================================================================================

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

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

                         COMMISSION FILE NUMBER 1-15081

                             UNIONBANCAL CORPORATION

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

                              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 |X|  No |_|

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

   Number of shares of Common Stock outstanding at July 31, 2003: 151,287,777


================================================================================


<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                                TABLE OF CONTENTS

                                                                           PAGE
                                                                          NUMBER
                                                                          ------
PART I
FINANCIAL INFORMATION
    Consolidated Financial Highlights.......................................   2
    Item 1. Financial Statements:
      Condensed Consolidated Statements of Income...........................   4
      Condensed Consolidated Balance Sheets.................................   5
      Condensed Consolidated Statements of Changes in Shareholders' Equity..   6
      Condensed Consolidated Statements of Cash Flows.......................   7
      Notes to Condensed Consolidated Financial Statements..................   8
    Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations:
      Introduction..........................................................  20
      Summary...............................................................  21
      Business Segments.....................................................  22
      Net Interest Income...................................................  32
      Noninterest Income....................................................  35
      Noninterest Expense...................................................  37
      Income Tax Expense....................................................  38
      Loans.................................................................  39
      Cross-Border Outstandings.............................................  40
      Provision for Credit Losses...........................................  40
      Allowance for Credit Losses...........................................  41
      Nonperforming Assets..................................................  45
      Loans 90 Days or More Past Due and Still Accruing.....................  45
      Quantitative and Qualitative Disclosure about Interest Rate Risk
        Management (Other Than Trading).....................................  46
      Liquidity Risk........................................................  49
      Regulatory Capital....................................................  50
      Certain Business Risk Factors.........................................  51
    Item 3. Quantitative and Qualitative Disclosure About Market Risk.......  55
    Item 4. Controls and Procedures.........................................  55
PART II
OTHER INFORMATION
    Item 1. Legal Proceedings...............................................  56
    Item 4. Submission of Matters to a Vote of Security Holders.............  56
    Item 6. Exhibits and Reports on Form 8-K................................  57
Signatures..................................................................  58




<PAGE>


                          PART I. FINANCIAL INFORMATION

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL HIGHLIGHTS
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                                    AS OF AND FOR THE THREE MONTHS ENDED
                                                                 -----------------------------------------
                                                                   JUNE 30,           JUNE 30,     PERCENT
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                        2002               2003       CHANGE
------------------------------------------------------------     -----------        -----------    -------

RESULTS OF OPERATIONS:
<S>                                                              <C>                <C>             <C>
  Net interest income(1)....................................     $   386,298        $   386,422       0.03%
  Provision for credit losses...............................          50,000             25,000     (50.00)
  Noninterest income........................................         175,606            203,171      15.70
  Noninterest expense.......................................         316,623            351,004      10.86
                                                                 -----------        -----------
  Income before income taxes(1).............................         195,281            213,589       9.38
  Taxable-equivalent adjustment.............................             537                645      20.11
  Income tax expense........................................          64,802             68,186       5.22
                                                                 -----------        -----------
  Net income................................................     $   129,942        $   144,758      11.40%
                                                                 ===========        ===========

PER COMMON SHARE:
  Net income--basic.........................................     $      0.83        $      0.96      15.66%
  Net income--diluted.......................................            0.81               0.96      18.52
  Dividends(2)..............................................            0.28               0.31      10.71
  Book value (end of period)................................           23.94              25.79       7.73
  Common shares outstanding (end of period).................     157,718,215        149,993,652      (4.90)
  Weighted average common shares outstanding--basic.........     157,314,527        150,046,659      (4.62)
  Weighted average common shares outstanding--diluted.......     159,675,924        151,489,337      (5.13)
BALANCE SHEET (END OF PERIOD):
  Total assets..............................................     $36,136,725        $42,668,834      18.08%
  Total loans...............................................      25,592,306         25,668,660       0.30
  Nonaccrual loans..........................................         414,482            379,487      (8.44)
  Nonperforming assets......................................         414,972            379,758      (8.49)
  Total deposits............................................      28,833,365         35,365,260      22.65
  Medium and long-term debt.................................         406,869            420,853       3.44
  Trust preferred securities................................         366,265            360,166      (1.67)
  Shareholders' equity......................................       3,775,663          3,868,959       2.47
BALANCE SHEET (PERIOD AVERAGE):
  Total assets..............................................     $35,730,492        $39,776,349      11.32%
  Total loans...............................................      25,578,846         26,517,316       3.67
  Earning assets............................................      32,674,628         36,074,488      10.41
  Total deposits............................................      28,222,245         32,587,173      15.47
  Shareholders' equity......................................       3,749,035          3,919,276       4.54
FINANCIAL RATIOS:
  Return on average assets(3)...............................            1.46%              1.46%
  Return on average shareholders' equity(3).................           13.90              14.81
  Efficiency ratio(4).......................................           56.35              59.53
  Net interest margin(1)....................................            4.74               4.29
  Dividend payout ratio.....................................           33.73              32.29
  Tangible equity ratio.....................................           10.16               8.59
  Tier 1 risk-based capital ratio...........................           11.90              11.44
  Total risk-based capital ratio............................           13.65              13.06
  Leverage ratio............................................           10.77               9.63
  Allowance for credit losses to total loans................            2.44               2.17
  Allowance for credit losses to nonaccrual loans...........          150.78             147.11
  Net loans charged off to average total loans(3)...........            0.90               0.80
  Nonperforming assets to total loans and foreclosed assets.            1.62               1.48
  Nonperforming assets to total assets......................            1.15               0.89


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

(1)  Amounts are on a  taxable-equivalent  basis using the federal statutory tax
     rate of 35 percent.

(2)  Dividends per share reflect dividends declared on UnionBanCal Corporation's
     common stock outstanding as of the declaration date.

(3)  Annualized.

(4)  The efficiency  ratio is noninterest  expense,  excluding  foreclosed asset
     expense    (income),    as   a   percentage   of   net   interest    income
     (taxable-equivalent basis) and noninterest income. Foreclosed asset expense
     (income) was ($13)  thousand for the second quarter of 2002 and nil for the
     second quarter of 2003.

</FN>

</TABLE>

                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL HIGHLIGHTS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                    AS OF AND FOR THE SIX MONTHS ENDED
                                                                ------------------------------------------
                                                                  JUNE 30,           JUNE 30,      PERCENT
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                       2002               2003        CHANGE
------------------------------------------------------------    -----------        -----------     -------
RESULTS OF OPERATIONS:
<S>                                                             <C>                <C>              <C>
  Net interest income(1)....................................    $   767,271        $   777,826        1.38%
  Provision for credit losses...............................        105,000             55,000      (47.62)
  Noninterest income........................................        335,349            388,942       15.98
  Noninterest expense.......................................        628,278            693,604       10.40
                                                                -----------        -----------
  Income before income taxes(1).............................        369,342            418,164       13.22
  Taxable-equivalent adjustment.............................          1,070              1,269       18.60
  Income tax expense........................................        123,553            136,620       10.58
                                                                -----------        -----------
  Net income................................................    $   244,719        $   280,275       14.53%
                                                                ===========        ===========

PER COMMON SHARE:
  Net income--basic.........................................    $      1.56        $      1.86       19.23%
  Net income--diluted.......................................           1.54               1.85       20.13
  Dividends(2)..............................................           0.53               0.59       11.32
  Book value (end of period)................................          23.94              25.79        7.73
  Common shares outstanding (end of period).................    157,718,215        149,993,652       (4.90)
  Weighted average common shares outstanding--basic.........    156,774,339        150,329,939       (4.11)
  Weighted average common shares outstanding--diluted.......    158,534,791        151,746,328       (4.28)
BALANCE SHEET (END OF PERIOD):
  Total assets..............................................    $36,136,725        $42,668,834       18.08%
  Total loans...............................................     25,592,306         25,668,660        0.30
  Nonaccrual loans..........................................        414,482            379,487       (8.44)
  Nonperforming assets......................................        414,972            379,758       (8.49)
  Total deposits............................................     28,833,365         35,365,260       22.65
  Medium and long-term debt.................................        406,869            420,853        3.44
  Trust preferred securities................................        366,265            360,166       (1.67)
  Shareholders' equity......................................      3,775,663          3,868,959        2.47
BALANCE SHEET (PERIOD AVERAGE):
  Total assets..............................................    $35,408,797        $39,066,221       10.33%
  Total loans...............................................     25,354,548         26,619,618        4.99
  Earning assets............................................     32,327,489         35,454,075        9.67
  Total deposits............................................     27,897,401         31,836,948       14.12
  Shareholders' equity......................................      3,687,244          3,896,909        5.69
FINANCIAL RATIOS:
  Return on average assets(3)...............................           1.39%              1.45%
  Return on average shareholders' equity(3).................          13.38              14.50
  Efficiency ratio(4).......................................          56.97              59.44
  Net interest margin(1)....................................           4.77               4.41
  Dividend payout ratio.....................................          33.97              31.72
  Tangible equity ratio.....................................          10.16               8.59
  Tier 1 risk-based capital ratio...........................          11.90              11.44
  Total risk-based capital ratio............................          13.65              13.06
  Leverage ratio............................................          10.77               9.63
  Allowance for credit losses to total loans................           2.44               2.17
  Allowance for credit losses to nonaccrual loans...........         150.78             147.11
  Net loans charged off to average total loans(3)...........           0.93               0.80
  Nonperforming assets to total loans and foreclosed assets.           1.62               1.48
  Nonperforming assets to total assets......................           1.15               0.89


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

(1)  Amounts are on a  taxable-equivalent  basis using the federal statutory tax
     rate of 35 percent.

(2)  Dividends per share reflect dividends declared on UnionBanCal Corporation's
     common stock outstanding as of the declaration date.

(3)  Annualized.

(4)  The efficiency  ratio is noninterest  expense,  excluding  foreclosed asset
     expense    (income),    as   a   percentage   of   net   interest    income
     (taxable-equivalent basis) and noninterest income. Foreclosed asset expense
     was $112  thousand  and $51  thousand  for the first six months of 2002 and
     2003, respectively.

</FN>
</TABLE>


                                       3
<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  FOR THE THREE MONTHS        FOR THE SIX MONTHS
                                                                     ENDED JUNE 30,              ENDED JUNE 30,
                                                                 ----------------------      ---------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)                      2002          2003          2002         2003
--------------------------------------------------------------   --------      --------      --------     --------

INTEREST INCOME
<S>                                                              <C>           <C>           <C>          <C>
  Loans.......................................................   $378,572      $354,913      $754,370     $717,888
  Securities..................................................     78,244        78,036       159,580      157,899
  Interest bearing deposits in banks..........................        629         1,130         1,125        2,092
  Federal funds sold and securities purchased under resale
    agreements................................................      4,828         4,001         8,887        5,678
  Trading account assets......................................        930           943         1,621        1,870
                                                                 --------      --------      --------     --------
    Total interest income.....................................    463,203       439,023       925,583      885,427
                                                                 --------      --------      --------     --------
INTEREST EXPENSE
  Domestic deposits...........................................     55,411        40,217       115,346       81,788
  Foreign deposits............................................      6,105         2,811        12,369        6,017
  Federal funds purchased and securities sold under
    repurchase agreements.....................................      1,396           747         3,345        2,074
  Commercial paper............................................      4,536         2,946         8,510        5,674
  Medium and long-term debt...................................      2,411         1,818         4,823        3,684
  UnionBanCal Corporation--obligated mandatorily
    redeemable preferred securities of subsidiary
    grantor trust.............................................      3,948         3,652         7,911        7,323
  Other borrowed funds........................................      3,635         1,055         7,078        2,310
                                                                 --------      --------      --------     --------
    Total interest expense....................................     77,442        53,246       159,382      108,870
                                                                 --------      --------      --------     --------
NET INTEREST INCOME...........................................    385,761       385,777       766,201      776,557
  Provision for credit losses.................................     50,000        25,000       105,000       55,000
                                                                 --------      --------      --------     --------
    Net interest income after provision for credit
      losses..................................................    335,761       360,777       661,201      721,557
                                                                 --------      --------      --------     --------
NONINTEREST INCOME
  Service charges on deposit accounts.........................     69,869        77,942       136,012      150,229
  Trust and investment management fees........................     37,587        33,141        74,312       65,816
  International commissions and fees..........................     19,239        21,276        37,462       40,889
  Insurance commissions.......................................      6,252        15,706        13,405       28,711
  Card processing fees, net...................................      8,736         9,340        17,275       19,022
  Brokerage commissions and fees..............................      9,275         8,729        18,907       17,595
  Foreign exchange trading gains, net.........................      7,011         6,958        13,459       13,892
  Merchant banking fees.......................................      9,081         6,191        16,026       12,209
  Securities gains, net.......................................      1,969         9,013         1,969        9,013
  Other.......................................................      6,587        14,875         6,522       31,566
                                                                 --------      --------      --------     --------
    Total noninterest income..................................    175,606       203,171       335,349      388,942
                                                                 --------      --------      --------     --------
NONINTEREST EXPENSE
  Salaries and employee benefits..............................    186,100       198,929       364,976      397,036
  Net occupancy...............................................     25,029        32,866        48,410       60,502
  Equipment...................................................     15,967        16,354        32,307       33,025
  Communications..............................................     12,568        13,354        26,509       27,198
  Professional services.......................................     10,936        13,566        20,439       25,580
  Data processing.............................................      7,540         7,744        16,531       16,228
  Foreclosed asset expense (income)...........................        (13)           --           112           51
  Other.......................................................     58,496        68,191       118,994      133,984
                                                                 --------      --------      --------     --------
    Total noninterest expense.................................    316,623       351,004       628,278      693,604
                                                                 --------      --------      --------     --------
  Income before income taxes..................................    194,744       212,944       368,272      416,895
  Income tax expense..........................................     64,802        68,186       123,553      136,620
                                                                 --------      --------      --------     --------
NET INCOME....................................................   $129,942      $144,758      $244,719     $280,275
                                                                 ========      ========      ========     ========
NET INCOME PER COMMON SHARE--BASIC............................   $   0.83      $   0.96      $   1.56     $   1.86
                                                                 ========      ========      ========     ========
NET INCOME PER COMMON SHARE--DILUTED..........................   $   0.81      $   0.96      $   1.54     $   1.85
                                                                 ========      ========      ========     ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING--BASIC.............    157,315       150,047       156,774      150,330
                                                                 ========      ========      ========     ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING--DILUTED...........    159,676       151,489       158,535      151,746
                                                                 ========      ========      ========     ========

</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                            (UNAUDITED)                           (UNAUDITED)
                                                                              JUNE 30,         DECEMBER 31,         JUNE 30,
(DOLLARS IN THOUSANDS)                                                          2002               2002               2003
-------------------------------------------------------------------------   -----------        -----------        -----------
ASSETS
<S>                                                                         <C>                <C>                 <C>
Cash and due from banks..................................................   $ 2,046,286        $ 2,823,573         $3,096,509
Interest bearing deposits in banks.......................................       153,423            278,849            212,746
Federal funds sold and securities purchased under resale agreements......       640,500          1,339,700          1,624,552
                                                                            -----------        -----------        -----------
  Total cash and cash equivalents........................................     2,840,209          4,442,122          4,933,807
Trading account assets...................................................       365,784            276,021            387,928
Securities available for sale:
  Securities pledged as collateral.......................................       133,219            157,823            154,961
  Held in portfolio......................................................     5,673,609          7,109,498          9,438,110
Loans (net of allowance for credit losses: June 30, 2002, $624,948;
  December 31, 2002, $609,190; June 30, 2003, $558,282)..................    24,967,358         25,828,893         25,110,378
Due from customers on acceptances........................................       119,072             62,469             81,560
Premises and equipment, net..............................................       500,584            504,666            498,708
Intangible assets........................................................        23,965             38,518             46,240
Goodwill.................................................................        92,924            150,542            178,591
Other assets.............................................................     1,420,001          1,599,221          1,838,551
                                                                            -----------        -----------        -----------
  Total assets...........................................................   $36,136,725        $40,169,773        $42,668,834
                                                                            ===========        ===========        ===========

LIABILITIES
Domestic deposits:
  Noninterest bearing....................................................   $12,938,634        $15,537,906        $17,198,024
  Interest bearing.......................................................    14,267,606         15,258,479         16,494,167
Foreign deposits:
  Noninterest bearing....................................................       315,416            583,836            490,314
  Interest bearing.......................................................     1,311,709          1,460,594          1,182,755
                                                                            -----------        -----------        -----------
  Total deposits.........................................................    28,833,365         32,840,815         35,365,260
Federal funds purchased and securities sold under repurchase agreements..       318,365            334,379            337,785
Commercial paper.........................................................       955,328          1,038,982            835,268
Other borrowed funds.....................................................       395,826            267,047            238,239
Acceptances outstanding..................................................       119,072             62,469             81,560
Other liabilities........................................................       965,972          1,083,836          1,160,744
Medium and long-term debt................................................       406,869            418,360            420,853
UnionBanCal Corporation--obligated mandatorily redeemable preferred
  securities of subsidiary grantor trust.................................       366,265            365,696            360,166
                                                                            -----------        -----------        -----------
  Total liabilities......................................................    32,361,062         36,411,584         38,799,875
                                                                            -----------        -----------        -----------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock:
  Authorized 5,000,000 shares, no shares issued or outstanding as of June
  30, 2002, December 31, 2002, and June 30, 2003.........................            --                 --                 --
Common stock--no stated value:
  Authorized 300,000,000 shares, issued 157,718,215 shares as of June 30,
  2002, 150,702,363 shares as of December 31, 2002, and 149,993,652 shares
  as of June 30, 2003....................................................     1,222,571            926,460            894,979
Retained earnings........................................................     2,393,132          2,591,635          2,783,314
Accumulated other comprehensive income...................................       159,960            240,094            190,666
                                                                            -----------        -----------        -----------
  Total shareholders' equity.............................................     3,775,663          3,758,189          3,868,959
                                                                            -----------        -----------        -----------
  Total liabilities and shareholders' equity.............................   $36,136,725        $40,169,773        $42,668,834
                                                                            ===========        ===========        ===========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       5

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                            FOR THE SIX MONTHS ENDED JUNE 30,
                                                                 -----------------------------------------------------
(DOLLARS IN THOUSANDS                                                      2002                          2003
------------------------------------------------------------     -----------------------       -----------------------
COMMON STOCK
<S>                                                              <C>            <C>            <C>            <C>
  Balance, beginning of period..............................     $1,181,925                    $  926,460
  Dividend reinvestment plan................................             72                            24
  Deferred compensation - restricted stock..................            (15)                           --
  Stock options exercised...................................         70,564                        13,324
  Stock issued in bank acquisitions.........................         23,852                            --
  Common stock repurchased(1)...............................        (53,827)                      (44,829)
                                                                 ----------                    ----------
    Balance, end of period..................................     $1,222,571                    $  894,979
                                                                 ----------                    ----------
RETAINED EARNINGS
  Balance, beginning of period..............................     $2,231,384                    $2,591,635
  Net income................................................        244,719     $244,719          280,275     $280,275
  Dividends on common stock(2)..............................        (83,077)                      (88,707)
  Deferred compensation - restricted stock..................            106                           111
                                                                 ----------                    ----------
    Balance, end of period..................................     $2,393,132                    $2,783,314
                                                                 ----------                    ----------
ACCUMULATED OTHER COMPREHENSIVE INCOME
  Balance, beginning of period..............................     $  132,933                    $  240,094
  Unrealized net gains on cash fllow hedges, net of tax
   expense of $23,776 and $22,289 in the first six months
   of 2002 and 2003, respectively...........................                      38,383                        35,983
  Less: reclassification adjustment for net gains on
   cash flow hedges included in net income, net of tax
   expense of $21,285 and $27,236 in the first six
   months of 2002 and 2003, respectively....................                     (34,361)                      (43,968)
                                                                                --------                      --------
  Net increase (reduction) in unrealized gains on cash
   flow hedges..............................................                       4,022                        (7,985)
  Unrealized holding gains (losses) arising during the
   period on securities available for sale, net of tax
   expense (benefit) of $14,039 and $(22,296) in the
   first six months of 2002 and 2003, respectively..........                      22,664                       (35,995)
  Less: reclassification adjustment for gains on
   securities available for sale included in net income,
   net of tax expense of $753 and $3,447 in the first
   six months of 2002 and 2003, respectively................                      (1,216)                       (5,566)
                                                                                --------                      --------
  Net unrealized gains (losses) on securities available
   for sale.................................................                      21,448                       (41,561)
  Foreign currency translation adjustment, net of tax
   expense of $964 and $73 in the first six months of
   2002 and 2003, respectively..............................                       1,557                           118
                                                                                --------                      --------
  Other comprehensive income (loss).........................         27,027       27,027          (49,428)     (49,428)
                                                                 ----------     --------       ----------     --------
  Total comprehensive income................................                    $271,746                      $230,847
                                                                                ========                      ========
    Balance, end of period..................................     $  159,960                    $  190,666
                                                                 ----------                    ----------
      TOTAL SHAREHOLDERS' EQUITY............................     $3,775,663                    $3,868,959
                                                                 ==========                    ==========

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

(1)  Common stock repurchased includes commission costs.

