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, 2000

                         Commission file number 0-28118

                                   -----------

                             UnionBanCal Corporation

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

                              400 CALIFORNIA STREET
                      SAN FRANCISCO, CALIFORNIA 94104-1476
                  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 |_|

  Number of shares of Common Stock outstanding at July 31, 2000: 161,314,052







<PAGE>

<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                                TABLE OF CONTENTS



                                                                                                PAGE
                                                                                               NUMBER
                                                                                               ------
<S>                                                                                                <C>
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:
      Introduction.......................................................................          14
      Summary............................................................................          14
      Mission Excel......................................................................          17
      Business Segments..................................................................          18
      Net Interest Income................................................................          25
      Noninterest Income.................................................................          28
      Noninterest Expense................................................................          30
      Income Tax Expense.................................................................          31
      Loans..............................................................................          31
      Cross-Border Outstandings..........................................................          32
      Provision for Credit Losses........................................................          32
      Allowance for Credit Losses........................................................          33
      Nonperforming Assets...............................................................          37
      Loans 90 Days or More Past Due and Still Accruing..................................          37
      Liquidity..........................................................................          37
      Regulatory Capital.................................................................          38
      Forward-looking Statements.........................................................          39
   Item 3. Market Risk...................................................................          43
PART II
OTHER INFORMATION
   Item 4. Other Information.............................................................          44
   Item 5. Exhibits and Reports on Form 8-K..............................................          44
   Signatures............................................................................          45
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL HIGHLIGHTS
                                  (UNAUDITED)
                                                                                                               PERCENT CHANGE TO
                                                               AS OF AND FOR THE THREE MONTHS                    JUNE 30, 2000
                                                                           ENDED                                     FROM:
                                                      ------------------------------------------------     -------------------------
                                                         JUNE 30,          MARCH 31,        JUNE 30,        JUNE 30,       MARCH 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)              1999              2000             2000            1999           2000
-----------------------------------------------       -------------     -------------    -------------     ----------     ----------
<S>                                                    <C>               <C>              <C>                 <C>           <C>
RESULTS OF OPERATIONS:
   Net interest income(1)......................        $    348,014      $    386,177     $    396,929         14.06%         2.78%
   Provision for credit losses.................              10,000            40,000           70,000        600.00         75.00
   Noninterest income..........................             144,798           152,010          173,070         19.53         13.85
   Noninterest expense, excluding restructuring
      credit...................................             305,229           267,038          290,319         (4.88)         8.72
   Restructuring credit........................                   -           (11,000)          (8,000)           nm        (27.27)%
                                                       ------------      ------------     ------------      ---------      ---------
   Income before income taxes].................             177,583           242,149          217,680         22.58        (10.10)
   Taxable-equivalent adjustment...............                 851               655              637        (25.15)        (2.75)
   Income tax expense..........................              62,005            83,023           75,628         21.97         (8.91)
                                                       ------------      ------------     ------------      ---------      ---------
   Net income..................................        $    114,727      $    158,471     $    141,415         23.26%       (10.76)%
                                                       ============      ============     ============      =========      =========
PER COMMON SHARE:
   Net income-basic............................        $       0.70      $       0.97     $       0.87         24.29%       (10.31)%
   Net income-diluted..........................                0.69              0.96             0.87         26.09         (9.38)
   Dividends]..................................                0.19              0.25             0.25         31.58             -
   Book value (end of period)..................               17.50             18.73            19.42         10.97          3.68
   Common shares outstanding (end of period)...         164,600,997       162,585,365      161,604,417         (1.82)        (0.60)
   Weighted average common shares
      outstanding-basic........................         164,588,227       163,803,054      162,231,696         (1.43)        (0.96)
   Weighted average common shares
      outstanding-diluted......................         165,278,828       164,326,864      162,660,994         (1.58)        (1.01)
BALANCE SHEET (END OF PERIOD):
   Total assets................................        $ 32,386,153      $ 33,616,363     $ 33,895,037          4.66%         0.83%
   Total loans.................................          24,586,658        25,983,684       26,373,044          7.27          1.50
   Nonaccrual loans............................              90,908           144,400          203,201        123.52         40.72
   Nonperforming assets........................              97,449           146,648          228,981        134.98         56.14
   Total deposits..............................          24,133,148        25,906,727       25,733,981          6.63         (0.67)
   Trust preferred securities..................             350,000           350,000          350,000             -             -
   Common equity...............................           2,881,137         3,045,474        3,138,690          8.94          3.06
BALANCE SHEET (PERIOD AVERAGE):
   Total assets................................        $ 31,960,796      $ 33,021,747     $ 33,846,445          5.90%         2.50%
   Total loans.................................          24,854,844        26,013,718       26,441,412          6.38          1.64
   Earning assets..............................          28,867,990        29,827,068       30,575,062          5.91          2.51
   Total deposits..............................          23,348,561        25,080,619       25,476,764          9.11          1.58
   Common equity...............................           2,872,991         3,014,743        3,085,227          7.39          2.34
FINANCIAL RATIOS:
   Return on average assets(3).................                1.44%             1.93%            1.68%
   Return on average common equity]............               16.02             21.14            18.44
   Efficiency ratio(4).........................               62.04             47.58            49.52
   Net interest margin(1)......................                4.84              5.20             5.21
   Dividend payout ratio.......................               27.14             25.77            28.74
   Tangible equity ratio.......................                8.70              8.90             9.13
   Tier 1 risk-based capital ratio.............               10.02             10.11            10.23
   Total risk-based capital ratio..............               11.96             11.96            12.05
   Leverage ratio..............................                9.91             10.24            10.26
   Allowance for credit losses to total loans..                1.83              1.86             1.90
   Allowance for credit losses to nonaccrual
      loans....................................              495.45            334.63           246.42
   Net loans charged off to average total
      loans(3).................................                0.12              0.42             0.80
   Nonperforming assets to total loans,
      foreclosed assets, and distressed loans
      held for sale............................                0.40              0.56             0.87
   Nonperforming assets to total assets........                0.30              0.44             0.68
---------------------------
<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) and noninterest income.  Foreclosed asset expense (income) was $(0.5)  million in the second
    quarter of 1999, and none in the first and second quarters of 2000.
(nm) = not meaningful
</FN>
</TABLE>

                                       2
<PAGE>
<TABLE>
<CAPTION>
                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL HIGHLIGHTS
                                   (UNAUDITED)
                                                                                             AS OF AND FOR THE SIX MONTHS ENDED
                                                                                         -------------------------------------------
                                                                                            JUNE 30,           JUNE 30,     PERCENT
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                                                1999               2000         CHANGE
---------------------------------------------------------------------------------        -------------      -------------   --------
<S>                                                                                      <C>                <C>              <C>
RESULTS OF OPERATIONS:
   Net interest income]..........................................................        $     688,725      $     783,106     13.70%
   Provision for credit losses...................................................               15,000            110,000    633.33
   Noninterest income............................................................              284,106            325,080     14.42
   Noninterest expense, excluding restructuring credit...........................              606,392            557,357     (8.09)
   Restructuring credit..........................................................                    -           (19,000)        nm
                                                                                         -------------      -------------
   Income before income taxes]...................................................              351,439            459,829     30.84
   Taxable-equivalent adjustment.................................................                1,741              1,292    (25.79)
   Income tax expense............................................................              116,476            158,651     36.21
                                                                                         -------------      -------------
   Net income....................................................................        $     233,222      $     299,886     28.58%
                                                                                         =============      =============
PER COMMON SHARE:
   Net income-basic..............................................................        $        1.39      $        1.84     32.37%
   Net income-diluted............................................................                 1.38               1.83     32.61
   Dividends]....................................................................                 0.38               0.50     31.58
   Book value (end of period)....................................................                17.50              19.42     10.97
   Common shares outstanding (end of period).....................................          164,600,997        161,604,417     (1.82)
   Weighted average common shares outstanding-basic..............................          168,186,916        163,017,375     (3.07)
   Weighted average common shares outstanding-diluted............................          168,842,537        163,606,186     (3.10)
BALANCE SHEET (END OF PERIOD):
   Total assets..................................................................        $  32,386,153      $  33,895,037      4.66%
   Total loans...................................................................           24,586,658         26,373,044      7.27
   Nonaccrual loans..............................................................               90,908            203,201    123.52
   Nonperforming assets..........................................................               97,449            228,981    134.98
   Total deposits................................................................           24,133,148         25,733,981      6.63
   Trust preferred securities....................................................              350,000            350,000         -
   Common equity.................................................................            2,881,137          3,138,690      8.94
BALANCE SHEET (PERIOD AVERAGE):
   Total assets..................................................................        $  31,844,898      $  33,434,301      4.99%
   Total loans...................................................................           24,569,371         26,227,565      6.75
   Earning assets................................................................           28,744,028         30,201,073      5.07
   Total deposits................................................................           23,327,365         25,278,692      8.36
   Common equity.................................................................            2,933,336          3,049,985      3.98
FINANCIAL RATIOS:
   Return on average assets].....................................................                 1.48%              1.80%
   Return on average common equity]..............................................                16.03              19.77
   Efficiency ratio].............................................................                62.39              48.58
   Net interest margin]..........................................................                 4.83               5.21
   Dividend payout ratio.........................................................                27.34              27.17
   Tangible equity ratio.........................................................                 8.70               9.13
   Tier 1 risk-based capital ratio...............................................                10.02              10.23
   Total risk-based capital ratio................................................                11.96              12.05
   Leverage ratio................................................................                 9.91              10.26
   Allowance for credit losses to total loans....................................                 1.83               1.90
   Allowance for credit losses to nonaccrual loans...............................               495.45             246.42
   Net loans charged off to average total loans].................................                 0.20               0.61
   Nonperforming assets to total loans, foreclosed assets, and distressed loans
      held for sale..............................................................                 0.40               0.87
   Nonperforming assets to total assets..........................................                 0.30               0.68
---------------------------
<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) and noninterest income. Foreclosed asset expense (income)  was  $(0.6)  million in the first six months of
    1999 and none for the first six months of 2000.
(nm) = not meaningful
</FN>
</TABLE>

                                       3


<PAGE>

Item 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

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

                                                                              FOR THE THREE MONTHS           FOR THE SIX MONTHS
                                                                                 ENDED JUNE 30,                ENDED JUNE 30,
                                                                             -----------------------      --------------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)                                   1999          2000            1999           2000
-----------------------------------------------------------------------      ----------    ---------      ----------     -----------
<S>                                                                          <C>           <C>            <C>            <C>
INTEREST INCOME
   Loans...............................................................      $ 464,858     $ 562,075      $  916,350     $ 1,102,052
   Securities..........................................................         54,213        56,446         111,031         106,983
   Interest bearing deposits in banks..................................          3,068         2,563           6,256           4,747
   Federal funds sold and securities purchased under resale agreements.          1,196         2,082           2,893           5,101
   Trading account assets..............................................          2,503         4,777           6,401           8,035
                                                                             ---------     ---------      ----------     -----------
      Total interest income............................................        525,838       627,943       1,042,931       1,226,918
                                                                             ---------     ---------      ----------     -----------
INTEREST EXPENSE
   Domestic deposits...................................................        101,519       140,188         207,666         268,938
   Foreign deposits....................................................         17,181        24,441          33,813          51,366
   Federal funds purchased and securities sold under repurchase
      agreements.......................................................         21,107        26,865          40,876          45,389
   Commercial paper....................................................         18,020        23,364          37,194          44,932
   Subordinated capital notes..........................................          4,036         5,081           8,145           9,937
   UnionBanCal Corporation-obligated mandatorily redeemable preferred
      securities of subsidiary grantor trust...........................          7,091         6,490          10,382          13,374
   Other borrowed funds................................................          9,721         5,222          17,871          11,168
                                                                             ---------     ---------      ----------     -----------
      Total interest expense...........................................        178,675       231,651         355,947         445,104
                                                                             ---------     ---------      ----------     -----------
NET INTEREST INCOME....................................................        347,163       396,292         686,984         781,814
   Provision for credit losses.........................................         10,000        70,000          15,000         110,000
                                                                             ---------     ---------      ----------     -----------
      Net interest income after provision for credit losses............        337,163       326,292         671,984         671,814
                                                                             ---------     ---------      ----------     -----------
NONINTEREST INCOME
   Service charges on deposit accounts.................................         42,929        52,645          82,580         100,208
   Trust and investment management fees................................         33,983        37,388          66,254          76,188
   Merchant transaction processing fees................................         18,146        18,438          32,658          35,533
   International commissions and fees..................................         18,080        18,415          35,711          35,451
   Merchant banking fees...............................................          9,154        11,109          16,615          25,328
   Brokerage commissions and fees......................................          6,080         9,263          11,676          18,693
   Securities gains, net...............................................            634        10,018           1,895           5,700
   Other...............................................................         15,792        15,794          36,717          27,979
                                                                             ---------     ---------      ----------     -----------
      Total noninterest income.........................................        144,798       173,070         284,106         325,080
                                                                             ---------     ---------      ----------     -----------
NONINTEREST EXPENSE
   Salaries and employee benefits......................................        167,015       153,062         334,682         292,256
   Net occupancy.......................................................         21,917        22,010          44,378          44,694
   Equipment...........................................................         15,475        16,710          30,016          32,004
   Merchant transaction processing.....................................         13,258        12,644          24,868          24,360
   Communications......................................................         10,618        10,745          20,551          21,312
   Professional services...............................................         10,290        10,556          20,984          18,518
   Data processing.....................................................          7,661         8,975          15,662          17,622
   Foreclosed asset expense (income)...................................          (512)            56           (553)              21
   Restructuring credit................................................              -       (8,000)               -        (19,000)
   Other...............................................................         59,507        55,561         115,804         106,570
                                                                             ---------     ---------      ----------     -----------
      Total noninterest expense........................................        305,229       282,319         606,392         538,357
                                                                             ---------     ---------      ----------     -----------
   Income before income taxes..........................................        176,732       217,043         349,698         458,537
   Income tax expense..................................................         62,005        75,628         116,476         158,651
                                                                             ---------     ---------      ----------     -----------
NET INCOME.............................................................      $ 114,727     $ 141,415      $  233,222     $   299,886
                                                                             =========     =========      ==========     ===========
NET INCOME PER COMMON SHARE-BASIC......................................      $    0.70     $    0.87      $     1.39     $      1.84
                                                                             =========     =========      ==========     ===========
NET INCOME PER COMMON SHARE-DILUTED....................................      $    0.69     $    0.87      $     1.38     $      1.83
                                                                             =========     =========      ==========     ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC.......................        164,588       162,232         168,187         163,017
                                                                             =========     =========      ==========     ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED.....................        165,279       162,661         168,843         163,606
                                                                             =========     =========      ==========     ===========
<FN>
See accompanying notes to condensed  consolidated financial statements.
</FN>
</TABLE>

