356 | )

---

43

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Net interest income in the first quarter of 2008, on a taxable-equivalent basis, increased 8 percent compared to the first quarter of 2007. Our net interest margin decreased by 3
basis points. These results were primarily due to the following:



We
use derivatives to hedge expected changes in the yields on our variable rate loans and term certificates of deposit and other time deposits (CDs), and to convert certain
fixed-rate
borrowings to floating rate. For loans, we had hedge expense of $10.3 million and hedge income of $5.7 million for the quarters ended March 31, 2007 and 2008, respectively. For
deposits and long-term fixed rate borrowings, we had hedge income of $0.1 million and $5.5 million for the quarters ended March 31, 2007 and 2008, respectively.

Noninterest Income and Noninterest Expense

The following tables detail our noninterest income and noninterest expense that exceeded 1% of our total revenues for the three months ended March 31, 2007
and 2008.

Noninterest Income

|                                          |                          | For the Three Months Ended |       
|----------------------------------------- | ------------------------ | -------------------------- | ------
|
|
|
|Service charges on deposit accounts       |                          | $                          | 74,945
|Trust and investment management fees      |                          |                            | 36,860
|Insurance commissions                     |                          |                            | 20,250
|Merchant banking fees                     |                          |                            | 9,077 
|Trading account activities                |                          |                            | 14,840
|Brokerage commissions and fees            |                          |                            | 9,660 
|Card processing fees, net                 |                          |                            | 7,127 
|Securities gains (losses), net            |                          |                            | 1,220 
|Gains on private capital investments, net |                          |                            | 9,095 
|Gain on the VISA IPO redemption           |                          |                            |      
|Other                                     |                          |                            | 27,784
|                                          |                          |                            |       
|                                          | Total noninterest income |                            | $     
|                                          |                          |                            |       

---

nmnot
meaningful

44

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Noninterest Expense

|                                                      |                                | For the Three Months Ended |        
|----------------------------------------------------- | ------------------------------ | -------------------------- | -------
|
|
|
|Salaries and other compensation                       |                                | $                          | 202,494
|Employee benefits                                     |                                |                            | 49,341 
|                                                      |                                |                            |        
|                                                      | Salaries and employee benefits |                            |        
|Net occupancy                                         |                                |                            | 34,459 
|Intangible asset amoritzation(1)                      |                                |                            | 1,926  
|Outside services                                      |                                |                            | 18,170 
|Equipment                                             |                                |                            | 16,333 
|Software                                              |                                |                            | 13,599 
|Professional services                                 |                                |                            | 16,927 
|Communications                                        |                                |                            | 9,306  
|Advertising and public relations                      |                                |                            | 8,367  
|Data processing                                       |                                |                            | 8,184  
|Foreclosed asset expense                              |                                |                            | 9      
|Provision for losses on off-balance sheet commitments |                                |                            | 1,000  
|Other                                                 |                                |                            | 30,751 
|                                                      |                                |                            |        
|                                                      | Total noninterest expense      |                            | $      
|                                                      |                                |                            |        

---

nmnot
meaningful

Income Tax Expense

Our effective tax rate was 33.5 percent in both the first quarter of 2007 and of 2008.

For
further information regarding income tax expense, see "Management's Discussion and Analysis of Financial Condition and Results of OperationsIncome Tax Expense" in our
2007 Form 10-K.

Loans

The following table shows loans outstanding by loan type at the end of each period presented.

|                                     |                           |                              |             |            |            |            |            | Increase (Decrease)
March 31, 2008 From: |           
|------------------------------------ | ------------------------- | ---------------------------- | ----------- | ---------- | ---------- | ---------- | ---------- | ---------------------------------------- | ----------
|
|
|
|Commercial, financial and industrial |                           | $                            | 13,274,776  |            | $          | 14,563,477 |            | $                                        | 15,727,520
|Construction                         |                           |                              | 2,258,668   |            |            | 2,406,729  |            |                                          | 2,556,946 
|Mortgage:                            |                           |                              |             |            |            |            |            |                                          |           
|                                     | Residential               |                              |             | 12,419,376 |            |            | 13,827,241 |                                          |           
|                                     | Commercial                |                              |             | 6,158,255  |            |            | 7,021,299  |                                          |           
|                                     |                           |                              |             |            |            |            |            |                                          |           
|                                     |                           | Total mortgage               |             |            | 18,577,631 |            |            | 20,848,540                               |           
|Consumer:                            |                           |                              |             |            |            |            |            |                                          |           
|                                     | Installment               |                              |             | 1,192,442  |            |            | 1,327,348  |                                          |           
|                                     | Revolving lines of credit |                              |             | 1,341,608  |            |            | 1,334,132  |                                          |           
|                                     |                           |                              |             |            |            |            |            |                                          |           
|                                     |                           | Total consumer               |             |            | 2,534,050  |            |            | 2,661,480                                |           
|Lease financing                      |                           |                              | 548,624     |            |            | 654,467    |            |                                          | 644,922   
|                                     |                           |                              |             |            |            |            |            |                                          |           
|                                     |                           | Total loans held to maturity |             |            | 37,193,749 |            |            | 41,134,693                               |           
|                                     |                           | Total loans held for sale    |             |            | 58,201     |            |            | 69,495                                   |           
|                                     |                           |                              |             |            |            |            |            |                                          |           
|                                     |                           |                              | Total loans |            | $          | 37,251,950 |            | $                                        | 41,204,188
|                                     |                           |                              |             |            |            |            |            |                                          |           

---

nm =
not meaningful

45

---





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.

Our
commercial market lending originates primarily through our commercial banking offices. These offices, which rely extensively on relationship-oriented banking, provide a variety of
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. We are active in, among other sectors, the oil
and gas, communications, entertainment, retailing, power and utilities and financial services industries.

The
commercial, financial and industrial loan portfolio increased in the first quarter of 2008 from the first quarter of 2007 mainly due to increased loan demand primarily in the oil and
gas and national corporate segments, as well as in the California middle market.



We engage in real estate lending that includes commercial mortgage loans and construction loans secured by deeds of trust.

Construction
loans are extended primarily to commercial property developers and to residential builders. As of March 31, 2008, the construction loan portfolio consists of:
approximately two-thirds in the commercial income producing real estate industry and approximately one-third in the homebuilder industry. The construction loan portfolio
increased from the first quarter of 2007 primarily due to higher demand for income property projects with apartment, office and retail financing representing the largest components. We continue to
experience negative risk grade trends in the homebuilder portfolio and weakening operating conditions in the homebuilder industry. Geographically, the outstanding homebuilder loan portfolio is
distributed as follows: approximately one-third in the San Francisco bay area, approximately one-third in the Los Angeles/Orange County region, including the Inland Empire,
approximately one-tenth in San Diego, and the remainder in other parts of California and other states.

The
commercial mortgage loan portfolio consists of loans on commercial income properties primarily in California. The commercial mortgages portfolio increased in the first quarter of
2008 from the first quarter of 2007 mainly due to higher demand in the California middle market sector for real estate related financing.



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.

At
March 31, 2008, 65 percent of our residential mortgage loans were interest only, none of which are negative amortizing. At origination, these interest only loans had
relatively high credit scores and had
weighted average loan-to-value (LTV) ratios of approximately 66 percent. The remainder of the portfolio consists of balloon or regular amortizing loans.

We
do not have a program for originating or purchasing subprime loan products. However, we do have several loan products that allow a customer to move more quickly through the loan
origination process by reducing or eliminating the need to verify the income or assets of the customer. We refer to these loans as "no doc" or "low doc" loans. "No doc" loans are only available
through the Retail Banking channel to existing clients for owner-occupied properties and eliminate the verification of both income and assets. "Low doc" loans are offered through all channels and
require the verification of assets. In both cases, these loans require

46

---



lower
LTV ratios and higher FICO® credit scores than for fully documented residential loans. Although these loans comprise nearly half of our residential loan portfolio, the delinquency
rates relative to the outstanding balances at March 31, 2008 were lower than fully documented loans. At March 31, 2008, the total amount of "no doc" and "low doc" loans past due
30 days or more was $19.4 million, compared to $5.8 million at March 31, 2007. The total amount of residential mortgages delinquent 30 days or more was
$61.4 million at March 31, 2008, compared to $29 million at March 31, 2007. Although delinquencies have risen since March 31, 2007, the delinquency ratio remains low
compared to the industry average for California prime loans.