(2)  Dividends  per share  were $0.53 and $0.59 for the first six months of 2002
     and 2003,  respectively.  Dividends are based on UnionBanCal  Corporation's
     shares outstanding as of the declaration date.
</FN>
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       6

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                    FOR THE SIX MONTHS
                                                                                       ENDED JUNE 30,
                                                                               -----------------------------
(DOLLARS IN THOUSANDS)                                                            2002               2003
----------------------------------------------------------------------------   ----------         ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                            <C>                <C>
  Net income................................................................   $  244,719         $  280,275
   Adjustments to reconcile net income to net cash provided by
   operating activities:
    Provision for credit losses.............................................      105,000             55,000
    Depreciation, amortization and accretion................................       39,605             61,742
    Provision for deferred income taxes.....................................       28,359             44,876
    Gains on securities available for sale..................................       (1,969)            (9,013)
    Net increase in prepaid expenses........................................      (86,060)           (83,845)
    Net (increase) decrease in fees and other charges receivable............       21,599            (94,140)
    Net increase in trading account assets..................................     (136,087)          (111,907)
    Loans originated for resale.............................................      (91,603)           (55,608)
    Net proceeds from sale of loans originated for resale...................       97,222             57,029
    Other, net..............................................................     (165,258)           (34,102)
                                                                               ----------         ----------
    Total adjustments.......................................................     (189,192)          (169,968)
                                                                               ----------         ----------
  Net cash provided by operating activities.................................       55,527            110,307
                                                                               ----------         ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sales of securities available for sale......................      125,688             35,296
  Proceeds from matured and called securities available for sale............      584,878          1,506,572
  Purchases of securities available for sale................................     (772,509)        (3,907,936)
  Net (increase) decrease in loans..........................................     (598,028)           643,659
  Net cash received (paid) in acquisitions..................................       64,689            (29,860)
  Other, net................................................................      (29,140)           (46,370)
                                                                               ----------         ----------
    Net cash used in investing activities...................................     (624,422)        (1,798,639)
                                                                               ----------         ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase in deposits..................................................       72,541          2,524,445
  Net increase (decrease) in federal funds purchased and securities
   sold under repurchase agreements.... ....................................     (100,449)             3,406
  Net decrease in commercial paper and other borrowed funds.................     (179,906)          (232,522)
  Common stock repurchased..................................................      (53,827)           (44,829)
  Payments of cash dividends................................................      (78,165)           (84,413)
  Stock options exercised...................................................       70,564             13,324
  Other, net................................................................        1,629                142
                                                                               ----------         ----------
    Net cash provided by (used in) financing activities.....................     (267,613)         2,179,553
                                                                               ----------         ----------
Net increase (decrease) in cash and cash equivalents........................     (836,508)           491,221
Cash and cash equivalents at beginning of period............................    3,664,954          4,442,122
Effect of exchange rate changes on cash and cash equivalents................       11,763                464
                                                                               ----------         ----------
Cash and cash equivalents at end of period..................................   $2,840,209         $4,933,807
                                                                               ==========         ==========


CASH PAID DURING THE PERIOD FOR:
  Interest..................................................................   $  168,806         $  117,463
  Income taxes..............................................................       73,098             51,197
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Acquisitions:
    Fair value of assets acquired...........................................   $  256,276         $   47,988
      Purchase price:
      Cash..................................................................      (20,940)           (40,300)
      Stock issued..........................................................      (23,852)                --
                                                                               ----------         ----------
    Liabilities assumed.....................................................   $  211,484         $    7,688
                                                                               ==========         ==========

</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                       7
<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 1--BASIS OF PRESENTATION AND NATURE OF OPERATIONS

     The unaudited condensed  consolidated  financial  statements of UnionBanCal
Corporation and subsidiaries (the Company) 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.  However,  they  do not  include  all  of the  disclosures
necessary  for annual  financial  statements  in  conformity  with US GAAP.  The
results of  operations  for the period  ended June 30, 2003 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 the
Company's Form 10-K/A for the year ended  December 31, 2002. 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 from those estimates.

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

     Since November 1999 through June 30, 2003, the Company has announced  stock
repurchase plans totaling $500 million. The Company repurchased $86 million, $27
million, and $18 million of common stock in 2002, the first quarter of 2003, and
the second quarter of 2003, respectively,  as part of these repurchase plans. As
of June 30, 2003,  $115 million of the Company's  common stock is authorized for
repurchase.  In addition,  on August 27,  2002,  the Company  announced  that it
purchased $300 million of its common stock from its majority owner,  The Bank of
Tokyo-Mitsubishi,  Ltd. (BTM), which is a wholly-owned  subsidiary of Mitsubishi
Tokyo Financial Group, Inc. At June 30, 2003, BTM owned approximately 66 percent
of the Company's outstanding common stock.

     Certain  amounts for prior  periods  have been  reclassified  to conform to
current financial statement presentation.

     STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE

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

     As allowed under the  provisions  of SFAS No. 123, as amended,  the Company
has chosen to continue to recognize  compensation  expense  using the  intrinsic
value-based method of valuing stock options prescribed in Accounting  Principles
Board  Opinion  (APB) No. 25,  "Accounting  for Stock Issued to


                                       8
<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 1--BASIS OF PRESENTATION AND NATURE OF OPERATIONS (CONTINUED)

Employees" and related Interpretations.  Under the intrinsic value-based method,
compensation  cost is measured as the amount by which the quoted market price of
the  Company's  stock at the date of grant  exceeds  the stock  option  exercise
price.

     At June 30, 2003,  the Company has two  stock-based  employee  compensation
plans. For further discussion  concerning our stock-based employee  compensation
plans  see  Note  14--"Management  Stock  Plan"  of the  Notes  to  Consolidated
Financial Statements included in the Form 10-K/A for the year ended December 31,
2002. Only restricted stock awards have been reflected in compensation  expense,
while all options  granted under those plans had an exercise  price equal to the
market value of the underlying common stock on the date of grant.

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

<TABLE>
<CAPTION>


                                                              THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                   JUNE 30,                    JUNE 30,
                                                            ----------------------      ---------------------
(DOLLARS IN THOUSANDS)                                         2002         2003          2002         2003
---------------------------------------------------------   --------      --------      --------     --------
<S>                                                         <C>           <C>           <C>          <C>
AS REPORTED NET INCOME...................................   $129,942      $144,758      $244,719     $280,275
Stock option-based employee compensation expense
 (determined under fair value based method for
 all awards, net of taxes)...............................     (5,740)       (6,527)       (9,918)     (12,483)
                                                            --------      --------      --------     --------
Pro forma net income, after stock option-based
 employee compensation expense...........................   $124,202      $138,231      $234,801     $267,792
                                                            ========      ========      ========     ========

EARNINGS PER SHARE--BASIC
As reported..............................................   $   0.83      $   0.96      $   1.56     $   1.86
Pro forma................................................   $   0.79      $   0.92      $   1.50     $   1.78
EARNINGS PER SHARE--DILUTED
As reported..............................................   $   0.81      $   0.96      $   1.54     $   1.85
Pro forma................................................   $   0.78      $   0.91      $   1.48     $   1.76

</TABLE>


     Compensation cost associated with the Company's  unvested  restricted stock
issued under the management  stock plan is measured based on the market price of
the  stock  at  the  grant  date  and  is  expensed  over  the  vesting  period.
Compensation  expense related to restricted stock awards for the second quarters
of 2002 and 2003 was not significant.

NOTE 2--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     In April 2003, the Financial  Accounting Standards Board (FASB) issued SFAS
No. 149,  "Amendment  of Statement  133 on  Derivative  Instruments  and Hedging
Activities."  This  Statement  amends and  clarifies  financial  accounting  and
reporting for derivative  instruments,  including certain derivative instruments
embedded  in other  contracts  and for  hedging  activities  under SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities." The changes in
this  Statement  improve  financial  reporting by requiring  that contracts with
comparable characteristics be accounted for similarly. SFAS No. 149 is


                                       9
<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 2--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

effective for contracts  entered into or modified after June 30, 2003, except as
stated below, and for hedging relationships  designated after June 30, 2003. All
provisions should be applied prospectively.

     The  provisions of SFAS No. 149 that relate to SFAS No. 133  implementation
issues that have been effective for fiscal quarters that began prior to June 15,
2003, will be applied in accordance with their  respective  effective  dates. In
addition,  the provisions of SFAS No. 149, which relate to forward  purchases or
sales of when-issued  securities or other securities that do not exist,  will be
applied to both existing contracts and new contracts entered into after June 30,
2003. Management believes that adoption of the provisions of this Statement will
not have a material  impact on the  Company's  financial  position or results of
operations.

     ACCOUNTING FOR CERTAIN FINANCIAL  INSTRUMENTS WITH  CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial  Instruments with Characteristics of both Liabilities and Equity." The
Statement  establishes standards for how the Company should classify and measure
certain  financial  instruments  with  characteristics  of both  liabilities and
equity.  SFAS No. 150 is effective  for  financial  instruments  entered into or
modified  after May 31, 2003, and otherwise is effective at the beginning of the
first interim  period  beginning  after June 15, 2003. The new standards for the
classification  and  measurement  of  financial  instruments  should be  applied
retroactively.  Any gain or loss resulting from the  implementation  of SFAS No.
150 will be reported as a cumulative effect of a change in accounting principle.
Management  believes that adoption of the standards of this  Statement  will not
have a  material  impact on the  Company's  financial  position  or  results  of
operations.

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

     In  November  2002,  the FASB  issued  FASB  Interpretation  No.  (FIN) 45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect Guarantees of Indebtedness of Others." FIN 45 expands on the accounting
guidance of Statements  No. 5, 57, and 107 and  incorporates  without change the
provisions  of FIN 34, which is  superseded.  FIN 45  elaborates on the existing
disclosure  requirements  for  most  guarantees  and  requires  that  guarantors
recognize  a  liability  for the fair  value of  guarantees  at  inception.  The
disclosure requirements of FIN 45 are effective for financial statements periods
ending  after  December  15,  2002.  The  initial  recognition  and  measurement
provisions of FIN 45 are applied on a prospective  basis to guarantees issued or
modified  after  December  31,  2002.  A  complete  description  of  significant
guarantees  that have been  entered  into by the  Company  may be found in "Note
7--Guarantees."  Adopting the  measurement  provisions  of FIN 45 did not have a
material  impact in the second quarter of 2003 and  management  believes that it
will not have a material impact on the Company's  future  financial  position or
results of operations.

     CONSOLIDATION OF VARIABLE INTEREST ENTITIES

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


                                       10
<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)


NOTE 2--RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

be included in a company's  consolidated  financial  statements.  A company that
holds variable  interests in an entity will need to  consolidate  that entity if
the  company's  interest  in the VIE is such  that  the  company  will  absorb a
majority of the VIE's  expected  losses  and/or  receive a majority of the VIE's
expected residual returns,  if they occur. New disclosure  requirements are also
prescribed by FIN 46. FIN 46 became effective upon its issuance.  As of June 30,
2003,   the  Company   does  not  believe  it  has  any  VIE's  for  which  this
interpretation would require consolidation. However, under FIN 46, the Company's
subsidiary,  which issued trust preferred  securities,  will be  deconsolidated.
Deconsolidation  of this  entity in the third  quarter of 2003 will cause  total
assets and total liabilities to increase by approximately  $10.8 million with no
change to the Company's results of operations.

     For additional information on recently issued accounting pronouncements and
other  significant  accounting  principles,  see Note 1--"Summary of Significant
Accounting  Policies  and  Nature of  Operations"  of the Notes to  Consolidated
Financial Statements included in the Form 10-K/A for the year ended December 31,
2002.

NOTE 3--EARNINGS PER SHARE

     Basic  earnings  per share (EPS) is computed by dividing  net income by the
weighted average number of common shares outstanding during the period.  Diluted
EPS incorporates the dilutive effect of common stock equivalents  outstanding on
an average basis during the period. Stock options are a common stock equivalent.
The following table presents a  reconciliation  of basic and diluted EPS for the
three months and six months ended June 30, 2002 and 2003.

<TABLE>
<CAPTION>


                                      THREE MONTHS ENDED JUNE 30,                             SIX MONTHS ENDED JUNE 30,
                          -------------------------------------------------     -------------------------------------------------
                                   2002                        2003                       2002                       2003
                          ----------------------     ----------------------     ----------------------      ---------------------
(AMOUNTS IN THOUSANDS,
  EXCEPT PER SHARE
  DATA)                     BASIC       DILUTED        BASIC       DILUTED        BASIC       DILUTED         BASIC      DILUTED
------------------------- --------      --------     --------      --------     --------      --------      --------     --------
<S>                       <C>           <C>          <C>           <C>          <C>           <C>           <C>          <C>
Net Income............... $129,942      $129,942     $144,758      $144,758     $244,719      $244,719      $280,275     $280,275
                          ========      ========     ========      ========     ========      ========      ========     ========
Weighted average common
  shares outstanding.....  157,315       157,315      150,047       150,047      156,774       156,774       150,330      150,330
Additional shares due to:
  Assumed conversion
  of dilutive stock
  options................       --         2,361           --         1,442           --         1,761            --        1,416
                          --------      --------     --------      --------     --------      --------      --------     --------
Adjusted weighted average
  common shares
  outstanding............  157,315       159,676      150,047       151,489      156,774       158,535       150,330      151,746
                          ========      ========     ========      ========     ========      ========      ========     ========
Net income per share..... $   0.83      $   0.81     $   0.96      $   0.96     $   1.56      $   1.54      $   1.86     $   1.85
                          ========      ========     ========      ========     ========      ========      ========     ========

</TABLE>
























                                       11
<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 4--ACCUMULATED OTHER COMPREHENSIVE INCOME

     The following  table  presents a summary of the  components of  accumulated
other comprehensive income.

<TABLE>
<CAPTION>

                                                              NET UNREALIZED GAINS
                                   NET UNREALIZED GAINS          ON SECURITIES              FOREIGN CURRENCY
                                   ON CASH FLOW HEDGES        AVAILABLE FOR SALE         TRANSLATION ADJUSTMENT
                                   ---------------------      ---------------------      -----------------------
                                                       FOR THE SIX MONTHS ENDED JUNE 30,
                                   -----------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)               2002          2003          2002         2003         2002           2003
-------------------------------    -------      --------      --------     --------      --------       --------
<S>                                <C>          <C>           <C>          <C>           <C>            <C>
Beginning balance..............    $62,840      $104,368      $ 83,271     $147,450      $(12,205)      $(10,649)
Change during the period.......      4,022        (7,985)       21,448      (41,561)        1,557            118
                                   -------      --------      --------     --------      --------       --------
Ending balance.................    $66,862      $ 96,383      $104,719     $105,889      $(10,648)      $(10,531)
                                   =======      ========      ========     ========      ========       ========
</TABLE>

<TABLE>
<CAPTION>


                                                                  MINIMUM PENSION          ACCUMULATED OTHER
                                                               LIABILITY ADJUSTMENT       COMPREHENSIVE INCOME
                                                               --------------------      ---------------------
                                                                    FOR THE SIX MONTHS ENDED JUNE 30,
                                                               -----------------------------------------------
(DOLLARS IN THOUSANDS)                                           2002        2003          2002         2003
---------------------------------------------------------      -------     --------      --------     --------
<S>                                                            <C>         <C>           <C>          <C>
Beginning balance........................................      $  (973)    $(1,075)      $132,933     $240,094
Change during the period.................................           --          --         27,027      (49,428)
                                                               -------     --------      --------     --------
Ending balance...........................................      $  (973)    $(1,075)      $159,960     $190,666
                                                               =======     ========      ========     ========
</TABLE>

NOTE 5--BUSINESS SEGMENTS

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

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

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

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

     o    The Global  Markets  Group  manages the  Company's  wholesale  funding
          needs,  securities  portfolio,  and interest rate and liquidity risks.
          The group also  offers a broad  range of risk  management  and


                                       12
<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 5--BUSINESS SEGMENTS (CONTINUED)

          trading products to institutional  and business clients of the Company
          through the businesses described above.

     The information,  set forth in the tables on the following pages,  reflects
selected  income  statement  and  balance  sheet  items by  business  unit.  The
information  presented  does  not  necessarily  represent  the  business  units'
financial  condition and results of operations were they  independent  entities.
Unlike  financial  accounting,  there is no  authoritative  body of guidance for
management accounting equivalent to US GAAP. Consequently,  reported results are
not necessarily comparable with those presented by other companies.

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

     "Other" includes the following items:

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

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

     o    the  Pacific  Rim  Corporate  Group,  with  assets at June 30, 2003 of
          $342.4  million,  which  offers  a  range  of  credit,   deposit,  and
          investment  management  products  and services to companies in the US,
          which are affiliated with companies headquartered in Japan; and

     o    the residual costs of support groups.





                                       13
<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 5--BUSINESS SEGMENTS (CONTINUED)

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


<TABLE>
<CAPTION>

                                                        COMMUNITY BANKING
                                                         AND INVESTMENT           COMMERCIAL FINANCIAL         INTERNATIONAL
                                                         SERVICES GROUP              SERVICES GROUP            BANKING GROUP
                                                      ---------------------      ----------------------     -------------------
                                                                     AS OF AND FOR THE THREE MONTHS ENDED JUNE 30,
                                                      -------------------------------------------------------------------------
                                                        2002         2003          2002          2003        2002        2003
---------------------------------------------------   --------     --------      --------      --------     -------     -------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>           <C>          <C>         <C>
Net interest income................................   $191,739     $212,859      $165,463      $204,011     $ 9,366     $ 9,829
Noninterest income.................................     94,305      111,872        54,474        61,552      16,632      26,090
                                                      --------     --------      --------      --------     -------     -------
Total revenue......................................    286,044      324,731       219,937       265,563      25,998      35,919
Noninterest expense................................    172,781      197,037        95,017       105,134      15,266      15,258
Credit expense (income)............................      8,911        8,064        47,487        42,145         460         547
                                                      --------     --------      --------      --------     -------     -------
Income before income tax expense (benefit).........    104,352      119,630        77,433       118,284      10,272      20,114
Income tax expense (benefit).......................     39,915       45,758        24,331        38,351       3,929       7,693
                                                      --------     --------      --------      --------     -------     -------
Net income (loss)..................................   $ 64,437     $ 73,872      $ 53,102      $ 79,933     $ 6,343     $12,421
                                                      ========     ========      ========      ========     =======     =======
TOTAL ASSETS, END OF PERIOD (dollars in millions):.   $ 10,929     $ 12,248      $ 15,932      $ 14,976     $ 1,467     $ 1,937
                                                      ========     ========      ========      ========     =======     =======

</TABLE>

<TABLE>
<CAPTION>


                                                              GLOBAL                                            UNIONBANCAL
                                                           MARKETS GROUP                 OTHER                  CORPORATION
                                                      ---------------------      ----------------------     -------------------
                                                                      AS OF AND FOR THE THREE MONTHS ENDED JUNE 30,
                                                      -------------------------------------------------------------------------
                                                        2002         2003          2002           2003        2002       2003
--------------------------------------------------    --------     --------      --------       -------     --------   --------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>            <C>         <C>        <C>
Net interest income...............................    $     12     $(60,157)     $ 19,181       $19,235     $385,761   $385,777
Noninterest income................................       4,708        1,882         5,487         1,775      175,606    203,171
                                                      --------     --------      --------       -------     --------   --------
Total revenue.....................................       4,720      (58,275)       24,668        21,010      561,367    588,948
Noninterest expense...............................       4,007        3,687        29,552        29,888      316,623    351,004
Credit expense (income)...........................          50           50        (6,908)      (25,806)      50,000     25,000
                                                      --------     --------      --------       -------     --------   --------
Income (loss) before income tax expense (benefit).         663      (62,012)        2,024        16,928      194,744    212,944
Income tax expense (benefit)......................         254      (23,719)       (3,627)          103       64,802     68,186
                                                      --------     --------      --------       -------     --------   --------
Net income (loss).................................    $    409     $(38,293)     $  5,651       $16,825     $129,942   $144,758
                                                      ========     ========      ========       =======     ========   ========
TOTAL ASSETS, END OF PERIOD (dollars in millions):    $  6,868     $ 11,824      $    941       $ 1,684     $ 36,137   $ 42,669
                                                      ========     ========      ========       =======     ========   ========

</TABLE>




                                       14

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 5--BUSINESS SEGMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                       COMMUNITY BANKING
                                                         AND INVESTMENT           COMMERCIAL FINANCIAL         INTERNATIONAL
                                                         SERVICES GROUP              SERVICES GROUP            BANKING GROUP
                                                      ---------------------      ----------------------     -------------------
                                                                      AS OF AND FOR THE SIX MONTHS ENDED JUNE 30,
                                                      -------------------------------------------------------------------------
                                                        2002         2003          2002          2003         2002       2003
---------------------------------------------------   --------     --------      --------      --------     --------   --------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>           <C>          <C>        <C>
Net interest income................................   $370,758     $418,550      $325,617      $396,362     $ 18,871   $ 20,048
Noninterest income.................................    183,409      213,469       102,978       119,462       32,720     41,573
                                                      --------     --------      --------      --------     --------   --------
Total revenue......................................    554,167      632,019       428,595       515,824       51,591     61,621
Noninterest expense................................    348,148      396,255       186,551       204,532       30,409     30,182
Credit expense (income)............................     17,891       15,782        94,520        84,607          954      1,052
                                                      --------     --------      --------      --------     --------   --------
Income before income tax expense (benefit).........    188,128      219,982       147,524       226,685       20,228     30,387
Income tax expense (benefit).......................     71,959       84,143        47,038        73,804        7,737     11,623
                                                      --------     --------      --------      --------     --------   --------
Net income (loss)..................................   $116,169     $135,839      $100,486      $152,881     $ 12,491   $ 18,764
                                                      ========     ========      ========      ========     ========   ========
TOTAL ASSETS, END OF PERIOD (dollars in millions):.   $ 10,929     $ 12,248      $ 15,932      $ 14,976     $  1,467   $  1,937
                                                      ========     ========      ========      ========     ========   ========
</TABLE>

<TABLE>
<CAPTION>


                                                              GLOBAL                                            UNIONBANCAL
                                                          MARKETS GROUP                  OTHER                  CORPORATION
                                                      ---------------------      ----------------------    ---------------------
                                                                       AS OF AND FOR THE SIX MONTHS ENDED JUNE 30,
                                                      --------------------------------------------------------------------------
                                                        2002         2003          2002          2003        2002        2003
----------------------------------------------        --------     --------      --------      --------    ---------   ---------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>           <C>         <C>         <C>
Net interest income........................           $ 12,718     $(93,775)     $ 38,237      $ 35,372    $ 766,201   $ 776,557
Noninterest income.........................              6,226        3,408        10,016        11,030      335,349     388,942
                                                      --------     --------      --------      --------    ---------   ---------
Total revenue..............................             18,944      (90,367)       48,253        46,402    1,101,550   1,165,499
Noninterest expense........................              7,921        7,800        55,249        54,835      628,278     693,604
Credit expense (income)....................                100          100        (8,465)      (46,541)     105,000      55,000
                                                      --------     --------      --------      --------    ---------   ---------
Income (loss) before income tax expense
  (benefit)................................             10,923      (98,267)        1,469        38,108      368,272     416,895
Income tax expense (benefit)...............              4,178      (37,587)       (7,359)        4,637      123,553     136,620
                                                      --------     --------      --------      --------    ---------   ---------
Net income (loss)..........................           $  6,745     $(60,680)     $  8,828      $ 33,471    $ 244,719   $ 280,275
                                                      ========     ========      ========      ========    =========   =========
TOTAL ASSETS, END OF PERIOD (dollars in
  millions):...............................           $  6,868     $ 11,824      $    941      $  1,684    $  36,137   $  42,669
                                                      ========     ========      ========      ========    =========   =========
</TABLE>


NOTE 6--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  income to
changes in interest  rates.  These  instruments are used to manage interest rate
risk  relating  to  specified  groups  of  assets  and  liabilities,   primarily
LIBOR-based   commercial  loans,   certificates  of  deposit,   trust  preferred
securities and medium-term notes.