                                       4

<PAGE>
<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                   (UNAUDITED)                     (UNAUDITED)
                                                                                     JUNE 30,      DECEMBER 31,     JUNE 30,
(DOLLARS IN THOUSANDS)                                                                 1999             1999           2000
-------------------------------------------------------------------------          -----------     -----------     -----------
<S>                                                                                <C>             <C>             <C>
ASSETS
Cash and due from banks..................................................          $ 2,499,686     $ 2,141,964     $ 2,232,750
Interest bearing deposits in banks.......................................              203,428         182,719         182,408
Federal funds sold and securities purchased under resale agreements......              385,930         833,450          64,980
                                                                                   -----------     -----------     -----------
      Total cash and cash equivalents....................................            3,089,044       3,158,133       2,480,138
Trading account assets...................................................              197,120         179,935         273,797
Securities available for sale............................................            3,272,934       3,210,099       3,470,780
Securities held to maturity (market value: June 30, 1999, $138,269;
   December 31, 1999, $45,376; June 30, 2000, $23,993)...................              138,267          46,526          25,151
Loans (net of allowance for credit losses: June 30, 1999, $450,403;
   December 31, 1999, $470,378; June 30, 2000, $500,731).................           24,136,255      25,442,580      25,872,313
Due from customers on acceptances........................................              323,307         259,340         256,834
Premises and equipment, net..............................................              440,569         425,021         424,898
Other assets.............................................................              788,657         963,142       1,091,126
                                                                                   -----------     -----------     -----------
      Total assets.......................................................          $32,386,153     $33,684,776     $33,895,037
                                                                                   ===========     ===========     ===========
LIABILITIES
Domestic deposits:
   Noninterest bearing...................................................          $ 9,619,005     $ 9,395,925     $ 9,846,855
   Interest bearing......................................................           12,695,248      14,274,310      14,003,065
Foreign deposits:
   Noninterest bearing...................................................              231,964         325,415         331,825
   Interest bearing......................................................            1,586,931       2,260,957       1,552,236
                                                                                   -----------     -----------     -----------
      Total deposits.....................................................           24,133,148      26,256,607      25,733,981
Federal funds purchased and securities sold under repurchase agreements..            1,616,670       1,156,799       1,640,265
Commercial paper.........................................................            1,344,156       1,108,258       1,431,737
Other borrowed funds.....................................................              817,031         540,496         262,662
Acceptances outstanding..................................................              323,307         259,340         256,834
Other liabilities........................................................              622,704         727,808         782,868
Subordinated capital notes...............................................              298,000         298,000         298,000
UnionBanCal Corporation-obligated mandatorily redeemable preferred
   securities of subsidiary grantor trust................................              350,000         350,000         350,000
                                                                                   -----------     -----------     -----------
      Total liabilities..................................................           29,505,016      30,697,308      30,756,347
                                                                                   -----------     -----------     -----------

Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock:
   Authorized 5,000,000 shares, no shares issued or outstanding as of June
      30, 1999, December 31, 1999, and June 30, 2000.....................                    -               -                 -
Common stock-no stated value:
   Authorized 300,000,000 shares, issued 164,600,997 shares as of June 30,
      1999, 164,282,622 shares as of December 31, 1999, and 161,604,417
      shares as of June 30, 2000.........................................            1,415,104       1,404,155       1,327,509
Retained earnings........................................................            1,487,481       1,625,263       1,845,037
Accumulated other comprehensive income (loss)............................              (21,448)        (41,950)        (33,856)
                                                                                   -----------     -----------     -----------
      Total shareholders' equity.........................................            2,881,137       2,987,468       3,138,690
                                                                                   -----------     -----------     -----------
      Total liabilities and shareholders' equity.........................          $32,386,153     $33,684,776     $33,895,037
                                                                                   ===========     ===========     ===========
<FN>
See accompanying notes to condensed  consolidated financial statements.
</FN>
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

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


                                                                                       FOR THE SIX MONTHS ENDED JUNE 30,
                                                                              ------------------------------------------------------
(DOLLARS IN THOUSANDS)                                                                 1999                          2000
-----------------------------------------------------------------------       ------------------------      ------------------------
<S>                                                                           <C>            <C>            <C>            <C>
COMMON STOCK
Balance, beginning of period...........................................       $ 1,725,619                   $ 1,404,155
Dividend reinvestment plan.............................................                29                            22
Deferred compensation-restricted stock awards (cancellations)..........               (34)                          (68)
Stock options exercised................................................             1,028                         1,239
Common stock repurchased...............................................          (311,538)                      (77,839)
                                                                              -----------                   -----------
Balance, end of period.................................................       $ 1,415,104                   $ 1,327,509
                                                                              -----------                   -----------
RETAINED EARNINGS
Balance, beginning of period...........................................       $ 1,314,915                   $ 1,625,263
Net income.............................................................           233,222    $233,222           299,886    $299,886
Dividends on common stock(1)...........................................           (62,541)                      (81,433)
Deferred compensation-restricted stock awards..........................             1,885                         1,321
                                                                              -----------                   -----------
Balance, end of period.................................................       $ 1,487,481                   $ 1,845,037
                                                                              -----------                   -----------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period...........................................       $    17,710                   $   (41,950)
Unrealized holding (losses) gains arising during the period on
   securities available for sale, net of tax (benefit) expense of
   $(23,967) and $6,922 in the first six months of 1999 and 2000,
   respectively........................................................                       (38,566)                       11,174
Less: reclassification adjustment for gains on securities available for
   sale included in net income, net of tax expense of $678 and $2,180
   in the first six months of 1999 and 2000, respectively                                      (1,217)                       (3,520)
                                                                                             --------                      --------
Net unrealized (losses) gains on securities available for sale.........                       (39,783)                        7,654
Foreign currency translation adjustment, net of tax benefit (expense)
   of $25 and $(273) in the first six months of 1999 and 2000,
   respectively........................................................                           (44)                          440
Minimum pension liability adjustment, net of tax expense of $373 in the
   first six months of 1999............................................                           669                             -
                                                                                             --------                      --------
Other comprehensive (loss) income......................................           (39,158)    (39,158)            8,094       8,094
                                                                              -----------    --------       -----------    --------
Total comprehensive income.............................................                      $194,064                      $307,980
                                                                                             ========                      ========
   Balance, end of period..............................................       $   (21,448)                  $   (33,856)
                                                                              -----------                   -----------
      TOTAL SHAREHOLDERS' EQUITY.......................................       $ 2,881,137                   $ 3,138,690
                                                                              ===========                   ===========
---------------------------
<FN>
(1)   Dividends  per share  were  $0.38 and $0.50 for the first six months of 1999  and  2000,  respectively.
      Dividends are based on UnionBanCal Corporation's shares outstanding as of the declaration date.

See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
                                        6

<PAGE>
<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                                                            FOR THE SIX MONTHS
                                                                                                              ENDED JUNE 30,
                                                                                                      -----------------------------
(DOLLARS IN THOUSANDS)                                                                                    1999              2000
-----------------------------------------------------------------------------------------------       -----------       -----------
<S>                                                                                                   <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income..................................................................................       $   233,222       $   299,886
   Adjustments to reconcile net income to net cash provided by operating activities:
      Provision for credit losses..............................................................            15,000           110,000
      Depreciation, amortization and accretion.................................................            36,064            35,823
      Provision for deferred income taxes......................................................            11,302            24,771
      Gain on sales of securities available for sale...........................................            (1,895)           (5,700)
      Utilization in excess of restructuring charge (credit)...................................                 -           (39,335)
      Net decrease (increase) in trading account assets........................................            70,598           (93,862)
      Other, net...............................................................................          (183,129)          (46,412)
                                                                                                      -----------       -----------
      Total adjustments........................................................................           (52,060)          (14,715)
                                                                                                      -----------       -----------
   Net cash provided by operating activities...................................................           181,162           285,171
                                                                                                      -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sales of securities available for sale........................................           199,852           388,049
   Proceeds from matured and called securities available for sale..............................           329,486           464,584
   Purchases of securities available for sale..................................................          (224,325)       (1,094,623)
   Proceeds from matured and called securities held to maturity................................            22,417            21,380
   Net increase in loans.......................................................................          (336,296)         (562,725)
   Other, net..................................................................................           (50,643)          (29,628)
                                                                                                      -----------       -----------
      Net cash used in investing activities....................................................           (59,509)         (812,963)
                                                                                                      -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net decrease in deposits....................................................................          (374,731)         (522,626)
   Net increase in federal funds purchased and securities sold under repurchase agreements.....           308,926           483,466
   Net increase in commercial paper and other borrowed funds...................................           385,277            45,645
   Common stock repurchased....................................................................          (311,538)          (77,839)
   Proceeds from issuance of trust preferred securities........................................           350,000                 -
   Payments of cash dividends..................................................................           (64,568)          (82,027)
   Other, net..................................................................................             1,013             1,701
                                                                                                      -----------       -----------
      Net cash provided by (used in) financing activities......................................           294,379          (151,680)
                                                                                                      ===========       ===========
Net increase (decrease) in cash and cash equivalents...........................................           416,032          (679,472)
Cash and cash equivalents at beginning of period...............................................         2,678,478         3,158,133
Effect of exchange rate changes on cash and cash equivalents...................................            (5,466)            1,477
                                                                                                      -----------       -----------
Cash and cash equivalents at end of period.....................................................       $ 3,089,044       $ 2,480,138
                                                                                                      ===========       ===========
CASH PAID DURING THE PERIOD FOR:
   Interest....................................................................................       $   348,438       $   431,552
   Income taxes................................................................................            33,178            91,202
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Loans transferred to foreclosed assets (OREO) and distressed loans held for sale............       $     3,892       $    25,286
   Dividends declared but unpaid...............................................................            31,312            40,530
<FN>
 See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                       7

<PAGE>


                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2000
                                  (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,  2000 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 for the year ended  December 31, 1999.  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.

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

         The Company  completed  the  repurchase of $100 million in common stock
between December 1999 and July 2000, under a stock repurchase plan authorized in
November  1999. As of June 30, 2000 $95.7 million of stock had been  repurchased
under the plan. In July 2000, the Company  announced an additional  $100 million
stock repurchase plan.

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

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

NOTE 2-RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative  Instruments and Hedging Activities".  The Statement will require the
Company to recognize all  derivatives  on the balance sheet at fair value.  SFAS
No.  133  requires  that  derivative  instruments  used to hedge  be  identified
specifically   to  assets,   liabilities,   firm   commitments   or  anticipated
transactions and measured as to effectiveness and  ineffectiveness  when hedging
changes in fair value or cash flows.  Derivative instruments that do not qualify
as either a fair  value or cash flow hedge will be valued at fair value with the
resultant gain or loss recognized in current earnings.  Changes in the effective
portion of fair value hedges will be recognized in current  earnings  along with
the change in fair value of the hedged item. Changes in the effective portion of
the fair


                                       8

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                             (UNAUDITED)(CONTINUED)


NOTE 2-RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

value of cash flow hedges will be recognized in other comprehensive income until
realization of the cash flows of the hedged item through current  earnings.  Any
ineffective  portion of hedges will be recognized in current  earnings.  In June
1999,  the FASB issued SFAS No. 137,  "Deferral  of the  Effective  Date of FASB
Statement No. 133", to defer for one year the effective  date of  implementation
of SFAS No. 133. In June 2000, FASB issued SFAS No. 138, "Accounting for Certain
Derivative  Instruments  and  Certain  Hedging  Activities",  which  amends  the
accounting  and  reporting  standards  of SFAS No.  133 for  certain  derivative
instruments and certain hedging activities. SFAS No. 133, as amended by SFAS No.
137 and SFAS No. 138, is  effective  for fiscal years  beginning  after June 15,
2000, with earlier application  encouraged.  Management believes that, depending
upon the  accumulated  net gain or loss of the  effective  portion  of cash flow
hedges at the date of adoption, the impact of the adoption of SFAS No. 133 could
have a  material  impact  on other  comprehensive  income.  However,  management
believes  that any  ineffective  portion of cash flow hedges or any other hedges
will not have a material impact on the Company's  financial  position or results
of operations. The Company expects to adopt SFAS No. 133 as of January 1, 2001.

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, 1999 and 2000:

<TABLE>
<CAPTION>


                                                 THREE MONTHS ENDED JUNE 30,                    SIX MONTHS ENDED JUNE 30,
                                         -------------------------------------------   -------------------------------------------
                                                 1999                   2000                   1999                   2000
                                         --------------------   --------------------   --------------------    -------------------
(AMOUNTS IN THOUSANDS, EXCEPT PER
 DATA                                      BASIC      DILUTED     BASIC      DILUTED     BASIC      DILUTED      BASIC     DILUTED
---------------------------------        --------    --------   --------    --------   --------    --------    --------   --------
<S>                                      <C>         <C>        <C>         <C>        <C>         <C>         <C>        <C>
Net Income.......................        $114,727    $114,727   $141,415    $141,415   $233,222    $233,222    $299,886   $299,886

Weighted average common shares
   outstanding...................         164,588     164,588    162,232     162,232    168,187     168,187     163,017    163,017
Additional shares due to:
   Assumed conversion of dilutive
      stock options..............               -         691          -         429          -         656           -        589
                                         --------    --------   --------    --------   --------    --------    --------   --------
Adjusted weighted average common
   shares outstanding............         164,588     165,279    162,232     162,661    168,187     168,843     163,017    163,606
                                         ========    ========   ========    ========   ========    ========    ========   ========
Net income per share.............        $   0.70    $   0.69   $   0.87    $   0.87   $   1.39    $   1.38    $   1.84   $   1.83
                                         ========    ========   ========    ========   ========    ========    ========   ========

</TABLE>


                                       9

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                             (UNAUDITED)(CONTINUED)


NOTE 4-COMPREHENSIVE INCOME

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

<TABLE>
<CAPTION>
                                    NET UNREALIZED GAINS           FOREIGN            MINIMUM PENSION        ACCUMULATED OTHER
                                   (LOSSES) ON SECURITIES          CURRENCY              LIABILITY             COMPREHENSIVE
                                     AVAILABLE FOR SALE          TRANSLATION             ADJUSTMENT            INCOME (LOSS)
                                    ---------------------    --------------------   --------------------    --------------------
                                                                  FOR THE SIX MONTHS ENDED JUNE 30,
                                    --------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                1999         2000         1999        2000        1999       2000       1999        2000
------------------------------      --------     --------     -------     -------     -------     -----     --------    --------

<S>                                 <C>          <C>          <C>         <C>         <C>         <C>       <C>         <C>
Beginning balance.............      $ 29,109     $(32,548)    $(9,651)    $(8,713)    $(1,748)    $(689)    $ 17,710    $(41,950)
Change during the period......       (39,783)       7,654         (44)        440         669         -      (39,158)      8,094
                                    --------     --------     -------     -------     -------     -----     --------    --------
Ending balance................      $(10,674)    $(24,894)    $(9,695)    $(8,273)    $(1,079)    $(689)    $(21,448)   $(33,856)
                                    ========     ========     =======     =======     =======     =====     ========    ========

</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
                  full range of banking  services,  primarily to individuals and
                  small  businesses,  delivered  through a tri-state  network of
                  branches and ATMs.  These services include  commercial  loans,
                  mortgages  and home equity  lines of credit,  consumer  loans,
                  deposit  services and cash  management  as well as  fiduciary,
                  private banking,  investment and asset management services for
                  individuals and institutions.

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

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

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

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

         The  information in this table is derived from the internal  management
reporting  system used by management to measure the  performance of the segments
and the Company overall.  The management  reporting system assigns balance sheet
and  income  statement  items  to each  segment  based  on  internal  management
accounting policies. Net interest income is determined by the Company's internal
funds


                                       10

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                             (UNAUDITED)(CONTINUED)


NOTE 5-BUSINESS SEGMENTS (CONTINUED)

transfer pricing system,  which assigns a cost of funds or a credit for funds to
assets   or   liabilities   based  on  their   type,   maturity   or   repricing
characteristics.  Noninterest  income and  expense  directly  attributable  to a
segment  are  assigned  to  that  business,  other  than  restructuring  charges
(credits). Indirect costs, such as overhead, operations, and technology expense,
are  allocated  to the  segments  based on  studies of  billable  unit costs for
product or data  processing.  With the  Company's  adoption  of a  risk-adjusted
return on capital (RAROC)  methodology,  credit expense is charged to businesses
based  upon  expected  losses  arising  from  credit  risk.  In  addition,   the
attribution  of economic  capital is related to unexpected  losses  arising from
credit, market and operational risks.