We
hold most of the loans we originate. However, we do sell our 30-year, fixed rate loans, except for Community Reinvestment Act (CRA) qualifying loans.

On
February 13, 2008, President Bush signed into law the Economic Stimulus Act of 2008, which, among other provisions, authorizes the three federal mortgage loan conduits, the
Federal National Mortgage Association (known as Fannie Mae), the Federal Home Loan Mortgage Corporation (known as Freddie Mac) and the Federal Housing Administration, to purchase new and existing
"jumbo" residential mortgage loans originated after June 30, 2007. The legislation, which will go into operation when the federal mortgage agencies calculate and publish new loan limits for
each Standard Metropolitan Statistical Area, based on average housing prices, will increase the current limit on conforming loans which can be purchased by Fannie Mae and Freddie Mac to up to $729,750
from its current maximum of $417,000. The purpose of the increased purchase authority, which will apply to loans originated through the end of 2008, is to provide increased liquidity to the secondary
market for "jumbo" residential loans. Loans on residential properties in a number of counties in the State of California where housing prices remain relatively high will be covered by the increased
purchase authority. This could result in an increased rate of loan originations and refinancings of loans on such properties, including properties securing loans made by us. The degree to which this
will occur and its overall effect on our residential mortgage loan portfolio cannot be determined at this time.



We originate consumer loans, such as auto loans and home equity loans and lines, through our branch network. The increase in consumer loans from March 31,
2007 was primarily in our Flex Equity line/loan product. The Flex Equity line/loan allows our customers the flexibility to manage a line of credit with as many as four fixed rate loans under a single
product. When customers convert their Flex Equity lines/loans to fixed rate loans, these new loans are classified as installment loans. Our total home equity loans and lines delinquent 30 days
or more were $10.3 million at March 31, 2008, compared to $4.7 million at March 31, 2007. Although the percentage increase from March 31, 2007 is high, the dollar
amount of the increase is not significant as compared to the industry average for California.



We offer two types of leases to our customers: direct financing leases, where the assets leased are acquired without additional financing from other sources; and
leveraged leases, where a substantial portion of the financing is provided by debt with no recourse to us. At March 31, 2008, we had leveraged leases of $551 million, which were 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.

47

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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 compared to exchange rate fluctuations and restrictions on the transfer of funds. The following table sets forth our cross-border outstandings as of March 31 and December 31,
2007 and March 31, 2008 for those countries 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. For the countries shown in the table
below, any significant local currency outstandings are either hedged or funded by local currency borrowings.

|(Dollars in millions) |             | Financial Institutions |   | Public Sector Entities |  | Corporations and Other Borrowers |   | Total Outstandings
|--------------------- | ----------- | ---------------------- | - | ---------------------- |  | -------------------------------- | - | ------------------
|March 31, 2007        |             |                        |   |                        |  |                                  |   |                   
|                      | Canada      |                        | $ | 270                    |  | $                                |  |                   
|                      | Germany     |                        |   | 610                    |  |                                  |  |                   
|                      | Switzerland |                        |   | 600                    |  |                                  |  |                   
|December 31, 2007     |             |                        |   |                        |  |                                  |   |                   
|                      | Canada      |                        | $ | 6                      |  | $                                |  |                   
|March 31, 2008        |             |                        |   |                        |  |                                  |   |                   
|                      | Canada      |                        | $ | 26                     |  | $                                |  |                   

Provision for Credit Losses

We recorded a provision for loan losses of $72 million in the first quarter of 2008, compared with a provision for loan losses of $4 million in the
first quarter of 2007. There was an $8 million provision for losses related to the allowance for losses on off-balance sheet commitments in the first quarter of 2008, compared to a
$1 million provision in the first quarter of 2007. The provisions for loan losses and for losses on off-balance sheet commitments are charged to income to bring our total allowances
for credit losses to a level deemed appropriate by management based on the factors discussed under "Allowances for Credit Losses" below.

Allowances for Credit Losses



We maintain allowances for credit losses (defined as both the allowance for loan losses and the allowance for off-balance sheet commitment losses) to
absorb losses inherent in the loan portfolio as well as for leases and off-balance sheet commitments. Understanding our policies on the allowances for credit losses is fundamental to
understanding our consolidated financial condition and consolidated results of operations. Accordingly, our significant policies and methodology on the allowances for credit losses are discussed in
detail in Note 1 to our Consolidated Financial Statements and in the section "Allowances for Credit Losses" included in our "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our 2007 Form 10-K.



At March 31, 2008, our total allowances for credit losses were $561 million, which consisted of $463 million related to loans and
$98 million related to off-balance sheet commitments. The allowances for credit losses consisted of $473 million and $88 million of allocated and unallocated
allowance, respectively. At March 31, 2008, our allowances for credit loss coverage ratios were 1.29 percent of total loans and

48

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445 percent
of total nonaccrual loans. At December 31, 2007, our total allowances for credit losses were $493 million, or 1.20 percent of the total loan portfolio and
885 percent of total nonaccrual loans.

In
addition, the allowances incorporate the results of measuring impaired loans as provided in SFAS No. 114, "Accounting by Creditors for Impairment of a Loan" as amended by 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 March 31, 2008 and December 31, 2007, total impaired loans were $127 million and $56 million, respectively, and the associated
impairment allowances were $26 million and $11 million, respectively.

At
March 31, 2008 and December 31, 2007, the allowance for losses related to off-balance sheet commitments included within our total allowances for credit
losses, was $98 million and $90 million, respectively. In determining the adequacy of our allowances for credit losses, we consider both the allowance for loan losses and for
off-balance sheet commitment losses.

As
a result of management's assessment of factors, including the credit quality of our loan portfolio, the adverse impact of a significant slowdown in the housing market, the
deterioration of the homebuilding segment and the significant growth and changes in the composition of the loan portfolio, we recorded a provision for loan losses of $72 million in the first
quarter of 2008, compared to a provision for loan losses of $4 million in the first quarter of 2007. The substantial increase in our provision for loan losses was larger than expected due to
several reasons. Our homebuilder portfolio experienced more declines in risk grade levels than previously expected as home prices in California have deteriorated rapidly since year end 2007. In
addition, we are beginning to see deterioration in other sectors of our commercial real estate portfolio, the construction and building materials related sectors of the commercial portfolio and in
small business loans. Lastly, we experienced significant loan growth during the first quarter of 2008.

We
expect to record a provision for credit losses of $60 million to $80 million for the second quarter of 2008 and a range of total provision for credit losses for the full
year 2008 of $225 million to
$300 million. The factors driving the increase in our projected provision include an anticipated acceleration of charge offs during the remainder of 2008, coupled with management's belief that
we are facing a recessionary economic environment, which we believe will result in deterioration in our loan portfolio.

During
the first quarter of 2008, there were no material changes in estimation methods or assumptions that affected our methodology for assessing the appropriateness of the formula and
specific allowances for credit losses.



At March 31, 2008, the formula allowance increased to $443 million, compared to $395 million at December 31, 2007. The net increase
was due primarily to an increase in criticized credits, primarily in our homebuilder portfolio. At March 31, 2008, the specific allowance was $30 million, compared to $12 million
at December 31, 2007.



At March 31, 2008, the unallocated allowance increased to $88 million, compared to $86 million at December 31, 2007, reflecting
management's belief that maintaining the unallocated allowance near our December 31, 2007 level is appropriate based on the uncertainty that current economic conditions will impact our
principal portfolio segments. Additionally, the reasons for which we believe an unallocated allowance is warranted are detailed below.

In
our assessment as of March 31, 2008, management focused, in particular, on the factors and conditions set out below. 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.

49

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Although
in certain instances the downgrading of a loan resulting from the effects of the conditions described below has been reflected in the formula allowance, management believes that
the impact of
these events on the collectability of the applicable loans may not have been fully reflected in the level of nonperforming loans or in the internal risk grading process with respect to such loans. In
addition, our formula allowance does not take into consideration sector-specific changes in the severity of losses that are expected to arise from the current economic conditions compared with our
historical losses. Accordingly, our evaluation of the probable losses related to the impact of these factors was reflected in the unallocated allowance. The evaluations of the inherent losses with
respect to these factors are subject to higher degrees of uncertainty because they are not identified with specific problem credits.

The
following describes some of the specific conditions we considered.

In
certain cases, we believe that credit migration is likely to be somewhat more severe than the long-run average, but a greater share of the inherent probable loss
associated with this credit migration is captured in the allocated allowance. The following describes the specific conditions we considered.