                                       15
<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 6--DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS USED FOR HEDGING
  (CONTINUED)

     CASH FLOW HEDGES

     HEDGING STRATEGIES FOR VARIABLE RATE LOANS AND CERTIFICATES OF DEPOSIT

     The Company  engages in several types of cash flow hedging  strategies  for
which the hedged transactions are forecasted future loan interest payments,  and
the  hedged  risk is the  variability  in those  payments  due to changes in the
designated  benchmark  rate,  e.g., US dollar LIBOR.  In these  strategies,  the
hedging instruments are matched with groups of variable rate loans such that the
tenor  of the  variable  rate  loans  and  that  of the  hedging  instrument  is
identical.  Cash flow hedging  strategies  include the  utilization of purchased
floor, cap, corridor options and interest rate swaps. The maximum length of time
over which the Company is hedging these exposures is 6.14 years.

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

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

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

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

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

     Hedging  transactions  are  structured  at  inception  so that the notional
amounts of the hedge are matched with an equal principal amount of loans or CDs,
the index and repricing  frequencies  of the hedge matches those of the loans or
CDs, and the period in which the designated hedged cash flows occurs is equal to
the term of the  hedge.  As such,  most of the  ineffectiveness  in the  hedging
relationship  results from


                                       16
<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 6--DERIVATIVE INSTRUMENTS AND OTHER FINANCIAL INSTRUMENTS USED FOR HEDGING
  (CONTINUED)


the mismatch  between the timing of reset dates on the hedge versus those of the
loans or CDs. In the second quarter of 2003,  the Company  recognized a net gain
of $0.3  million due to  ineffectiveness,  which is  recognized  in  noninterest
expense, compared to a net loss of $0.1 million in the second quarter of 2002.

     FAIR VALUE HEDGES

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

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

     Fair value  hedging  transactions  are  structured at inception so that the
notional  amounts of the swap match an associated  principal amount of the Trust
Preferred  Securities.  The interest payment dates, the expiration date, and the
embedded call option of the swap match those of the Trust Preferred  Securities.
The ineffectiveness on the fair value hedges in the second quarter of 2003 was a
net loss of less than $0.1  million,  compared to a net gain of $0.5  million in
the second quarter of 2002.

     HEDGING STRATEGY FOR MEDIUM-TERM NOTES

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

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

     OTHER

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

     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.



                                       17
<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)


NOTE 7--GUARANTEES

     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.  The majority of these types of  commitments  have
terms of one year or less.  Collateral  may be  obtained  based on  management's
credit  assessment of the customer.  As of June 30, 2003, the Company's  maximum
exposure to loss for standby and  commercial  letters of credit is $3.0  billion
and $280.1 million, respectively.

     The  Company  has  contingent   consideration   agreements  that  guarantee
additional  payments to acquired insurance  agencies'  shareholders based on the
agencies  future  performance in excess of established  revenue and/or  earnings
before interest,  taxes,  depreciation and amortization (EBITDA) thresholds.  If
the insurance  agencies' future  performance  exceeds these thresholds  during a
three-year  period,  the  Company  will be  liable  to make  payments  to former
shareholders.  As of June 30, 2003, the Company has a maximum  exposure of $12.0
million for these agreements, which expire December 2005.

     The  Company is fund  manager for limited  liability  corporations  issuing
low-income  housing  investments.  Low-income  housing  investments  provide tax
benefits to investors in the form of tax deductions  from  operating  losses and
tax credits. To facilitate the sale of these investments, the Company guarantees
the timely  completion of projects and delivery of tax benefits  throughout  the
investment  term.   Guarantees  may  include  a  minimum  rate  of  return,  the
availability of tax credits,  and operating  deficit  thresholds over a ten-year
average period.  Additionally,  the Company receives project  completion and tax
credit   guarantees  from  the  limited  liability   corporations   issuing  the
investments that reduce the Company's  ultimate exposure to loss. As of June 30,
2003, the Company's  maximum  exposure to loss under these guarantees is limited
to a return of investor capital and minimum  investment yield, or $77.0 million.
The Company maintains a liability of $3.0 million for these guarantees.

     The Company has  guarantees  that obligate it to perform if its  affiliates
are unable to discharge their obligations.  These obligations  include guarantee
of trust preferred securities,  commercial paper obligations and leveraged lease
transactions.  Guarantees issued by the Bank for an affiliate's commercial paper
program are done in order to  facilitate  their sale.  As of June 30, 2003,  the
Bank had a maximum  exposure  to loss  under  these  guarantees,  which  have an
average term of less than one year, of $842.1 million.  The Bank's  guarantee is
fully collateralized by a pledged deposit.  UnionBanCal  Corporation  guarantees
its subsidiaries' leveraged lease transactions, which have terms ranging from 15
to 30 years. Following the original funding of the leveraged lease transactions,
UnionBanCal  Corporation has no material obligation to be satisfied.  As of June
30, 2003, UnionBanCal Corporation had no exposure to loss for these agreements.

NOTE 8--ACQUISITIONS

     On April 1, 2003, the Company completed its acquisition of Tanner Insurance
Brokers, Inc., and recorded approximately $31 million of goodwill and $9 million
of  rights-to-expiration.  The  rights-to-expiration  will  be  amortized  on an
accelerated basis over its useful economic life.


                                       18
<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003
                                   (UNAUDITED)

NOTE 9--SUBSEQUENT EVENTS

     On July 1, 2003,  the Company  completed  its  acquisition  of Monterey Bay
Bank, a savings and loan  association  based in  Watsonville,  California.  As a
result,  the Company  acquired $632 million in total assets and eight  branches.
The Company paid $96.7 million in cash and common stock.

     On July 23, 2003, the Board of Directors declared a quarterly cash dividend
of $0.31 per share of common stock. The dividend will be paid on October 3, 2003
to shareholders of record as of September 5, 2003.





































                                       19
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     THIS DOCUMENT INCLUDES FORWARD-LOOKING INFORMATION, WHICH IS SUBJECT TO THE
"SAFE HARBOR"  CREATED BY SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND SECTION 21E OF THE SECURITIES  EXCHANGE ACT OF 1934, AS AMENDED. WE MAY MAKE
FORWARD-LOOKING  STATEMENTS  IN OTHER  UNITED  STATES  SECURITIES  AND  EXCHANGE
COMMISSION (SEC) FILINGS, PRESS RELEASES,  NEWS ARTICLES,  CONFERENCE CALLS WITH
WALL STREET  ANALYSTS  AND  SHAREHOLDERS  AND WHEN WE ARE  SPEAKING ON BEHALF OF
UNIONBANCAL  CORPORATION.  FORWARD-LOOKING  STATEMENTS  CAN BE IDENTIFIED BY THE
FACT THAT THEY DO NOT RELATE  STRICTLY TO  HISTORICAL OR CURRENT  FACTS.  OFTEN,
THEY INCLUDE THE WORDS  "BELIEVE,"  "EXPECT,"  "ANTICIPATE,"  "INTEND,"  "PLAN,"
"ESTIMATE,"  "PROJECT," OR WORDS OF SIMILAR  MEANING,  OR FUTURE OR  CONDITIONAL
VERBS  SUCH  AS   "WILL,"   "WOULD,"   "SHOULD,"   "COULD,"   OR  "MAY."   THESE
FORWARD-LOOKING  STATEMENTS ARE INTENDED TO PROVIDE  INVESTORS  WITH  ADDITIONAL
INFORMATION  WITH  WHICH THEY MAY  ASSESS  OUR  FUTURE  POTENTIAL.  ALL OF THESE
FORWARD-LOOKING  STATEMENTS ARE BASED ON ASSUMPTIONS  ABOUT AN UNCERTAIN  FUTURE
AND ARE BASED ON INFORMATION  AVAILABLE AT THE DATE SUCH  STATEMENTS ARE ISSUED.
WE DO NOT  UNDERTAKE  TO UPDATE  FORWARD-LOOKING  STATEMENTS  TO REFLECT  FACTS,
CIRCUMSTANCES,   ASSUMPTIONS   OR  EVENTS   THAT   OCCUR   AFTER  THE  DATE  THE
FORWARD-LOOKING STATEMENTS ARE MADE.

     THERE ARE NUMEROUS RISKS AND UNCERTAINTIES THAT COULD AND WILL CAUSE ACTUAL
RESULTS  TO  DIFFER  MATERIALLY  FROM  THOSE  DISCUSSED  IN OUR  FORWARD-LOOKING
STATEMENTS.  MANY OF THESE  FACTORS ARE BEYOND OUR ABILITY TO CONTROL OR PREDICT
AND  COULD  HAVE A  MATERIAL  ADVERSE  EFFECT  ON  OUR  STOCK  PRICE,  FINANCIAL
CONDITION, AND RESULTS OF OPERATIONS OR PROSPECTS.  SUCH RISKS AND UNCERTAINTIES
INCLUDE,  BUT ARE NOT  LIMITED  TO,  THE  FOLLOWING  FACTORS:  ADVERSE  ECONOMIC
CONDITIONS  IN  CALIFORNIA,  GLOBAL  POLITICAL AND GENERAL  ECONOMIC  CONDITIONS
RELATED TO THE TERRORIST ATTACKS ON SEPTEMBER 11, 2001, AND THEIR AFTERMATH, THE
WAR IN IRAQ, ADVERSE ECONOMIC CONDITIONS AFFECTING CERTAIN INDUSTRIES, INCLUDING
POWER COMPANIES AND THE AIRLINE  INDUSTRY,  FLUCTUATIONS IN INTEREST RATES,  THE
CONTROLLING INTEREST IN US OF THE BANK OF TOKYO-MITSUBISHI, LTD. (BTM), WHICH IS
A WHOLLY-OWNED SUBSIDIARY OF MITSUBISHI TOKYO FINANCIAL GROUP, INC., COMPETITION
IN THE BANKING INDUSTRY,  RESTRICTIONS ON DIVIDENDS,  ADVERSE EFFECTS OF CURRENT
AND FUTURE BANKING RULES, REGULATIONS AND LEGISLATION, AND RISKS ASSOCIATED WITH
VARIOUS STRATEGIES WE MAY PURSUE, INCLUDING POTENTIAL ACQUISITIONS, DIVESTITURES
AND  RESTRUCTURINGS.  SEE ALSO  THE  SECTION  ENTITLED  "CERTAIN  BUSINESS  RISK
FACTORS" LOCATED NEAR THE END OF THIS  "MANAGEMENT'S  DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION."

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

INTRODUCTION

     We are a California-based,  commercial bank holding company incorporated in
California,  with consolidated assets of $42.7 billion at June 30, 2003. At June
30,  2003,  Union Bank of  California,  N.A.  (the Bank) was the fourth  largest
commercial  bank in  California,  based on total  assets and total  deposits  in
California.

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

     Since  November  1999  through  June  30,  2003,  we have  announced  stock
repurchase plans totaling $500 million. We repurchased $86 million, $27 million,
and $18  million of common  stock in 2002,  the first  quarter of 2003,  and the
second quarter of 2003,  respectively,  as part of these repurchase plans. As of
June 30, 2003, $115 million of our common stock is authorized for repurchase. In
addition, on August 27, 2002, we announced that we purchased $300 million of our
common  stock  from our  majority  owner,  BTM.  At June  30,  2003,  BTM  owned
approximately 66 percent of our outstanding common stock.


                                       20
<PAGE>



SUMMARY

     COMPARISON OF THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     Net income was $144.8  million,  or $0.96 per diluted common share,  in the
second  quarter of 2003,  compared  with  $129.9  million,  or $0.81 per diluted
common share, in the second quarter of 2002.  This increase in diluted  earnings
per share of $0.15, or 19 percent, above the second quarter of 2002 was due to a
$27.6 million,  or 16 percent,  increase in noninterest income, a $25.0 million,
or 50 percent,  decrease in  provision  for credit  losses,  and a $0.1  million
increase in net interest  income (on a  taxable-equivalent  basis),  offset by a
$34.4 million,  or 11 percent,  increase in noninterest  expense  coupled with a
decrease in weighted average shares outstanding due to share repurchases.  Other
highlights of the second quarter of 2003 include:

     o    Net interest income, on a taxable-equivalent basis, was $386.4 million
          in the second  quarter of 2003,  an increase of $0.1  million over the
          second quarter of 2002.  Net interest  margin in the second quarter of
          2003 was 4.29  percent,  a decrease of 45 basis points from the second
          quarter of 2002.

     o    A provision  for credit  losses of $25.0  million was  recorded in the
          second  quarter  of 2003  compared  with  $50.0  million in the second
          quarter of 2002. This resulted from management's regular assessment of
          overall credit quality, loan portfolio  composition,  and business and
          economic  conditions  in  relation to the level of the  allowance  for
          credit losses. The allowance for credit losses was $558.3 million,  or
          147 percent of total nonaccrual loans, at June 30, 2003, compared with
          $624.9 million,  or 151 percent of total nonaccrual loans, at June 30,
          2002.

     o    Noninterest  income was $203.2  million in the second quarter of 2003,
          an increase of $27.6 million,  or 16 percent,  from the second quarter
          of 2002. This increase  included a $9.5 million  increase in insurance
          commissions  mostly associated with our acquisitions of John Burnham &
          Company and Tanner Insurance  Brokers,  Inc., an $8.1 million increase
          in service  charges on deposit  accounts,  a $7.0 million  increase in
          securities  gains mainly  attributable  to a $9.0 million gain arising
          from the early call of a Mexican  Brady Bond,  partly offset by a $4.4
          million decrease in trust and investment management fees.

     o    Noninterest  expense was $351.0 million in the second quarter of 2003,
          an increase of $34.4 million,  or 11 percent,  over the second quarter
          of 2002. This increase  included a $12.8 million  increase in salaries
          and other compensation,  which was primarily  attributable to our 2002
          acquisitions and new branch openings, higher employee benefits of $5.5
          million and a $7.8 million increase in net occupancy, which included a
          $4.2 million write-off of leasehold improvements.

     o    Income tax  expense in the second  quarter of 2003 was $68.2  million,
          resulting in a 32 percent  effective  income tax rate.  For the second
          quarter of 2002, the effective income tax rate was 33 percent.

     o    Return on average  assets was  unchanged  at 1.46  percent in both the
          second  quarter of 2003 and the second  quarter of 2002. Our return on
          average  shareholders' equity increased to 14.81 percent in the second
          quarter of 2003  compared  to 13.90  percent in the second  quarter of
          2002.

     o    Total loans at June 30, 2003 were $25.7 billion,  a slight increase of
          $76.4 million from June 30, 2002.

     o    Nonperforming  assets were $379.8 million at June 30, 2003, a decrease
          of $35.2  million,  or 8 percent,  from June 30,  2002.  Nonperforming
          assets, as a percentage of total assets,  decreased to 0.89 percent at
          June 30, 2003,  compared  with 1.15  percent at June 30,  2002.  Total
          nonaccrual  loans were $379.5 million at June 30, 2003,  compared with
          $414.5  million at June 30,  2002,  contributing  to a decrease in the
          ratio of  nonaccrual  loans to total loans of 1.48 percent at June 30,
          2003 from 1.62 percent at June 30, 2002.


                                       21
<PAGE>



     o    Our Tier 1 and total risk-based  capital ratios were 11.44 percent and
          13.06  percent,  respectively,  at June 30, 2003,  compared with 11.90
          percent  and  13.65  percent,  respectively,  at June  30,  2002.  Our
          leverage  ratio was 9.63 percent at June 30, 2003  compared with 10.77
          percent at June 30, 2002.

     COMPARISON OF SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     Net income was $280.3  million,  or $1.85 per diluted common share,  in the
first six months of 2003,  compared  with $244.7  million,  or $1.54 per diluted
common share, in the first six months of 2002. This increase in diluted earnings
per share of $0.31, or 20 percent, above the first six months of 2002 was due to
a $53.6 million, or 16 percent, increase in noninterest income, a $50.0 million,
or 48 percent,  decrease in provision for credit losses, and a $10.6 million, or
1 percent,  increase in net  interest  income (on a  taxable-equivalent  basis),
offset by a $65.3  million,  or 10  percent,  increase  in  noninterest  expense
coupled  with a decrease in weighted  average  shares  outstanding  due to share
repurchases. Other highlights of the first six months of 2003 include:

     o    Net interest income, on a taxable-equivalent basis, was $777.8 million
          in the first six months of 2003,  an increase of $10.6  million,  or 1
          percent, over the first six months of 2002. Net interest margin in the
          first six  months of 2003 was 4.41  percent,  a  decrease  of 36 basis
          points from the first six months of 2002.

     o    A provision  for credit  losses of $55.0  million was  recorded in the
          first six months of 2003 compared with $105.0 million in the first six
          months of 2002. This resulted from management's  regular assessment of
          overall credit quality, loan portfolio  composition,  and business and
          economic  conditions  in  relation to the level of the  allowance  for
          credit losses.

     o    Noninterest income was $388.9 million in the first six months of 2003,
          an increase of $53.6 million, or 16 percent, from the first six months
          of 2002. This increase  included a $15.3 million increase in insurance
          commissions  mostly associated with our acquisitions of John Burnham &
          Company and Tanner Insurance  Brokers,  Inc., a $14.2 million increase
          in service  charges  on deposit  accounts,  higher  income  related to
          private capital investments, net, of $10.5 million mainly due to lower
          writedowns in the current year,  lower  residual  value  writedowns on
          auto leases of $9.0 million and a $7.0 million  increase in securities
          gains  mainly  attributable  to a $9.0  million  gain arising from the
          early call of a Mexican  Brady Bond,  partly  offset by a $8.5 million
          decrease in trust and investment management fees.

     o    Noninterest  expense  was  $693.6  million  in the first six months of
          2003, an increase of $65.3 million, or 10 percent,  over the first six
          months of 2002.  This increase  included a $32.1  million  increase in
          salaries  and  employee  benefits  primarily  attributable  to  higher
          salaries and other  compensation  of $18.0 million,  mostly related to
          our  2002  acquisitions  and  new  branch  openings,  higher  employee
          benefits  of  $14.1  million  and a  $12.1  million  increase  in  net
          occupancy,  which  included  a $4.2  million  write-off  of  leasehold
          improvements.

     o    Income tax expense in the first six months of 2003 was $136.6 million,
          resulting in a 33 percent effective income tax rate. For the first six
          months of 2002, the effective income tax rate was 34 percent.

     o    Return on average  assets  increased  to 1.45 percent in the first six
          months of 2003  compared  to 1.39  percent  in the first six months of
          2002. Our return on average  shareholders'  equity  increased to 14.50
          percent in the first six months of 2003  compared to 13.38  percent in
          the first six months of 2002.

BUSINESS SEGMENTS

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


                                       22
<PAGE>



     The  risk-adjusted  return on  capital  (RAROC)  methodology  used seeks to
attribute  economic  capital to business units consistent with the level of risk
they assume.  These risks are primarily credit risk, market risk and operational
risk.  Credit risk is the potential loss in economic value due to the likelihood
that the obligor will not perform as agreed.  Market risk is the potential  loss
in fair  value due to  changes  in  interest  rates,  currency  rates and equity
prices.  Operational  risk is the  potential  loss due to  failures  in internal
control, system failures, or external events.

     The following  tables  reflect the condensed  income  statements,  selected
average  balance  sheet  items and  selected  financial  ratios  for each of our
primary business units. The information presented does not necessarily represent
the business  units'  financial  condition  and results of operations as if they
were  independent  entities.  Also,  the tables  have been  expanded  to include
performance center earnings.  A performance center is a special unit of the Bank
whose income generating activities,  unlike typical profit centers, are based on
other business segment units' customer base. The revenues generated and expenses
incurred for those  transactions  entered into to accommodate  our customers are
allocated to other business segments where the customer  relationships reside. A
performance   center's  purpose  is  to  foster   cross-selling   with  a  total
profitability  view of the products and  services it manages.  For example,  the
Global Markets  Trading and Sales unit,  within the Global  Markets Group,  is a
performance  center that manages the foreign  exchange,  derivatives,  and fixed
income  securities  activities  within the Global Markets  organization.  Unlike
financial accounting,  there is no authoritative body of guidance for management
accounting  equivalent  to US  GAAP.  Consequently,  reported  results  are  not
necessarily comparable with those presented by other companies.