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

<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,
                                                           -------------------------------------------------------------------------
                                                            1999          2000          1999          2000        1999        2000
                                                           --------     --------      --------      --------     -------    --------
<S>                                                        <C>          <C>           <C>           <C>          <C>        <C>
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
Total revenue(1)...................................        $262,030     $295,540      $178,416      $233,105     $24,938    $ 22,226
Net income.........................................        $ 35,667     $ 63,109      $ 53,528      $ 82,461     $ 4,629    $  3,893
Total assets at period end (dollars in millions)...        $  9,509     $  8,920      $ 16,059      $ 18,975     $ 1,524    $  1,538
</TABLE>

<TABLE>
<CAPTION>

                                                                 GLOBAL                                             UNIONBANCAL
                                                              MARKETS GROUP               OTHER                     CORPORATION
                                                            ------------------     ----------------------      ---------------------
                                                                          AS OF AND FOR THE THREE MONTHS ENDED JUNE 30,
                                                            ------------------------------------------------------------------------
                                                              1999        2000       1999          2000          1999          2000
                                                            -------     ------     -------      ---------      --------     --------

<S>                                                         <C>         <C>        <C>          <C>            <C>          <C>
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
Total revenue(1).....................................       $17,918     $7,587     $ 8,659      $ 10,904       $491,961     $569,362
Net income...........................................       $ 7,461     $2,317     $13,442      $(10,365)      $114,727     $141,415
Total assets at period end (dollars in millions).....       $ 3,723     $3,687     $ 1,572      $    776       $ 32,386      $33,895
---------------------------
<FN>
(1)  Total revenue is comprised of net interest income and noninterest income
</FN>
</TABLE>

                                       11

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                             (UNAUDITED)(CONTINUED)


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,
                                                           ------------------------------------------------------------------------
                                                             1999       2000          1999        2000         1999         2000
                                                           --------   --------      --------    --------     --------    ----------
<S>                                                        <C>          <C>           <C>           <C>          <C>         <C>
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
Total revenue(1)...................................        $509,984   $568,028      $345,832    $447,767     $ 52,233    $   48,279
Net income.........................................        $ 64,579   $116,983      $ 98,282    $156,819     $ 10,634    $   10,158
Total assets at period end (dollars in millions)...        $  9,509   $  8,920      $ 16,059    $ 18,975     $  1,524    $    1,538

                                                                GLOBAL                                            UNIONBANCAL
                                                            MARKETS GROUP               OTHER                     CORPORATION
                                                           -------------------      --------------------     ----------------------
                                                                        AS OF AND FOR THE SIX MONTHS ENDED JUNE 30,
                                                           -------------------------------------------------------------------------
                                                             1999       2000          1999        2000         1999         2000
                                                           --------   --------      --------    --------     --------    ----------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
Total revenue(1).....................................      $ 42,700   $  9,438      $ 20,342    $ 33,382     $971,090    $1,106,894
Net income...........................................      $ 18,929   $    974      $ 40,798    $ 14,952     $233,222    $  299,886
Total assets at period end (dollars in millions).....      $  3,723   $  3,687      $  1,572    $    775     $ 32,386    $   33,895
---------------------------
<FN>
(1)      Total revenue is comprised of net interest income and noninterest income
</FN>
</TABLE>

NOTE 6-RESTRUCTURING CHARGE (CREDIT)

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

         During  the second  quarter  of 2000,  the  restructuring  reserve  was
reduced by $8.0 million. Total reductions for the six months ended June 30, 2000
were $19.0  million.  The  reductions  were  primarily  related to the severance
portion of the reserve,  reflecting continuing changes in attrition assumptions.
As a result  of  ongoing  evaluations,  management  believes  that  the  current
strength of the California  economy  resulted in markedly higher attrition rates
than the  Company had  previously  anticipated  at the end of the first  quarter
2000. Consequently, lower than expected severance payments attributed to Mission
Excel position eliminations will be paid.


                                       12

<PAGE>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2000
                             (UNAUDITED)(CONTINUED)


NOTE 6-RESTRUCTURING CHARGE (CREDIT)

         The  table  below  provides  details  of  the   restructuring   related
liability.

<TABLE>
<CAPTION>
                                                                   OCCUPANCY
                                                                      AND
(DOLLARS IN THOUSANDS)                               PERSONNEL       OTHER         TOTAL
--------------------------------------------------   ---------     ---------      ---------
<S>                                                    <C>            <C>           <C>
Balances at December 31, 1999.....................     $59,525        $9,834        $69,359
Less:
Cash..............................................      14,615         5,711         20,326
Noncash...........................................           -             9              9
                                                     ---------     ---------      ---------
   Total utilization..............................      14,615         5,720         20,335
Restructuring credit..............................      18,000         1,000         19,000
                                                     ---------     ---------      ---------
Balances at June 30, 2000.........................     $26,910        $3,114        $30,024
                                                     =========     =========      =========
</TABLE>

         Personnel expense consists of severance and related benefits to be paid
under the Company's  enhanced  severance  plan. The Company now expects to sever
approximately  800  employees  under the plan of which 620  employees  have been
terminated  as  of  June  30,  2000.  Occupancy  and  other  consists  of  lease
termination  costs and the cost of  professional  services  incurred  during the
assessment phase of the project.




                                       13

<PAGE>


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

         THIS DOCUMENT CONTAINS  FORWARD-LOOKING  STATEMENTS THAT ARE SUBJECT TO
RISKS AND  UNCERTAINTIES  THAT COULD CAUSE ACTUAL  RESULTS TO DIFFER  MATERIALLY
FROM THOSE  INDICATED.  FOR A  DISCUSSION  OF FACTORS  THAT COULD  CAUSE  ACTUAL
RESULTS TO DIFFER,  PLEASE SEE THE DISCUSSION CONTAINED HEREIN ON PAGE 39 AND IN
OUR PUBLICLY  AVAILABLE  SECURITIES  AND EXCHANGE  COMMISSION  FILINGS AND PRESS
RELEASES.

INTRODUCTION

         We  are  a  California-based   commercial  bank  holding  company  with
consolidated  assets  of  $33.9  billion  at June  30,  2000.  Our  wholly-owned
subsidiary, Union Bank of California, N.A., is the third largest commercial bank
in California,  based on total assets and total deposits in California,  and one
of the 30 largest  commercial  banks in the United States.  At June 30, 2000, we
operated  241 banking  offices in  California,  6 banking  offices in Oregon and
Washington,  and 18 overseas  facilities.  At June 30, 2000,  we were 65 percent
owned  by The  Bank of  Tokyo-Mitsubishi,  Ltd.  and 35  percent  owned by other
shareholders.

         Our interim  financial  information  should be read in conjunction with
our Form 10-K for the year ended  December 31, 1999.  Certain  amounts for prior
periods  have been  reclassified  to  conform  to  current  financial  statement
presentation.

SUMMARY

         To  facilitate  the  discussion  of  the  results  of  operations,  the
following  table  includes  certain pro forma earnings  disclosures  and ratios.
These presentations  supplement the Condensed Consolidated  Statements of Income
on page 4, which are prepared in accordance with accounting principles generally
accepted in the United  States of America (US GAAP),  primarily  with respect to
the treatment of the restructuring credits, which were recorded in the first and
second  quarters  of  2000,  as  well  as  reflecting  the  taxable   equivalent
adjustment.  Management  believes  that  it  is  meaningful  to  understand  the
operating  results  and trends  excluding  these  credits  and,  therefore,  has
included  information in this table and in management's  discussion and analysis
(MD&A) which follows, that presents income excluding these items and related pro



                                       14

<PAGE>

forma ratio and per share  calculations.  These pro forma earnings have not been
adjusted for any other non-recurring items that may impact our ratios or trends.

<TABLE>
<CAPTION>


                                                                                    FOR THE THREE MONTHS        FOR THE SIX MONTHS
                                                                                        ENDED JUNE 30,             ENDED JUNE 30,
                                                                                   ----------------------      --------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                                        1999          2000          1999        2000
----------------------------------------------------------------------------       --------      --------      --------    --------
<S>                                                                                <C>           <C>           <C>         <C>
INCOME BEFORE INCOME TAXES..................................................       $177,583      $217,680      $351,439    $459,829
   Restructuring credit.....................................................              -        (8,000)            -     (19,000)
   Taxable equivalent adjustment............................................           (851)         (637)       (1,741)     (1,292)
   Income tax expense(1)....................................................        (62,005)      (72,614)     (116,476)   (151,492)
                                                                                   --------      --------      --------    --------
PRO FORMA EARNINGS..........................................................       $114,727      $136,429      $233,222    $288,045
                                                                                   ========      ========      ========    ========

PER COMMON SHARE, EXCLUDING RESTRUCTURING CREDIT
   Pro forma earnings (basic)...............................................       $   0.70      $   0.84      $   1.39    $   1.77
   Pro forma earnings (diluted).............................................           0.69          0.84          1.38        1.76

SELECTED FINANCIAL RATIOS, EXCLUDING RESTRUCTURING CREDIT
   Pro forma return on average assets.......................................           1.44%         1.62%         1.48%       1.73%
   Pro forma return on average common equity................................          16.02         17.78         16.03       18.99
   Pro forma efficiency ratio]..............................................          62.04         50.92         62.39       50.29
   Pro forma dividend payout ratio..........................................          27.14         29.76         27.34       28.41
---------------------------
<FN>
(1)  Excludes  the income tax  credits of $3.014  million  and $7.159  million in the three and six months  ending  June 30,  2000,
     respectively, related to restructuring credits.

(2)  The pro  forma  efficiency  ratio  is  noninterest  expense,  excluding foreclosed asset income and  restructuring  charge,
     as a percentage of net  interest  income   (taxable-equivalent)  and  noninterest  income. Foreclosed  asset  expense/(income)
     was  $(0.512)  million and $0.056 million  for the  second  quarter of 1999 and 2000, respectively, and ($0.553)  million
     and $0.021  million for the first six months of 1999 and 2000, respectively.
</FN>
</TABLE>

         COMPARISON OF THREE MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         Net income was $141.4  million,  or $0.87 per diluted common share,  in
the second  quarter of 2000 compared with $114.7  million,  or $0.69 per diluted
common share,  in the second quarter of 1999.  Return on average assets was 1.68
percent for the quarter ending June 30, 2000, compared with 1.44 percent for the
same period in 1999,  and return on average  common equity was 18.44 percent for
the  quarter  ending June 30,  2000,  compared  with 16.02  percent for the same
period in 1999.

         Excluding  the effects of the $8.0 million  restructuring  credit ($5.0
million net of tax), which was recorded in the second quarter of 2000, pro forma
earnings  were $136.4  million or $0.84 per diluted  common  share in the second
quarter of 2000 compared to $114.7  million or $0.69 per diluted common share in
the same period of 1999. In the second  quarter of 2000, our pro forma return on
average assets  increased to 1.62 percent from 1.44 percent a year earlier,  and
our pro forma return on average  common  equity  increased to 17.78 percent from
16.02 percent a year earlier.

         Major factors affecting the earnings trend were:

         o   Total interest  income during the second quarter of 2000, on a
             taxable-  equivalent basis, was $102.1 million or 19.4% higher
             than the same period in 1999.  Increased average earning asset
             balances and the increasing interest rate environment were the
             main contributors to the higher total interest income.

         o   Net  interest  margin  for the  second  quarter of 2000 was 37
             basis  points or 7.6  percent  higher  than the same period in
             1999. Increased yields on earning assets,  partially offset by
             higher cost of funds


                                       15

<PAGE>

             on  interest  bearing  liabilities,  both
             resulting from the increasing interest rate environment,  were
             the main contributors to a higher net interest margin.

         o   Growth in several  fee  revenue  businesses  was  strong  with
             service  charges on  deposit  accounts  up $9.7  million or 23
             percent,  trust and investment management fees up $3.4 million
             or 10 percent,  brokerage  fees and commission up $3.2 million
             or 52 percent, and merchant banking fees up $2.0 million or 21
             percent.  Overall  fee  revenue  grew  $18.2  million  or 12.6
             percent, excluding a net securities gain of $10.0 million.

         o   The  provision  for loan losses  increased to $70.0 million in
             the  second  quarter  of 2000 from  $10.0  million in the same
             period in 1999. The change is attributed to an increase in our
             criticized credits and in our impairment allowance.

         o   Operating expenses,  excluding a restructuring  reserve credit
             of $8.0 million,  decreased  $14.9 million or 4.9 percent from
             the same period in 1999. The decrease is mainly  attributed to
             lower  direct  expenses  realized  through our  Mission  Excel
             expense  reduction  efforts  and higher  prior  year  expenses
             related to the Year 2000 conversion.

         COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         Net income was $299.9  million or $1.83 per diluted  common share,  for
the first six months of 2000 compared  with $233.2  million or $1.38 per diluted
common  share,  for the first six months of 1999,  Return on average  assets was
1.80 percent for the quarter  ending June 30, 2000,  compared  with 1.48 percent
for the same  period in 1999,  and  return on  average  common  equity was 19.77
percent for the quarter  ending June 30, 2000,  compared  with 16.03 percent for
the same period in 1999.

         Excluding the effects of the $19.0 million  restructuring credit ($11.8
million net of tax),  which was  recorded  in the first six months of 2000,  pro
forma  earnings  were $288.0  million or $1.76 per diluted  common share for the
first six months of 2000, compared to $233.2 million or $1.38 per diluted common
share for the first six months of 1999.  For the first six  months of 2000,  our
pro forma return on average assets increased to 1.73 percent from 1.48 percent a
year earlier,  and our pro forma return on average  common  equity  increased to
18.99 percent from 16.03 percent a year earlier.

         Major factors affecting the earnings trend were:

         o   Total interest  income during the first six months of 2000, on
             a  taxable-  equivalent  basis,  was  $184.0  million  or 17.6
             percent higher than the same period in 1999. Increased average
             earning  asset  balances  and  the  increasing  interest  rate
             environment  were the main  contributors  to the higher  total
             interest income.

         o   Net  interest  margin  for the first six months of 2000 was 38
             basis  points,  or 7.9 percent  higher than the same period in
             1999. Increased yields on earning assets,  partially offset by
             higher cost of funds on  interest  bearing  liabilities,  both
             resulting from the increasing interest rate environment,  were
             the main contributors to a higher net interest margin.

         o   Growth  in  several  fee  revenue  businesses  continued  with
             service  charges on deposit  accounts  up $17.6  million or 21
             percent,  trust and investment management fees up $9.9 million
             or 15 percent,  merchant  banking  fees up $8.7  million or 52
             percent,  and brokerage fees and commission up $7.0 million or
             60%. Overall,  fee revenue grew $31.0 million or 10.9 percent,
             excluding the net securities gain of $10.0 million.

         o   The provision for loan losses  increased to $110.0  million in
             the first six  months of 2000 from  $15.0  million in the same
             period in 1999. The change is attributed to an increase in our
             criticized credits and in our impairment allowance.


                                       16

<PAGE>


         o   Operating  expenses  decreased  $49.0  million or 8.0 percent,
             excluding a  restructuring  reserve  credit of $19.0  million,
             from  the  same  period  in  1999.   The  decrease  is  mainly
             attributed to lower direct  expenses  realized  through to our
             Mission Excel  expense  reduction  efforts,  higher prior year
             expenses related to the Year 2000 conversion.