50

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

|                                                                     |                                      | For the Three Months
Ended March 31,             |                       |       |       |         |      
|-------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------------ | --------------------- | ----- | ----- | ------- | -----
|
|
|
|Balance, beginning of period                                         |                                      | $                                                | 331,077               |       | $     | 402,726 |      
|Loans charged off:                                                   |                                      |                                                  |                       |       |       |         |      
|                                                                     | Commercial, financial and industrial |                                                  |                       | 3,078 |       |         | 9,805
|                                                                     | Mortgage                             |                                                  |                       |      |       |         | 240  
|                                                                     | Consumer                             |                                                  |                       | 1,341 |       |         | 3,056
|                                                                     |                                      |                                                  |                       |       |       |         |      
|                                                                     |                                      | Total loans charged off                          |                       |       | 4,419 |         |      
|Recoveries of loans previously charged off:                          |                                      |                                                  |                       |       |       |         |      
|                                                                     | Commercial, financial and industrial |                                                  |                       | 1,694 |       |         | 1,177
|                                                                     | Consumer                             |                                                  |                       | 281   |       |         | 383  
|                                                                     | Lease financing                      |                                                  |                       | 8     |       |         | 15   
|                                                                     |                                      |                                                  |                       |       |       |         |      
|                                                                     |                                      | Total recoveries of loans previously charged off |                       |       | 1,983 |         |      
|                                                                     |                                      |                                                  |                       |       |       |         |      
|                                                                     |                                      |                                                  | Net loans charged off |       |       | 2,436   |      
|Provision for loan losses                                            |                                      |                                                  | 4,000                 |       |       | 72,000  |      
|Foreign translation adjustment                                       |                                      |                                                  | 38                    |       |       | (257    | )    
|                                                                     |                                      |                                                  |                       |       |       |         |      
|Ending balance of allowance for loan losses                          |                                      | $                                                | 332,679               |       | $     | 462,943 |      
|Allowance for losses on off-balance sheet commitments                |                                      |                                                  | 82,374                |       |       | 98,374  |      
|                                                                     |                                      |                                                  |                       |       |       |         |      
|Allowances for credit losses                                         |                                      | $                                                | 415,053               |       | $     | 561,317 |      
|                                                                     |                                      |                                                  |                       |       |       |         |      
|Allowances for loan losses to total loans(1)                         |                                      |                                                  | 0.89                  | %     |       | 1.06    | %    
|Allowances for credit losses to total loans(2)                       |                                      |                                                  | 1.11                  |       |       | 1.29    |      
|Provision for loan losses to net loans charged off                   |                                      |                                                  | 164.20                |       |       | 624.67  |      
|Net loans charged off to average loans outstanding for the period(3) |                                      |                                                  | 0.03                  |       |       | 0.11    |      

---

nm =
not meaningful

Nonperforming Assets

Nonperforming assets consist of nonaccrual loans, restructured loans 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 the Consolidated Financial Statements included in our 2007
Form 10-K. Restructured loans are loans in which the Bank has formally restructured all or a significant portion of the loan and provided a concession in the form of debt
forgiveness, a modification of interest rate and/or payment terms. The impairment (the shortfall between the present value of the loan under modified terms and the carrying value) is normally recorded
in noninterest expense at the date of restructuring. Restructured loans are disclosed as nonperforming assets for the calendar year of restructuring, and, if in current status during this

51

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period
may be disclosed as performing assets thereafter. 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.

|                                                    |                                                           |                            |         |      |        |         |      | Increase (Decrease)
March 31, 2008 From: |        
|--------------------------------------------------- | --------------------------------------------------------- | -------------------------- | ------- | ---- | ------ | ------- | ---- | ---------------------------------------- | -------
|
|
|
|Commercial, financial and industrial                |                                                           | $                          | 5,120   |      | $      | 29,293  |      | $                                        | 46,780 
|Construction                                        |                                                           |                            |        |      |        | 13,662  |      |                                          | 55,464 
|Commercial mortgage                                 |                                                           |                            | 21,489  |      |        | 12,775  |      |                                          | 23,839 
|Lease financing                                     |                                                           |                            | 15,001  |      |        |        |      |                                          |       
|                                                    |                                                           |                            |         |      |        |         |      |                                          |        
|                                                    |                                                           | Total nonaccrual loans     |         |      | 41,610 |         |      | 55,730                                   |        
|Restructured Loans                                  |                                                           |                            |         |      |        |         |      |                                          |        
|                                                    | MortgageResidential                                      |                            |         |     |        |         |     |                                          |        
|Foreclosed assets                                   |                                                           |                            | 134     |      |        | 795     |      |                                          | 4,984  
|                                                    |                                                           |                            |         |      |        |         |      |                                          |        
|                                                    |                                                           | Total nonperforming assets |         | $    | 41,744 |         | $    | 56,525                                   |        
|                                                    |                                                           |                            |         |      |        |         |      |                                          |        
|Allowances for loan losses                          |                                                           | $                          | 332,679 |      | $      | 402,726 |      | $                                        | 462,943
|                                                    |                                                           |                            |         |      |        |         |      |                                          |        
|Allowances for credit losses                        |                                                           | $                          | 415,053 |      | $      | 493,100 |      | $                                        | 561,317
|                                                    |                                                           |                            |         |      |        |         |      |                                          |        
|Nonaccrual loans to total loans                     |                                                           |                            | 0.11    | %    |        | 0.14    | %    |                                          | 0.29   
|Allowances for loan losses to nonaccrual loans(1)   |                                                           |                            | 799.52  |      |        | 722.64  |      |                                          | 367.17 
|Allowances for credit losses to nonaccrual loans(2) |                                                           |                            | 997.48  |      |        | 884.80  |      |                                          | 445.20 
|                                                    | Nonperforming assets to total loans and foreclosed assets |                            |         | 0.11 |        |         | 0.14 |                                          |        
|Nonperforming assets to total assets                |                                                           |                            | 0.08    |      |        | 0.10    |      |                                          | 0.23   

---

nm =
not meaningful

The increase in nonaccrual loans from March 31, 2007 to March 31, 2008 was primarily due to an increase in commercial and
construction loans (primarily related to our homebuilder loan portfolio), partially offset by higher loan pay downs and chargeoffs. During the first quarter of 2008, we had two restructured
residential loans totaling $0.6 million for which we recorded a $0.1 million impairment
charge. During the first quarter of 2008, we had no sales of nonperforming loans, compared to approximately $3 million in the first quarter of 2007. Losses from these sales were reflected in
charge offs.

52

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Loans 90 Days or More Past Due and Still Accruing

|                                     |             |                                                         |       |       |       |       |        | Increase (Decrease)
March 31, 2008 From: |      
|------------------------------------ | ----------- | ------------------------------------------------------- | ----- | ----- | ----- | ----- | ------ | ---------------------------------------- | -----
|
|
|
|Commercial, financial and industrial |             | $                                                       | 648   |       | $     | 3,797 |        | $                                        | 1,311
|Construction                         |             |                                                         |      |       |       |      |        |                                          | 3,904
|Mortgage:                            |             |                                                         |       |       |       |       |        |                                          |      
|                                     | Residential |                                                         |       | 3,793 |       |       | 13,359 |                                          |      
|                                     | Commercial  |                                                         |       | 201   |       |       |       |                                          |      
|                                     |             |                                                         |       |       |       |       |        |                                          |      
|                                     |             | Total mortgage                                          |       |       | 3,994 |       |        | 13,359                                   |      
|Consumer and other                   |             |                                                         | 1,540 |       |       | 2,982 |        |                                          | 5,119
|                                     |             |                                                         |       |       |       |       |        |                                          |      
|                                     |             | Total loans 90 days or more past due and still accruing |       | $     | 6,182 |       | $      | 20,138                                   |      
|                                     |             |                                                         |       |       |       |       |        |                                          |      

---

nm =
not meaningful

Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk primarily exists in interest rate risk in our non-trading balance sheet and, to a much lesser degree, in price risk in our
trading portfolio for our customer-focused trading and sales activities. The objective of market risk management is to mitigate any undue adverse impact on earnings and capital arising from changes in
interest rates and other market variables and to ensure the
Bank has adequate sources of liquidity. This risk management objective supports our broad objective of enhancing shareholder value, which encompasses stable earnings growth over time and capital
stability.