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



















                                       23

<PAGE>


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

<TABLE>
<CAPTION>

                                                        COMMUNITY BANKING
                                                          AND INVESTMENT          COMMERCIAL FINANCIAL          INTERNATIONAL
                                                          SERVICES GROUP             SERVICES GROUP             BANKING GROUP
                                                      ---------------------      ----------------------     -------------------
                                                                    AS OF AND FOR THE THREE MONTHS ENDED JUNE 30,
                                                      -------------------------------------------------------------------------
                                                        2002         2003          2002          2003         2002       2003
                                                      --------     --------      --------      --------     -------     -------
RESULTS OF OPERATIONS AFTER PERFORMANCE CENTER
  EARNINGS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>           <C>          <C>         <C>
  Net interest income..............................   $191,739     $212,859      $165,463      $204,011     $ 9,366     $ 9,829
  Noninterest income...............................     94,305      111,872        54,474        61,552      16,632      26,090
                                                      --------     --------      --------      --------     -------     -------
  Total revenue....................................    286,044      324,731       219,937       265,563      25,998      35,919
  Noninterest expense..............................    172,781      197,037        95,017       105,134      15,266      15,258
  Credit expense (income)..........................      8,911        8,064        47,487        42,145         460         547
                                                      --------     --------      --------      --------     -------     -------
  Income (loss) before income tax expense (benefit)    104,352      119,630        77,433       118,284      10,272      20,114
  Income tax expense (benefit).....................     39,915       45,758        24,331        38,351       3,929       7,693
                                                      --------     --------      --------      --------     -------     -------
  Net income (loss)................................   $ 64,437     $ 73,872      $ 53,102      $ 79,933     $ 6,343     $12,421
                                                      ========     ========      ========      ========     =======     =======
PERFORMANCE CENTER EARNINGS (DOLLARS IN THOUSANDS):
  Net interest income..............................   $    222     $    181      $   (326)     $   (175)    $    --     $    10
  Noninterest income...............................    (12,387)     (10,706)       14,715        17,039       1,157         253
  Noninterest expense..............................     (9,628)      (9,021)        8,437         9,504         861          83
  Net income (loss)................................     (1,614)        (948)        3,746         4,588         183         111
  Total loans (dollars in millions)................         26           25           (47)          (45)         --          --
AVERAGE BALANCES (DOLLARS IN MILLIONS):
  Total loans(1)...................................   $  9,986     $ 11,229      $ 14,148      $ 13,071     $ 1,047     $ 1,606
  Total assets.....................................     10,752       12,236        15,894        15,162       1,403       2,009
  Total deposits(1)................................     14,395       16,424         9,275        12,236       1,567       1,471
FINANCIAL RATIOS:
  Risk adjusted return on capital(2)...............         45%          45%           14%           19%         40%         73%
  Return on average assets (2).....................       2.40         2.42          1.34          2.11        1.81        2.48
  Efficiency ratio(3)..............................       60.4         60.7          43.2          39.6        58.7        42.5

</TABLE>

<TABLE>
<CAPTION>

                                                             GLOBAL                                              UNIONBANCAL
                                                          MARKETS GROUP                   OTHER                   CORPORATION
                                                      ---------------------      ----------------------     --------------------
                                                                    AS OF AND FOR THE THREE MONTHS ENDED JUNE 30,
                                                      --------------------------------------------------------------------------
                                                        2002         2003          2002          2003         2002        2003
                                                      --------     --------      --------      --------     --------    --------
RESULTS OF OPERATIONS AFTER PERFORMANCE CENTER
  EARNINGS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>           <C>          <C>         <C>
  Net interest income..........................       $     12     $(60,157)     $ 19,181      $ 19,235     $385,761    $385,777
  Noninterest income...........................          4,708        1,882         5,487         1,775      175,606     203,171
                                                      --------     --------      --------      --------     --------    --------
  Total revenue................................          4,720      (58,275)       24,668        21,010      561,367     588,948
  Noninterest expense..........................          4,007        3,687        29,552        29,888      316,623     351,004
  Credit expense (income)......................             50           50        (6,908)      (25,806)      50,000      25,000
                                                      --------     --------      --------      --------     --------    --------
  Income (loss) before income tax expense
  (benefit)....................................            663      (62,012)        2,024        16,928      194,744     212,944
  Income tax expense (benefit).................            254      (23,719)       (3,627)          103       64,802      68,186
                                                      --------     --------      --------      --------     --------    --------
  Net income (loss)............................       $    409     $(38,293)     $  5,651      $ 16,825     $129,942    $144,758
                                                      ========     ========      ========      ========     ========    ========
PERFORMANCE CENTER EARNINGS (DOLLARS IN
  THOUSANDS):
  Net interest income..........................       $     --     $   (128)     $    104      $    112     $     --    $     --
  Noninterest income...........................         (6,934)      (9,876)        3,449         3,290           --          --
  Noninterest expense..........................         (1,217)      (2,025)        1,547         1,459           --          --
  Net income (loss)............................         (3,531)      (4,927)        1,216         1,176           --          --
  Total loans (dollars in millions)............             --           --            21            20           --          --
AVERAGE BALANCES (DOLLARS IN MILLIONS):
  Total loans(1)...............................       $     70     $    287      $    328      $    324     $ 25,579    $ 26,517
  Total assets.................................          6,902        9,454           779           915       35,730      39,776
  Total deposits(1)............................          2,070        1,071           915         1,385       28,222      32,587
FINANCIAL RATIOS:
  Risk adjusted return on capital(2)...........             --%         (15)%          na            na           na          na
  Return on average assets (2).................           0.01        (1.63)           na            na         1.46%       1.46%
  Efficiency ratio(3)..........................           84.9           na            na            na         56.4        59.5

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

(1)  Represents  loans and deposits for each business  segment after  allocation
     between the  segments of loans and deposits  originated  in one segment but
     managed by another segment.

(2)  Annualized.

(3)  The efficiency  ratio is noninterest  expense,  excluding  foreclosed asset
     expense  (income),  as a percentage of net interest  income and noninterest
     income. Foreclosed asset expense (income) was ($13) thousand and nil in the
     second quarters of 2002 and 2003, respectively.

na = not applicable
</FN>

</TABLE>

                                       24
<PAGE>


<TABLE>
<CAPTION>


                                                         COMMUNITY BANKING
                                                           AND INVESTMENT         COMMERCIAL FINANCIAL          INTERNATIONAL
                                                           SERVICES GROUP            SERVICES GROUP             BANKING GROUP
                                                      ---------------------      ----------------------     --------------------
                                                                       AS OF AND FOR THE SIX MONTHS ENDED JUNE 30,
                                                      --------------------------------------------------------------------------
                                                        2002         2003          2002          2003         2002        2003
                                                      --------     --------      --------      --------     --------    --------
RESULTS OF OPERATIONS AFTER PERFORMANCE CENTER
  EARNINGS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>           <C>          <C>         <C>
  Net interest income..............................   $370,758     $418,550      $325,617      $396,362     $ 18,871    $ 20,048
  Noninterest income...............................    183,409      213,469       102,978       119,462       32,720      41,573
                                                      --------     --------      --------      --------     --------    --------
  Total revenue....................................    554,167      632,019       428,595       515,824       51,591      61,621
  Noninterest expense..............................    348,148      396,255       186,551       204,532       30,409      30,182
  Credit expense (income)..........................     17,891       15,782        94,520        84,607          954       1,052
                                                      --------     --------      --------      --------     --------    --------
  Income (loss) before income tax expense (benefit)    188,128      219,982       147,524       226,685       20,228      30,387
  Income tax expense (benefit).....................     71,959       84,143        47,038        73,804        7,737      11,623
                                                      --------     --------      --------      --------     --------    --------
  Net income (loss)................................   $116,169     $135,839      $100,486      $152,881     $ 12,491    $ 18,764
                                                      ========     ========      ========      ========     ========    ========
PERFORMANCE CENTER EARNINGS (DOLLARS IN THOUSANDS):
  Net interest income..............................   $    443     $    368      $   (672)     $   (367)    $     --    $     14
  Noninterest income...............................    (24,672)     (21,077)       29,537        31,888        2,041         585
  Noninterest expense..............................    (18,744)     (17,227)       16,225        17,811        1,627         334
  Net income (loss)................................     (3,453)      (2,190)        7,920         8,553          256         163
  Total loans (dollars in millions)................         26           26           (46)          (46)          --          --
AVERAGE BALANCES (DOLLARS IN MILLIONS):
  Total loans(1)...................................   $  9,764     $ 11,171      $ 14,136       $13,301     $  1,032    $  1,566
  Total assets.....................................     10,532       12,132        15,878        15,375        1,357       1,966
  Total deposits(1)................................     14,092       16,105         9,094        11,797        1,562       1,494
FINANCIAL RATIOS:
  Risk adjusted return on capital(2)...............         41%          42%           13%           18%          39%         59%
  Return on average assets (2).....................       2.22         2.25          1.27          1.99         1.86        1.92
  Efficiency ratio(3)..............................       62.8         62.7          43.5          39.7         58.9        49.0

</TABLE>

<TABLE>
<CAPTION>

                                                              GLOBAL                                             UNIONBANCAL
                                                          MARKETS GROUP                  OTHER                   CORPORATION
                                                      ---------------------      ----------------------     ----------------------
                                                                   AS OF AND FOR THE SIX MONTHS ENDED JUNE 30,
                                                      ----------------------------------------------------------------------------
                                                        2002         2003          2002          2003          2002         2003
                                                      --------     --------      --------      --------     ---------    ---------
RESULTS OF OPERATIONS AFTER PERFORMANCE
CENTER EARNINGS (DOLLARS IN THOUSANDS):
<S>                                                   <C>          <C>           <C>           <C>          <C>          <C>
  Net interest income......................           $ 12,718     $(93,775)     $ 38,237      $ 35,372     $ 766,201    $ 776,557
  Noninterest income.......................              6,226        3,408        10,016        11,030       335,349      388,942
                                                      --------     --------      --------      --------     ---------    ---------
  Total revenue............................             18,944      (90,367)       48,254        46,402     1,101,550    1,165,499
  Noninterest expense......................              7,921        7,800        55,249        54,835       628,278      693,604
  Credit expense (income)..................                100          100        (8,465)      (46,541)      105,000       55,000
                                                      --------     --------      --------      --------     ---------    ---------
  Income (loss) before income tax expense
  (benefit)................................             10,923      (98,267)        1,470        38,108       368,272      416,895
  Income tax expense (benefit).............              4,178      (37,587)       (7,359)        4,637       123,553      136,620
                                                      --------     --------      --------      --------     ---------    ---------
  Net income (loss)........................           $  6,745     $(60,680)     $  8,828      $ 33,471     $ 244,719    $ 280,275
                                                      ========     ========      ========      ========     =========    =========
PERFORMANCE CENTER EARNINGS (DOLLARS IN
  THOUSANDS):
  Net interest income......................           $     --     $   (230)     $    229      $    215     $      --    $      --
  Noninterest income.......................            (13,569)     (17,949)        6,663         6,553            --           --
  Noninterest expense......................             (2,232)      (3,653)        3,124         2,735            --           --
  Net income (loss)........................             (7,001)      (8,970)        2,278        24,444            --           --
  Total loans (dollars in millions)........                 --           --            20            20            --           --
AVERAGE BALANCES (DOLLARS IN MILLIONS):
  Total loans(1)...........................           $     85     $    251      $    338      $    331     $  25,355    $  26,620
  Total assets.............................              6,814        8,714           828           879        35,409       39,066
  Total deposits(1)........................              2,242        1,139           907         1,302        27,897       31,837
FINANCIAL RATIOS:
  Risk adjusted return on capital(2).......                  2%         (12)%          na            na            na           na
  Return on average assets (2).............               0.19        (1.41)           na            na          1.39%        1.45%
  Efficiency ratio(3)......................               41.8           na            na            na          57.0         59.4


---------------------------
<FN>
(1)  Represents  loans and deposits for each business  segment after  allocation
     between the  segments of loans and deposits  originated  in one segment but
     managed by another segment.

(2)  Annualized.

(3)  The efficiency  ratio is noninterest  expense,  excluding  foreclosed asset
     expense  (income),  as a percentage of net interest  income and noninterest
     income.  Foreclosed asset expense was $112 thousand and $51 thousand in the
     first six months of 2002 and 2003, respectively.

na = not applicable

</FN>
</TABLE>

                                       25
<PAGE>


     COMMUNITY BANKING AND INVESTMENT SERVICES GROUP

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

     In the second  quarter of 2003, net income  increased  $9.4 million,  or 15
percent,  compared to the second quarter of 2002. Total revenue  increased $38.7
million, or 14 percent, compared to a year earlier.  Increased asset and deposit
volumes  offset the effect of a lower  interest rate  environment  leading to an
increase of $21.1 million,  or 11 percent, in net interest income over the prior
year.  Excluding auto lease residual  writedowns of $3.0 million and none in the
second  quarter of 2002 and 2003,  respectively,  and the impact of  performance
center earnings,  noninterest  income was $12.9 million,  or 12 percent,  higher
than the prior year primarily due to our acquisitions of John Burnham & Company,
in the fourth quarter of 2002, and Tanner Insurance  Brokers,  Inc., on April 1,
2003, and higher  deposit-related  service fees.  Noninterest  expense increased
$24.3  million,  or 14 percent,  in the second  quarter of 2003  compared to the
second quarter of 2002 with the majority of that increase being  attributable to
higher salaries and employee  benefits mainly related to  acquisitions,  deposit
gathering,  small business  growth and  residential  loan growth over the second
quarter of 2002.

     In 2003, the Community  Banking and Investment  Services Group continues to
emphasize  growing the consumer asset  portfolio,  expanding  wealth  management
services, extending the small business franchise,  expanding the branch network,
and expanding  cross selling  activities  throughout  the Bank. The strategy for
growing the  consumer  asset  portfolio  primarily  focused on mortgage and home
equity products that may be originated  through the branch  network,  as well as
through channels such as wholesalers,  correspondents, and whole loan purchases.
As of June 30, 2003,  residential  mortgages  have grown by $1.1 billion,  or 20
percent,  from the prior  year.  The Wealth  Management  division  is focused on
becoming a growing  provider of banking and  investment  products  for  affluent
individuals in geographic areas already served by us. We seek to provide quality
service  superior  to  that  of our  competitors  and  offer  our  customers  an
attractive  product  suite.  Core elements of the initiative to extend our small
business  franchise  include  improving  our sales force,  increasing  marketing
activities,   adding  new  locations,  and  developing  online  capabilities  to
complement physical distribution.  Expansion of the distribution network will be
achieved through acquisitions and new branch openings. During 2002, we completed
our acquisitions of Valencia Bank and Trust, a commercial bank with $266 million
in assets and five branches, and First Western Bank, a commercial bank with $224
million  in  assets  and seven  branches.  On July 1,  2003,  we  completed  the
acquisition  of  Monterey  Bay  Bank,  a $632  million-asset  savings  and  loan
association  headquartered in Watsonville,  California,  with eight full-service
branches in the Greater Monterey Bay area.

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

     COMMUNITY BANKING serves its customers through 267 full-service branches in
California,  4 full-service branches in Oregon and Washington,  and a network of
528 proprietary  ATMs.  Customers may also access our services 24 hours a day by
telephone or through our BANK@HOME  product at  www.uboc.com.  In addition,  the
division offers automated teller and point-of-sale merchant services.

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

     o    through  community   banking  branches,   which  serve  consumers  and
          businesses  with  checking  and deposit  services,  as well as various
          types of consumer financing;

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


                                       26
<PAGE>


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

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

     Wealth  Management  provides  private  banking  services  to  our  affluent
clientele as well as brokerage products and services.

     o    The Private Bank focuses primarily on delivering financial services to
          high net worth individuals with sophisticated  financial needs as well
          as to  professional  service  firms.  Specific  products  and services
          include  trust and  estate  services,  investment  account  management
          services,  and  deposit  and credit  products.  A key  strategy of The
          Private Bank is to expand its  business by  leveraging  existing  Bank
          client relationships.  Through 13 existing locations, The Private Bank
          relationship   managers  offer  all  of  our  available  products  and
          services.

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

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

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

     o    Institutional   Services  provides   custody,   corporate  trust,  and
          retirement plan services.  Custody Services provides both domestic and
          international   safekeeping/settlement   services   in   addition   to
          securities lending.  Corporate Trust acts as trustee for corporate and
          municipal debt issues.  Retirement  Services  provides a full range of
          defined  benefit and  defined  contribution  administrative  services,
          including trustee services, administration, investment management, and
          401(k) valuation services.  The client base of Institutional  Services
          includes financial  institutions,  corporations,  government agencies,
          unions,  insurance companies,  mutual funds,  investment managers, and
          non-profit  organizations.  Institutional  Services'  strategy  is  to
          continue to leverage and expand our position in our target markets. As
          we announced on April 30, 2002, we acquired a  substantial  portion of
          the trust and  institutional  custody  business  of a bank  located in
          Southern  California.

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

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

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

     CERTAIN INDUSTRY DEVELOPMENTS

     Union Bank of  California,  N.A.  is a member of  MasterCard  International
Incorporated ("MCI"), VISA U.S.A., Inc. and VISA International,  Inc. (together,
"Visa"),  is an issuer of debit cards,  primarily of the MCI "MasterMoney" card,
and is an MCI and Visa merchant bank card services bank.


                                       27
<PAGE>


     In 1996,  Wal-Mart  Stores,  Inc. and several other  retailers sued MCI and
Visa in cases now pending in federal court in New York,  asserting  that MCI and
Visa's rules regarding uniform  acceptance of all Visa and MasterCard credit and
debit cards were an illegal tying arrangement.

     Prior to trial,  MCI and Visa agreed to settle these cases. The settlements
reportedly  remain  subject  to court  approval.  Neither  we nor Union  Bank of
California, N.A. are a party to these suits, and neither will be directly liable
for these settlements. However, MCI or Visa may seek to assess, or assert claims
against, their members to fund the settlements.  In addition,  even if no direct
claim is asserted against members,  the  implementation of the settlements could
adversely affect their operations.

     In the year ended December 31, 2002, interchange income from our debit card
operations was less than one percent of our gross revenues. While our 2003 debit
card  interchange  income can be expected to be reduced if the  settlements  are
approved and  implemented in the current year, we cannot predict what effect the
settlements will have on the competitive environment or our future earnings from
debit card  operations.

     INSURANCE  SERVICES  provides  a range  of  risk  management  services  and
insurance  products to business and retail customers.  The group, which includes
our fourth quarter 2001  acquisition of  Armstrong/Robitaille,  Inc., our fourth
quarter  2002  acquisition  of John  Burnham  &  Company,  and our April 1, 2003
acquisition of Tanner Insurance  Brokers,  Inc.,  offers its risk management and
insurance products through offices in California and Oregon.

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

     The group  competes  with larger  banks by  attempting  to provide  service
quality superior to that of its major competitors.  The group's primary means of
competing with community  banks include its branch network and its technology to
deliver  banking  services.  The group also offers  convenient  banking hours to
consumers through our drive-through banking locations and selected branches that
are open seven days a week.

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

     COMMERCIAL FINANCIAL SERVICES GROUP

     The  Commercial   Financial   Services  Group  offers  financing  and  cash
management  services to middle-market and large corporate  businesses  primarily
headquartered in the western United States.  The Commercial  Financial  Services
Group  has  continued  to focus  specialized  financing  expertise  to  specific
geographic markets and industry segments such as energy, entertainment, and real
estate. Relationship managers in the Commercial Financial Services Group provide
credit services,  including commercial loans,  accounts receivable and inventory
financing,  project financing,  lease financing, trade financing and real estate
financing. In addition to credit services, the group offers its customers access
to cash management  services  delivered through deposit managers with experience
in cash management solutions for businesses and government entities.

     In the second quarter of 2003, net income  increased  $26.8 million,  or 51
percent,  compared to the second quarter of 2002. Net interest income  increased
$38.5 million, or 23 percent, partially attributable to the impact of increasing
deposit  balances and a lower cost of funds  resulting  from the lower  interest
rate  environment.  Beginning  in 2003,  the transfer  pricing  credit for funds
provides for a floor on analyzed DDA balances,  which was  triggered  during the
first quarter of 2003.  Had such a floor existed in the second


                                       28
<PAGE>


quarter of 2002, net interest income would have been higher by approximately $11
million. Excluding higher income in the private equity portfolio of $3.7 million
mainly related to lower writedowns on private capital  investments in the second
quarter of 2003  compared  to the second  quarter  of 2002,  noninterest  income
increased  $3.4  million,  or 6  percent.  This 6 percent  increase  was  mainly
attributable  to  higher  deposit-related   service  fees.  Noninterest  expense
increased $10.1 million, or 11 percent, compared to a year earlier due to higher
expenses to support increased  product sales and deposit volume.  Credit expense
decreased  $5.3  million  mainly  attributable  to a  refinement  in  the  RAROC
allocation   of  capital   and   expected   losses   and  lower  loan   balances
year-over-year.

     The group's  initiatives  during 2003 include  expanding  wholesale deposit
activities and increasing  domestic trade  financing.  Loan  strategies  include
originating, underwriting and syndicating loans in core competency markets, such
as the California middle-market,  commercial real estate, energy, entertainment,
equipment  leasing and commercial  finance.  The Commercial  Financial  Services
Group provides  strong  processing  services,  including  services such as check
processing, front-end item processing, cash vault services and digital imaging.

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

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

     o    the Corporate Deposit and Treasury Management Division, which provides
          deposit and cash management expertise to clients in the middle-market,
          large   corporate   market,   government   agencies  and   specialized
          industries;

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

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

     o    the  Corporate  Capital  Markets   Division,   which  provides  custom
          financing  to  middle-market  and  large  corporate  clients  in their
          defined  industries  and  geographic  markets,  together  with limited
          merchant and investment banking related products and services.