         Nonperforming  assets  increased $131.5 million,  or 135 percent,  from
June 30,  1999 to $229.0  million at June 30,  2000.  Nonperforming  assets as a
percentage of total assets increased to 0.68 percent at June 30, 2000,  compared
with 0.30 percent one year earlier. Total nonaccrual loans were $90.9 million at
June 30, 1999,  compared with $203.2  million at June 30, 2000,  resulting in an
increase in the ratio of  nonaccrual  loans to total loans from 0.37  percent at
June 30, 1999 to 0.77 percent at June 30, 2000.

         Our Tier 1 and total  risk-based  capital ratios were 10.02 percent and
11.96 percent,  respectively,  at June 30, 1999, compared with 10.20 percent and
12.04  percent,  respectively,  at June 30, 2000.  Our  leverage  ratio was 9.91
percent at June 30, 1999 compared with 10.24 percent at June 30, 2000

MISSION EXCEL

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

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

         During the second quarter 2000, as part of our regular  evaluation,  we
reduced our  restructuring  reserve by $8 million.  Total reductions for the six
months  ended June 30, 2000 were $19.0  million.  The  reduction,  in the second
quarter,  arose in the  severance  portion of our reserve due to a change in the
attrition  assumptions  that were used at the end of the first quarter 2000. The
continuing  strength  of the  California  economy,  coupled  with a tight  labor
market, resulted in a markedly higher attrition rate than we had anticipated. As
a result,  we have reduced the total number of employees  expected to be severed
under the plan from 1,400 to 800.  As we  continue  to  evaluate  the  attrition
assumptions  utilized in estimating the severance reserve,  further  adjustments
may be necessary.

         At  the   completion  of  the  plan,  we  currently   expect  to  sever
approximately  800 employees who are not  concentrated in any one group or class
of staff. Of the total,  620 employees have been severed as of June 30, 2000 and
the  remaining  180  employees  are  expected  to be  severed  in the next three
quarters.  Most of these employees were notified of their severance date by June
30, 2000.

         The following table presents the restructuring  reserve for the period,
the  utilization and reduction of the reserve,  and the resulting  balance as of
June 30, 2000.

<TABLE>
<CAPTION>

                                                     FOR THE THREE         FOR THE SIX
                                                      MONTHS ENDED         MONTHS ENDED
(DOLLARS IN THOUSANDS)                               JUNE 30, 2000        JUNE 30, 2000
------------------------------------------------     -------------        -------------
<S>                                                      <C>                 <C>
Balance, beginning of period....................         $45,298             $69,359
Restructuring credit............................          (8,000)            (19,000)
Utilization.....................................          (7,274)            (20,335)
                                                         -------             -------
Balance, end of period..........................         $30,024             $30,024
                                                         =======             =======
</TABLE>


                                       17


<PAGE>


BUSINESS SEGMENTS

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

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

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

         The significant  changes in the RAROC measurement  methodology  concern
the  recognition of credit expense for expected  losses arising from credit risk
and the  attribution of economic  capital  related to unexpected  losses arising
from credit, market and operational risks. Business unit results are based on an
internal  management   reporting  system  used  by  management  to  measure  the
performance of the units and UnionBanCal  Corporation as a whole. The management
reporting  system  identifies  balance sheet and income  statement items to each
business unit based on internal  management  accounting  policies.  Net interest
income is determined  using our internal funds transfer  pricing  system,  which
assigns  a cost of funds to  assets or a credit  for  funds to  liabilities  and
capital, based on their type, maturity or repricing characteristics. Noninterest
income and expense  directly or indirectly  attributable  to a business unit are
assigned to that business.


                                       18

<PAGE>


         We have restated the business  units'  results for the prior periods to
reflect any reorganizational changes that 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,
                                                        ----------------------------------------------------------------------------
                                                          1999         2000          1999         2000          1999          2000
                                                        --------      --------     --------     ---------      --------    ---------
<S>                                                     <C>           <C>          <C>          <C>            <C>         <C>
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   Net interest income...........................       $169,213      $183,171     $146,122     $ 182,265      $ 10,977    $  8,147
   Noninterest income............................         92,817       112,369       32,294        50,840        13,961      14,079
                                                        --------      --------     --------     ---------      --------    --------
   Total revenue.................................        262,030       295,540      178,416       233,105        24,938      22,226
   Noninterest expense(1)........................        191,327       180,772       70,897        74,461        14,558      14,081
   Credit expense (income).......................         13,014        12,563       22,036        29,377         2,899       1,840
                                                        --------      --------     --------     ---------      --------    --------
   Income before income tax expense (benefit)....         57,689       102,205       85,483       129,267         7,481       6,305
   Income tax expense (benefit)..................         22,022        39,096       31,955        46,806         2,852       2,412
                                                        --------      --------     --------     ---------      --------    --------
   Net income....................................       $ 35,667      $ 63,109     $ 53,528     $  82,461      $  4,629    $  3,893
                                                        ========      ========     ========     =========      ========    ========
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans...................................       $  8,300      $  7,978     $ 14,569     $  17,047      $  1,036    $    939
   Total assets..................................          9,281         8,888       15,908        18,893         1,584       1,543
   Total deposits................................         14,000        14,134        5,722         6,238           789         875
   FINANCIAL RATIOS:
   Return on risk adjusted capital(2)............             24%           42%          19%           21%           18%         16%
   Return on average assets(2)...................           1.54          2.86         1.35          1.76          1.17        1.01
   Efficiency ratio(3)...........................          73.02         61.17        39.74         31.94         58.38       63.35

<CAPTION>

                                                               GLOBAL                                               UNIONBANCAL
                                                            MARKETS GROUP                   OTHER                   CORPORATION
                                                        ----------------------     ----------------------      ---------------------
                                                                         AS OF AND FOR THE THREE MONTHS ENDED JUNE 30,
                                                        ----------------------------------------------------------------------------
                                                          1999         2000          1999         2000          1999          2000
                                                        --------      --------     --------     ---------      --------    ---------
<S>                                                     <C>           <C>          <C>          <C>            <C>         <C>
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   Net interest income...........................       $ 14,892      $ 10,073     $  5,959     $ 12,636       $347,163    $396,292
   Noninterest income............................          3,026        (2,486)       2,700       (1,732)       144,798     173,070
                                                        --------      --------     --------     --------       --------    --------
   Total revenue.................................         17,918         7,587        8,659       10,904        491,961     569,362
   Noninterest expense(1)........................          5,847         3,822       22,600        9,183        305,229     282,319
   Credit expense (income).......................              -             -      (27,949)      26,220         10,000      70,000
                                                        --------      --------     --------     --------       --------    --------
   Income before income tax expense (benefit)....         12,071         3,765       14,008      (24,499)       176,732     217,043
   Income tax expense (benefit)..................          4,610         1,448          566      (14,134)        62,005      75,628
                                                        --------      --------     --------     --------       --------    --------
   Net income....................................         $7,461        $2,317      $13,442     $(10,365)      $114,727    $141,415
                                                        ========      ========     ========     ========       ========    ========
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans...................................       $      -      $      -     $    950     $     477      $ 24,855    $ 26,441
   Total assets..................................          3,789         3,713        1,399           809        31,961      33,846
   Total deposits................................          2,748         3,389           90           841        23,349      25,477
FINANCIAL RATIOS:
   Return on risk adjusted capital(2)............             14%            6%          na            na            na          na
   Return on average assets(2)...................           0.79          0.25           na            na          1.44%       1.68%
   Efficiency ratio(3)...........................          32.63         50.38           na            na         62.04       49.52
---------------------------
<FN>
(1)   "Other" includes a second quarter restructuring credit of $8.0 million ($5.1 million, net of tax).
(2)   Annualized.
(3)   The efficiency ratio is noninterest expense, excluding foreclosed asset income and restructuring charge, as a percentage of
      net interest income (taxable-equivalent) and noninterest income.  Foreclosed asset income/(expense) was $0.512 million and
      ($0.056) million for the second quarter of 1999 and 2000, respectively.
(na) = not applicable
</FN>
</TABLE>
                                       19

<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,
                                                        ----------------------------------------------------------------------------
                                                          1999         2000          1999         2000          1999          2000
                                                        --------      --------     --------     ---------      --------    ---------
<S>                                                     <C>           <C>          <C>          <C>            <C>         <C>
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   Net interest income...........................       $333,986      $360,031     $283,824     $ 354,932      $ 22,866    $ 16,772
   Noninterest income............................        175,998       207,997       62,008        92,835        29,367      31,507
                                                        --------      --------     --------     ---------      --------    --------
   Total revenue.................................        509,984       568,028      345,832       447,767        52,233      48,279
   Noninterest expense(1)........................        379,475       354,179      143,765       144,907        29,095      27,107
   Credit expense (income).......................         25,921        24,404       44,845        57,681         5,877       4,722
                                                        --------      --------     --------     ---------      --------    --------
   Income before income tax expense (benefit)....        104,588       189,445      157,222       245,179        17,261      16,450
   Income tax expense (benefit)..................         40,009        72,462       58,941        88,360         6,627       6,292
                                                        --------      --------     --------     ---------      --------    --------
   Net income....................................       $ 64,579      $116,983     $ 98,282     $ 156,819      $ 10,634    $ 10,158
                                                        ========      ========     ========     =========      ========    ========
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans...................................       $  8,318      $  7,990     $ 14,154     $  16,758      $  1,091    $    966
   Total assets..................................          9,290         8,927       15,503        18,519         1,681       1,554
   Total deposits................................         13,899        14,266        5,781         6,128           785         884
FINANCIAL RATIOS:
   Return on risk adjusted capital(2)............             22%           43%          18%           22%           18%         20%
   Return on average assets(2)...................           1.40          2.64         1.28          1.70          1.25        1.31
   Efficiency ratio(3)...........................          74.41         62.35        41.57         32.36         55.70       56.15
<CAPTION>

                                                               GLOBAL                                              UNIONBANCAL
                                                            MARKETS GROUP                   OTHER                  CORPORATION
                                                        ----------------------     ----------------------      ---------------------
                                                                          AS OF AND FOR THE SIX MONTHS ENDED JUNE 30,
                                                        ----------------------------------------------------------------------------
                                                          1999          2000         1999         2000           1999        2000
                                                        --------      --------     --------     ---------      --------   ----------
<S>                                                     <C>           <C>          <C>          <C>            <C>       <C>
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   Net interest income...........................       $ 34,297      $ 22,092     $  12,011    $  27,987      $686,984  $  781,814
   Noninterest income............................          8,403       (12,654)        8,330        5,395       284,106     325,080
                                                        --------      --------     ----------   ---------      --------   ---------
   Total revenue.................................         42,700         9,438        20,341       33,382       971,090   1,106,894
   Noninterest expense(1)........................         11,974         7,861        42,083        4,303       606,392     538,357
   Credit expense (income).......................              -             -       (61,643)      23,193        15,000     110,000
                                                        --------      --------     ---------    ---------      --------   ---------
   Income before income tax expense (benefit)....         30,726         1,577        39,901        5,886       349,698     458,537
   Income tax expense (benefit)..................         11,797           603          (897)      (9,066)      116,476     158,651
                                                        --------      --------     ---------    ---------      --------    --------
   Net income....................................       $ 18,929      $    974     $  40,798    $  14,952      $233,222  $  299,886
                                                        ========      ========     =========    =========      ========  ==========
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans...................................       $      -      $      -     $   1,006    $     514      $ 24,569  $   26,228
   Total assets..................................          3,952         3,610         1,419          824        31,845      33,434
   Total deposits................................          2,819         3,410            43          591        23,327      25,279
FINANCIAL RATIOS:
   Return on risk adjusted capital(2)............             21%            1%           na           na           na           na
   Return on average assets(2)...................           0.97          0.05            na           na         1.48%        1.80%
   Efficiency ratio(3)...........................          28.04         83.29            na           na        62.39        48.58
---------------------------
(1)   "Other" includes restructuring credits of $19.0 million ($11.8 million, net of tax).
(2)   Annualized.
(3)   The efficiency ratio is noninterest expense, excluding foreclosed asset income and restructuring charge, as a percentage of
      net interest income (taxable-equivalent) and noninterest income.  Foreclosed asset income/(expense)  was $0.553  million
      and  ($0.021)  million for the first six months of 1999 and 2000, respectively.
      (na) = not applicable
</TABLE>

                                       20

<PAGE>


         COMMUNITY BANKING AND INVESTMENT SERVICES GROUP

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

         In addition to our traditional network channels,  the Community Banking
and Investment Services Group announced earlier this year the establishment of a
unique  alliance  with NIX Check  Cashing and  Operation  Hope designed to bring
convenient banking services to a broader community. This alliance will allow our
small  business  and  consumer  clients  access to a unique  blend of  financial
services  combining  the NIX Check  Cashing  services,  Union Bank of California
Banking  Services and Operation  Hope,  Inc small business  education  services.
Checking and savings account  services are available today through  selected NIX
locations  with future  services  planned to include  applications  for consumer
loans,  credit cards, new and used car loans,  home equity loans and residential
mortgages.

         Continued  success  in  these  strategies  has  resulted  in  increased
revenues,  reduced  costs,  improved  efficiency  ratios and  higher  returns on
capital.  In the second quarter of 2000, net income increased $27.4 million,  an
increase of over 75% compared to second  quarter 1999.  Total revenue  increased
$33.5 million  compared to a year ago with the majority of that increase  coming
from  a  $19.6  million  increase  in  noninterest  income.  Noninterest  income
increases  arose from a strategic  repricing  effort  initiated  through Mission
Excel,  and from the  purchase of trust assets of the  Imperial  Trust  Company,
which occurred in mid-1999. Net interest income increased $14.0 million over the
prior year due to a combination of higher earning asset volume and a higher rate
environment.

         Operating  expenses  decreased in the Community  Banking and Investment
Services  Group  by  $10.6  million,  due  to a  combination  of  the  continued
implementation  of Mission Excel cost reduction  efforts and the introduction of
technology improvements in back office operations and call centers.

         With the completion of  organizational  changes  resulting from Mission
Excel, the Community Banking and Investment Services Group is comprised of three
major  divisions:   Community  Banking,  Wealth  Management,  and  Institutional
Services and Asset Management.

         COMMUNITY  BANKING  serves over one  million  consumer  households  and
businesses through its 241 full-service  branches in California,  6 full-service
branches in Oregon and  Washington,  3 full-service  branches in Guam and Saipan
and its  network of over 425  proprietary  ATMs.  Customers  may also access our
services  24 hours a day by  telephone  or  through  our  Bank@Home  product  at
www.UBOC.com.   In  addition,   the  division   offers   automated   teller  and
point-of-sale  debit  services  through  our  founding  membership  in the  Star
System(R), the largest shared ATM network in the Western United States.

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

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

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

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

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

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


                                       21

<PAGE>


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

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

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

         o   HighMark  Capital  Management,  Inc., a registered  investment
             advisor,  manages our  proprietary  HighMark  family of mutual
             funds. It also offers  investment  management  services to all
             UBOC  clients,  including  institutions,   pension  funds  and
             individuals.  HighMark  Capital  Management's  strategy  is to
             expand  distribution  of its  mutual  funds by  targeting  its
             marketing  efforts  at  registered   investment  advisors  and
             regional   broker/dealers.   In  addition,   HighMark  Capital
             Management,   Inc.   is  working   with  The  Bank  of  Tokyo-
             Mitsubishi,  Ltd. and other third parties to establish  mutual
             funds  offshore  that  HighMark  will  advise  and  offer   to
             non-U.S. investors.  HighMark also serves as a sub-advisor for
             funds managed by  Tokyo-Mitsubishi  Asset Management,  Ltd. in
             Japan.

         o   Business  Trust  provides  businesses,   government  agencies,
             unions and  non-profit  organizations  with trustee  services,
             investment  management and 401(k) valuation and  recordkeeping
             services.   Business   Trust's   strategy  is  to  expand  its
             third-party   distribution   network  to   include   insurance
             companies, investment managers, brokers and mutual funds.