The
Board of Directors, through its Finance and Capital Committee, approves our Asset and Liability Management, Investment and Derivatives Policy (ALM Policy), which governs the
management of market risk and guides our investment, derivatives and trading activities. The ALM Policy establishes the Bank's risk tolerance guidelines by outlining standards for measuring market
risk, creates Board-level limits for specific market risks, establishes guidelines for reporting market risk and requires independent review and oversight of market risk activities.

In
an effort to ensure that the Bank has an effective process to identify, measure, monitor and manage market risk, the ALM Policy requires the Bank to establish an Asset Liability
Management Committee (ALCO), which is comprised of the members of the CEO Forum and the Treasurer. ALCO provides the broad and strategic guidance of market risk management by formulating
high-level strategies for market risk management and defining the risk/return direction for the Bank, and by approving the investment, derivatives and trading policies that govern the
Bank's activities. ALCO is also responsible for the ongoing management of market risk and approves specific risk management programs, including those related to interest rate hedging, investment
securities, wholesale funding and trading activities.

The
Treasurer is primarily responsible for the implementation of risk management strategies approved by ALCO and for operational management of market risk through the funding, investment
and derivatives hedging activities of Corporate Treasury. The managers of the Global Markets Division and the Capital Markets Division are responsible for operational management of price risk through
the trading activities conducted in their respective divisions. The Market Risk Monitoring (MRM) unit is responsible for the monitoring of market risk and MRM functions independently of all operating
and management units.

We
have separate and distinct methods for managing the market risk associated with our asset and liability management activities and our trading activities, as described below. For
additional information about our market risk management, please see "Qualitative and Quantitative Disclosure about Market Risk" in

53

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"Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our 2007 Form 10-K.



During the first quarter of 2008, our interest rate risk profile remained liability sensitive primarily as a result of trends in our balance sheet with loan
growth and declining core deposit balances funded by wholesale borrowing and, to a lesser degree, from hedge programs executed during 2006 and 2007. During 2008, we added $500 million of new
floor hedges to reduce our downside asset-sensitivity (see discussion of "ALM Derivatives" below).

At
March 31, 2008, Economic Net Interest Income (NII) sensitivity was liability sensitive to parallel rate shifts. A +200 basis point parallel shift would reduce
12-month Economic NII by 2.85 percent, while a similar downward shift would increase it by 2.87 percent. At March 31, 2007, a +200 basis point parallel shift would
reduce 12-month Economic NII by 0.36 percent, while a similar downward shift would increase it by 1.07 percent. We caution that ongoing enhancements to our interest rate risk
modeling may make prior-year comparisons of Economic NII less meaningful. Economic NII adjusts our reported NII for the effect of certain noninterest bearing deposit related fee and
expense items. Those adjustment items are innately liability sensitive, meaning that reported NII is less liability sensitive than Economic NII.

Economic NII

|(Dollars in millions)            |  | March 31, 2007 |       | December 31, 2007 |   | March 31, 2008 |   
|-------------------------------- |  | -------------- | ----- | ----------------- | - | -------------- | --
|+200 basis points                |  | $              | (6.5  | )                 | $ | (17.4          | ) 
|as a percentage of base case NII |  |                | (0.36 | )%                |   | (0.93          | )%
|-200 basis points                |  | $              | 19.6  |                   | $ | 35.2           |   
|as a percentage of base case NII |  |                | 1.07  | %                 |   | 1.87           | % 

The above table is presented on a continuing operations basis, with all assets and liabilities associated with the disposal of the retirement
recordkeeping business eliminated for December 31, 2007 and March 31, 2008. The assets and liabilities of the retirement recording keeping business are included for March 31,
2007. We believe that this approach provides the best representation of our risk profiles.

In
the case of non-parallel yield curve changes, our Economic NII is liability sensitive to changes in short-term rates (with long-term rates held
constant) and asset sensitive to changes in long-term rates (with short-term rates held constant). In other words, our Economic NII will benefit from curve steepening with
short-term rates dropping and will contract from the curve further inverting with long-term rates dropping.



During the course of 2007 we moved towards a more liability sensitive interest rate risk profile for the Bank in anticipation of falling rates. The real estate
residential mortgage and commercial mortgage portfolios grew by $1.6 billion and $1.2 billion, respectively, during the first quarter of 2008 compared to the first quarter of 2007. In
comparison total loans grew by $4.2 billion during the same period. The growth in fixed rate assets during 2007 and in the first quarter of 2008 supported largely by shorter term funding
coupled with lower rates on our interest bearing short-term liabilities, amongst other dynamics, has enabled us to position the Bank favorably for lower rates. In managing the interest rate
sensitivity of our balance sheet, we use the ALM investment securities portfolio and derivatives positions as the primary tools to adjust our interest rate risk profile, if necessary. During the first
quarter of 2008, we reinvested proceeds from maturing ALM securities into securities with like terms and asset allocation. New derivative hedges were also added during the quarter as described below.

54

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At March 31, 2007 and 2008, our available for sale securities portfolio included $6.5 billion and $6.6 billion, respectively, of securities
for ALM purposes. At March 31, 2008, approximately $5.0 billion of the portfolio was pledged to secure trust and public deposits and for other purposes as required or permitted by law.
During the first quarter of 2008, we purchased approximately $363 million par value of securities, while approximately $343 million par value of ALM securities matured or were called.

The
composition of the portfolio is expected to remain relatively stable in 2008. Based on current prepayment projections, the estimated ALM portfolio effective duration was 2.3 at
March 31, 2008, compared to 2.0 at March 31, 2007. Effective duration is a measure of price sensitivity of a bond portfolio to immediate parallel shifts in interest rates. An effective
duration of 2.3 suggests an expected price change of approximately minus 2.3 percent for an immediate 1.0 percent parallel increase in interest rates.



During the first quarter of 2008, the ALM derivatives portfolio increased by a net $200 million notional amount, as $500 million of notional amount
of LIBOR floor contracts were purchased to maintain the downside liability sensitivity of our overall risk position, offset by maturities of $300 million notional amount of receive fixed
interest rate swaps.

The
fair value of the ALM derivative contracts increased as the value of our receive fixed interest rate swaps and floor option contracts benefited from the Federal Reserve Board's
interest rate reductions in the first quarter of 2008, the expectation of lower future interest rates, higher volatility in interest rates and as a result of the net $200 million increase in
notional amount during the first quarter of 2008. For additional discussion of derivative instruments and our hedging strategies, see Note 8 to the condensed consolidated financial statements
in this Form 10-Q and Note 19 to our consolidated financial statements included in our 2007 Form 10-K.

The
following table provides the notional value and the fair value of our ALM derivatives portfolio as of March 31, 2007, December 31, 2007, and March 31, 2008 and
the change in fair value between December 31, 2007 and March 31, 2008.

|(Dollars in thousands)                                                         |                                                           | March 31,
2007                        |           | December 31,
2007 |        | March 31,
2008 |         | Increase / (Decrease) From December 31, 2007 to March 31, 2008 |          
|------------------------------------------------------------------------------ | --------------------------------------------------------- | ------------------------------------- | --------- | ----------------- | ------ | -------------- | ------- | -------------------------------------------------------------- | ---------
|Total gross notional amount of positions held for purposes other than trading: |                                                           | $                                     | 7,950,000 |                   | $      | 9,250,000      |         | $                                                              | 9,450,000
|                                                                               | of which, interest rate swaps pay fixed rates of interest |                                       |           |                  |        |                |        |                                                                |          
|                                                                               |                                                           |                                       |           |                   |        |                |         |                                                                |          
|Fair value of positions held for purposes other than trading:                  |                                                           |                                       |           |                   |        |                |         |                                                                |          
|                                                                               | Gross positive fair value                                 |                                       | $         | 46,739            |        | $              | 148,036 |                                                                | $        
|                                                                               | Gross negative fair value                                 |                                       |           | 25,411            |        |                | 2,015   |                                                                |          
|                                                                               |                                                           |                                       |           |                   |        |                |         |                                                                |          
|                                                                               |                                                           | Positive fair value of positions, net |           | $                 | 21,328 |                | $       | 146,021                                                        |          
|                                                                               |                                                           |                                       |           |                   |        |                |         |                                                                |          



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 range of products compared to the securities, foreign exchange and derivatives markets. In acting

55

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for
our own account, we may take positions in certain securities and foreign exchange instruments, subject to various limits in amount, tenor and other respects, with the objective of generating
trading profits.