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

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

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

     INTERNATIONAL BANKING GROUP

     The International Banking Group focuses on providing  correspondent banking
and trade  finance  related  products  and services to  international  financial
institutions  worldwide,  primarily in Asia.  This focus  includes  products and
services  such as letters of credit,  international  payments,  collections  and
financing  of mostly  short-term  transactions.  The group also  serves  certain
foreign  firms and US  corporate  clients in  selected  countries  where we have
branches,  including Hong Kong, Japan, Korea, the Philippines and Taiwan. In the
US, the group serves mostly  subsidiaries  and affiliates of non-Japanese  Asian
companies


                                       29
<PAGE>


and US branches/agencies of foreign banks. The majority of the revenue generated
by the  International  Banking Group is from customers  domiciled outside of the
US.

     In the second  quarter of 2003, net income  increased  $6.1 million,  or 96
percent,  compared to the second  quarter of 2002.  Total  revenue in the second
quarter of 2003  increased $9.9 million,  or 38 percent,  compared to the second
quarter of 2002. Net interest income increased $0.5 million, or 5 percent,  from
the  second  quarter  of  2002,  mainly  attributable  to  higher  loan  volume.
Noninterest  income was $9.5  million,  or 57  percent,  higher  than the second
quarter of 2002, mainly  attributable to a $9.0 million gain on an early call of
a Mexican Brady Bond in the second quarter of 2003. Noninterest expense of $15.3
million was relatively unchanged from the second quarter of 2002. Credit expense
of $0.5 million was  relatively  unchanged  from the second quarter of 2002. The
International   Banking  Group's  business   revolves  around  short-term  trade
financing,  mostly to banks, which we believe tends to result in service-related
income,  as well as  significantly  lower  credit  risk when  compared  to other
lending activities.

     The  group  has a long  history  of  providing  correspondent  banking  and
trade-related products and services to international financial institutions.  We
believe  the  group  continues  to  achieve  strong  customer   loyalty  in  the
correspondent banking market. The International Banking Group,  headquartered in
San Francisco,  also maintains  representative offices in Asia and Latin America
and an international banking subsidiary in New York.

     GLOBAL MARKETS GROUP

     The Global Markets Group conducts business activities  primarily to support
the previously described business groups and their customers.  This group offers
a broad range of risk management  products,  such as foreign exchange  contracts
and interest rate swaps and options. It trades money market, government, agency,
and other securities to meet investment needs of our  institutional and business
clients.  Another  primary  area of the  group is  treasury  management  for our
Company,  which encompasses wholesale funding,  liquidity  management,  interest
rate risk management,  including  securities portfolio  management,  and hedging
activities.  The Global  Markets  Group  results  include the  transfer  pricing
activity for the Bank, which allocates to the other business segments their cost
of  funds  on all  asset  categories  or  credit  for  funds  in the case of all
liability categories.

     In the second quarter of 2003,  net loss was $38.3 million  compared to net
income of $0.4  million in the  second  quarter  of 2002.  Total  revenue in the
second quarter of 2003 decreased by $63.0 million, or 1,335 percent, compared to
the second  quarter of 2002,  resulting  from a $60.2  million  decrease  in net
interest income. The decrease in net interest income was primarily  attributable
to a higher  transfer  pricing  residual in the second quarter of 2003 caused by
significantly higher  quarter-over-prior year quarter growth in deposits,  which
are  priced on  longer-term  liability  rates,  compared  to  credits on earning
assets, which are priced on shorter-term  lending rates.  Beginning in 2003, the
transfer pricing credit for funds provides for a floor on analyzed DDA balances,
which was triggered  during the first quarter 2003.  Had such a floor existed in
the  second  quarter  of 2002,  net  interest  income  would  have  declined  by
approximately $11 million.  Noninterest income was $2.9 million,  or 60 percent,
lower than the  second  quarter of 2002,  mainly  attributable  to gains of $2.0
million on the sale of  securities  in the prior year  quarter.  Compared to the
second  quarter  of 2002,  noninterest  expense  decreased  $0.3  million,  or 8
percent.

     OTHER

     "Other" includes the following items:

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

                                       30
<PAGE>


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

     o    the  Pacific  Rim  Corporate  Group,  with  assets at June 30, 2003 of
          $342.4  million,  which  offers  a  range  of  credit,   deposit,  and
          investment  management  products  and services to companies in the US,
          which are affiliated with companies headquartered in Japan; and

     o    the residual costs of support groups.

     Net income for "Other" in the second quarter of 2003 was $16.8 million. The
results were impacted by the following factors:

     o    Credit expense  (income) of ($25.8)  million was due to the difference
          between the $25.0 million in provision  for credit  losses  calculated
          under our US GAAP methodology and the $50.8 million in expected losses
          for  the  reportable  business  segments,  which  utilizes  the  RAROC
          methodology;

     o    Net  interest  income  of  $19.2  million,  which  resulted  from  the
          differences  between the credit for equity for the reportable segments
          under  RAROC  and  the  net  interest  income  earned  by  UnionBanCal
          Corporation,  and a credit for  deposits in the Pacific Rim  Corporate
          Group;

     o    Noninterest income of $1.8 million; and

     o    Noninterest expense of $29.9 million.

     Net income for "Other" in the second quarter of 2002 was $5.7 million.  The
results were impacted by the following factors:

     o    Credit  expense  (income) of ($6.9)  million was due to the difference
          between the $50.0 million in provision  for credit  losses  calculated
          under our US GAAP methodology and the $56.9 million in expected losses
          for  the  reportable  business  segments,  which  utilizes  the  RAROC
          methodology; offset by

     o    Net  interest  income  of  $19.2  million,  which  resulted  from  the
          differences  between the credit for equity for the reportable segments
          under  RAROC  and  the  net  interest  income  earned  by  UnionBanCal
          Corporation,  and a credit for  deposits in the Pacific Rim  Corporate
          Group;

     o    Noninterest income of $5.5 million; and

     o    Noninterest expense of $29.6 million.

















                                       31
<PAGE>


     NET INTEREST INCOME

     The following  tables show the major  components of net interest income and
net interest margin.

<TABLE>
<CAPTION>

                                                                   FOR THE THREE MONTHS ENDED
                                       ---------------------------------------------------------------------------------------
                                                    JUNE 30, 2002                                  JUNE 30, 2003
                                       ----------------------------------------       ----------------------------------------
                                                          INTEREST      AVERAGE                          INTEREST      AVERAGE
                                         AVERAGE           INCOME/       YIELD/         AVERAGE           INCOME/       YIELD/
(DOLLARS IN THOUSANDS)                   BALANCE         EXPENSE(1)     RATE(1)         BALANCE         EXPENSE(1)     RATE(1)
-------------------------------------  -----------       ----------     -------       -----------       ----------     -------
ASSETS
Loans:(2)
<S>                                    <C>               <C>               <C>        <C>               <C>               <C>
  Domestic...........................  $24,538,646       $  371,173        6.06%      $24,916,936       $  346,204        5.63%
  Foreign(3).........................    1,040,200            7,587        2.93         1,600,380            8,995        2.28
Securities--taxable..................    5,570,242           77,553        5.57         7,685,140           77,341        4.03
Securities--tax-exempt...............       36,946              998       10.81            40,984            1,016        9.91
Interest bearing deposits in banks.        120,411              629        2.09           221,004            1,130        2.05
Federal funds sold and securities
  purchased under resale agreements      1,090,306            4,828        1.78         1,276,224            4,001        1.26
Trading account assets...............      277,877              972        1.40           333,820              981        1.18
                                       -----------       ----------                   -----------       ----------
      Total earning assets...........   32,674,628          463,740        5.69        36,074,488          439,668        4.88
                                                         ----------                                     ----------
Allowance for credit losses..........     (630,120)                                      (585,597)
Cash and due from banks..............    1,833,950                                      2,099,440
Premises and equipment, net..........      498,683                                        509,372
Other assets.........................    1,353,351                                      1,678,646
                                       -----------                                    -----------
      Total assets...................  $35,730,492                                    $39,776,349
                                       ===========                                    ===========
LIABILITIES
Domestic deposits:
  Interest bearing...................  $ 7,883,320       $   22,551        1.15       $ 9,928,211       $   18,799        0.76
  Savings and consumer time..........    3,599,305           15,267        1.70         3,871,674           11,277        1.17
  Large time.........................    3,218,788           17,593        2.19         2,532,971           10,141        1.61
Foreign deposits(3)..................    1,614,335            6,105        1.52         1,224,201            2,811        0.92
                                       -----------       ----------                   -----------       ----------
      Total interest bearing deposits   16,315,748           61,516        1.51        17,557,057           43,028        0.98
                                       -----------       ----------                   -----------       ----------
Federal funds purchased and
  securities sold under repurchase
  agreements.........................      361,412            1,396        1.55           333,415              747        0.90
Commercial paper.....................    1,033,358            4,536        1.76           995,048            2,946        1.19
Other borrowed funds.................      667,234            3,635        2.19           138,074            1,055        3.06
Medium and long-term debt............      399,681            2,411        2.42           399,745            1,818        1.82
UnionBanCal Corporation--obligated
  mandatorily redeemable preferred
  securities of subsidiary grantor
  trust..............................      352,375            3,948        4.47           351,553            3,652        4.16
                                       -----------       ----------                   -----------       ----------
      Total borrowed funds...........    2,814,060           15,926        2.27         2,217,835           10,218        1.85
                                       -----------       ----------                   -----------       ----------
      Total interest bearing
         liabilities.................   19,129,808           77,442        1.62        19,774,892           53,246        1.08
                                                         ----------                                     ----------
Noninterest bearing deposits.........   11,906,497                                     15,030,116
Other liabilities....................      945,152                                      1,052,065
                                       -----------                                    -----------
      Total liabilities..............   31,981,457                                     35,857,073
SHAREHOLDERS' EQUITY
Common equity........................    3,749,035                                      3,919,276
                                       -----------                                    -----------
      Total shareholders' equity.....    3,749,035                                      3,919,276
                                       -----------                                    -----------
      Total liabilities and
         shareholders' equity........  $35,730,492                                    $39,776,349
                                       ===========                                    ===========
Net interest income/margin
  (taxable-equivalent basis).........                       386,298        4.74%                           386,422        4.29%
Less: taxable-equivalent adjustment..                           537                                            645
                                                         ----------                                     ----------
      Net interest income............                    $  385,761                                     $  385,777
                                                         ==========                                     ==========

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

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

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

(3)  Foreign  loans and  deposits  are those loans and  deposits  originated  in
     foreign branches.
</FN>
</TABLE>


                                       32
<PAGE>

<TABLE>
<CAPTION>


                                                                       FOR THE SIX MONTHS ENDED
                                       ---------------------------------------------------------------------------------------
                                                       JUNE 30, 2002                                  JUNE 30, 2003
                                       ----------------------------------------       ----------------------------------------
                                                          INTEREST      AVERAGE                          INTEREST      AVERAGE
                                         AVERAGE           INCOME/       YIELD/         AVERAGE           INCOME/       YIELD/
 (DOLLARS IN THOUSANDS)                  BALANCE         EXPENSE(1)     RATE(1)         BALANCE         EXPENSE(1)     RATE(1)
 ------------------------------------  -----------       ----------     -------       -----------       ----------     -------
<S>                                    <C>               <C>              <C>         <C>               <C>               <C>
 ASSETS
 Loans:(2)
  Domestic...........................  $24,314,639       $  739,235        6.12%      $25,051,062       $  701,277        5.63%
  Foreign(3).........................    1,039,909           15,509        3.01         1,568,556           17,161        2.21
 Securities--taxable.................    5,561,342          158,216        5.69         7,351,834          156,520        4.26
 Securities--tax-exempt..............       37,586            1,989       10.59            41,461            2,030        9.79
 Interest bearing deposits in banks..      102,509            1,125        2.21           212,266            2,092        1.99
 Federal funds sold and securities
  purchased under resale agreements..    1,013,769            8,887        1.77           908,213            5,678        1.26
 Trading account assets..............      257,735            1,692        1.32           320,683            1,938        1.22
                                       -----------       ----------                   -----------       ----------
      Total earning assets...........   32,327,489          926,653        5.76        35,454,075          886,696        5.03
                                                         ----------                                     ----------
 Allowance for credit losses.........     (637,210)                                      (594,370)
 Cash and due from banks.............    1,887,985                                      2,097,220
 Premises and equipment, net.........      497,483                                        508,175
 Other assets........................    1,333,050                                      1,601,121
                                       -----------                                    -----------
      Total assets...................  $35,408,797                                    $39,066,221
                                       ===========                                    ===========
 LIABILITIES
 Domestic deposits:
  Interest bearing...................  $ 7,672,584           45,709        1.20       $ 9,648,251           37,608        0.79
  Savings and consumer time..........    3,574,422           32,237        1.82         3,845,754           23,593        1.24
  Large time.........................    3,351,398           37,400        2.25         2,473,968           20,587        1.68
 Foreign deposits(3).................    1,681,420           12,369        1.48         1,303,747            6,017        0.93
                                       -----------       ----------                   -----------       ----------
      Total interest bearing deposits   16,279,824          127,715        1.58        17,271,720           87,805        1.03
                                       -----------       ----------                   -----------       ----------
 Federal funds purchased and
  securities sold under repurchase
  agreements.........................      450,800            3,345        1.50           424,955            2,074        0.98
 Commercial paper....................      976,624            8,510        1.76           959,386            5,674        1.19
 Other borrowed funds................      682,558            7,078        2.09           155,375            2,310        3.00
 Medium and long-term debt...........      399,834            4,823        2.43           399,737            3,684        1.86
 UnionBanCal Corporation--obligated
  mandatorily redeemable preferred
  securities of subsidiary grantor
  trust..............................      352,337            7,911        4.47           351,603            7,323        4.17
                                       -----------       ----------                   -----------       ----------
      Total borrowed funds...........    2,862,153           31,667        2.23         2,291,056           21,065        1.85
                                       -----------       ----------                   -----------       ----------
      Total interest bearing
         liabilities.................   19,141,977          159,382        1.68        19,562,776          108,870        1.12
                                                         ----------                                     ----------
 Noninterest bearing deposits........   11,617,577                                     14,565,228
 Other liabilities...................      961,999                                      1,041,308
                                       -----------                                    -----------
      Total liabilities..............   31,721,553                                     35,169,312
 SHAREHOLDERS' EQUITY
 Common equity.......................    3,687,244                                      3,896,909
                                       -----------                                    -----------
      Total shareholders' equity.....    3,687,244                                      3,896,909
                                       -----------                                    -----------
      Total liabilities and
         shareholders' equity........  $35,408,797                                    $39,066,221
                                       ===========                                    ===========
 Net interest income/margin
(taxable-equivalent basis)...........                       767,271        4.77%                           777,826        4.41%
 Less: taxable-equivalent adjustment.                         1,070                                          1,269
                                                         ----------                                     ----------
      Net interest income............                    $  766,201                                     $  776,557
                                                         ==========                                     ==========

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

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

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

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

</FN>
</TABLE>

                                       33
<PAGE>


     THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     Our net  interest  income is  impacted by changes in  interest  rates,  the
steepening  and  flattening of the yield curve and changes in volumes and mix of
earning assets, deposits, and interest bearing liabilities. Net interest income,
on a taxable-equivalent basis, was $386.4 million in the second quarter of 2003,
compared with $386.3 million in the second quarter of 2002. This slight increase
of $0.1  million  was  attributable  primarily  to the impact of the  decreasing
interest  rate  environment  throughout  the  prior  year  on  interest  bearing
liabilities, increasing average noninterest bearing deposits, and higher earning
assets,  mostly  offset by  significantly  lower  yields on our earning  assets.
Decreasing  market  rates  resulted  in  lower  rates  on our  interest  bearing
liabilities of 54 basis points on average  balances of $19.8 billion,  which was
mostly  offset by lower  average  yield of 81 basis  points on  average  earning
assets of $36.1 billion,  which was favorably  impacted by higher  interest rate
derivatives income of $10.4 million. Mitigating the impact of the lower interest
rate  environment on our net interest  margin was an increase in average earning
assets of $3.4 billion,  primarily in securities and residential mortgage loans,
funded by a $3.1 billion, or 26 percent, increase in average noninterest bearing
deposits. As a result of these changes and a flattening yield curve environment,
as short-term  interest rates rise while long-term  interest rates decline,  our
net interest margin decreased by 45 basis points, to 4.29 percent.

     Average  earning  assets were $36.1 billion in the second  quarter of 2003,
compared  with  $32.7  billion in the second  quarter of 2002.  This  growth was
attributable to a $2.1 billion,  or 38 percent,  increase in average  securities
and a $938.5 million,  or 4 percent,  increase in average loans. The increase in
average  securities,  which were comprised  primarily of fixed rate  securities,
reflected liquidity and interest rate risk management  actions.  The increase in
average loans was mostly due to a $1.2 billion  increase in average  residential
mortgages,  which was a result of a strategic portfolio shift from more volatile
commercial  loans.  Other  loan  activities  included  an  increase  in  average
commercial  mortgages  of $449.9  million and a decrease in average  commercial,
financial, and industrial loans of $609.8 million.

     Deposit  growth,  especially  in  our  title  and  escrow  industries,  has
contributed  significantly  to our lower cost of funds  year-over-year.  Average
noninterest  bearing  deposits were $3.1 billion,  or 26 percent,  higher in the
second  quarter  of 2003 over the prior  year,  which  included  a $1.1  billion
increase in average title and escrow  deposits.  We anticipate that growth rates
in average  noninterest bearing deposits will decline from the 2002 growth rates
as refinancings slow down due to interest rate increases.

     SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     Our net  interest  income is  impacted by changes in  interest  rates,  the
steepening  and  flattening of the yield curve and changes in volumes and mix of
earning assets, deposits, and interest bearing liabilities. Net interest income,
on a  taxable-equivalent  basis,  was $777.8  million in the first six months of
2003,  compared  with  $767.3  million  in the  first six  months of 2002.  This
increase of $10.5  million,  or 1 percent,  was  attributable  primarily  to the
impact of the decreasing interest rate environment  throughout the prior year on
interest bearing  liabilities,  increasing average noninterest bearing deposits,
and higher earning assets,  partly offset by  significantly  lower yields on our
earning assets.  Decreasing market rates resulted in lower rates on our interest
bearing  liabilities  of 56 basis points on average  balances of $19.6  billion,
which was partly  offset by a lower  average yield of 73 basis points on average
earning assets of $35.5 billion, which was favorably impacted by higher interest
rate  derivatives  income of $16.3  million.  Mitigating the impact of the lower
interest rate  environment on our net interest margin was an increase in average
earning assets of $3.1 billion, primarily in securities and residential mortgage
loans, funded by a $2.9 billion, or 25 percent,  increase in average noninterest
bearing  deposits.  As a result of these  changes and a  flattening  yield curve
environment,  as short-term  interest rates rise while long-term  interest rates
decline, our net interest margin decreased by 36 basis points, to 4.41 percent.

     Average  earning assets were $35.5 billion in the first six months of 2003,
compared  with $32.3  billion in 2002.  This growth was  attributable  to a $1.8
billion, or 32 percent,  increase in average securities and a


                                       34
<PAGE>



$1.3 billion,  or 5 percent,  increase in average loans. The increase in average
securities,  which were comprised primarily of fixed rate securities,  reflected
liquidity and interest  rate risk  management  actions.  The increase in average
loans  was  mostly  due  to a  $1.3  billion  increase  in  average  residential
mortgages,  which was a result of a strategic portfolio shift from more volatile
commercial  loans.  Other  loan  activities  included  an  increase  in  average
commercial  mortgages  of $485.6  million and a decrease in average  commercial,
financial, and industrial loans of $507.9 million.

     Deposit  growth,  especially  in  our  title  and  escrow  industries,  has
contributed  significantly  to our lower cost of funds  year-over-year.  Average
noninterest  bearing  deposits were $2.9 billion,  or 25 percent,  higher in the
first six  months of 2003 over the first six  months of 2002,  which  included a
$973.1 million increase in average title and escrow deposits.

NONINTEREST INCOME

<TABLE>
<CAPTION>

                                       FOR THE THREE MONTHS ENDED                          FOR THE SIX MONTHS ENDED
                             ----------------------------------------------      ----------------------------------------------
                                                              INCREASE                                           INCREASE
                                                             (DECREASE)                                         (DECREASE)
                             JUNE 30,      JUNE 30,     -------------------      JUNE 30,      JUNE 30,     -------------------
(DOLLARS IN THOUSANDS)         2002          2003        AMOUNT     PERCENT        2002          2003        AMOUNT     PERCENT
---------------------------  --------      --------     -------     -------      --------      --------     -------     -------
<S>                          <C>           <C>          <C>          <C>         <C>           <C>          <C>          <C>
Service charges on deposit
  accounts.................  $ 69,869      $ 77,942     $ 8,073       11.55%     $136,012      $150,229     $14,217       10.45%
Trust and investment
  management fees..........    37,587        33,141      (4,446)     (11.83)       74,312        65,816      (8,496)     (11.43)
International commissions
  and fees.................    19,239        21,276       2,037       10.59        37,462        40,889       3,427        9.15
Insurance commissions......     6,252        15,706       9,454      151.22        13,405        28,711      15,306      114.18
Card processing fees, net..     8,736         9,340         604        6.91        17,275        19,022       1,747       10.11
Brokerage commissions and
  fees.....................     9,275         8,729        (546)      (5.89)       18,907        17,595      (1,312)      (6.94)
Foreign exchange trading
  gains, net...............     7,011         6,958         (53)      (0.76)       13,459        13,892         433        3.22
Merchant banking fees......     9,081         6,191      (2,890)     (31.82)       16,026        12,209      (3,817)     (23.82)
Securities gains, net......     1,969         9,013       7,044      357.75         1,969         9,013       7,044      357.75
Other......................     6,587        14,875       8,288      125.82         6,522        31,566      25,044      383.99
                             --------      --------     -------                  --------      --------     -------
  Total noninterest income.  $175,606      $203,171     $27,565       15.70%     $335,349      $388,942     $53,593       15.98%
                             ========      ========     =======                  ========      ========     =======

</TABLE>


     THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     In the second quarter of 2003,  noninterest  income was $203.2 million,  an
increase of $27.6 million, or 16 percent,  over the second quarter of 2002. This
increase  was  mainly  attributable  to a $9.5  million  increase  in  insurance
commissions  mostly  associated with our  acquisitions of John Burnham & Company
and Tanner Insurance  Brokers,  Inc., a $8.1 million increase in service charges
on deposit accounts, higher income related to private capital investments,  net,
of $3.7  million  mainly due to lower  writedowns  in the  current  year,  lower
residual  value  writedowns  on auto leases of $3.0  million and a $7.0  million
increase in securities gains mainly  attributable to a $9.0 million gain arising
from the early call of a Mexican  Brady Bond,  partly  offset by a $4.4  million
decrease in trust and investment management fees.