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

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

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

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

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


                                       22

<PAGE>

         COMMERCIAL FINANCIAL SERVICES GROUP

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

         The  group's  continued  success  in  their  focused  approach  to  the
wholesale  market  has led to second  quarter  2000 net  income  growth of $28.9
million over a year ago.  Revenues  increased by $54.7 million  primarily due to
strong loan  growth,  higher  interest  rates and improved  noninterest  income.
Operating  expenses increased $3.6 million over the second quarter last year due
to higher expenses to support increased  deposit volume.  Despite this increase,
the group  continues to improve  efficiency  with revenue  growth  significantly
outpacing expense growth.  Credit expenses increased $7.3 million in response to
the strong loan growth over the prior year.

         The Commercial  Financial  Services Group is organized in the following
five business units:

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

         o   The Specialized Lending Group which serves clients in specific
             industries such as Oil and Gas, Utilities, Telecommunications,
             clients  requiring  access  to  asset  based  lending,   lease
             financing and real estate financing or large corporate clients
             headquartered in the Western United States,

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

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

         o   The Corporate  Capital Markets Division that provides merchant
             and investment banking related products and services.

         In addition, the Commercial Customer Service Unit supports the business
units described above by providing centralized customer service support.

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

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

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

         INTERNATIONAL BANKING GROUP

         The International  Banking Group mainly provides  correspondent banking
and trade  finance-related  products  and  services to  international  financial
institutions worldwide,  primarily in Asia. This includes providing products and
services  that  facilitate  trade  finance  transactions,   including  payments,
collection  and the  extension  of  short-term  credit.  The group  also  serves
selected  foreign  firms  and  U.S.  corporate


                                       23

<PAGE>


clients in selected countries worldwide,  particularly in Asia. In the U.S., the
group serves  subsidiaries  and affiliates of  non-Japanese  Asian companies and
U.S.   branches  and  agencies  of  foreign  banks.   The  group  also  provides
international  services to domestic  corporate clients along the West Coast. The
group's  revenue  predominately  relates  to  foreign  customers.  In the second
quarter of 2000,  net  income  decreased  $0.7  million  compared  to the second
quarter of 1999. Economic recovery has put pressure on spreads in Asia, and this
pressure,  along with a decline in portfolio exposure,  has reduced net interest
income. Noninterest expenses for the second quarter were $0.5 million lower than
the same period last year as Mission Excel initiatives were implemented.

         The group has a long and stable history of providing  correspondent and
trade- related services to international financial institutions. We believe that
we have achieved a leading market  position and strong  customer  loyalty in the
Asia/Pacific  correspondent  banking  market  because we provide  high  quality,
customized  products,  and services at competitive  prices.  The group maintains
branches in Tokyo, Taipei, Seoul, Manila and Hong Kong,  representative  offices
in  other  parts  of  Asia  and  Latin  America,  and an  international  banking
subsidiary in New York.

         One of the group's  primary  services is  international  trade finance.
Trade  finance is typically  short-term,  which means it  generally  has a lower
credit risk.

         GLOBAL MARKETS GROUP

         The Global  Markets Group  conducts  business  activities  primarily to
support the previously described business groups and their customers. This group
offers a broad range of risk management  products,  such as foreign exchange and
interest rate swaps, caps and floors.  Additionally,  it places debt securities,
including Union Bank of California,  N.A.'s own liabilities,  with institutional
investors and trades debt instruments in the secondary market. At the same time,
this group manages our market-related  risks as part of its responsibilities for
asset/liability  management including wholesale funding,  liquidity,  securities
portfolio,  and  off-balance  sheet  interest  rate risk  hedges.  In the second
quarter of 2000,  net  income  decreased  $5.1  million  compared  to the second
quarter of 1999.  Total revenue in the second  quarter of 2000  decreased  $10.3
million  primarily  due to the sale of  securities  in our portfolio in order to
replace low  yielding  with higher  yielding  securities  compared to the second
quarter of 1999.  Noninterest  expense in the second  quarter of 2000  decreased
$2.0 million largely due to personnel expense reductions  compared to the second
quarter of 1999.

         OTHER

         "Other" includes the following items:

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

         o   The adjustment  between the credit expense under RAROC and the
             provision for credit  losses under US GAAP,  the net impact of
             transfer  pricing,  and earnings  associated with  unallocated
             equity capital.

         o   The Credit Management Group,  which  includes $97 million  and
             $229 million of average  nonperforming assets at June 30, 1999
             and 2000, respectively.

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

         o   The residual costs of support groups.


                                       24

<PAGE>


NET INTEREST INCOME

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

<TABLE>
<CAPTION>

                                                                        FOR THE THREE MONTHS ENDED
                                                                        --------------------------
                                                          JUNE 30, 1999                                  JUNE 30, 2000
                                            -----------------------------------------      -----------------------------------------
                                                              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........................         $23,798,981         $448,704        7.56%      $25,385,864          $544,700       8.63%
   Foreign(3)......................           1,055,863           16,284         6.19        1,055,548            17,441        6.65
Securities-taxable.................           3,385,289           52,798         6.24        3,400,563            55,269        6.51
Securities-tax-exempt..............              80,378            2,076        10.33           68,992             1,725       10.00
Interest bearing deposits in banks.             204,783            3,068         6.01          224,542             2,563        4.59
Federal funds sold and securities                96,976            1,196         4.95          130,551             2,082        6.41
   purchased under resale agreements
Trading account assets.............             245,720            2,563         4.18          309,002             4,800        6.25
                                            -----------         --------                   -----------          --------
      Total earning assets.........          28,867,990          526,689         7.32       30,575,062           628,580        8.26
                                                                --------                                        --------

Allowance for credit losses........           (444,775)                                      (502,637)
Cash and due from banks............           1,992,353                                      2,148,274
Premises and equipment, net........             434,916                                        424,321
Other assets.......................           1,110,312                                      1,201,425
                                            -----------                                    -----------
      Total assets.................         $31,960,796                                    $33,846,445
                                            ===========                                    ===========

LIABILITIES
Domestic deposits:
   Interest bearing................          $5,642,605           35,065         2.49       $5,966,563            39,077        2.63
   Savings and consumer time.......           3,349,783           26,423         3.16        3,408,870            29,778        3.51
   Large time......................           3,780,046           40,031         4.25        4,691,132            71,333        6.12
Foreign deposits(3)................           1,588,022           17,181         4.34        1,782,915            24,441        5.51
                                            -----------         --------                   -----------          --------
      Total interest bearing deposits        14,360,456          118,700         3.32       15,849,480           164,629        4.18
                                            -----------         --------                   -----------          --------

Federal funds purchased and
   securities sold under repurchase
   agreements......................           1,810,742           21,107         4.68        1,747,380            26,865        6.18
Commercial paper...................           1,513,389           18,020         4.78        1,508,552            23,364        6.23
Other borrowed funds...............             809,688            9,721         4.82          403,730             5,222        5.20
Subordinated capital notes.........             298,000            4,036         5.43          298,000             5,081        6.86
UnionBanCal Corporation-obligated
   mandatorily redeemable preferred
   securities of subsidiary grantor
   trust...........................             350,000            7,091         8.11          350,000             6,490        7.41
                                             -----------         --------                   -----------          --------
      Total borrowed funds.........           4,781,819           59,975         5.03        4,307,662            67,022        6.25
                                            -----------         --------                   -----------          --------
      Total interest bearing
        liabilities................          19,142,275          178,675         3.74       20,157,142           231,651        4.62
                                                                --------                   -----------
Noninterest bearing deposits.......           8,988,105                                      9,627,284
Other liabilities..................             957,425                                        976,792
                                            -----------                                    -----------
      Total liabilities............          29,087,805                                     30,761,218
SHAREHOLDERS' EQUITY
Common equity......................           2,872,991                                      3,085,227
                                            -----------                                    -----------
      Total shareholders' equity...           2,872,991                                      3,085,227
                                            -----------                                    -----------
      Total liabilities and
        shareholders' equity.......         $31,960,796                                    $33,846,445
                                            ===========                                    ===========
Net interest income/margin
   (taxable-equivalent basis)......                              348,014        4.84%                            396,929       5.21%
Less: taxable-equivalent adjustment.                                 851                                             637
                                                                --------                                        --------
      Net interest income..........                             $347,163                                        $396,292
                                                                ========                                        ========
---------------------------
<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  and renegotiated  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>

                                       25

<PAGE>


NET INTEREST INCOME (CONTINUED)

<TABLE>
<CAPTION>

                                                                         FOR THE SIX MONTHS ENDED
                                                                         --------------------------
                                                          JUNE 30, 1999                                  JUNE 30, 2000
                                            -----------------------------------------      -----------------------------------------
                                                              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........................         $23,471,714         $881,817        7.57%      $25,151,087        $1,066,371       8.53%
   Foreign(3)......................           1,097,657           34,814         6.40        1,076,478            35,817        6.69
Securities-taxable.................           3,459,548          108,185         6.26        3,261,317           104,603        6.42
Securities-tax-exempt..............              82,618            4,206        10.18           69,642             3,490       10.02
Interest bearing deposits in banks.             210,146            6,256         6.00          202,414             4,747        4.72
Federal funds sold and securities
   purchased under resale agreements            118,008            2,893         4.94          170,251             5,101        6.03
Trading account assets.............             304,337            6,501         4.31          269,884             8,081        6.02
                                            -----------        ---------                   -----------        ----------
      Total earning assets.........          28,744,028        1,044,672         7.33       30,201,073         1,228,210        8.17
                                                               ---------                                      ----------
Allowance for credit losses........           (450,991)                                      (489,092)
Cash and due from banks............           1,987,361                                      2,112,631
Premises and equipment, net........             431,280                                        424,376
Other assets.......................           1,133,220                                      1,185,313
                                            -----------                                    -----------
      Total assets.................         $31,844,898                                    $33,434,301
                                            ===========                                    ===========

LIABILITIES
Domestic deposits:
   Interest bearing................          $5,576,172           69,772         2.52       $5,925,182            76,142        2.58
   Savings and consumer time.......           3,342,751           53,684         3.24        3,402,526            58,349        3.45
   Large time......................           3,888,808           84,210         4.37        4,571,463           134,447        5.91
Foreign deposits(3)................           1,554,959           33,813         4.39        1,922,153            51,366        5.37
                                            -----------        ---------                   -----------        ----------
      Total interest bearing deposits        14,362,690          241,479         3.39       15,821,324           320,304        4.07
                                            -----------        ---------                   -----------        ----------

Federal funds purchased and
   securities sold under repurchase
   agreements......................           1,757,433           40,876         4.69        1,537,135            45,389        5.94
Commercial paper...................           1,554,786           37,194         4.82        1,511,586            44,932        5.98
Other borrowed funds...............             723,847           17,871         4.98          428,599            11,168        5.24
Subordinated capital notes.........             298,000            8,145         5.51          298,000             9,937        6.71
UnionBanCal Corporation-obligated
   mandatorily redeemable preferred
   securities of subsidiary grantor
   trust...........................             255,249           10,382         8.15          350,000            13,374        7.63
                                            -----------        ---------                   -----------        ----------
      Total borrowed funds.........           4,589,315          114,468         5.03        4,125,320           124,800        6.08
                                            -----------        ---------                   -----------        ----------
      Total interest bearing
        liabilities................          18,952,005          355,947         3.79       19,946,644           445,104        4.49
                                                               ---------                                      ----------
Noninterest bearing deposits.......           8,964,675                                      9,457,368
Other liabilities..................             994,882                                        980,304
                                            -----------                                    -----------
      Total liabilities............          28,911,562                                     30,384,316
SHAREHOLDERS' EQUITY
Common equity......................           2,933,336                                      3,049,985
                                            -----------                                    -----------
      Total shareholders' equity...           2,933,336                                      3,049,985
                                            -----------                                    -----------
      Total liabilities and
        shareholders' equity.......         $31,844,898                                    $33,434,301
                                            ===========                                    ===========


Net interest income/margin (taxable-equivalent basis)            688,725        4.83%                            783,106       5.21%
Less: taxable-equivalent adjustment                                1,741                                           1,292
                                                               ---------                                        --------
Net interest income................                             $686,984                                        $781,814
                                                                ========                                        ========

---------------------------
<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  and renegotiated  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>



                                       26

<PAGE>

Net interest income is interest  earned on loans and  investments  less interest
expense on deposit accounts and borrowings.  Primary factors affecting the level
of net interest  income  include the margin between the yield earned on interest
earning assets and the rate paid on interest bearing liabilities, as well as the
volume and composition of average  interest  earning assets and average interest
bearing liabilities.

         THREE MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         Net interest income, on a taxable-equivalent  basis, was $348.0 million
in the  second  quarter  of 1999,  compared  with  $396.9  million in the second
quarter of 2000. This increase of $48.9 million, or 14 percent, was attributable
primarily to a $1.7 billion,  or 6 percent,  increase in average earning assets,
partially  funded  by a  $639.2  million,  or 7  percent,  increase  in  average
noninterest bearing deposits. In addition, the net interest margin was favorably
impacted by the interest rate  environment  that contributed to higher yields on
loans and other interest  bearing  assets,  partially  offset by higher rates on
deposits and other  average  interest  bearing  liabilities,  as well as a lower
effective  cost  of  funding  the  increased  assets.  The net  interest  margin
increased 37 basis points to 5.21%.

         Average  earning  assets  were $28.9  billion in the second  quarter of
1999, compared with $30.6 billion in the second quarter of 2000. This growth was
attributable  to a $1.6 billion,  or 6 percent,  increase in average loans.  The
growth in average  loans was mostly due to the  increase in average  commercial,
financial and industrial loans of $972.1 million,  real estate mortgage loans of
$479.5 million, and real estate construction loans of $256.2 million,  partially
offset by lower average consumer loans of $160.0 million.

         The higher  interest  rate  environment  resulted  in higher  yields on
average earning assets of 94 basis points, partially offset by higher rates paid
on average  interest  bearing  liabilities  of 88 basis points.  The decision to
maintain an asset sensitive balance sheet contributed to the higher yields.  The
$1.0 billion,  or 5 percent,  increase in average interest  bearing  liabilities
over the second  quarter  of 1999 was due to an  increase  in  average  interest
bearing deposits of $1.5 billion, primarily large time deposits.

         Average  noninterest  bearing deposits  increased $639.2 million,  or 7
percent,  over the  second  quarter of 1999.  This  large base of  interest-free
funding continues to benefit our lower cost of funds.

         SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         Net interest income, on a taxable-equivalent  basis, was $688.7 million
in the first six months of 1999,  compared with $783.1  million in the first six
months of 2000. This increase of $94.4 million, or 14 percent,  was attributable
primarily to a $1.5 billion,  or 5 percent,  increase in average earning assets,
partially  funded  by a  $492.7  million,  or 5  percent,  increase  in  average
noninterest bearing deposits. In addition, the net interest margin was favorably
impacted by the interest rate  environment  that contributed to higher yields on
loans and other interest  bearing  assets,  partially  offset by higher rates on
deposits and other  average  interest  bearing  liabilities,  as well as a lower
effective  cost  of  funding  the  increased  assets.  The net  interest  margin
increased 38 basis points to 5.21%.