As
of March 31, 2008, we had $13.5 billion notional amount of interest rate derivative contracts, which included $6.8 billion notional amount of derivative contracts
entered into as an accommodation for customers. We act as an intermediary and entered into $6.7 billion notional amount of offsetting contracts with major dealers, at a credit spread, thus
neutralizing substantially all of the related market risk on our customer accommodation transactions.

We
market energy derivative contracts to existing energy industry customers, primarily oil and gas producers, in order to meet their hedging needs. All transactions are fully matched to
remove our exposure to market risk, with income earned on the credit spread. As of March 31, 2008, we had $4.3 billion notional amount of energy derivative contracts with half of these
energy derivative contracts entered into as an accommodation for customers and the remaining half entered into as matching contracts to remove our exposure to market risk on our customer accommodation
transactions.

Liquidity Risk

Liquidity risk is the undue risk to the Bank's earnings and capital, which would result from the Bank's inability to meet its obligations as they come due without
incurring unacceptable costs. The management of liquidity risk is governed by the ALM Policy under the oversight of ALCO. Liquidity is managed using a total balance sheet perspective that analyzes
both funding capacity available through increased liabilities and liquidation of assets relative to projected demands for liquidity. The primary sources of liquidity are core deposits, asset
liquidation, including securities sold under repurchase agreements, and wholesale funding, which includes funds raised from interbank and other sources, both domestic and offshore. The Treasurer is
responsible for operational management of liquidity through the funding and investment functions of Corporate Treasury. ALCO also maintains a Liquidity Contingency Plan that identifies actions to be
taken to ensure adequate liquidity if an event should occur that disrupts or adversely affects the Bank's normal funding activities.

Core
deposits provide us with a sizable source of relatively stable and low-cost funds. Our $31.7 billion in average core deposits, which includes demand deposits,
money market demand accounts, savings and consumer time deposits, combined with average common stockholders' equity, funded 64.1 percent of average total assets of $56.7 billion in the
first quarter of 2008. Most of the remaining funding was provided by short-term borrowings in the form of certificates of deposit, large time deposits, federal funds purchased, securities
sold under repurchase agreements, commercial paper and other borrowings.

Our
securities portfolio provides additional enhancement to our liquidity position, which may be created through either securities sales or repurchase agreements. At March 31,
2008, we could have sold or transferred under repurchase agreements approximately $2.5 billion of our available for sale securities. Liquidity may also be provided by the sale or maturity of
other assets such as interest-bearing deposits in banks, federal funds sold and trading account securities. The aggregate balance of these assets averaged $1.1 billion in the first quarter of
2008. Additional liquidity may be provided through loan maturities and sales.

In
2006, the Bank established a $4 billion Bank Note Program. As of March 31, 2008, the remaining available funding under the Bank Note Program is $2.6 billion. In
the third quarter 2007, the Bank pledged collateral to establish borrowing capacity with the Federal Home Loan Bank of San Francisco. As of March 31, 2008, the Bank had total borrowing capacity
of $4.3 billion, with $1.0 million of actual borrowing outstanding. The Bank has the capability to pledge portions of its unencumbered loan portfolio to Federal Home Loan Bank of San
Francisco and the Federal Reserve Bank which would provide a total borrowing capacity in excess of $25 billion.

56

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In
addition to the funding provided by our bank subsidiary, we raise funds at the holding company level. UnionBanCal Corporation has in place a shelf registration with the Securities and
Exchange Commission (SEC) permitting ready access to the public debt markets. As of March 31, 2008, $600 million of debt or other securities were available for issuance under this shelf
registration. We do not have firm commitments in place to sell securities under either the Bank Note Program or the shelf registration. These sources, in addition to our core deposit and equity
capital, provide a stable funding base. Management does not rely on any one source of liquidity and manages availability in response to changing balance sheet needs. The costs and ability to raise
funds are influenced by our credit ratings. The following table provides our credit ratings as of March 31, 2008.

|                  |  |                      |  | Union Bank of California, N.A. |  | UnionBanCal Corporation
|----------------- |  | -------------------- |  | ------------------------------ |  | -----------------------
|Standard & Poor's |  | Long-term
Short-term |  | A+
A-1                         |  | A
A-1                  
|Moody's           |  | Long-term
Short-term |  | Aa3
P-1                        |  | 
                    
|Fitch             |  | Long-term
Short-term |  | A+
F1                          |  | A+
F1                  
|DBRS              |  | Long-term
Short-term |  | A (high)
R-1 (middle)          |  | A
R-1 (low)            

Regulatory Capital

The following tables summarize our risk-based capital, risk-weighted assets, and risk-based capital ratios.

UnionBanCal Corporation

|(Dollars in thousands)   |  | March 31,
2007 |            | December 31,
2007 |   | March 31,
2008 |  | Minimum Regulatory Requirement
|------------------------ |  | -------------- | ---------- | ----------------- | - | -------------- |  | ------------------------------
|Capital Components       |  |                |            |                   |   |                |  |                               
|Tier 1 capital           |  | $              | 4,291,483  |                   | $ | 4,533,763      |  | $                             
|Tier 2 capital           |  |                | 1,511,809  |                   |   | 1,590,160      |  |                               
|                         |  |                |            |                   |   |                |  |                               
|Total risk-based capital |  | $              | 5,803,292  |                   | $ | 6,123,923      |  | $                             
|                         |  |                |            |                   |   |                |  |                               
|Risk-weighted assets     |  | $              | 50,996,413 |                   | $ | 54,606,527     |  | $                             
|                         |  |                |            |                   |   |                |  |                               
|Quarterly average assets |  | $              | 52,858,843 |                   | $ | 54,843,792     |  | $                             
|                         |  |                |            |                   |   |                |  |                               

|
|

|                                         |  | Amount |           | Ratio |       | Amount |   | Ratio     |  | Amount |   | Ratio |           | Amount |       | Ratio |   
|---------------------------------------- |  | ------ | --------- | ----- | ----- | ------ | - | --------- |  | ------ | - | ----- | --------- | ------ | ----- | ----- | --
|Capital Ratios                           |  |        |           |       |       |        |   |           |  |        |   |       |           |        |       |       |   
|Total capital (to risk-weighted assets)  |  | $      | 5,803,292 |       | 11.38 | %      | $ | 6,123,923 |  | 11.21  | % | $     | 6,262,059 |        | 10.97 | %     | 3$
|Tier 1 capital (to risk-weighted assets) |  |        | 4,291,483 |       | 8.42  |        |   | 4,533,763 |  | 8.30   |   |       | 4,603,703 |        | 8.07  |       |   
|Leverage(1)                              |  |        | 4,291,483 |       | 8.12  |        |   | 4,533,763 |  | 8.27   |   |       | 4,603,703 |        | 8.09  |       |   

---

57

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Union Bank of California, N.A.

|(Dollars in thousands)   |  | March 31,
2007 |            | December 31,
2007 |   | March 31,
2008 |  | Minimum Regulatory Requirement |            | "Well-Capitalized" Regulatory Requirement
|------------------------ |  | -------------- | ---------- | ----------------- | - | -------------- |  | ------------------------------ | ---------- | -----------------------------------------
|Capital Components       |  |                |            |                   |   |                |  |                                |            |                                          
|Tier 1 capital           |  | $              | 4,218,036  |                   | $ | 4,449,368      |  | $                              | 4,543,850  |                                          
|Tier 2 capital           |  |                | 1,103,054  |                   |   | 1,181,796      |  |                                | 1,252,860  |                                          
|                         |  |                |            |                   |   |                |  |                                |            |                                          
|Total risk-based capital |  | $              | 5,321,090  |                   | $ | 5,631,164      |  | $                              | 5,796,710  |                                          
|                         |  |                |            |                   |   |                |  |                                |            |                                          
|Risk-weighted assets     |  | $              | 50,527,546 |                   | $ | 54,234,495     |  | $                              | 56,740,071 |                                          
|                         |  |                |            |                   |   |                |  |                                |            |                                          
|Quarterly average assets |  | $              | 52,300,597 |                   | $ | 54,277,811     |  | $                              | 56,431,504 |                                          
|                         |  |                |            |                   |   |                |  |                                |            |                                          

|
|

|                                         |  | Amount |           | Ratio |       | Amount |   | Ratio     |  | Amount |   | Ratio |           | Amount |       | Ratio |    | Amount       |  | Ratio |  
|---------------------------------------- |  | ------ | --------- | ----- | ----- | ------ | - | --------- |  | ------ | - | ----- | --------- | ------ | ----- | ----- | -- | ------------ |  | ----- | -
|Capital Ratios                           |  |        |           |       |       |        |   |           |  |        |   |       |           |        |       |       |    |              |  |       |  
|Total capital (to risk-weighted assets)  |  | $      | 5,321,090 |       | 10.53 | %      | $ | 5,631,164 |  | 10.38  | % | $     | 5,796,710 |        | 10.22 | %     | 3$ | 4,539,206    |  | 8.0   | %
|Tier 1 capital (to risk-weighted assets) |  |        | 4,218,036 |       | 8.35  |        |   | 4,449,368 |  | 8.20   |   |       | 4,543,850 |        | 8.01  |       |    | 3  2,269,603 |  | 4.0   |  
|Leverage(1)                              |  |        | 4,218,036 |       | 8.07  |        |   | 4,449,368 |  | 8.20   |   |       | 4,543,850 |        | 8.05  |       |    | 3  2,257,260 |  | 4.0   |  

---

We and Union Bank of California 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).