     Revenue from service  charges on deposit  accounts  was $77.9  million,  an
increase of $8.1  million or 12 percent  over the second  quarter of 2002.  This
increase  was  primarily  attributable  to a 20 percent  increase  in  quarterly
average demand deposits (excluding title and escrow deposits) and overdraft fees
of $3.5 million  associated  with a new  overdraft  program  introduced in April
2003.

     Trust and investment management fees were $33.1 million, a decrease of $4.4
million,  or 12  percent,  from the second  quarter of 2002.  This  decrease  is
primarily attributable to the decline in equity market values and lower revenues
as our clients shift toward fixed income investments.  In addition,  the current
low interest rate environment has led to a significant  reduction in balances in
the HighMark  money market funds.  Total assets under  administration  of $145.2
billion at June 30, 2003 increased by $8.3 billion, or 6 percent,  from June 30,
2002.


                                       35
<PAGE>


     Insurance  commissions were $15.7 million,  an increase of $9.5 million, or
151  percent,  over the  second  quarter  of 2002,  reflecting  the  incremental
revenues associated with our insurance agency acquisitions.

     Securities gains, net, were $9.0 million compared to securities gains, net,
of $2.0 million in the second quarter of 2002. In the second quarter of 2003, we
realized a gain of $9.0 million on an early call of a Mexican Brady Bond.

     Other noninterest income was $14.9 million, an increase of $8.3 million, or
126  percent  from  the  second  quarter  of  2002.  This  increase  was  mainly
attributable to:

     o    an increase in income related to private capital investments,  net, of
          $3.7 million  primarily  due to lower  writedowns  on private  capital
          investments  of $4.4 million in the second quarter of 2003 compared to
          the second quarter of 2002. Our private  capital  investments  include
          direct  investments  in private  and  public  companies  and  indirect
          investments  in private  equity  funds.  The fair  values of  publicly
          traded  investments  are  determined  by using quoted  market  prices.
          Investments  that are not publicly traded are initially valued at cost
          and  subsequent  adjustments  to fair value are  estimated  based on a
          company's businesses model,  current projected financial  performance,
          liquidity and overall economic and market conditions, and

     o    no residual  value  writedowns on auto leases in the second quarter of
          2003  compared to residual  value  writedowns  of $3.0  million in the
          second  quarter of 2002.  The decline in our  impairment  for residual
          values  for the  auto  lease  portfolio  over  the  previous  year was
          impacted by (a) our decision to cease originating auto leases in April
          2001, which resulted in a reduction in the number of automobiles under
          lease at June 30, 2003;  and (b) the current period  determination  of
          used car valuations,  obtained from a nationally recognized automobile
          valuation expert and our own experience.  Residual values are affected
          by the rate at which  automobiles  are  returned to the lessor and the
          auction  values of the  automobiles  themselves.  In 2003, the rate of
          decline in used car prices and the rate of  increase in number of cars
          we expect to be returned  over the  remaining  life of the  portfolio,
          slowed  from the  previous  year.  As of June  30,  2003,  auto  lease
          financing was $156.2  million  compared to $310.7 million for the same
          period last year.

     SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     In the first six months of 2003,  noninterest income was $388.9 million, an
increase of $53.6  million,  or 16  percent,  over the first six months of 2002.
This increase was mainly  attributable to a $15.3 million  increase in insurance
commissions  mostly associated with our insurance agency  acquisitions,  a $14.2
million increase in service charges on deposit  accounts,  higher income related
to private  capital  investments,  net, of $10.5 million  primarily due to lower
writedowns in the current year,  lower residual value  writedowns on auto leases
of  $9.0  million  and a  $7.0  million  increase  in  securities  gains  mainly
attributable  to a $9.0  million  gain  arising from the early call of a Mexican
Brady Bond,  partly offset by an $8.5 million  decrease in trust and  investment
management fees.

     Revenue from service  charges on deposit  accounts was $150.2  million,  an
increase of $14.2  million,  or 10  percent,  over the first six months of 2002.
This increase was primarily  attributable to a 20 percent  increase in quarterly
average demand deposits  (excluding title escrow deposits) and overdraft fees of
$3.5 million associated with a new overdraft program introduced in April 2003.

     Trust and investment management fees were $65.8 million, a decrease of $8.5
million,  or 11  percent,  from the first six months of 2002.  This  decrease is
primarily attributable to the decline in equity market values and lower revenues
as our clients shift toward fixed income investments.  In addition,  the current
low interest rate environment has led to a significant  reduction in balances in
the HighMark money market funds.


                                       36
<PAGE>


     Insurance  commissions were $28.7 million, an increase of $15.3 million, or
114 percent,  reflecting the incremental  revenues associated with our insurance
agency    acquisitions,    and    growth    in    insurance    commissions    at
Armstrong/Robitaille, Inc.

     Securities gains, net, were $9.0 million compared to securities gains, net,
of $2.0  million  in the first six  months of 2002.  In the first six  months of
2003,  we  realized a gain of $9.0  million on an early call of a Mexican  Brady
Bond.

     Other noninterest  income was $31.6 million,  an increase of $25.0 million,
or 384  percent,  from the first six months of 2002.  This  increase  was mainly
attributable  to an increase in income related to private  capital  investments,
net, of $10.5 million  primarily due to lower  writedowns in the current year, a
decrease of $9.0 million in residual value  writedowns on auto leases and a $3.3
million insurance recovery from the September 11, 2001 World Trade Center attack
recorded in the first quarter of 2003.

NONINTEREST EXPENSE

<TABLE>
<CAPTION>

                                    FOR THE THREE MONTHS ENDED                           FOR THE SIX MONTHS ENDED
                            -----------------------------------------------      ----------------------------------------------
                                                             INCREASE                                            INCREASE
                                                            (DECREASE)                                          (DECREASE)
                            JUNE 30,      JUNE 30,     --------------------      JUNE 30,      JUNE 30,     -------------------
(DOLLARS IN THOUSANDS)        2002          2003        AMOUNT      PERCENT        2002          2003        AMOUNT     PERCENT
--------------------------- --------      --------     -------      -------      --------      --------     -------     -------
<S>                         <C>           <C>          <C>           <C>         <C>           <C>          <C>          <C>
Salaries and other
  compensation............  $154,209      $161,567     $ 7,358         4.77%     $296,633      $314,627     $17,994        6.07%
Employee benefits.........    31,891        37,362       5,471        17.16        68,343        82,409      14,066       20.58
                            --------      --------     -------                   --------      --------     -------
  Salaries and employee
  benefits................   186,100       198,929      12,829         6.89       364,976       397,036      32,060        8.78
Net occupancy.............    25,029        32,866       7,837        31.31        48,410        60,502      12,092       24.98
Equipment.................    15,967        16,354         387         2.42        32,307        33,025         718        2.22
Communications............    12,568        13,354         786         6.25        26,509        27,198         689        2.60
Professional services.....    10,936        13,566       2,630        24.05        20,439        25,580       5,141       25.15
Software..................    10,039        10,849         810         8.07        21,549        22,925       1,376        6.39
Advertising and public
  relations...............     8,621         9,693       1,072        12.43        18,629        19,360         731        3.92
Data processing...........     7,540         7,744         204         2.71        16,531        16,228       (303)       (1.83)
Intangible asset
  amortization............     1,280         3,227       1,947       152.11         2,164         5,704       3,540      163.59
Foreclosed asset expense
  (income)................       (13)           --          13      (100.00)          112            51         (61)     (54.46)
Other.....................    38,556        44,422       5,866        15.21        76,652        85,995       9,343       12.19
                            --------      --------     -------                   --------      --------     -------
  Total noninterest expense $316,623      $351,004     $34,381        10.86%     $628,278      $693,604     $65,326       10.40%
                            ========      ========     =======                   ========      ========     =======

</TABLE>


     THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     In the second quarter of 2003,  noninterest  expense was $351.0 million, an
increase of $34.4 million, or 11 percent,  over the second quarter of 2002. This
increase was primarily due to a $12.8 million  increase in salaries and employee
benefits and a $7.8 million  increase in net  occupancy,  which  included a $4.2
million write-off of leasehold improvements.

     Salaries and employee  benefits were $198.9  million,  an increase of $12.8
million,  or 7 percent,  over the  second  quarter of 2002.  This  increase  was
primarily attributable to annual merit increases, higher staff levels associated
with our recent acquisitions,  and increased insurance and worker's compensation
benefits expenses.

     Net occupancy expense was $32.9 million, an increase of $7.8 million, or 31
percent  over  the  second   quarter  of  2002.   This  increase  was  primarily
attributable  to recent  acquisitions,  new branch  openings,  other  facilities
restructuring  initiatives,   higher  property  insurance  and  a  $4.2  million
write-off of leasehold improvements.


                                       37
<PAGE>


     Professional  services  expense  was $13.6  million,  an  increase  of $2.6
million,  or 24 percent,  over the second  quarter of 2002.  This  increase  was
primarily  attributable  to higher  consulting  and other  professional  service
expenses.

     Intangible  asset  amortization  was  $3.2  million,  an  increase  of $1.9
million,  or 152 percent,  from the second  quarter of 2002.  This  increase was
primarily  associated with our acquisitions in the fourth quarter of 2002 and in
the second quarter of 2003.

     Other noninterest  expense was $44.4 million,  an increase of $5.9 million,
or 15 percent over the second  quarter of 2002.  This  increase  included a $2.6
million increase in unguaranteed  low-income housing credit amortization expense
and $2.1 million in write-offs related to two software development projects.

     SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2003

     In the first six months of 2003, noninterest expense was $693.6 million, an
increase of $65.3  million,  or 10  percent,  over the first six months of 2002.
This  increase was  primarily  due to a $32.1  million  increase in salaries and
employee benefits and a $12.1 million increase in net occupancy,  including $4.2
million related to the write-off of leasehold improvements.

     Salaries and employee  benefits were $397.0  million,  an increase of $32.1
million,  or 9 percent,  over the first six months of 2002.  This  increase  was
primarily  attributable  to annual merit  increases,  higher staff levels mostly
associated with our recent acquisitions, increased insurance and health benefits
expense, and 401(k) plan expenses.

     Net occupancy expense was $60.5 million,  an increase of $12.1 million,  or
25  percent,  over the first six months of 2002.  This  increase  was  primarily
attributable  to recent  acquisitions,  new branch  openings,  other  facilities
restructuring  initiatives,   higher  property  insurance  and  a  $4.2  million
write-off of leasehold improvements.

     Professional  services  expense  was $25.6  million,  an  increase  of $5.1
million,  or 25 percent  over the first six months of 2002.  This  increase  was
primarily  attributable  to  increased  legal  services,  consulting  and  other
professional service expenses.

     Intangible  asset  amortization  was  $5.7  million,  an  increase  of $3.5
million,  or 164 percent,  from the first six months of 2002.  This increase was
primarily  associated with our acquisitions in the fourth quarter of 2002 and in
the second quarter of 2003.

     Other noninterest  expense was $86.0 million,  an increase of $9.3 million,
or 12 percent,  over the first six months of 2002. This increase included a $4.8
million increase in unguaranteed  low-income housing credit amortization expense
and $2.1 million in write-offs related to two software development projects.

INCOME TAX EXPENSE

     Income  tax  expense  in the  second  quarter  of 2003 was  $68.2  million,
resulting in a 32 percent  effective income tax rate.  Income tax expense in the
second  quarter of 2003  included a $2.7 million  refund of income taxes paid in
1998,  1999, and 2000,  resulting from the settlement of several tax issues with
the Internal  Revenue  Service.  For the second  quarter of 2002,  the effective
income tax rate was 33 percent.

     Income tax  expense  in the first six  months of 2003 was  $136.6  million,
resulting in a 33 percent effective income tax rate. For the first six months of
2002, the effective income tax rate was 34 percent.


                                       38
<PAGE>



LOANS

     The following table shows loans outstanding by loan type.

<TABLE>
<CAPTION>
                                                                                                      PERCENT CHANGE TO
                                                                                                     JUNE 30, 2003 FROM:
                                                                                                  --------------------------
                                               JUNE 30,         DECEMBER 31,       JUNE 30,       JUNE 30,      DECEMBER 31,
(DOLLARS IN THOUSANDS)                           2002               2002             2003           2002            2002
-------------------------------------------  -----------        -----------      -----------      --------      ------------
Domestic:
<S>                                          <C>                <C>              <C>               <C>              <C>
  Commercial, financial and industrial.....  $11,006,283        $10,338,508      $ 9,404,285       (14.56)%         (9.04)%
  Construction.............................    1,163,530          1,285,204        1,110,794        (4.53)         (13.57)
   Mortgage:
    Residential............................    5,673,529          6,382,227        6,799,874        19.85            6.54
    Commercial.............................    3,769,068          4,150,178        4,172,864        10.71            0.55
                                             -----------        -----------      -----------
      Total mortgage.......................    9,442,597         10,532,405       10,972,738        16.20            4.18
   Consumer:
    Installment............................      997,973            909,787          851,857       (14.64)          (6.37)
    Revolving lines of credit..............      988,996          1,102,771        1,179,961        19.31            7.00
                                             -----------        -----------      -----------
      Total consumer.......................    1,986,969          2,012,558        2,031,818         2.26            0.96
  Lease financing..........................      880,892            812,918          704,353       (20.04)         (13.35)
                                             -----------        -----------      -----------
      Total loans in domestic offices......   24,480,271         24,981,593       24,223,988        (1.05)          (3.03)
Loans originated in foreign branches.......    1,112,035          1,456,490        1,444,672        29.91           (0.81)
                                             -----------        -----------      -----------
      Total loans..........................  $25,592,306        $26,438,083      $25,668,660         0.30%          (2.91)%
                                             ===========        ===========      ===========
</TABLE>



     Our  lending  activities  are  predominantly   domestic,  with  such  loans
comprising 94 percent of the total loan portfolio at June 30, 2003.  Total loans
at June 30,  2003,  were $25.7  billion,  an  increase  of $76  million,  or 0.3
percent, from June 30, 2002. The increase was mainly attributable to an increase
in the  residential  mortgage  portfolio  of $1.1  billion,  an  increase in the
commercial  mortgage  portfolio  of $404  million,  and an increase in the loans
originated in foreign  branches of $333  million,  partly offset by a decline in
the  commercial,  financial and industrial  loan portfolio of $1.6 billion and a
decline in lease financing of $177 million.

     Commercial,  financial and  industrial  loans  represent one of the largest
categories  in the loan  portfolio.  These  loans are  extended  principally  to
corporations,  middle-market businesses, and small businesses,  with no industry
concentration  exceeding 10 percent of total loans.  This  portfolio  has a high
degree of geographic  diversification  based upon our customers'  revenue bases,
which we believe lowers our  vulnerability to changes in the economic outlook of
any particular  region of the US. The commercial,  financial and industrial loan
portfolio  was $9.4  billion,  or 37 percent of total  loans,  at June 30, 2003,
compared with $11.0 billion, or 43 percent of total loans, at June 30, 2002. The
decrease  of $1.6  billion,  or 15  percent,  from the prior year was  primarily
attributable  to current  economic  conditions  that have reduced loan demand in
some segments.  Loan sales and managed exits are consistent with our strategy to
reduce  our  exposure  to  more  volatile  commercial  loans  and  increase  the
percentage of more stable consumer loans (including residential mortgages).

     The construction loan portfolio totaled $1.1 billion, or 4 percent of total
loans,  at June 30,  2003,  compared  with $1.2  billion,  or 5 percent of total
loans,  at June 30, 2002. This decrease of $53 million,  or 5 percent,  from the
prior year was primarily  attributable  to the slowing economy and its impact on
development and construction projects.

     Commercial  mortgages were $4.2 billion,  or 16 percent of total loans,  at
June 30, 2003,  compared with $3.8 billion, or 15 percent, at June 30, 2002. The
mortgage loan portfolio consists of loans on commercial


                                       39
<PAGE>


and  industrial  projects  primarily in  California.  The increase in commercial
mortgages of $404 million, or 11 percent,  from June 30, 2002, was primarily due
to demand in the Southern California real estate market.

     Residential  mortgages were $6.8 billion,  or 26 percent of total loans, at
June 30, 2003, compared with $5.7 billion, or 22 percent of total loans, at June
30, 2002. The increase in residential  mortgages of $1.1 billion, or 20 percent,
from June 30, 2002,  continues to be  influenced  by our  strategic  decision to
increase  our  residential   mortgage   portfolio  through  increased   in-house
production and additional  wholesale and correspondent  channels.  While we hold
most of the  loans  we  originate,  we  sell  most of our  30-year,  fixed  rate
non-Community Reinvestment Act (CRA) residential mortgage loans.

     Consumer loans totaled $2.0 billion,  or 8 percent of total loans,  at June
30, 2003,  compared with $2.0 billion,  or 8 percent of total loans, at June 30,
2002.  The  slight  increase  of $44.8  million,  or 2  percent,  was  primarily
attributable to an increase in home equity loans,  partially  offset by pay-offs
related to the run-off of the automobile  dealer lending  business exited in the
third quarter of 2000. The indirect  automobile dealer lending portfolio at June
30, 2003 was $93.9 million.

     Lease  financing  totaled $704.4  million,  or 3 percent of total loans, at
June 30, 2003,  compared with $880.9  million,  or 3 percent of total loans,  at
June 30, 2002. As we announced in 2001, we have ceased  originating auto leases.
At June 30, 2003,  our portfolio had declined to $156.2 million and will decline
40 percent by December  2003, 90 percent by December 2004, and will fully mature
by mid-year 2006.

     Loans originated in foreign branches totaled $1.4 billion,  or 6 percent of
total loans, at June 30, 2003, compared with $1.1 billion, or 4 percent, at June
30,  2002.  The  increase  in loans  originated  in foreign  branches  of $332.6
million, or 30 percent, from June 30, 2002, was primarily attributable to higher
borrowings from financial  institutions attracted to lower US interest rates and
increased lending in Canada.

CROSS-BORDER OUTSTANDINGS

     Our  cross-border  outstandings  reflect  certain  additional  economic and
political  risks that are not  reflected in domestic  outstandings.  These risks
include those arising from exchange rate  fluctuations  and  restrictions on the
transfer of funds. The following table sets forth our cross-border  outstandings
as of June 30, 2002,  December 31, 2002 and June 30, 2003, for any country where
such  outstandings   exceeded  1  percent  of  total  assets.  The  cross-border
outstandings were compiled based upon category and domicile of ultimate risk and
are  comprised  of  balances  with banks,  trading  account  assets,  securities
available for sale, securities purchased under resale agreements, loans, accrued
interest  receivable,  acceptances  outstanding  and  investments  with  foreign
entities. The amounts outstanding exclude local currency  outstandings.  For any
country  shown in the table below,  we do not have  significant  local  currency
outstandings that are not hedged or are not funded by local currency borrowings.

<TABLE>
<CAPTION>

                                                       PUBLIC        CORPORATIONS
                                       FINANCIAL       SECTOR          AND OTHER            TOTAL
(DOLLARS IN MILLIONS)               INSTITUTIONS      ENTITIES         BORROWERS        OUTSTANDINGS
----------------------------------  ------------      --------       ------------       ------------
<S>                                     <C>             <C>               <C>               <C>
June 30, 2002
Korea.............................      $491            $--               $42               $533
December 31, 2002
Korea.............................      $599            $--               $75               $674
June 30, 2003
Korea.............................      $559            $--               $73               $632

</TABLE>

PROVISION FOR CREDIT LOSSES

     We recorded a $25 million provision for credit losses in the second quarter
of 2003,  compared  with a $50 million  provision for credit losses for the same
period in the prior  year.  The  provision  for  credit  losses in the first six
months of 2003 was $55  million,  compared  with a $105  million  provision  for
credit  losses  for the same  period in the prior  year.  Provisions  for credit
losses are charged to income to bring our allowance for credit losses to a level
deemed appropriate by management based on the factors discussed under "Allowance
for Credit Losses" below.


                                       40
<PAGE>


ALLOWANCE FOR CREDIT LOSSES

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

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

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

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

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

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

     Specific   allowances  are  established  in  cases  where   management  has
identified  significant  conditions  or  circumstances  related to a credit or a
portfolio segment that management  believes indicate the probability that a loss
has been incurred.  This amount may be determined  either by a method prescribed
by SFAS No. 114,  "Accounting by Creditors for Impairment of a Loan," as amended
by SFAS No. 118,  "Accounting  by Creditors  for  Impairment  of a  Loan--Income
Recognition  and  Disclosures"  or  methods  that  include  a range of  probable
outcomes based upon certain qualitative factors.

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

     o    general  economic and business  conditions  affecting  our key lending
          areas;

     o    credit  quality  trends  (including  trends  in  nonperforming   loans
          expected to result from existing conditions);

     o    collateral values;

     o    loan volumes and concentrations;

     o    seasoning of the loan portfolio;

     o    specific industry conditions within portfolio segments;

     o    recent loss experience in particular segments of the portfolio;

     o    duration of the current economic cycle;



                                       41
<PAGE>



     o    bank regulatory examination results; and

     o    findings of our internal credit examiners.