         Average  earning  assets were $28.7  billion in the first six months of
1999,  compared with $30.2 billion in the first six months of 2000.  This growth
was  attributable  to a $1.7 billion,  or 7 percent,  increase in average loans,
partially offset by $211.2 million, or 6 percent decrease in average securities.
The  growth  in  average  loans  was  mostly  due to  the  increase  in  average
commercial,  financial  and  industrial  loans of $991.3  million,  real  estate
mortgage loans of $522.9 million,  and real estate  construction loans of $251.2
million, partially offset by lower average consumer loans of $154.5 million. The
decrease in average  securities,  which comprised primarily fixed rate available
for sale  securities,  reflected  liquidity  and interest  rate risk  management
actions.

         The higher  interest  rate  environment  resulted  in higher  yields on
average earning assets of 84 basis points, partially offset by higher rates paid
on average  interest  bearing  liabilities  of 70 basis points.  The decision to
maintain an asset sensitive balance sheet contributed to the higher yields.  The
$994.6 million,

                                       27

<PAGE>

or 5 percent,  increase in average interest  bearing  liabilities over the first
six months of 1999 was due to an increase in average  interest  bearing deposits
of $1.5 billion, or 10 percent, primarily large time deposits.

         Average  noninterest  bearing deposits  increased $492.7 million,  or 5
percent,  over the first six months of 1999.  This  large base of  interest-free
funding continues to benefit our lower cost of funds.

<TABLE>
<CAPTION>

NONINTEREST INCOME


                                                            FOR THE THREE MONTHS ENDED               FOR THE SIX MONTHS ENDED
                                                        ----------------------------------      -----------------------------------
                                                           JUNE 30,     JUNE 30,      PERCENT     JUNE 30,      JUNE 30,     PERCENT
                                                             1999         2000        CHANGE        1999         2000        CHANGE
(DOLLARS IN THOUSANDS)                                     --------     --------     --------     --------      --------     -------
<S>                                                         <C>          <C>          <C>          <C>          <C>         <C>

Service charges on deposit accounts................         $42,929      $52,645       22.63%      $82,580      $100,208      21.35%
Trust and investment management fees...............          33,983       37,388        10.02       66,254        76,188       14.99
Merchant transaction processing fees...............          18,146       18,438         1.61       32,658        35,533        8.80
International commissions and fees.................          18,080       18,415         1.85       35,711        35,451      (0.73)
Merchant banking fees..............................           9,154       11,109        21.36       16,615        25,328       52.44
Brokerage commissions and fees.....................           6,080        9,263        52.35       11,676        18,693       60.10
Foreign exchange trading gains, net................           4,494        7,869        75.10        9,606        14,912       55.24
Securities gains, net..............................             634       10,018           nm        1,895         5,700      200.79
Other..............................................          11,298        7,925      (29.85)       27,111        13,067     (51.80)
                                                           --------     --------      -------     --------      --------     -------
   Total noninterest income........................        $144,798     $173,070       19.53%     $284,106      $325,080      14.42%
                                                           ========     ========                  ========      ========
---------------------------
<FN>
nm = not meaningful
</FN>
</TABLE>


         THREE MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         In the second quarter of 2000,  noninterest  income was $173.1 million,
an increase of $28.3 million, or 20 percent,  over the same period in 1999. This
increase was  attributed to growth in deposit-  related  income,  net gains from
securities  sales,  trust and investment  fees,  merchant  banking and brokerage
revenues, and net gains from foreign exchange trading.

         Service  charges on deposit  accounts  revenue  was $52.6  million,  an
increase  of $9.7  million or 23 percent  over the second  quarter of 1999.  The
increase was primarily attributable to a 9 percent increase in average deposits,
higher  overdraft  fees due to a change in fee  structure,  and the expansion of
several products and services.

         Trust  and  investment  management  fees  were  $37.4  million  for the
quarter,  an increase of $3.4 million or 10% over same period 1999. The increase
was  attributed to the purchase of the trust assets of Imperial  Trust  Company,
which  occurred  in mid-1999  and growth in the  institutional  trust  business,
offset by a small decline in personal trust fees.  Managed assets have grown 11%
over the prior year and  currently  stand at $20.9  billion,  while total assets
have increased 19% to $130.1 billion.

         Merchant  banking fees were $11.1 million,  an increase of $2.0 million
or 21  percent  over the second  quarter of 1999.  The  increase  was  primarily
related to increased  syndication  and  investment  banking  activities  for the
period.

         Brokerage  commissions and fees were $9.3 million,  an increase of $3.2
million  or 52  percent  over the  second  quarter  of 1999.  The  increase  was
primarily related to brokerage  commissions on sales of  non-proprietary  mutual
funds, annuities, and insurance products and growth in corporate sweep products.

         Foreign exchange  trading gains, net were $7.9 million,  an increase of
$3.4 million or 75% over the second quarter of 1999. The increase was attributed
to an increase in exporters' cross border  transactions,  reflecting the gradual
recovery  of the  Asian and  European  economies  and a strong  US  dollar  that
resulted  in an  increase  in overseas  direct  investments  and capital  market
securities' investments.

                                       28

<PAGE>

         Securities  gains, net were $10.0 million,  an increase of $9.4 million
over the second quarter of 1999. This increase was primarily related to a single
venture capital securities gain.

         Other noninterest  income was $7.9 million,  a decrease of $3.4 million
or 30 percent from the second  quarter of 1999.  The decrease was  attributed to
lower trading gains on money market  securities  and on the sale of a portion of
the healthcare industry related loans in the portfolio.

         SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         In the first six months of 2000, noninterest income was $325.1 million,
an increase of $41.0 million, or 14 percent,  over the same period in 1999. This
increase was primarily attributed to growth in deposit-related income, trust and
investment fees, merchant banking and brokerage revenues, net gains from foreign
exchange trading, and net gains from securities sales.

         Service  charges on deposit  accounts  revenue was $100.2  million,  an
increase of $17.6  million or 21 percent over the first six months of 1999.  The
increase was primarily attributable to a 8 percent increase in average deposits,
higher  overdraft  fees due to a change in fee  structure,  and the expansion of
several products and services.

         Trust and investment management fees were $76.2 million, an increase of
$9.9 million or 15 percent over the first six months of 1999. The acquisition of
Imperial Trust Company accounted for just over 33% of the increase with the rest
attributable  to growth in  institutional  trust business,  institutional  asset
management accounts, and a 20% increase in retail HighMark Fund balances.

         Merchant  banking fees were $25.3 million,  an increase of $8.7 million
or 52 percent  over the first six months of 1999.  The  increase  was  primarily
related to higher syndication and investment banking activities for the period.

         Brokerage  commissions and fees were $18.7 million, an increase of $7.0
million  or 60  percent  over the first six  months of 1999.  The  increase  was
primarily related to brokerage  commissions on sales of  non-proprietary  mutual
funds, annuities, and insurance products and growth in corporate sweep products.

         Foreign exchange trading gains, net were $14.9 million,  an increase of
$5.3  million  or 55% over the  first  six  months  of 1999.  The  increase  was
attributed to an increase in exporters'  cross border  transactions,  reflecting
the gradual recovery of the Asian and European  economies and a strong US$ which
resulted  in an  increase  in overseas  direct  investments  and capital  market
securities' investments.

         Securities gains, net were $5.7 million, an increase of $3.8 million or
201  percent  over the first six months of 1999.  This  increase  was  primarily
related to a single venture capital  securities  gain,  partially  offset by the
sale of certain lower  yielding  securities in our portfolio  where the proceeds
were used to purchase higher yielding securities.

         Other noninterest income was $13.1 million, a decrease of $14.0 million
or 52 percent over the first six months of 1999.  The decrease was attributed to
lower trading gains on money market  securities  and on the sale of a portion of
the healthcare  industry  related loans in the portfolio,  partially offset by a
$4.1 million gain on the sale of a property.

                                       29

<PAGE>

<TABLE>
<CAPTION>

NONINTEREST EXPENSE


                                                            FOR THE THREE MONTHS ENDED                 FOR THE SIX MONTHS ENDED
                                                       ------------------------------------      -----------------------------------
                                                       JUNE 30,     JUNE 30,        PERCENT      JUNE 30,      JUNE 30,      PERCENT
(DOLLARS IN THOUSANDS)                                   1999         2000           CHANGE        1999          2000         CHANGE
----------------------                                 --------     --------       --------      --------      --------     --------
<S>                                                    <C>          <C>            <C>           <C>           <C>          <C>

Salaries and other compensation................        $135,202     $127,711        (5.54)%      $266,276      $257,326      (3.36)%
Employee benefits..............................          31,813       25,351        (20.31)        68,406        34,930      (48.94)
                                                       --------     --------                     --------      --------
Personnel-related expense......................         167,015      153,062         (8.35)       334,682       292,256      (12.68)
Net occupancy..................................          21,917       22,010           0.42        44,378        44,694         0.71
Equipment......................................          15,475       16,710           7.98        30,016        32,004         6.62
Merchant transaction processing................          13,258       12,644         (4.63)        24,868        24,360       (2.04)
Communications.................................          10,618       10,745           1.20        20,551        21,312         3.70
Professional services..........................          10,290       10,556           2.59        20,984        18,518      (11.75)
Data processing................................           7,661        8,975          17.15        15,662        17,622        12.51
Advertising and public relations...............           9,390        6,758        (28.03)        15,496        12,504      (19.31)
Software.......................................           6,264        5,147        (17.83)        12,677        10,981      (13.38)
Printing and office supplies...................           6,025        4,933        (18.12)        12,697         9,890      (22.11)
Travel.........................................           5,822        4,417        (24.13)         9,901         8,120      (17.99)
Intangible asset amortization..................           3,509        3,338         (4.87)         7,018         6,676       (4.87)
Armored car....................................           3,241        3,143         (3.02)         6,468         6,284       (2.84)
Foreclosed asset expense (income)..............           (512)           56             nm         (553)            21           nm
Restructuring credit...........................               -      (8,000)             nm             -      (19,000)           nm
Other..........................................          25,256       27,825          10.17        51,547        52,115         1.10
                                                       --------     --------                     --------      --------
   Total noninterest expense...................        $305,229     $282,319         (7.51)      $606,392      $538,357      (11.22)
                                                       ========     ========                     ========      ========
---------------------------
<FN>
nm = not meaningful
</FN>
</TABLE>



         THREE MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         In the  second  quarter of 2000,  noninterest  expense,  excluding  the
restructuring  credit,  was $290.3  million,  a decrease of $14.9 million,  or 5
percent,  over the same period in 1999.  This decrease was mainly  attributed to
lower direct  expenses  realized  through our Mission  Excel  expense  reduction
efforts  and  higher  expenses  in the  prior  year  related  to the  Year  2000
conversion.

         Personnel-related  expense  was $153.1  million,  a  decrease  of $14.0
million  or 8  percent  over the  second  quarter  of 1999.  This  decrease  was
attributed to lower staff expense due to personnel  reductions  achieved through
Mission Excel and changes to our pension plan assumptions.

         Advertising and public relations  expense was $6.8 million,  a decrease
$2.6 million or 28 percent over the second  quarter of 1999.  This  decrease was
primarily related to a major  outdoor-related  advertising campaign sponsored in
the prior  year,  as well as to the timing of current  projects  in the  current
year.

         SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000

         In the first six months of 2000,  noninterest  expense,  excluding  the
restructuring  credit,  was $557.4  million,  a decrease of $49.0 million,  or 8
percent,  over the same period in 1999.  This  decrease was  attributed to lower
direct expenses  realized through our Mission Excel expense  reduction  efforts,
higher  expenses in the prior year  related to the Year 2000  conversion,  and a
one-time credit of $16.0 million related to an accounting  change in recognizing
pension expense.

         Personnel-related  expense  was $292.3  million,  a  decrease  of $42.4
million  or 13  percent  over the first six months of 1999.  This  decrease  was
attributed  to a  one-time  credit  for  an  accounting  methodology  change  in
recognizing  pension  expense of $16.0 million,  personnel  reductions  achieved
through Mission Excel, and changes to our pension plan assumptions.

                                       30

<PAGE>

         Professional services were $18.5 million, a decrease of $2.5 million or
12 percent over the first six months of 1999.  This  decrease was  attributed to
higher Year 2000 conversion cost in the first six months of 1999.

         Printing and office  supplies  expense was $9.9 million,  a decrease of
$2.8 million or 22 percent over the first six months of 1999.  This  improvement
was attributed to Mission Excel efficiency achievements.

INCOME TAX EXPENSE

         The effective tax rate for each of the second quarters of 1999 and 2000
were 35  percent.  The  effective  tax rate for the first six months of 1999 and
2000 were 33 percent and 35 percent,  respectively.  During the first quarter of
1999,  we  recognized a tax benefit as the result of an IRS  settlement  of $6.3
million for refund  claims we filed for the years 1992 through  1994.  Excluding
this tax  benefit,  our  effective  tax rate would have been 35 percent  for the
first six months ended June 30, 1999 and June 30, 2000.

LOANS

         The following table shows loans outstanding by loan type.

<TABLE>
<CAPTION>

                                                                                                              PERCENT CHANGE TO
                                                                                                             JUNE 30, 2000 FROM:
                                                                                                         ---------------------------
                                                     JUNE 30,         DECEMBER 31,       JUNE 30,        JUNE 30,       DECEMBER 31,
(DOLLARS IN THOUSANDS)                                 1999               1999             2000            1999             1999
----------------------                              -----------        -----------      -----------      --------       ------------
<S>                                                 <C>                <C>              <C>              <C>            <C>
Domestic:
   Commercial, financial and industrial....         $13,440,720        $14,176,630      $14,716,318         9.49%              3.81%
   Construction............................             559,906            648,478          844,632         50.85              30.25
   Mortgage:
      Residential..........................           2,567,584          2,581,141        2,684,010          4.53               3.99
      Commercial...........................           3,132,623          3,572,347        3,418,277          9.12             (4.31)
                                                    -----------        -----------      -----------
        Total mortgage.....................           5,700,207          6,153,488        6,102,287          7.05             (0.83)
   Consumer:
      Installment..........................           1,969,685          1,922,158        1,785,146        (9.37)             (7.13)
      Revolving lines of credit............             732,758            727,776          740,822          1.10               1.79
                                                    -----------        -----------      -----------
        Total consumer.....................           2,702,443          2,649,934        2,525,968        (6.53)             (4.68)
   Lease financing.........................           1,142,180          1,148,542        1,139,978        (0.19)             (0.75)
                                                    -----------        -----------      -----------
        Total loans in domestic offices....          23,545,456         24,777,072       25,329,183          7.58               2.23
Loans originated in foreign branches.......           1,041,202          1,135,886        1,043,861          0.26             (8.10)
                                                    -----------        -----------      -----------
Total loans................................         $24,586,658        $25,912,958      $26,373,044         7.27%              1.78%
                                                    ===========        ===========      ===========
</TABLE>

         Our lending  activities  are  predominantly  domestic,  with such loans
comprising 96 percent of the total loan portfolio at June 30, 2000.  Total loans
at June 30, 2000 were $26.4 billion,  an increase of $1.8 billion, or 7 percent,
over June 30, 1999. The increase was  attributable  to growth in the commercial,
financial and industrial  loan  portfolio,  which  increased  $1.3 billion,  the
commercial  mortgage  loan  portfolio,   which  increased  $285.7  million,  the
construction  loan portfolio,  which increased  $284.7 million,  the residential
mortgage loan portfolio,  which increased  $116.4 million,  partially offset by,
the consumer loan portfolio, which decreased $176.5 million.