The
decrease in the Tier 1 and Total capital ratios from December 31, 2007 was primarily due to an increase in risk-weighted assets stemming from growth in our
loan portfolio. The decrease in our leverage ratios from December 31, 2007 was primarily due to the increase in our quarterly average assets, which was due to growth in our loan portfolio.

As
of March 31, 2008 management believes the capital ratios of Union Bank of California 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.

Business Segments

The various operating segments reporting under our Chief Operating Officer and the Group Head of Pacific Rim Corporate Group have been aggregated into two
reportable business segments entitled "Retail Banking" and "Wholesale Banking" based upon the aggregation criteria prescribed in SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information."

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, market and operational. 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 all other factors, such as failures in internal control, system failures, or external events. RAROC
is one of several measures that is used to measure business unit compensation.

The
table that follows reflects the condensed income statements, selected average balance sheet items, and selected financial ratios, including changes compared to the prior year, for
each of our reportable business segments. The information presented does not necessarily represent the businesses' financial condition and results of operations as if they were independent entities.
We reflect a "market view" perspective in measuring our operating segments. The market view is a measurement of our customer markets aggregated to show all revenues generated and expenses incurred
compared to all products and services sold to those customers regardless of where product areas organizationally report. Therefore, revenues and expenses are included in

58

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both
the operating segment that provides the service and the operating segment that manages the customer relationship. The duplicative results compared to this internal management accounting view are
reflected in "Reconciling Items." The market view approach fosters cross-selling with a total profitability view of the products and services being managed. For example, the Securities Trading and
Sales unit within the Global Markets Division is a business unit that manages the fixed income securities activities for all retail and corporate customers throughout the Bank. This unit retains and
also allocates revenues and expenses to divisions responsible for such retail and commercial customer relationships.

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 compared to credit risk and attributes economic capital related to unexpected losses arising
compared to 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 for 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 allocated to the business units based on a predetermined percentage of usage.

59

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The
reportable business segment results for the prior periods have been adjusted to reflect changes in the transfer pricing methodology, the organizational changes that have occurred and
our discontinued operations. For further detail on discontinued operations, see Note 3 to the condensed consolidated financial statements in this Form 10-Q.

|                                                    |                                                                 | Retail Banking |   |         |   |   |         | Wholesale Banking |   |        |   |    |   
|--------------------------------------------------- | --------------------------------------------------------------- | -------------- | - | ------- | - | - | ------- | ----------------- | - | ------ | - | -- | --
|
|
|                                                    | Results of operationsMarket View (dollars in thousands):       |                |   |         |   |   |         |                   |   |        |   |    |   
|                                                    | Net interest income (expense)                                   |                | $ | 227,791 |   | $ | 223,825 |                   | $ | (3,966 | ) | (2 | )%
|                                                    | Noninterest income (expense)                                    |                |   | 113,564 |   |   | 120,672 |                   |   | 7,108  |   | 6  |   
|                                                    |                                                                 |                |   |         |   |   |         |                   |   |        |   |    |   
|                                                    | Total revenue                                                   |                |   | 341,355 |   |   | 344,497 |                   |   | 3,142  |   | 1  |   
|                                                    | Noninterest expense (income)                                    |                |   | 226,551 |   |   | 231,549 |                   |   | 4,998  |   | 2  |   
|                                                    | Credit expense (income)                                         |                |   | 6,274   |   |   | 6,439   |                   |   | 165    |   | 3  |   
|                                                    |                                                                 |                |   |         |   |   |         |                   |   |        |   |    |   
|                                                    | Income (loss) from continuing operations before income taxes    |                |   | 108,530 |   |   | 106,509 |                   |   | (2,021 | ) | (2 | ) 
|                                                    | Income tax expense (benefit)                                    |                |   | 41,513  |   |   | 40,740  |                   |   | (773   | ) | (2 | ) 
|                                                    |                                                                 |                |   |         |   |   |         |                   |   |        |   |    |   
|                                                    | Income (loss) from continuing operations                        |                |   | 67,017  |   |   | 65,769  |                   |   | (1,248 | ) | (2 | ) 
|                                                    | Income (loss) from discontinued operations, net of income taxes |                |   |        |   |   |        |                   |   |       |   | na |   
|                                                    |                                                                 |                |   |         |   |   |         |                   |   |        |   |    |   
|                                                    | Net income (loss)                                               |                | $ | 67,017  |   | $ | 65,769  |                   | $ | (1,248 | ) | (2 | ) 
|                                                    |                                                                 |                |   |         |   |   |         |                   |   |        |   |    |   
|Average balancesMarket View (dollars in millions): |                                                                 |                |   |         |   |   |         |                   |   |        |   |    |   
|                                                    | Total loans                                                     |                | $ | 16,249  |   | $ | 17,987  |                   | $ | 1,738  |   | 11 |   
|                                                    | Total assets                                                    |                |   | 17,077  |   |   | 18,786  |                   |   | 1,709  |   | 10 |   
|                                                    | Total deposits                                                  |                |   | 18,467  |   |   | 18,398  |                   |   | (69    | ) | 0  |   
|Financial ratiosMarket View                        |                                                                 |                |   |         |   |   |         |                   |   |        |   |    |   
|                                                    | Risk adjusted return on capital(1)                              |                |   | 43      | % |   | 44      | %                 |   |        |   |    |   
|                                                    | Return on average assets(1)                                     |                |   | 1.59    |   |   | 1.41    |                   |   |        |   |    |   
|                                                    | Efficiency ratio(2)                                             |                |   | 66.37   |   |   | 67.19   |                   |   |        |   |    |   

|
|

|                                                          |                                                                 | Other |   |         |   |   |         | Reconciling Items |   | UnionBanCal Corporation |   |      |   |   |        
|--------------------------------------------------------- | --------------------------------------------------------------- | ----- | - | ------- | - | - | ------- | ----------------- | - | ----------------------- | - | ---- | - | - | -------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Net interest income (expense)                                   |       | $ | (40,134 | ) | $ | (28,139 | )                 | $ | 11,995                  |   | 30   | % | $ | (2,064 
|                                                          | Noninterest income (expense)                                    |       |   | 6,451   |   |   | 14,318  |                   |   | 7,867                   |   | 122  |   |   | (15,741
|                                                          |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Total revenue                                                   |       |   | (33,683 | ) |   | (13,821 | )                 |   | 19,862                  |   | 59   |   |   | (17,805
|                                                          | Noninterest expense (income)                                    |       |   | 31,373  |   |   | 33,686  |                   |   | 2,313                   |   | 7    |   |   | (9,734 
|                                                          | Credit expense (income)                                         |       |   | (27,317 | ) |   | 28,434  |                   |   | 55,751                  |   | 204  |   |   | (24    
|                                                          |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Income (loss) from continuing operations before income taxes    |       |   | (37,739 | ) |   | (75,941 | )                 |   | (38,202                 | ) | (101 | ) |   | (8,047 
|                                                          | Income tax expense (benefit)                                    |       |   | (12,796 | ) |   | (21,027 | )                 |   | (8,231                  | ) | (64  | ) |   | (3,078 
|                                                          |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Income (loss) from continuing operations                        |       |   | (24,943 | ) |   | (54,914 | )                 |   | (29,971                 | ) | (120 | ) |   | (4,969 
|                                                          | Income (loss) from discontinued operations, net of income taxes |       |   | 1,090   |   |   | (162    | )                 |   | (1,252                  | ) | (115 | ) |   |       
|                                                          |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Net income (loss)                                               |       | $ | (23,853 | ) | $ | (55,076 | )                 | $ | (31,223                 | ) | (131 | ) | $ | (4,969 
|                                                          |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|Average balancesMarket View (dollars in millions):       |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Total loans                                                     |       | $ | 30      |   | $ | 8       |                   | $ | (22                     | ) | (73  | ) | $ | (21    
|                                                          | Total assets                                                    |       |   | 8,793   |   |   | 8,343   |                   |   | (450                    | ) | (5   | ) |   | (23    
|                                                          | Total deposits                                                  |       |   | 5,193   |   |   | 7,522   |                   |   | 2,329                   |   | 45   |   |   | (553   
|Financial ratiosMarket View                              |                                                                 |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Risk adjusted return on capital(1)                              |       |   | na      |   |   | na      |                   |   |                         |   |      |   |   | na     
|                                                          | Return on average assets(1)                                     |       |   | na      |   |   | na      |                   |   |                         |   |      |   |   | na     
|                                                          | Efficiency ratio(2)                                             |       |   | na      |   |   | na      |                   |   |                         |   |      |   |   | na     