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

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

     COMPARISON OF THE TOTAL  ALLOWANCE AND RELATED  PROVISION FOR CREDIT LOSSES
FROM DECEMBER 31, 2002

     At  December  31,  2002,  our total  allowance  for credit  losses was $609
million,  or 2.30 percent of the total loan portfolio and 180.9 percent of total
nonaccrual  loans.  At June 30, 2003, our total  allowance for credit losses was
$558 million,  or 2.17 percent of the total loan  portfolio and 147.1 percent of
total nonaccrual loans. In addition,  the allowance  incorporates the results of
measuring impaired loans as provided in SFAS No. 114 as amended by SFAS No. 118.
These accounting standards prescribe the measurement methods, income recognition
and disclosures  related to impaired loans. At December 31, 2002, total impaired
loans  were $300  million,  and the  associated  impairment  allowance  was $106
million, compared with $327 million and $113 million,  respectively, at June 30,
2003.  On June 30, 2003 and December 31, 2002,  the total  allowance  for credit
losses for  off-balance  sheet  commitments was $72.3 million and $75.4 million,
respectively.

     During the  second  quarter  of 2003,  there were no changes in  estimation
methods  or  assumptions   that  affected  our  methodology  for  assessing  the
appropriateness  of the  formula  and  specific  allowances  for credit  losses.
Changes in  estimates  and  assumptions  regarding  the effects of economic  and
business  conditions on borrowers and other factors,  which are described below,
affected the assessment of the unallocated allowance.

     We recorded a $25 million  provision in the second  quarter of 2003,  which
took into  consideration the following  factors:  the continued slow US economy;
the adverse  impact on the airline  industry from the war in Iraq,  severe acute
respiratory syndrome (SARS), and the generally weak economy; uncertain, although
improving,  conditions in the communications/media,  power, and other sectors in
domestic markets in which we operate;  and growth and changes in the composition
of the loan portfolio.



                                       42
<PAGE>


     CHANGES IN THE FORMULA AND SPECIFIC ALLOWANCES

     At June 30, 2003, the formula allowance was $276 million,  compared to $294
million at December 31, 2002, a decrease of $18 million.  The specific allowance
was $124  million at June 30,  2003,  compared to $121  million at December  31,
2002,  an increase of $3 million.  The changes in both the formula and  specific
allowances  reflect  the  movement  of  credits  to  nonaccrual  status  and the
reduction in the amount of commercial loans.

     CHANGES IN THE UNALLOCATED ALLOWANCE

     At June 30, 2003, the unallocated  allowance was $158 million,  compared to
$194 million at December 31, 2002, a decrease of $36 million.  In evaluating the
appropriateness  of the  unallocated  allowance,  we  considered  the  following
factors,  as well as more general factors such as the interest rate  environment
and the  impact of the  economic  downturn  on those  borrowers  who have a more
leveraged financial profile:

     o    With  respect  to  the   communications/media   industry,   management
          considered  the impact of  weakened  consumer  confidence  on consumer
          spending  and  advertising  revenues,  as  well  as  the  increasingly
          competitive environment facing telecommunication carriers, which could
          be in the range of $12 million to $33 million.

     o    With  respect  to  the  commercial  real  estate  sector,   management
          considered  weak demand  growth and  continuing  excess supply in many
          markets,  as well as the  specific  weakness  in  Northern  California
          resulting from regional over-dependence on the hi-tech sector and some
          portfolio  concentration  in the office and apartment  markets,  which
          could be in the range of $16 million to $32 million.

     o    With respect to power companies and utilities,  management  considered
          excess generating  capacity,  cyclical  weakness in demand,  high debt
          burdens   and  capital   market   disaffection   in  the   unregulated
          merchant-energy  sector, which could be in the range of $15 million to
          $30 million.

     o    With  respect  to  cross-border   loans  and  acceptances  to  certain
          Asia/Pacific Rim countries,  management considered the effects of slow
          US growth coupled with the continuing  struggle against  recession and
          deflation  in Japan,  which could be in the range of $8 million to $17
          million.

     o    With respect to the retail sector,  management  considered the adverse
          effects  of  the  weak  economy  and  less  robust  consumer  spending
          resulting in unwanted  accumulation of inventories,  which could be in
          the range of $6 million to $12 million.

     o    With respect to leasing,  management  considered the on-going problems
          of the airline  industry  as it  continues  to struggle  with the weak
          economy and excess capacity, exacerbated by the war in Iraq and public
          health concerns about SARS,  which could be in the range of $6 million
          to $12 million.

     o    With respect to the technology  industry,  management  considered weak
          capital  spending in the US, as well as the effects of excess capacity
          and steepening price declines in many technology segments, which could
          be in the range of $4 million to $9 million.

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

     Although in certain  instances the  downgrading  of a loan  resulting  from
these effects was reflected in the formula allowance,  management  believes that
in most  instances  the  impact  of these  events on the  collectibility  of the
applicable loans may not have been reflected in the level of nonperforming loans
or in the internal risk grading process with respect of such loans. Accordingly,
our evaluation of the probable  losses related to these factors was reflected in
the unallocated  allowance.  The evaluations of the inherent


                                       43
<PAGE>


losses  with  respect  to these  factors  were  subject  to  higher  degrees  of
uncertainty because they were not identified with specific problem credits.

     CHANGE IN THE TOTAL ALLOWANCE FOR CREDIT LOSSES

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

<TABLE>
<CAPTION>

                                                                  FOR THE THREE MONTHS         FOR THE SIX MONTHS
                                                                      ENDED JUNE 30,              ENDED JUNE 30,
                                                                 ----------------------      ---------------------
(DOLLARS IN THOUSANDS)                                             2002          2003          2002         2003
--------------------------------------------------------------   --------      --------      --------     --------
<S>                                                              <C>           <C>           <C>          <C>
Balance, beginning of period..................................   $629,367      $586,197      $634,509     $609,190
Loans charged off:
  Commercial, financial and industrial........................     67,952        51,130       130,178       88,956
  Commercial mortgage.........................................         --            --            20           --
  Consumer....................................................      2,476         2,429         5,235        5,085
  Lease financing.............................................        674        13,190         1,507       32,208
                                                                 --------      --------      --------     --------
    Total loans charged off...................................     71,102        66,749       136,940      126,249
Recoveries of loans previously charged off:
  Commercial, financial and industrial........................     12,822        13,008        17,339       18,587
  Construction................................................         40            --            40           --
  Commercial mortgage.........................................         44            44           139          150
  Consumer....................................................        873           697         1,781        1,420
  Lease financing.............................................        182            50           383          168
                                                                 --------      --------      --------     --------
    Total recoveries of loans previously charged off..........     13,961        13,799        19,682       20,325
                                                                 --------      --------      --------     --------
      Net loans charged off...................................     57,141        52,950       117,258      105,924
Provision for credit losses...................................     50,000        25,000       105,000       55,000
Foreign translation adjustment and other net additions(2).....      2,722            35         2,697           16
                                                                 --------      --------      --------     --------
Balance, end of period........................................   $624,948      $558,282      $624,948     $558,282
                                                                 ========      ========      ========     ========
Allowance for credit losses to total loans....................       2.44%         2.17%         2.44%        2.17%
Provision for credit losses to net loans charged off..........      87.50         47.21         89.55        51.92
Net loans charged off to average loans outstanding
 for the period(1)............................................       0.90          0.80          0.93         0.80

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

(1)  Annualized.

(2)  Includes $2.4 million related to the First Western Bank  acquisition in the
     second quarter of 2002.
</FN>

</TABLE>

     Total loans  charged off in the second  quarter of 2003  decreased  by $4.4
million  from the  second  quarter  of 2002,  primarily  due to a $16.8  million
decrease in  commercial,  financial and  industrial  loans  charged off,  partly
offset by a $12.5 million increase in lease financing  charge-offs.  Charge-offs
reflect  the  realization  of  losses  in the  portfolio  that  were  recognized
previously through provisions for credit losses.

     Second quarter 2003 recoveries of loans previously charged off decreased by
$0.2  million  from the second  quarter  of 2002.  The  percentage  of net loans
charged  off to  average  loans  outstanding  for  the  second  quarter  of 2003
decreased by 10 basis points from the same period in 2002. At June 30, 2003, the
allowance for credit losses exceeded the annualized net loans charged off during
the  second  quarter  of  2003,  reflecting  management's  belief,  based on the
foregoing analysis, that there are additional losses inherent in the portfolio.

     Historical net charge-offs are not necessarily  indicative of the amount of
net charge-offs that we will realize in the future.


                                       44
<PAGE>


NONPERFORMING ASSETS

<TABLE>
<CAPTION>

                                                                  JUNE 30,        DECEMBER 31,    JUNE 30,
(DOLLARS IN THOUSANDS)                                                2002            2002          2003
--------------------------------------------------------------    --------        -----------     --------
<S>                                                               <C>             <C>             <C>
Commercial, financial and industrial..........................    $386,912        $   276,415     $273,896
Construction..................................................          --                 --        1,559
Commercial mortgage...........................................      24,201             23,980       48,479
Lease financing...............................................       3,369             36,294       52,568
Loan originated in foreign branches...........................          --                 --        2,985
                                                                  --------        -----------     --------
  Total nonaccrual loans......................................     414,482            336,689      379,487
Foreclosed assets.............................................         490                715          271
                                                                  --------        -----------     --------
  Total nonperforming assets..................................    $414,972        $   337,404     $379,758
                                                                  ========        ===========     ========
Allowance for credit losses...................................    $624,948        $   609,190     $558,282
                                                                  ========        ===========     ========
Nonaccrual loans to total loans...............................        1.62%              1.27%        1.48%
Allowance for credit losses to nonaccrual loans...............      150.78             180.94       147.11
Nonperforming assets to total loans and foreclosed assets.....        1.62               1.28         1.48
Nonperforming assets to total assets..........................        1.15               0.84         0.89

</TABLE>


     At June 30, 2003,  nonperforming assets totaled $379.8 million, an increase
of $42.4  million,  or 13 percent,  from  December  31,  2002.  The increase was
primarily due to our decision to place additional airplane leases on nonaccrual,
partially  offset by our decision  during the second  quarter of 2003, to return
two airplane leases,  totaling $18.3 million, to accrual status. In addition, we
placed two San  Francisco Bay Area office loans,  totaling  approximately  $22.8
million, on nonaccrual status.

     Nonaccrual  loans as a percentage  of total loans were 1.48 percent at June
30, 2003, compared with 1.62 percent at June 30, 2002. Nonperforming assets as a
percentage  of total loans and  foreclosed  assets were 1.48 percent at June 30,
2003, compared to 1.62 percent at June 30, 2002.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

<TABLE>
<CAPTION>

                                                                    JUNE 30,        DECEMBER 31,    JUNE 30,
(DOLLARS IN THOUSANDS)                                                2002              2002          2003
------------------------------------------------------------------  --------        -----------     --------
<S>                                                                 <C>             <C>             <C>
Commercial, financial and industrial..............................  $ 11,096        $     1,705     $  1,728
Construction......................................................        --                679        2,311
Mortgage:
  Residential.....................................................     5,104              3,211        3,915
  Commercial......................................................       523                506          540
                                                                    --------        -----------     --------
    Total mortgage................................................     5,627              3,717        4,455
Consumer and other................................................     1,513              2,072        1,879
                                                                    --------        -----------     --------
  Total loans 90 days or more past due and still accruing.........  $ 18,236        $     8,173     $ 10,373


</TABLE>









                                       45

<PAGE>


QUANTITATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT INTEREST RATE RISK  MANAGEMENT
(OTHER THAN TRADING)

     THE FOLLOWING INFORMATION ON MARKET RISK ASSOCIATED WITH INTEREST RATE RISK
IS BEING PROVIDED IN ORDER TO EXPAND THE INFORMATION ON THE ASSUMPTIONS  USED IN
OUR SIMULATION  MODELS,  WHICH  QUANTIFY OUR  SENSITIVITY TO CHANGES IN INTEREST
RATES.  SEE ALSO  PART I,  ITEM 3 OF THIS  DOCUMENT,  TITLED  "QUANTITATIVE  AND
QUALITATIVE DISCLOSURE ABOUT MARKET RISK."

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

     The management of market risk is governed by policies reviewed and approved
annually by our Board of Directors (Board). The Board assigns responsibility for
market risk management to the Chief Executive  Officer as the  administrator  of
the  Asset &  Liability  Management  Committee  (ALCO),  which  is  composed  of
UnionBanCal Corporation executives.  ALCO meets monthly and reports quarterly to
the Finance  and Capital  Committee  of the Board on  activities  related to the
management  of market risk. As part of the  management of our market risk,  ALCO
may direct changes in the mix of assets and  liabilities and the extent to which
we utilize  investment  securities and derivative  instruments  such as interest
rate swaps,  caps and floors to hedge our interest rate exposures.  ALCO reviews
and approves specific market risk management  programs involving  investment and
hedging  activities  and  certain  market  risk  limits.  The ALCO  Chairman  is
responsible  for the  company-wide  management of market risk.  The Treasurer is
responsible for implementing funding, investing, and hedging strategies designed
to manage this risk. On a day-to-day  basis, the monitoring of market risk takes
place at a centralized  level within the Market Risk Monitoring unit (MRM).  MRM
is responsible  for measuring  risks to ensure  compliance  with all market risk
limits  and   guidelines   incorporated   within  the  policies  and  procedures
established by the Board and ALCO.  MRM reports  monthly to ALCO on trading risk
exposures and on compliance  with interest rate risk,  securities  portfolio and
derivatives   policy  limits.   MRM  also  reports  quarterly  to  ALCO  on  the
effectiveness  of our  hedging  activities.  In  addition,  periodic  reviews by
internal audit and regulators  provide  further  evaluation of controls over the
risk management process.

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

     INTEREST RATE RISK MANAGEMENT (OTHER THAN TRADING)

     We engage in asset and  liability  management  activities  with the primary
purposes of managing the  sensitivity of net interest income (NII) to changes in
interest  rates within limits  established  by the Board and  maintaining a risk
profile that is consistent with management's strategic objectives.

     The  Asset &  Liability  Management  (ALM)  Policy  approved  by the  Board
requires  monthly  monitoring of interest rate risk by ALCO through a variety of
modeling  techniques that are used to quantify the sensitivity of NII to changes
in interest rates. As directed by ALCO, and in  consideration  of the importance
of our demand  deposit  accounts  as a funding  source,  NII is  adjusted in the
official  policy risk measure to incorporate  the effect of certain  noninterest
expense  items  related to these  deposits  that are  nevertheless  sensitive to
changes in interest  rates.  In managing  interest rate risk,  ALCO monitors NII
sensitivity on both an adjusted and unadjusted basis.


                                       46
<PAGE>

     Our  unhedged  NII remains  inherently  asset  sensitive,  meaning that our
assets  generally  reprice more quickly than our  liabilities,  particularly our
core deposits.  Since the NII associated with an asset  sensitive  balance sheet
tends to decrease when interest  rates decline and increase when interest  rates
rise,  derivative  hedges and the  securities  portfolio are used to manage this
risk.  In the  second  quarter  of 2003,  we did not enter  into any  derivative
hedges.  We  continued  to  increase  the size of our  securities  portfolio  in
response to strong growth in core deposits, which respond more slowly to changes
in market rates than wholesale liabilities. Together, our hedging and investment
activities  resulted  in an  essentially  neutral  risk  profile  for the hedged
balance  sheet with  respect  to  parallel  yield  curve  shifts.  For a further
discussion  of  derivative  instruments  and our  hedging  strategies,  see Note
16--"Derivative  Instruments" of the Notes to Consolidated  Financial Statements
included in our Form 10-K/A for the year ended December 31, 2002.

     However,  our NII is also  sensitive  to  non-parallel  shifts in the yield
curve. In general, our NII increases when the yield curve steepens (specifically
when short rates,  under one year, drop and long rates,  beyond one year, rise),
while a flattening  curve tends to depress our NII and net interest  margin.  In
this respect,  our NII is asset sensitive when measured  against changes in long
rates and slightly  liability  sensitive when measured  against changes in short
rates.  This asset sensitivity in relation to a flattening of the yield curve is
manifested  in the NII  simulations  primarily  by an  acceleration  of mortgage
prepayments  (in  both  the  residential  portfolio  and  investment  securities
portfolio)  when long rates  decline.  Prepayments  depress NII even if interest
rates do not change  because  the cash flows from the  prepaid  assets that were
booked at higher  rates  must be  reinvested  at lower  prevailing  rates.  As a
result,  a continuation  of the recent high volume of  prepayments  will further
compress our net interest margin and negatively affect NII in the coming months,
even if market rates remain at current levels.

     Our official NII policy measure involves a simulation of "Earnings-at-Risk"
(EaR) in which we estimate the impact that gradual, ramped-on parallel shifts in
the yield  curve  would have on NII over a 12-month  horizon.  Under the Board's
policy limits, the negative change in simulated NII in either the up or down 200
basis point shock  scenarios  may not exceed 4 percent of NII as measured in the
base case, or no change, scenario. The following table sets forth the simulation
results in both the up and down 200 basis  point ramp  scenarios  as of June 30,
2003(1):


                                                MARCH 31,     JUNE 30,
(DOLLARS IN MILLIONS)                             2003          2003
-------------------------------------------     --------      -------
+200 basis points..........................        $15.4         $6.7
as a percentage of base case NII...........         1.04%        0.46%
-200 basis points..........................       $(15.3)       $(2.4)
as a percentage of base case NII...........         1.04%        0.17%

------------------

(1)  For these policy simulations,  NII is adjusted to incorporate the effect of
     certain  non-interest  expense  items  related to demand  deposits that are
     nevertheless sensitive to changes in interest rates.

     EaR in the down 200 basis point scenario was ($2.4) million, or .17 percent
of adjusted NII in the base case scenario, well within the Board's guidelines.

     However,  with federal funds and LIBOR rates  already below two percent,  a
downward  ramp  scenario of 200 basis  points would  result in  short-term  rate
levels below zero. As a result,  we believe that a downward ramp scenario of 100
basis  points  provides  a more  reasonable  measure of asset  sensitivity  in a
falling interest rate environment.  As of June 30, 2003, the difference  between
adjusted  NII in the base case and  adjusted NII after a gradual 100 basis point
downward ramp was a positive $2.4 million, or .17 percent of the base case.

     Management's goal in the NII simulations is to capture the risk embedded in
the balance sheet. As a result,  asset and liability  balances are kept constant
throughout the analysis horizon. Two exceptions are non-maturity deposits, which
vary with levels of interest rates  according to  statistically  derived balance
equations,  and  discretionary  derivative  hedges and fixed income  portfolios,
which  are  allowed  to run off.


                                       47
<PAGE>



Additional  assumptions  are made to model the future  behavior of deposit rates
and loan  spreads  based on  statistical  analysis,  management's  outlook,  and
historical  experience.  The prepayment  risks related to residential  loans and
mortgage-backed  securities are measured using industry  estimates of prepayment
speeds. The sensitivity of the simulation results to the underlying  assumptions
is  tested  as a  regular  part  of the  risk  measurement  process  by  running
simulations with different assumptions. In addition,  management supplements the
official  risk measures  based on the constant  balance  sheet  assumption  with
volume-based   simulations  of  NII  based  on  forecasted   balances  and  with
value-based simulations that measure the sensitivity of economic-value-of-equity
(EVE) to changes in interest rates. We believe that, together, these simulations
provide  management with a reasonably  comprehensive  view of the sensitivity of
our  operating  results  to  changes  in  interest  rates,  at  least  over  the
measurement  horizon.  However,  as with any  financial  model,  the  underlying
assumptions  are  inherently  uncertain  and subject to  refinement  as modeling
techniques  and  theory  improve  and  historical   data  becomes  more  readily
accessible.  Consequently,  our simulation  models cannot predict with certainty
how rising or falling  interest rates might impact net interest  income.  Actual
and  simulated  NII  results  will  differ to the extent  there are  differences
between actual and assumed  interest rate changes,  balance sheet  volumes,  and
management strategies, among other factors.

     TRADING ACTIVITIES

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

     In  order to  manage  interest  rate and  foreign  currency  exchange  risk
associated with our trading activities,  we utilize a variety of non-statistical
methods including:  position limits for each trading activity,  daily marking of
all positions to market, daily profit and loss statements, position reports, and
independent  verification of all inventory  pricing.  Additionally,  Market Risk
Monitoring (MRM) reports positions and profits and losses daily to the Treasurer
and trading  managers and weekly to the ALCO Chairman.  ALCO is provided reports
on a monthly  basis.  We believe  that these  procedures,  which  stress  timely
communication between MRM and senior management, are the most important elements
of the risk management process.

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


<TABLE>
<CAPTION>

                                        MARCH 31, 2003             JUNE 30, 2003
                                   ----------------------     ----------------------
                                   AVERAGE    HIGH    LOW     AVERAGE    HIGH    LOW
(DOLLARS IN THOUSANDS)               VAR       VAR    VAR       VAR       VAR    VAR
--------------------------------   -------    ----    ---     -------    ----    ---
<S>                                   <C>     <C>     <C>        <C>     <C>     <C>
Foreign exchange................      $155    $293    $67        $152    $340    $67
Securities......................       207     463     97         231     463     97

</TABLE>


     Consistent  with our  business  strategy of focusing on the sale of capital
markets  products  to  customers,  we  manage  our  trading  risk  exposures  at
conservative  levels,  well below the trading risk policy limits  established by
the Board. As a result,  our foreign exchange  business  continues to derive the
bulk of its


                                       48
<PAGE>



revenue from customer-related transactions. We take inter-bank trading positions
only on a  limited  basis and we do not take any  large or  long-term  strategic
positions in the market for the Bank's own  portfolio.  In 2002, we continued to
grow  our  customer-related  foreign  exchange  business  while  maintaining  an
essentially  unchanged inter-bank trading risk profile as measured under our VaR
methodology.