         Commercial,  financial  and  industrial  loans  represent  the  largest
category  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 commercial, financial and industrial
loans. At June 30, 1999 and 2000, the commercial,  financial and industrial loan
portfolio was $13.4 billion, or 55 percent of total loans, and $14.7 billion, or
56 percent of total  loans,  respectively.  The increase of $1.3  billion,  or 9
percent,  from June 30, 1999 was  primarily  attributable  to loans  extended to
businesses with revenues exceeding $20 million.  The growth continued to reflect
the results of initiatives to increase  participation in larger  syndicated loan
positions as lead manager and as agent, especially in the communications, media,

                                       31

<PAGE>

and  entertainment  and  energy  capital  services  industries  in which we have
developed specialized lending expertise.

         The construction loan portfolio totaled $560.0 million, or 2 percent of
total loans,  at June 30, 1999,  compared with $884.6  million,  or 3 percent of
total loans,  at June 30, 2000.  This growth of $284.7  million,  or 51 percent,
from  June 30,  1999 was  primarily  attributable  to the  continuing  favorable
California real estate market coupled with a strong West Coast economy.

         Mortgage loans were $5.7 billion, or 23 percent of total loans, at June
30, 1999,  compared with $6.1 billion, or 23 percent of total loans, at June 30,
2000. The mortgage loan portfolio consists of loans on commercial and industrial
projects  and  residential  loans,  secured by  one-to-four  family  residential
properties,  primarily in California.  The increase in commercial mortgage loans
of $285.7  million,  or 9 percent and in  residential  mortgage  loans of $116.4
million,  or 5  percent,  from  June 30,  1999,  reflected  both  the  favorable
California real estate market and a strong west coast economy.

         Consumer loans totaled $2.7 billion,  or 11 percent of total loans,  at
June 30, 1999, compared with $2.5 billion, or 10 percent of total loans, at June
30,  2000.  The  decrease  of  $176.5  million,  or  7  percent,  was  primarily
attributable  to a  reduction  in auto  dealer  loans  mainly  due to  increased
competition in the business and the maturities of loans  originated  during peak
years.

         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, 1999, December 31, 1999, and June 30, 2000 for each country where
such  outstandings   exceeded  1  percent  of  total  assets.  The  cross-border
outstandings were compiled based upon category and domicile of ultimate risk and
are  comprised  of  balances  with banks,  trading  account  assets,  securities
available for sale, securities purchased under resale agreements, loans, accrued
interest  receivable,  acceptances  outstanding  and  investments  with  foreign
entities.  The amounts  outstanding  for each  country  exclude  local  currency
outstandings.  For those individual  countries shown in the table below, most of
our local  currency  outstandings  are  hedged or are  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, 1999
Japan.......................................................                 $72            $-               $448               $520
Korea.......................................................                 353             -                122                475
December 31, 1999
Japan.......................................................                  82             -                339                421
Korea.......................................................                 422             -                 53                475
June 30, 2000
Korea.......................................................                 336             -                 52                388

</TABLE>

         PROVISION FOR CREDIT LOSSES

         We recorded a $10.0  million  provision for credit losses in the second
quarter of 1999,  compared with a $70 million provision for credit losses in the
second quarter of 2000. The provision for credit losses for the six months ended
June 30, 2000 was $110.0  million  compared to $15.0  million for the six months
ended June 30, 1999. 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.

                                       32

<PAGE>

         The  significant  increase in our  provision  for credit  losses in the
second  quarter of 2000  resulted in large part from our normal  credit  process
that identified  increasing  levels of criticized  assets while applying tighter
standards to the  definitions  of potential and  well-defined  weaknesses in our
loan portfolio.

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

         o   Problem  graded loan loss factors are derived from a migration
             model that tracks  historical  loss experience over a six-year
             period,

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

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

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

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

         The  unallocated  allowance  is  composed  of two  elements.  The first
element  consists of an amount  between 20 percent to 25 percent of the total of
the formula and  specific  allowances.  This  element  recognizes  the model and
estimation risk associated with the formula and specific allowances.  The second
element is based upon management's evaluation of various conditions, the effects
of which are not  directly  measured  in the  determination  of the  formula and
specific  allowances.  The evaluation of the inherent loss with respect to these
conditions  is subject to a higher  degree of  uncertainty  because they are not
identified with specific problem credits or portfolio  segments.  The conditions
evaluated in connection  with the unallocated  allowance  include the following,
which existed at the balance sheet date:

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

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

         o   Collateral values,

         o   Loan volumes and concentrations,

                                       33

<PAGE>

         o   Seasoning of the loan portfolio,

         o   Specific industry conditions within portfolio segments,

         o   Recent loss experience in particular segments of the
             portfolio,

         o   Duration of the current business cycle,

         o   Bank regulatory examination results, and

         o   Findings of our internal credit examiners.

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

         The  allowance  for credit  losses is based upon  estimates of probable
losses  inherent in the loan portfolio.  The amount actually  observed for these
losses  can vary  significantly  from the  estimated  amounts.  Our  methodology
includes  several  features that are intended to reduce the differences  between
estimated and actual losses.  The loss migration model that is used to establish
the loan loss factors for problem graded loans is designed to be self-correcting
by taking into account our recent loss experience. Similarly, by basing the pass
graded loan loss  factors  over a period  reflective  of a business  cycle,  the
methodology is designed to take our recent loss experience into account.  Pooled
loan loss factors are adjusted quarterly based upon the level of net charge-offs
expected by management in the next twelve months.  Furthermore,  our methodology
permits  adjustments  to any loss factor used in the  computation of the formula
allowance in the event that,  in  management's  judgment,  significant  factors,
which affect the  collectibility of the portfolio as of the evaluation date, 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, 1999

         At December 31, 1999, our allowance for credit losses was $470 million,
or 1.82  percent of total  loans,  and 281  percent of total  nonaccrual  loans,
compared  with an allowance  for credit losses at June 30, 2000 of $501 million,
or 1.90 percent of total loans, and 246 percent of total nonaccrual loans.

         In  addition,  the  allowance  incorporates  the  results of  measuring
impaired  loans as  provided in SFAS No. 114 and SFAS No.  118,  "Accounting  by
Creditors for Impairment of a Loan-Income  Recognition and  Disclosures".  These
accounting standards prescribe the measurement  methods,  income recognition and
disclosures  related to impaired  loans.  At December 31, 1999,  total  impaired
loans were $167.4  million and the  associated  impairment  allowance  was $42.4
million, compared with $203.2 million and $67.2 million,  respectively,  at June
30, 2000.

         During the second quarter of 2000,  there were no changes in estimation
methods  or  assumptions   that  affected  our  methodology  for  assessing  the
appropriateness  of the  allowance  for credit  losses.  Changes in  assumptions
regarding the effects of economic and business conditions on borrowers and other
factors,  which  are  described  below,  have  affected  the  assessment  of the
unallocated  allowance.  We are presently in the process of reviewing all of our
risk grades and their related risk grade  factors in order to determine  whether
or not model and  estimation  risk is present.  Our intent is to  complete  this
review by the fourth quarter of 2000.

                                       34

<PAGE>

         CHANGES IN THE FORMULA, SPECIFIC AND UNALLOCATED ALLOWANCES FROM
         DECEMBER 31, 1999

         At June 30, 2000,  the formula  allowance was $308 million  compared to
$257 million at December 31, 1999,  an increase of $51 million.  This was due to
increases in criticized  credits and downward  migration  within the  criticized
grades.  Regulatory  examiners are currently  reviewing shared national credits,
the  outcome of which is expected  in  mid-August  2000.  Further  increases  in
criticized credits could result.

         At June 30, 2000,  the specific  allowance was $81 million  compared to
$51 million at December 31, 1999, an increase of $30 million. This was primarily
caused by both higher  impairment  allowances on our nonaccrual loans and higher
levels of nonaccrual loans.

         At June 30, 2000, the unallocated  allowance was $111 million  compared
to $162 million at December  31,  1999,  a decrease of $51  million.  Management
believes that the inherent  losses related to certain  conditions  considered in
its evaluation of the unallocated  allowance have been recognized in the formula
allowance during the six months ended June 30, 2000. As a result, $51 million of
the  unallocated  allowance  has been  incorporated  in the  formula or specific
allowances.

         At June 30, 2000,  we had a $111 million  unallocated  allowance in our
allowance  for  credit  losses.  In  evaluating  the   appropriateness   of  the
unallocated allowance, we considered the following factors:

         o   the approximately $78 million to $97 million margin for model
             and estimation risk prescribed by our credit policy,

         o   the  effects  of  changes  in  the  economic,   regulatory,
             and  technology   environments   on  borrowers  in  the
             communications/media industry, which could be in the range of
             $6 million to $11 million,

         o   the effects of export market  conditions and cyclical  over-
             capacity  on borrowers in the technology  industry,  which
             could be in the range of $4 million to $8 million,

         o   the continued but decreasing  effects of the instability in
             certain Asian  countries on borrowers,  which could be in
             the range of $5 to $23 million,

         o   the continued but decreasing effects of weather conditions on
             borrowers in the agricultural industry,  which could be
             in the range of $3 million to $6 million, and

         o   the adverse  effects on borrowers in the  healthcare  industry
             from reduced  reimbursements from government medical insurance
             programs,  which  have  been  reduced  as a  result  of  their
             incorporation  into our formula  allowance,  which could be in
             the range of $3 million to $5 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.  See
forward-looking statements on page 39.

                                       35

<PAGE>

         CHANGE IN THE TOTAL ALLOWANCE FOR CREDIT LOSSES

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

<TABLE>
<CAPTION>


                                                                                    FOR THE THREE MONTHS        FOR THE SIX MONTHS
                                                                                       ENDED JUNE 30,             ENDED JUNE 30,
                                                                                   ----------------------      ---------------------
(DOLLARS IN THOUSANDS)                                                               1999          2000          1999         2000
----------------------                                                             --------      --------      --------     --------
<S>                                                                                <C>           <C>           <C>          <C>
Balance, beginning of period................................................       $447,936      $483,206      $459,328     $470,378
Loans charged off:
   Commercial, financial and industrial.....................................          8,758        53,445        12,490       84,774
   Mortgage.................................................................            231            79           640          115
   Consumer.................................................................          3,415         3,099         7,812        5,994
   Lease financing..........................................................            882           731         1,774        1,331
   Foreign(1)...............................................................              -             -        14,127            -
                                                                                   --------      --------      --------     --------
      Total loans charged off...............................................         13,286        57,354        36,843       92,214
Recoveries of loans previously charged off:
   Commercial, financial and industrial.....................................          3,008         2,691         7,570        8,643
   Mortgage.................................................................            307            88           403          127
   Consumer.................................................................          2,223         1,974         4,637        3,513
   Lease financing..........................................................            194           137           343          327
                                                                                   --------      --------      --------     --------
      Total recoveries of loans previously charged off......................          5,732         4,890        12,953       12,610
                                                                                   --------      --------      --------     --------
        Net loans charged off...............................................          7,554        52,464        23,890       79,604
Provision for credit losses.................................................         10,000        70,000        15,000      110,000
Foreign translation adjustment and other net additions (deductions).........             21          (11)          (35)         (43)
                                                                                   --------      --------      --------     --------
Balance, end of period......................................................       $450,403      $500,731      $450,403     $500,731
                                                                                   ========      ========      ========     ========



Allowance for credit losses to total loans..................................          1.83%         1.90%         1.83%        1.90%
Provision for credit losses to net loans charged off........................         132.38        133.42         62.79       138.18
Net loans charged off to average loans outstanding for the period(2)........           0.12          0.80          0.20         0.61

---------------------------
<FN>
(1)      Foreign loans are those loans originated in foreign branches.
(2)      Annualized.
</FN>
</TABLE>

         Total loans  charged  off in the second  quarter of 2000  increased  by
$44.1 million from the second  quarter of 1999, of which $24 million was related
to distressed loan sales.  Charge-offs  reflect the realization of losses in the
portfolio that were recognized previously through provisions for credit losses.

         The  second  quarter's  recoveries  of  loans  previously  charged  off
decreased by $0.8 million from the same period in 1999.  The  percentage  of net
loans  charged off to average  loans  increased  by 567  percent,  from the same
period in 1999. At June 30, 2000,  the allowance for credit losses  exceeded the
net loans charged off during the second quarter of 2000, 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.

                                       36

<PAGE>

         NONPERFORMING ASSETS

<TABLE>
<CAPTION>

                                                                                            JUNE 30,       DECEMBER 31,     JUNE 30,
(DOLLARS IN THOUSANDS)                                                                        199              199            2000
----------------------                                                                      --------       ------------     --------
<S>                                                                                         <C>            <C>              <C>
Commercial, financial and industrial................................................         $81,441           $159,479     $190,397
Construction........................................................................           4,352              4,286        4,078
Commercial mortgage.................................................................           5,115              3,629        3,352
Foreign.............................................................................               -                  -        5,374
                                                                                            --------           --------     --------
      Total nonaccrual loans........................................................          90,908            167,394      203,201
Foreclosed assets...................................................................           6,541              2,386        1,792
Distressed loans held for sale......................................................               -                  -       23,988
                                                                                            --------           --------     --------
      Total nonperforming assets....................................................         $97,449           $169,780     $228,981
                                                                                            ========           ========     ========
Allowance for credit losses.........................................................        $450,403           $470,378     $500,731
                                                                                            ========           ========     ========

                                                                                               0.37%              0.65%        0.77%
Nonaccrual loans to total loans.....................................................
Allowance for credit losses to nonaccrual loans.....................................          495.45             281.00       246.42
Nonperforming assets to total loans, foreclosed assets and distressed loans held for            0.40               0.66         0.87
   sale.............................................................................
Nonperforming assets to total assets................................................            0.30               0.50         0.68

</TABLE>

         At June 30, 2000,  nonperforming  assets  totaled  $229.0  million,  an
increase of $131.5 million,  or 135 percent,  from a year earlier.  The increase
was  concentrated  among several large  credits in different  industry  sectors.
Included in  nonperforming  assets are $24 million in distressed  loans that are
being held for  accelerated  disposition.  During the second quarter of 2000, we
sold $66.7  million of  distressed  loans  under  this  accelerated  disposition
program.

         Nonaccrual  loans as a  percentage  of total loans were 0.77 percent at
June 30, 2000, compared with 0.37 percent at June 30, 1999. Nonperforming assets
as a percentage of total loans, foreclosed assets, and distressed loans held for
sale  increased  to 0.87  percent at June 30, 2000 from 0.40 percent at June 30,
1999.

<TABLE>
<CAPTION>

         LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING


                                                                                            JUNE 30,       DECEMBER 31,     JUNE 30,
(DOLLARS IN THOUSANDS)                                                                        199              199            2000
----------------------                                                                      --------       ------------     --------
<S>                                                                                         <C>            <C>              <C>
Commercial, financial and industrial................................................            $409             $2,729       $2,552
Mortgage:
   Residential......................................................................           5,843              5,830        2,837
   Commercial.......................................................................           5,535                442          875
                                                                                             -------            -------       ------
      Total mortgage................................................................          11,378              6,272        3,712
Consumer and other..................................................................           3,364              2,932        3,217
                                                                                             -------            -------       ------
   Total loans 90 days or more past due and still accruing..........................         $15,151            $11,933       $9,481
                                                                                             =======            =======       ======

</TABLE>

         LIQUIDITY

         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 Asset &  Liability  Management  (ALM)  Policy  approved by our Board
requires quarterly reviews of our liquidity by the Asset & Liability  Management
Committee  (ALCO),  which is composed of bank senior  executives.  Our liquidity
management  draws upon the  strengths  of our  extensive  retail and  commercial
market business franchise,  coupled with the ability to obtain funds for various
terms in a variety of domestic and  international  money  markets.  Liquidity is
managed  through the  funding and  investment  functions  of the Global  Markets
Group.