---

na =
not applicable

nm =
not meaningful

60

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Retail Banking provides financial products including credit, deposit, trust, investment management and risk management delivered through our branches,
relationship managers, private bankers and trust administrators, to individuals, small businesses and institutional clients. Retail banking is focused on executing a segment based strategy that will
identify targeted opportunities within the consumer and small business markets, and develop product, marketing and sales strategies to attract new customers in these identified target markets. While
the primary focus of Retail Banking's segment based strategy is deposit growth, an additional focus continues to be consumer and small business loan generation.

During
the first quarter of 2008, Retail Banking's net income decreased by 2 percent compared to the same period in 2007. The decrease in net income reflects lower net interest
income and higher noninterest expenses, partially offset by higher noninterest income. The decrease in net interest income in 2008 reflects a decrease in noninterest bearing deposits and higher
interest bearing deposits.

Averages
assets grew by 10 percent in the first quarter of 2008 compared to the first quarter of 2007. This increase was primarily driven by a 13 percent growth in average
residential mortgage loans. Additionally, the focus on home equity loans and more effective cross-selling efforts resulted in an overall growth in consumer loans in the first quarter of 2008.

Average
deposits remained flat for the first quarter of 2008 compared to the first quarter of 2007. Retail Banking's strategy continues to focus on attracting consumer and small business
deposits through marketing activities, increasing customer cross-sell, relationship management, increasing and improving sales resources, establishing new locations and new products. We
expect that a larger branch network, along with this Retail Banking strategy, will improve growth prospects when combined with more robust efforts in the telephone and internet channels.

Noninterest
income for the first quarter of 2008 compared to the first quarter of 2007 increased 6 percent. This increase was primarily due to growth in trust fees, partially
offset by a decrease in deposit fees. Noninterest expenses increased 2 percent in the first quarter of 2008 compared to the first quarter of 2007.

Retail Bankingis comprised of the following major divisions: Retail Banking Branches, Consumer Asset Management, Wealth Management and
Institutional Services and Asset Management.



Retail
Banking Branches is organized geographically. We serve our customers in the following ways:



Through
alliances with other financial institutions, Consumer Asset Management offers additional products and services, such as credit cards and merchant bank cards.

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Our
Retail Banking Branches and Consumer Asset Management divisions compete with larger banks by attempting to provide service quality superior to that of our major competitors. The
primary means of competing with community banks include our branch network and our 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.

These
divisions compete 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.



Wholesale Banking offers financing, depository, cash management and insurance services to middle market and large corporate businesses primarily headquartered in
the western U.S. Wholesale Banking continues to focus on specific geographic markets and industry segments such as energy, entertainment and real estate. Relationship managers 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, Wholesale
Banking offers cash management services delivered through deposit managers with significant industry expertise and experience in cash management solutions for businesses, U.S. correspondent banks and
government entities, as well as investment and risk management products.

During
the first quarter of 2008, Wholesale Banking's net income decreased by 7 percent, compared to the first quarter of 2007, due to higher noninterest expense and lower
noninterest income, partially offset by higher net interest income.

62

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In
the first quarter of 2008 net interest income increased 10 percent compared to the same period in 2007. The increase in net interest income was primarily due to an
11 percent increase in average loan balances, mainly in the Energy and National divisions, as well as the California middle market. Net interest income was negatively impacted by a decrease in
noninterest bearing deposits and an increase in interest bearing deposits.

Noninterest
income decreased by 11 percent in the first quarter of 2008 compared to the first quarter of 2007, primarily due to lower gains on private capital investments and
insurance commissions, partially offset by higher merchant banking fees. Noninterest expense was $19.4 million higher in the first quarter
of 2008 compared to the first quarter of 2007, mainly due to an $18.7 million goodwill charge related to our insurance brokerage business.

Wholesale
Banking initiatives continue to include expanding deposit activities and loan strategies that include originating, underwriting and syndicating loans in core competency
markets, such as the California middle- market, corporate banking, commercial real estate, energy, equipment leasing and commercial finance. Commercial Deposit and Treasury Management Division
provides processing services, including services such as Automated Clearing House (ACH), check processing and cash vault services.

Wholesale Bankingis comprised of the following main divisions:



63

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The
main strategy of our Wholesale Banking business units is to target industries and companies for which we can reasonably expect to be one of a customer's primary banks. Consistent
with this strategy, Wholesale Banking business units attempt to serve a large part of the targeted customers' credit and depository needs. The Wholesale Banking business units compete with other banks
primarily on the basis of the quality of our relationship managers, the level of industry expertise, the delivery of quality customer service, and our reputation as a "business bank." We also compete
with a variety of other financial services companies as well as non-bank 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.



Net loss increased by $31.2 million in the first quarter of 2008 compared to the first quarter of 2007 primarily due to higher credit expenses related to
our loan loss provision and higher noninterest expense, partially offset by lower net interest expense and higher noninterest income.

"Other"
includes the following items:



The
first quarter of 2008 financial results were impacted by the following factors:



64

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The
first quarter of 2007 financial results were impacted by the following factors:



Regulatory Matters

In recent years, a number of banks and bank holding companies have been subject to regulatory actions, including cease and desist orders, formal written
agreements and the assessment of significant civil money penalties, and criminal sanctions, including the imposition of significant fines, as a result of failures to comply with the Bank Secrecy Act
and other anti-money laundering laws and regulations (BSA/AML).

In
October 2004, Union Bank of California International entered into a written agreement with the Federal Reserve Bank of New York relating to Union Bank of California International's
BSA/AML controls and processes. With the liquidation of Union Bank of California International in March 2007, the written agreement is no longer effective. In March 2005, Union Bank of California
entered into a memorandum of understanding with the Office of the Comptroller of the Currency (OCC), which required Union Bank of California to strengthen its BSA/AML controls and processes.

Management
is committed to resolving these issues raised by the regulators and continues to take actions it believes to be appropriate to achieve this objective. We have committed
significant resources to strengthen our BSA/AML controls and processes. Among other actions to enhance our controls and procedures, we engaged independent consultants to provide a comprehensive review
of our suspicious activity monitoring and reporting, acquired new and upgraded our existing compliance systems, added numerous well qualified staff, enhanced training, and put in place an enhanced
internal audit program.

On
September 14, 2007, Union Bank of California entered into a Stipulation and Consent to the Issuance of a Consent Order, and a Consent Order to a Civil Money Penalty and to
Cease and Desist (the Order) with the OCC. The Order supersedes the March 2005 memorandum of understanding described above. The Order imposed a civil money penalty of $10 million and requires
Union Bank of California to take actions to improve BSA/AML compliance. On the same day, the U.S. Treasury Department's Financial Crimes Enforcement

65

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Network
(FinCEN) executed an Assessment of Civil Money Penalty (the Assessment) in the amount of $10 million. The Assessment provides that the $10 million penalty is deemed to be
satisfied by Union Bank of California's payment of the civil money penalty of $10 million to the OCC. On September 17, 2007, Union Bank of California entered into a Deferred Prosecution
Agreement (DPA) with the Department of Justice (DOJ). Under the DPA, the DOJ has agreed to defer prosecution for past violations of BSA/AML that occurred in Union Bank of California's now discontinued
international banking business, and to dismiss prosecution completely if Union Bank of California meets the conditions of the Order for one year. Pursuant to the DPA, Union Bank of California also
paid $21.6 million in the third quarter of 2007 to the DOJ. We are committed to making all improvements necessary to strengthen Union Bank of California's Bank Secrecy Act compliance program
and to achieve compliance with the Order and the DPA.