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

     Our interest rate derivative  contracts  included as of June 30, 2003, $3.6
billion of derivative  contracts entered into as an accommodation for customers.
We act as an  intermediary  and match these  contracts,  at a credit spread,  to
contracts with major dealers, thus neutralizing the related market risk.

LIQUIDITY RISK

     Liquidity risk represents the potential for loss as a result of limitations
on our ability to adjust our future  cash flows to meet the needs of  depositors
and borrowers and to fund operations on a timely and  cost-effective  basis. The
ALM Policy approved by the Board requires  quarterly reviews of our liquidity by
ALCO.  Additionally,  ALCO  conducts  monthly  ongoing  reviews of our liquidity
situation.  Liquidity  is managed  through this ALCO  coordination  process on a
Bank-wide basis, encompassing all major business units. The operating management
of liquidity is implemented through the funding and investment  functions of the
Global Markets Group.  Our liquidity  management draws upon the strengths of our
extensive retail and commercial core deposit franchise, coupled with the ability
to obtain  funds for various  terms in a variety of domestic  and  international
money  markets.  Our  securities  portfolio  represents a significant  source of
additional liquidity.

     Core deposits  provide us with a sizable  source of  relatively  stable and
low-cost funds. Our average core deposits,  which include demand deposits, money
market  demand  accounts,  savings,  and consumer time  deposits,  combined with
average common shareholders'  equity,  funded 82 percent of average total assets
of $39.8 billion for the second quarter of 2003.  Most of the remaining  funding
was provided by short-term borrowings in the form of negotiable  certificates of
deposit,  large  time  deposits,  foreign  deposits,  federal  funds  purchased,
securities  sold  under  repurchase  agreements,  commercial  paper,  and  other
borrowings.  The securities  portfolio  provides  additional  enhancement to our
liquidity  position,  which may be created through either  securities  sales, or
repurchase agreements. Liquidity may also be provided by the sale or maturity of
assets. Such assets include  interest-bearing  deposits in banks,  federal funds
sold,  securities  purchased  under  resale  agreements,   and  trading  account
securities.  The aggregate of these assets averaged $1.8 billion for the quarter
ended  June  30,  2003.  Additional  liquidity  may  be  provided  through  loan
maturities and sales.














                                       49
<PAGE>


REGULATORY CAPITAL

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

UNIONBANCAL CORPORATION

<TABLE>
<CAPTION>

                                                                                                 MINIMUM
                                        JUNE 30,         DECEMBER 31,       JUNE 30,           REGULATORY
(DOLLARS IN THOUSANDS)                    2002               2002             2003             REQUIREMENT
---------------------------------- -----------------  -----------------  -----------------   ----------------
CAPITAL COMPONENTS
<S>                                   <C>                <C>                <C>
Tier 1 capital....................    $ 3,834,103        $ 3,667,237        $ 3,791,651
Tier 2 capital....................        562,165            573,858            538,163
                                   -----------------  -----------------  -----------------
Total risk-based capital..........    $ 4,396,268        $ 4,241,095        $ 4,329,814
                                   =================  =================  =================
Risk-weighted assets..............    $32,213,352        $32,811,441        $33,142,588
                                   =================  =================  =================
Quarterly average assets..........    $35,613,957        $37,595,002        $39,366,344
                                   =================  =================  =================
</TABLE>
<TABLE>
<CAPTION>

CAPITAL RATIOS                       AMOUNT    RATIO     AMOUNT   RATIO     AMOUNT   RATIO     AMOUNT   RATIO
--------------                     ----------  -----  ----------  -----  ----------  -----   ---------- -----
<S>                                <C>         <C>    <C>         <C>    <C>         <C>     <C>         <C>
Total capital (to risk-weighted
  assets)......................... $4,396,268  13.65% $4,241,095  12.93% $4,329,814  13.06% >$2,651,407   8.0%
                                                                                            -
Tier 1 capital (to risk-weighted
  assets).........................  3,834,103  11.90   3,667,237  11.18   3,791,651  11.44  > 1,325,704   4.0
                                                                                            -
Leverage(1).......................  3,834,103  10.77   3,667,237   9.75   3,791,651   9.63  > 1,574,654   4.0
                                                                                            -
-----------------------
<FN>
(1)  Tier 1 capital  divided by  quarterly  average  assets  (excluding  certain
     intangible assets).
</FN>
</TABLE>

UNION BANK OF CALIFORNIA, N.A.


<TABLE>
<CAPTION>


                                                                                                  MINIMUM        "WELL-CAPITALIZED"
                                        JUNE 30,         DECEMBER 31,        JUNE 30,           REGULATORY           REGULATORY
(DOLLARS IN THOUSANDS)                    2002               2002              2003             REQUIREMENT         REQUIREMENT
---------------------------------- -----------------  -----------------  -----------------   ----------------   -------------------
<S>                                   <C>                <C>               <C>
CAPITAL COMPONENTS
Tier 1 capital....................    $ 3,473,828        $ 3,334,720       $ 3,490,596
Tier 2 capital....................        471,258            484,062           467,613
                                   -----------------  -----------------  -----------------
Total risk-based capital..........    $ 3,945,086        $ 3,818,782       $ 3,958,209
                                   =================  =================  =================
Risk-weighted assets..............    $31,581,189        $32,161,047       $32,492,833
                                   =================  =================  =================
Quarterly average assets..........    $35,113,945        $37,019,328       $38,811,257
                                   =================  =================  =================
</TABLE>

<TABLE>
<CAPTION>


CAPITAL RATIOS                        AMOUNT   RATIO    AMOUNT    RATIO     AMOUNT   RATIO     AMOUNT   RATIO     AMOUNT     RATIO
--------------                     ----------  -----  ----------  -----  ----------  -----   ---------- -----   ----------   -----
<S>                                <C>         <C>    <C>         <C>    <C>         <C>     <C>          <C>   <C>           <C>
Total capital (to risk-weighted
  assets)......................... $3,945,086  12.49% $3,818,782  11.87% $3,958,209  12.18% >$2,599,427   8.0% >$3,249,283    10.0%
                                                                                            -                  -
Tier 1 capital (to risk-weighted
  assets).........................  3,473,828  11.00   3,334,720  10.37   3,490,596  10.74  > 1,299,713   4.0  > 1,949,570     6.0
                                                                                            -                  -
Leverage(1).......................  3,473,828   9.89   3,334,720   9.01   3,490,596   8.99  > 1,552,450   4.0  > 1,940,563     5.0
                                                                                            -                  -
----------------------------
<FN>

(1)  Tier 1 capital  divided by  quarterly  average  assets  (excluding  certain
     intangible assets).
</FN>

</TABLE>

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

     Compared  with  December 31, 2002,  our Tier 1 risk-based  capital ratio at
June 30, 2003,  increased 26 basis points to 11.44 percent, our total risk-based
capital ratio increased 13 basis points to 13.06 percent, and our leverage ratio
decreased 12 basis points to 9.63  percent.  The increase in our capital  ratios
was primarily attributable to an increase in shareholders' equity, partly offset
by an increase in risk-weighted assets.

     As of June 30, 2003,  management  believes the capital ratios of Union Bank
of  California,  N.A.  met all  regulatory  requirements  of  "well-capitalized"
institutions,  which are 10 percent for the total  risk-based  capital  ratio, 6
percent for the Tier 1 risk-based  capital  ratio and 5 percent for the leverage
ratio.


                                       50
<PAGE>


CERTAIN BUSINESS RISK FACTORS

     ADVERSE CALIFORNIA ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS

     A substantial majority of our assets, deposits and fee income are generated
in California.  As a result, poor economic conditions in California may cause us
to incur losses  associated  with higher default rates and decreased  collateral
values in our loan portfolio.  Economic  conditions in California are subject to
various  uncertainties  at this  time,  including  the  long-term  impact of the
California  energy  crisis,  the  decline  in  the  technology  sector  and  the
California state  government's  recent  budgetary  crisis and continuing  fiscal
difficulties.  If economic  conditions  in  California  continue to decline,  we
expect that our level of problem assets could increase.

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

     On-going  acts or threats of terrorism and actions taken by the US or other
governments  as a  result  of  such  acts or  threats  have  contributed  to the
continuing downturn in US economic conditions and could further adversely affect
business  and  economic  conditions  in the US  generally  and in our  principal
markets. For example, the events of September 11, 2001, caused a decrease in air
travel in the US, which adversely  affected the airline  industry and many other
travel-related industries, including those operating in California.

     ADVERSE  ECONOMIC  FACTORS  AFFECTING  CERTAIN  INDUSTRIES  COULD ADVERSELY
     AFFECT OUR BUSINESS

     We are subject to certain industry-specific  economic factors. For example,
a significant  and increasing  portion of our total loan portfolio is related to
residential real estate.  Accordingly, a downturn in the real estate and housing
industries  in California  could have an adverse  effect on our  operations.  In
addition,  auto leases comprise a declining portion of our total loan portfolio.
We  ceased   originating   auto  leases  in  April  2001;   however,   continued
deterioration  in the used car  market may  result in  additional  losses on the
valuation of auto lease  residuals  on our  remaining  auto  leases.  We provide
financing to businesses in a number of other industries that may be particularly
vulnerable    to    industry-specific    economic    factors,    including   the
communications/media  industry,  the retail industry,  the airline industry, the
power industry and the technology industry.  Industry-specific  risks are beyond
our control  and could  adversely  affect our  portfolio  of loans,  potentially
resulting in an increase in nonperforming loans or charge-offs.

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

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

     FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR BUSINESS

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



                                       51
<PAGE>


     FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR MARGIN SPREAD

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

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

     BTM, a wholly owned subsidiary of Mitsubishi  Tokyo Financial Group,  Inc.,
owns  a  majority  (approximately  66  percent  as of  June  30,  2003)  of  the
outstanding  shares of our common stock.  As a result,  BTM can elect all of our
directors  and,  as a result,  can control  the vote on all  matters,  including
determinations  such as:  approval  of mergers or other  business  combinations;
sales of all or substantially all of our assets; any matters submitted to a vote
of our  shareholders;  issuance of any  additional  common stock or other equity
securities;  incurrence  of debt other than in the ordinary  course of business;
the selection and tenure of our Chief  Executive  Officer;  payment of dividends
with respect to common stock or other equity securities;  and other matters that
might be favorable to BTM.

     A majority of our  directors  are not officers or employees of  UnionBanCal
Corporation or any of our affiliates,  including BTM. However,  because of BTM's
control over the election of our directors,  BTM could change the composition of
our Board of  Directors  so that the Board  would not have a majority of outside
directors.  BTM's  ability  to prevent  an  unsolicited  bid for us or any other
change in  control  could have an  adverse  effect on the  market  price for our
common stock.

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

     BTM may sell  shares of our common  stock in  compliance  with the  federal
securities  laws. By virtue of BTM's current control of us, BTM could sell large
amounts  of shares of our  common  stock by  causing  us to file a  registration
statement  that would allow them to sell shares more easily.  In  addition,  BTM
could sell shares of our common stock without registration. Although we can make
no prediction as to the effect, if any, that such sales would have on the market
price of our common stock, sales of substantial  amounts of our common stock, or
the perception that such sales could occur,  could  adversely  affect the market
price of our common stock. If BTM sells or transfers  shares of our common stock
as a block, another person or entity could become our controlling shareholder.

     BTM'S FINANCIAL CONDITION COULD ADVERSELY AFFECT OUR OPERATIONS

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

     POTENTIAL CONFLICTS OF INTEREST WITH BTM COULD ADVERSELY AFFECT US

     BTM's  view  of  possible   new   businesses,   strategies,   acquisitions,
divestitures or other initiatives may differ from ours. This may delay or hinder
us from pursuing such initiatives.

     Also, as part of BTM's normal risk management processes, BTM manages global
credit exposures and concentrations on an aggregate basis, including UnionBanCal
Corporation.  Therefore,  at  certain  levels or in certain  circumstances,  our
ability to approve certain credits or other banking  transactions and categories
of customers is subject to the  concurrence of BTM. We may wish to extend credit
or furnish other banking


                                       52
<PAGE>



services to the same  customers  as BTM. Our ability to do so may be limited for
various  reasons,  including  BTM's  aggregate  credit  exposure  and  marketing
policies.

     Certain directors' and officers'  ownership interests in BTM's common stock
or service as a director  or officer or other  employee of both us and BTM could
create or appear to create  potential  conflicts of interest,  especially  since
both of us compete in the US banking industry.

     SUBSTANTIAL  COMPETITION IN THE CALIFORNIA  BANKING MARKET COULD  ADVERSELY
     AFFECT US

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

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

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

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

     ADVERSE EFFECTS OF, OR CHANGES IN, BANKING OR OTHER LAWS AND REGULATIONS OR
     GOVERNMENTAL FISCAL OR MONETARY POLICIES COULD ADVERSELY AFFECT US

     We are subject to significant federal and state regulation and supervision,
which is primarily  for the benefit and  protection of our customers and not for
the benefit of investors. In the past, our business has been materially affected
by these  regulations.  This trend is likely to continue  in the  future.  Laws,
regulations  or policies,  including  accounting  standards and  interpretations
currently  affecting us and our subsidiaries may change at any time.  Regulatory
authorities  may  also  change  their   interpretation  of  these  statutes  and
regulations.  Therefore,  our business  may be adversely  affected by any future
changes in laws, regulations, policies or interpretations, including legislative
and  regulatory  reactions to the terrorist  attack on September  11, 2001,  and
future acts of terrorism,  and the Enron Corporation,  WorldCom,  Inc. and other
major US corporate  bankruptcies and reports of accounting  irregularities at US
public  companies,  including  various  large  and  publicly  traded  companies.
Additionally,  our  international  activities  may be  subject  to the  laws and
regulations of the jurisdiction where business is being conducted. International
laws,  regulations and policies  affecting us and our subsidiaries may change at
any time and affect our  business  opportunities  and  competitiveness  in these
jurisdictions.  Due to BTM's controlling ownership of us, laws,  regulations and
policies adopted or enforced by the Government of Japan may adversely affect our
activities and investments and those of our subsidiaries in the future.

     Additionally,  our  business  is affected  significantly  by the fiscal and
monetary  policies  of  the  federal   government  and  its  agencies.   We  are
particularly  affected by the policies of the Federal Reserve Board


                                       53
<PAGE>


(FRB),  which  regulates  the  supply  of  money  and  credit  in the US.  Under
long-standing  policy of the FRB, a bank holding company is expected to act as a
source of  financial  strength  for its  subsidiary  banks.  As a result of that
policy,  we may be  required  to commit  financial  and other  resources  to our
subsidiary bank in  circumstances  where we might not otherwise do so. Among the
instruments  of monetary  policy  available to the FRB are (a)  conducting  open
market operations in US government  securities,  (b) changing the discount rates
of borrowings by depository  institutions,  and (c) imposing or changing reserve
requirements  against certain  borrowings by banks and their  affiliates.  These
methods are used in varying  degrees  and  combinations  to directly  affect the
availability  of bank loans and deposits,  as well as the interest rates charged
on loans  and paid on  deposits.  The  policies  of the FRB may have a  material
effect on our business, results of operations and financial condition.

     WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR OPERATING STRATEGIES

     From time to time,  we develop  long-term  financial  performance  goals to
guide and  measure  the  success  of our  operating  strategies.  We can make no
assurances that we will be successful in achieving these long-term goals or that
our operating strategies will be successful. Achieving success in these areas is
dependent on a number of factors,  many of which are beyond our direct  control.
Factors that may adversely affect our ability to attain our long-term  financial
performance goals include:

     o    deterioration of our asset quality;

     o    our  inability  to control  noninterest  expense,  including,  but not
          limited to, rising employee and healthcare costs;

     o    our inability to increase noninterest income;

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

     o    our ability to manage loan growth;

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

     o    regulatory and other impediments associated with making acquisitions;

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

     o    decreases in our net interest margin;

     o    increases in competition;

     o    adverse regulatory or legislative developments; and

     o    unexpected increases in costs related to acquisitions.

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

     We may seek to acquire or invest in  companies,  technologies,  services or
products that complement our business. There can be no assurance that we will be
successful in completing any such  acquisition or investment as this will depend
on the availability of prospective  target companies at valuation levels we find
attractive and the competition  for such  opportunities  from other bidders.  In
addition,  we continue to evaluate the  performance of all of our businesses and
business  lines and may sell a business  or  business  line.  Any  acquisitions,
divestitures or restructuring may result in the issuance of potentially dilutive
equity securities,  significant write-offs,  including those related to goodwill
and other intangible  assets,  and/or the incurrence of debt, any of which could
have a material adverse effect on our business,  financial condition and results
of  operations.  Acquisitions,   divestitures  or  restructuring  could  involve
numerous  additional  risks  including  difficulties  in obtaining  any required
regulatory  approvals  and in the  assimilation  or  separation  of  operations,
services,  products and personnel,  the diversion of management's attention from
other  business  concerns,  higher than expected  deposit  attrition  (run-off),
divestitures required by


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<PAGE>


regulatory  authorities,  the disruption of our business, and the potential loss
of key  employees.  There  can be no  assurance  that we will be  successful  in
overcoming these or any other significant risks encountered.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     A complete explanation  concerning our market risk exposure is incorporated
by  reference  from the text under the  caption  "Quantitative  and  Qualitative
Disclosures  About Market  Risk" in the Form 10-K/A for the year ended  December
31, 2002 and by reference to Part I, Item 2 of this document  under the captions
"Quantitative  and  Qualitative  Disclosure  about Interest Rate Risk Management
(Other Than Trading)," "Liquidity Risk," and "Certain Business Risk Factors."

ITEM 4. CONTROLS AND PROCEDURES

     (a)  EVALUATION  OF  DISCLOSURE  CONTROLS  AND  PROCEDURES.  Based on their
evaluation as of June 30, 2003,  our principal  executive  officer and principal
financial officer have concluded that our disclosure controls and procedures (as
defined in Rules  13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of
1934  (Exchange  Act)) are effective to ensure that  information  required to be
disclosed by us in reports we file or submit under the Exchange Act is recorded,
processed,  summarized,  and  reported  within  the time  periods  specified  in
Securities and Exchange Commission (SEC) rules and forms.

     (b) CHANGES IN INTERNAL  CONTROLS.  These officers have also concluded that
during  the  second  quarter  of 2003  there  was no  significant  change in our
internal control over financial  reporting that has materially  affected,  or is
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.
























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<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     We are subject to various  pending and threatened  legal actions that arise
in the normal  course of  business.  We maintain  reserves for losses from legal
actions that are both probable and estimable.

     Union Bank of California,  N.A., our major  subsidiary (the Bank), has been
named in two suits pending in the United States  District  Court for the Central
District  of  California,  Christensen  v.  Union Bank of  California  (formerly
captioned as Rockoff v Union Bank of California et al)(filed  December 21, 2001)
and Neilson v Union Bank of California et al (filed  September 4, 2002), and one
suit in Los Angeles  County  Superior  Court,  Kilpatrick v Orrick  Herrington &
Sutcliffe,  et al (filed April 22, 2003 as to the Bank). The plaintiffs in these
suits  collectively  seek in excess of $250 million alleged to have been lost by
those who  invested  money in various  investment  arrangements  conducted by an
individual  named Reed Slatkin.  Mr. Slatkin is alleged to have been operating a
fraudulent  investment  scheme  commonly  referred to as a "Ponzi"  scheme.  The
plaintiffs in the  Christensen  case are various  investors in the  arrangements
conducted  by Mr.  Slatkin and the  plaintiffs  in the Neilson case include both
investors  and the trustee of Mr.  Slatkin's  bankruptcy  estate.  A substantial
majority of those who invested  with Mr.  Slatkin had no  relationship  with the
Bank. A small minority,  comprising less than five percent of the investors, had
custodial  accounts  with the Bank.  The Neilson case seeks to impose  liability
upon the Bank and two other financial  institutions for both the losses suffered
by those custodial  customers as well as investors who had no relationship  with
the Bank.  The plaintiff in the  Kilpatrick  case is an individual  investor who
seeks  recovery of funds  placed in an account for a limited  liability  company
which he formed with Slatkin.

     Another  suit has been filed with  regard to an  unrelated  "Ponzi"  scheme
perpetrated by PinnFund, USA, located in San Diego,  California.  The victims of
this scheme have filed suit against the Bank seeking $235  million.  They assert
that the Bank improperly  opened and administered a deposit  account,  which was
used by PinnFund in furtherance of the fraud.

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

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

     For information regarding matters submitted to a vote at the Annual Meeting
of  Shareholders  on April 23, 2003 ("Annual  Meeting"),  see Part II, Item 4 of
Form 10-Q for the quarter ended March 31, 2003, incorporated herein.

     At that annual meeting, our shareholders  approved our reincorporation from
California to Delaware. This is expected to occur by the end of the year.











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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A)      EXHIBITS:


 NO.                                     DESCRIPTION
----      ----------------------------------------------------------------------
10.1      Form of Change-of-Control  Agreement, dated as of May 1, 2003, between
          UnionBanCal  Corporation  and each of the  policy-making  officers  of
          UnionBanCal Corporation(1)
31.1      Certification  of the Chief  Executive  Officer  pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002(1)
31.2      Certification  of the Chief  Financial  Officer  pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002(1)
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(1)
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(1)

------------------------
(1)      Provided herewith


(B)      REPORTS ON FORM 8-K

     We furnished a report on Form 8-K on April 16, 2003 reporting  under Item 9
thereof that UnionBanCal  Corporation issued a press release concerning earnings
for the first quarter of 2003.




















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<PAGE>



                                   SIGNATURES

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




                                             UNIONBANCAL CORPORATION
                                                  (Registrant)

                           By:               /S/ NORIMICHI KANARI
                                  ----------------------------------------------
                                                 Norimichi Kanari
                                       PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                           (Principal Executive Officer)

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

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

                           Date:  August 14, 2003













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