                                       37

<PAGE>

         Core deposits provide us with a sizable source of relatively stable and
low-cost funds. Our average core deposits,  which include demand deposits, money
market demand  accounts,  and savings and consumer time deposits,  combined with
average common shareholders'  equity,  funded 65 percent of average total assets
of $33.8  billion  for the  second  quarter  ended  June 30,  2000.  Most of the
remaining  funding  was  provided  by  short-term  borrowings  in  the  form  of
negotiable  certificates of deposit,  foreign deposits,  federal funds purchased
and securities  sold under  repurchase  agreements,  commercial  paper and other
borrowings.

         Liquidity may also be provided by the sale or maturity of assets.  Such
assets  include  interest-bearing  deposits  in banks,  federal  funds  sold and
securities  purchased under resale agreements,  and trading account  securities.
The aggregate of these assets averaged $0.7 billion during the second quarter of
2000.  Additional  liquidity may be provided by investment  securities available
for sale that amounted to $3.5 billion at June 30, 2000, and by loan maturities.

         REGULATORY CAPITAL

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

<TABLE>
<CAPTION>

UNIONBANCAL CORPORATION


                                                                                             Minimum            "Well-Capitalized"
                                June 30,        December 31,        June 30,               Regulatory               Regulatory
(Dollars in thousands)            1999              1999              2000                 Requirement              Requirement
----------------------         -----------      ------------       -----------          -----------------       ------------------
<S>                            <C>               <C>               <C>                  <C>                     <C>
CAPITAL COMPONENTS
Tier 1 capital.........         $3,160,230        $3,308,912        $3,468,456
Tier 2 capital.........            614,712           616,772           618,790
                               -----------       -----------       -----------
Total risk-based capital        $3,774,942        $3,925,684        $4,078,246
                               ===========       ===========       ===========
Risk-weighted assets...        $31,553,704       $33,288,167       $33,907,287
                               ===========       ===========       ===========
Quarterly average assets       $31,889,889       $32,765,347       $33,790,732
                               ===========       ===========       ===========

<CAPTION>

                              AMOUNT    RATIO    AMOUNT    RATIO    AMOUNT    RATIO        AMOUNT    RATIO
                              ------    -----    ------    -----    ------    -----        ------    -----
<S>                         <C>        <C>     <C>        <C>     <C>        <C>        <C>          <C>                <C>
CAPITAL RATIOS
Total capital (to           $3,774,942 11.96%  $3,925,684  11.79% $4,087,246  12.05%  >  $2,712,583   8.0%               na
   risk-weighted assets)                                                              -
Tier 1 capital (to           3,160,230  10.02   3,308,912   9.94   3,468,456  10.23   >   1,356,291    4.0               na
   risk-weighted assets)                                                              -
Leverage ratio (1)......     3,160,230   9.91   3,308,912  10.10   3,468,456  10.26   >   1,351,629    4.0               na
                                                                                      -

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

<CAPTION>


UNION BANK OF CALIFORNIA, N.A.

                                                                                             Minimum            "Well-Capitalized"
                                June 30,        December 31,        June 30,               Regulatory               Regulatory
(Dollars in thousands)            1999              1999              2000                 Requirement              Requirement
----------------------         -----------      ------------       -----------          -----------------       ------------------
<S>                            <C>               <C>               <C>                  <C>                     <C>
CAPITAL COMPONENTS
Tier 1 capital.........         $3,047,190        $3,103,324        $3,207,626
Tier 2 capital.........            509,703           511,327           510,959
                               -----------       -----------       -----------
Total risk-based capital        $3,556,893        $3,614,651        $3,718,585
                               ===========       ===========       ===========
Risk-weighted assets...        $31,151,170       $32,850,575       $33,276,287
                               ===========       ===========       ===========
Quarterly average assets       $31,587,511       $32,507,079       $33,342,936
                               ===========       ===========       ===========

<CAPTION>


                              AMOUNT    RATIO    AMOUNT    RATIO    AMOUNT    RATIO        AMOUNT    RATIO           AMOUNT    RATIO
                              ------    -----    ------    -----    ------    -----        ------    -----           ------    -----
<S>                         <C>        <C>     <C>        <C>     <C>        <C>        <C>          <C>             <C>       <C>
Total capital (to             $3,556,893 11.42%  $3,614,651  11.00%  $3,718,585 11.17%  >   $2,662,103   8.0%  >   $3,327,629  10.0%
   risk-weighted assets)..                                                              -                      -
Tier 1 capital (to             3,047,190   9.78   3,103,324    9.45   3,207,626   9.64  >    1,331,051    4.0  >    1,996,577    6.0
   risk-weighted assets)..                                                              -                      -
Leverage ratio(1).........     3,047,190   9.65   3,103,324    9.55   3,207,626   9.62  >    1,333,717    4.0  >    1,667,147    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  issued by  federal  banking  agencies,  including  minimum  capital
requirements.  We and Union Bank of  California,  N.A.  are required to

                                       38

<PAGE>

maintain minimum ratios of total and Tier 1 capital to risk-weighted  assets and
of Tier 1 capital to quarterly average assets (the leverage ratio).

         Compared with December 31, 1999, our Tier 1 risk-based capital ratio at
June 30, 2000 increased 26 basis points to 10.20 percent,  our total  risk-based
capital ratio increased 26 basis points to 12.05 percent, and our leverage ratio
increased 16 basis points to 10.26 percent.  The increases in the capital ratios
were primarily attributable to a higher growth rate in tier 1 capital attributed
to higher growth in net income.

         As of June 30, 2000,  management  believes the capital  ratios of Union
Bank of  California,  N.A. met all regulatory  minimums of a  "well-capitalized"
institution.

         FORWARD-LOOKING STATEMENTS

         Our  management   frequently   makes   forward-looking   statements  in
Securities and Exchange  Commission  filings,  such as this one, press releases,
news  articles,  conference  calls  with Wall  Street  analysts  and when we are
speaking on behalf of UnionBanCal Corporation. The forward-looking statements we
make 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.  There are numerous factors
that could and will cause actual  results to differ from those  discussed in our
forward-looking  statements.  Many of these  factors  are beyond our  ability to
control or predict and could have a material  adverse effect on our stock price,
financial  position,  or  results of  operations.  Some,  but not all,  of these
factors are discussed below.

         ADVERSE CALIFORNIA ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR
         BUSINESS

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

         ADVERSE  ECONOMIC  FACTORS  AFFECTING  CERTAIN  INDUSTRIES  COULD HAVE
         AN ADVERSE  EFFECT ON OUR  CUSTOMERS  AND THEIR ABILITY TO MAKE
         PAYMENTS TO US

         We are also subject to certain industry-specific  economic factors. For
example,  a portion  of our total  loan  portfolio  is  related  to real  estate
obligations,  and a portion of our recent  growth has been fueled by the general
real estate recovery in California.  Accordingly,  a downturn in the real estate
industry  in  California  could  have  an  adverse  effect  on  our  operations.
Similarly,  a  portion  of our  total  loan  portfolio  is to  borrowers  in the
agricultural industry.  Adverse weather conditions,  combined with low commodity
prices, may adversely affect the agricultural  industry and,  consequently,  may
impact our business negatively.

         FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR BUSINESS

         Significant  increases in market interest rates, or the perception that
an increase may occur,  could adversely affect both our ability to originate new
loans and our ability to grow.  Conversely,  a decrease in interest  rates could
result in an acceleration  in the prepayment of loans.  In addition,  changes in
market interest rates, or changes in the  relationships  between  short-term and
long-term  market  interest  rates,  or  changes  in the  relationships  between
different  interest  rate  indices,  could affect the interest  rates charged on
interest  earning  assets  differently  than the interest rates paid on interest
bearing  liabilities.  This  difference  could result in an increase in interest
expense relative to interest  income.  An increase in market interest rates also
could adversely affect the ability of our floating-rate  borrowers to meet their
higher

                                       39

<PAGE>

payment  obligations.   If  this  occurred,   it  could  cause  an  increase  in
nonperforming assets and charge-offs, which could adversely affect our business.

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

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

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

         Although  we  fund  our  operations   independently   of  The  Bank  of
Tokyo-Mitsubishi,  Ltd.  and believe our  business  is not  necessarily  closely
related to The Bank of Tokyo-Mitsubishi, Ltd.'s business or outlook, The Bank of
Tokyo-Mitsubishi.  Ltd.'s credit ratings may affect our credit ratings. The Bank
of  Tokyo-Mitsubishi,  Ltd's credit  ratings were  downgraded in October 1998 by
Standard and Poor's  Corporation and are currently on Moody's Investors Service,
Inc.'s credit watch with negative  implications.  Any future  downgrading of The
Bank of Tokyo-Mitsubishi, Ltd.'s credit rating could adversely affect our credit
ratings.  Therefore,  as long as The Bank of Tokyo-Mitsubishi,  Ltd. maintains a
majority interest in us, deterioration in The Bank of  Tokyo-Mitsubishi,  Ltd.'s
financial condition could result in an increase in our borrowing costs and could
impair  our  access to the  public  and  private  capital  markets.  The Bank of
Tokyo-Mitsubishi,  Ltd. is also subject to regulatory  oversight and review. Our
business  operations  and  expansion  plans  could  be  negatively  affected  by
regulatory  concerns  related to the Japanese  financial  system and The Bank of
Tokyo-Mitsubishi, Ltd..

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

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

         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

                                       40

<PAGE>

as many financial and  non-financial  firms that offer services similar to those
offered by us.  Some of our  competitors  are  community  banks that have strong
local market positions.  Other competitors include large financial  institutions
(such as Bank of  America,  California  Federal,  Washington  Mutual,  and Wells
Fargo) that have substantial capital,  technology and marketing resources.  Such
large financial  institutions may have greater access to capital at a lower cost
than us,  which may  adversely  affect our  ability to compete  effectively.  In
addition,  there  have  been a number  of  recent  mergers  involving  financial
institutions  located  in  California.   Some  of  the  merged  banks,  such  as
Norwest/Wells  Fargo,  employ a strong  community-based  banking  model of doing
business  that may increase  competition  with our  distinctive  combination  of
traditional community bank service coupled with a large branch network.

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

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

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

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

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

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

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<PAGE>

         STRATEGIES

         In  connection  with our  strategic  repositioning,  we have  developed
long-term financial performance goals, which we expect to result from successful
implementation of our operating strategies. We cannot assure you that we will be
successful in achieving these  long-term goals or that our operating  strategies
will be successful. Achieving success in these areas is dependent on a number of
factors, many of which are beyond our direct control.

         Factors that may  adversely  affect our ability to attain our long-term
financial performance goals include:

         o   deterioration of our asset quality,

         o   our inability to reduce noninterest expenses,

         o   our inability to increase noninterest income,

         o   our inability to decrease reliance on asset revenues,

         o   our ability to sustain loan growth,

         o   regulatory and other impediments associated with making
             acquisitions,

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

         o   decreases in net interest margins,

         o   increases in competition,

         o   adverse regulatory or legislative developments,

         o   unexpected increases in costs related to potential acquisi-
             tions, and

         o   unexpected increased costs associated with implementation of
             our efficiency improvement project.

         RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR DIVESTITURES OR
         RESTRUCTURING

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

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

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

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<PAGE>

support the growth of our business could have a material adverse effect upon our
business, results of operations, and financial condition.

ITEM 3. MARKET RISK.

         Information  concerning our exposure to market risk, which has remained
relatively  unchanged from December 31, 1999, is  incorporated by reference from
the text under the  caption  "Quantitative  and  Qualitative  Disclosures  About
Market Risk" in the Form 10-K for the year ended December 31, 1999.


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<PAGE>

                           PART II. OTHER INFORMATION



ITEM 4. OTHER INFORMATION

         SHAREHOLDER PROPOSALS: Shareholders who expect to present a proposal at
the 2001 Annual  Meeting of  Shareholders  should  notify the  Secretary  of the
Company at 400 California Street, Mail Code 1-001-18, San Francisco, CA 94104 by
December 1, 2000.  Without such notice,  proxy holders appointed by the Board of
Directors of the Company will be entitled to exercise their discretionary voting
authority  when the  proposal  is  raised at the  annual  meeting,  without  any
discussion  of the proposal in the proxy  statement.  Note that the December 31,
2000 deadline for submitting  shareholder proposals for presentation at the 2001
Annual Meeting of Shareholders, for publication in the Company's proxy statement
and action on the proxy form or otherwise, as stated on page 23 of the Company's
Proxy  Statement  dated March 31, 2000,  is incorrect.  The correct  deadline is
December 1, 2000.

ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits:

NO.      DESCRIPTION
---      -----------

 3.1     Restated Articles of Incorporation of the Registrant, as amended(1)
 3.2     By-laws of the Registrant, as amended January 27, 1999(2)
10.1     Management Stock Plan. (As restated effective June 1, 1997)*(3)
10.2     Union Bank of California Deferred Compensation Plan. (January 1, 1997,
         Restatement, as amended November 21, 1996)*(4)
10.3     Union Bank of California Senior Management Bonus Plan. (Effective
         January 1, 2000)*(5)
10.4     Richard C. Hartnack Employment Agreement. (Effective January 1, 1998)*
         (6)
10.5     Robert M. Walker Employment Agreement. (Effective January 1, 1998)*(6)
10.6     Union Bank of California Supplemental Executive Retirement Plan.
         (Effective January 1, 1988) (Amended and restated as of January 1,
         1997)*(3)
10.7     Performance Share Plan. (Effective January 1, 1997) *(3)
10.8     Service Agreement Between Union Bank of California and The Bank of
         Tokyo-Mitsubishi Ltd. (Effective October 1, 1997)*(3)
10.9     Management Stock Plan. (As restated effective January 1, 2000)*(7)
10.10    Union Bank of California, N.A. Supplemental Retirement Plan for Policy
         Making Officers (effective November 1, 1999)*(5)
27.1     Financial Data Schedule(5)

---------------------------
(1)      Incorporated by reference to Form 10-K for the year ended December 31,
         1998.

(2)      Incorporated by reference to Form 10-Q for the quarter ended March 31,
         1999.

(3)      Incorporated by reference to Form 10-K for the year ended December 31,
         1997.

(4)      Incorporated by reference to Form 10-K for the year ended December 31,
         1996.

(5)      Filed herewith.

(6)      Incorporated by reference to Form 10-Q for the quarter ended September
         30, 1998.

(7)      Incorporated by reference to Form 10-Q for the quarter ended June 30,
         1999.

* Management contract or compensatory plan, contract or arrangement.

(b)      Reports on Form 8-K:

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

                                       44

<PAGE>


                                   SIGNATURES

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

                            UNIONBANCAL CORPORATION
                             (Registrant)


                            By: /s/ DAVID I. MATSON
                                ----------------------------------------
                                    David I. Matson
                                    Executive Vice President and
                                    Chief Financial Officer


                            By: /s/ DAVID A. ANDERSON
                                ----------------------------------------
                                    David A. Anderson
                                    Senior Vice President and Controller


                            Dated:  August 14, 2000



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