The
Bank of Tokyo-Mitsubishi UFJ, Ltd., a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc., owns a majority of the outstanding shares of our common stock. In
December 2006, Mitsubishi UFJ Financial Group, The Bank of Tokyo-Mitsubishi UFJ and its wholly owned subsidiary, Bank of Tokyo-Mitsubishi UFJ Trust Company, entered into a series of agreements with
the Federal Deposit Insurance Corporation, the Federal Reserve Bank of San Francisco, the Federal Reserve Bank of New York and the New York State Banking Department, which require a strengthening of
their BSA/AML controls and processes.

Until
resolved, these pending regulatory matters, including the Order and the DPA, or any future regulatory or other government actions concerning BSA/AML controls and processes, may
adversely affect UnionBanCal Corporation's and Union Bank of California's ability to obtain regulatory approvals for future initiatives, including acquisitions. Also, any future actions relating to
noncompliance or repeat violations of BSA/AML laws, regulations or orders, including any failure to comply with the requirements of the Order or the DPA, could result in the assessment of additional
civil money penalties or the imposition of additional fines, which could be substantial.

The
SEC is conducting an inquiry regarding certain practices related to our mutual fund activities. The inquiry concerns the use of a portion of the fees received under an agreement from
the HighMark Funds by an unaffiliated administrator to pay expenses related to the marketing and distribution of fund shares. The HighMark Funds is a family of mutual funds managed by HighMark Capital
Management, Inc., the investment management subsidiary of Union Bank of California. We are cooperating with this inquiry.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

A discussion of our market risk exposure is incorporated by reference to Part I, Item 2 of this Form 10-Q under
the caption "Quantitative and Qualitative Disclosures About Market Risk" and to Part II, Item 1A of this Form 10-Q under the caption "Risk Factors."

Item 4.   Controls and Procedures

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that the design
and operation of our disclosure controls and procedures are effective as of March 31, 2008. This conclusion is based on an evaluation conducted under the supervision and with the participation
of management. Disclosure controls and procedures are those
controls and procedures which ensure that information required to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported in a
timely manner and in accordance with Securities and Exchange Commission rules and regulations.

During
the quarter ended March 31, 2008, there were no changes in our internal controls over financial reporting that materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

For a discussion of the action filed by DataTreasury Corporation, please refer to Item 3 of Part I of our 2007
Form 10-K.

For
information relating to the Bank Secrecy Act and other anti-money laundering laws and regulations (BSA/AML) matters, please refer to "Management's Discussion and Analysis
of Financial Condition and Results of OperationsRegulatory Matters," in Item 2 of Part I of this Form 10-Q.

We
are subject to various other pending and threatened legal actions that arise in the normal course of business. We maintain reserves for losses from legal actions that are both
probable and estimable. In addition, we believe the disposition of all claims currently pending will not have a material adverse effect on our consolidated financial condition, operating results or
liquidity.

Item 1A.   Risk Factors

For a discussion of risk factors relating to our business, please refer to Item 1A of Part I of our 2007
Form 10-K, which is incorporated by reference herein, in addition to "Management's
Discussion and Analysis of Financial Condition and Results of OperationsRegulatory Matters" in Item 2 of Part I of this Form 10-Q and the following
information.



Commencing in 2007 and continuing into 2008, certain adverse financial developments have impacted the U.S. and global economies and financial markets and present
challenges for the banking and financial services industry and for Union Bank of California. These developments include a general slowing of economic growth both globally and in the U.S. which has
prompted the Congress to adopt an economic stimulus bill which President Bush signed into law on February 13, 2008, and which prompted the Federal Reserve Board to decrease its discount rate
and the federal funds rate several times in the first quarter of 2008. These developments have contributed to substantial volatility in the equity securities markets, as well as volatility and a
tightening of liquidity in the credit markets. In addition, financial and credit conditions in the domestic residential real estate markets have deteriorated significantly, particularly in the
subprime sector. These conditions in turn have led to significant deterioration in certain financial markets, particularly the markets for subprime residential mortgage-backed securities and for
collateralized debt obligations backed by residential mortgage-backed securities. In addition, these conditions have rendered it more difficult for financial institutions and others to obtain
transparent valuations for various portfolio debt securities, especially in the case of collateralized debt obligations backed by residential mortgage-backed securities or other collateral, including
corporate obligations, as well as contributing to a widening of credit spreads and a general lack of liquidity in the marketplace, all of which can result in decreases in fair value of portfolio
securities of these types. If, notwithstanding the federal government's recent fiscal and monetary measures, the U.S. economy were to remain in a recessionary condition for an extended period, this
would present additional significant challenges for the U.S. banking and financial services industry and for Union Bank of California. While it is difficult to predict how long these conditions will
exist and which markets and businesses of the Bank may be affected, these factors could continue to present risks for some time for the industry and the Bank.



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, especially in California. Increases in

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residential
mortgage loan interest rates could have an adverse effect on our operations by depressing new mortgage loan originations, which in turn could negatively impact our title and escrow deposit
levels. Additionally, a further downturn in the residential real estate and housing industries in California could have an adverse effect on our operations and the quality of our real estate loan
portfolio. Although we do not engage in subprime or negative amortization lending, effects of recent subprime market challenges, combined with the ongoing deterioration in the U.S. and California real
estate markets, could result in further price reductions in single family home prices and a lack of liquidity in refinancing markets. These factors could adversely impact the quality of our
residential construction and residential mortgage portfolio in various ways, including by decreasing the value of the collateral for our mortgage loans. These factors could also negatively affect the
economy in general and thereby our overall loan portfolio.

We
provide financing to businesses in a number of other industries that may be particularly vulnerable to industry-specific economic factors, including the home building industry, the
commercial real estate industry, the communications/media industry, the retail industry, the energy industry and the technology industry. The home building industry in California has been especially
adversely impacted by the deterioration in residential real estate markets, particularly in the subprime housing sectors and has lead us to take additional provisions against credit losses in this
portfolio as to which we expect an acceleration of charge offs during the rest of 2008 and additional provisions. Continued increases in fuel prices and energy costs could adversely affect businesses
in several of these industries. 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 and a slowing of growth or reduction in our loan portfolio.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds



The following table presents repurchases by us of our equity securities during the first quarter of 2008.

|Period        |       | Total Number of Shares Purchased(1) |       | Average Price Paid per Share |       | Total Number of Shares Purchased as Part of Publicly Announced Programs |   | Approximate Dollar Value of Shares that May Yet Be Purchased under the Programs |  
|------------- | ----- | ----------------------------------- | ----- | ---------------------------- | ----- | ----------------------------------------------------------------------- | - | ------------------------------------------------------------------------------- | -
|January 2008  |       | 965                                 |       | $                            | 48.66 |                                                                         |  |                                                                                 | $
|February 2008 |       | 266                                 |       | $                            | 48.20 |                                                                         |  |                                                                                 | $
|March 2008    |       | 845                                 |       | $                            | 48.97 |                                                                         |  |                                                                                 | $
|              |       |                                     |       |                              |       |                                                                         |   |                                                                                 |  
|              | Total |                                     | 2,076 |                              | $     | 48.72                                                                   |   |                                                                                |  
|              |       |                                     |       |                              |       |                                                                         |   |                                                                                 |  

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Item 6.   Exhibits

|No.  |  | Description                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Description of Compensation Arrangement Providing for Annual Discretionary Cash Payment to Expatriate Executive Officers(1)                             
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(2)                                               
|31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(2)                                               
|32.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(2)
|32.2 |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(2)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                     | UNIONBANCAL CORPORATION (Registrant)
|-------------------- | ------------------------------------
|Date:    May 8, 2008 | By:                                 
|Date:    May 8, 2008 | By:                                 
|Date:    May 8, 2008 | By:                                 

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EXHIBIT INDEX

|No.  |  | Description                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Description of Compensation Arrangement Providing for Annual Discretionary Cash Payment to Expatriate Executive Officers(1)                             
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(2)                                               
|31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(2)                                               
|32.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(2)
|32.2 |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(2)

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