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

FORM 10-Q

|ý                                                        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|-------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|For the quarterly period ended September 30, 2007       
|OR                                                      
|o                                                        |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                        to

Commission file number 1-15081

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

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

400 California Street
San Francisco, California 94104-1302(Address and zip code of principal executive offices)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act.    Large accelerated
filer ý    Accelerated filer o    Non-accelerated
filer o

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

Number of shares of Common Stock outstanding at October 31, 2007: 138,537,819



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UnionBanCal Corporation and Subsidiaries    TABLE OF CONTENTS

|                      |                                                                                                | Page
Number                                                         
|--------------------- | ---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------
|PART I                |                                                                                                |                                                                     
|Financial Information |                                                                                                |                                                                     
|                      | Condensed Consolidated Financial Highlights                                                    |                                                                     
|                      | ITEM 1. FINANCIAL STATEMENTS:                                                                  |                                                                     
|                      |                                                                                                | Condensed Consolidated Statements of Income                         
|                      |                                                                                                | Condensed Consolidated Balance Sheets                               
|                      |                                                                                                | Condensed Consolidated Statements of Changes in Stockholders' Equity
|                      |                                                                                                | Condensed Consolidated Statements of Cash Flows                     
|                      |                                                                                                | Notes to Condensed Consolidated Financial Statements                
|                      | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: |                                                                     
|                      |                                                                                                | Introduction                                                        
|                      |                                                                                                | Executive Overview                                                  
|                      |                                                                                                | Discontinued Operations                                             
|                      |                                                                                                | Critical Accounting Estimates                                       
|                      |                                                                                                | Financial Performance                                               
|                      |                                                                                                | Net Interest Income                                                 
|                      |                                                                                                | Noninterest Income and Noninterest Expense                          
|                      |                                                                                                | Income Tax Expense                                                  
|                      |                                                                                                | Loans                                                               
|                      |                                                                                                | Cross-Border Outstandings                                           
|                      |                                                                                                | Provision for Credit Losses                                         
|                      |                                                                                                | Allowances for Credit Losses                                        
|                      |                                                                                                | Nonperforming Assets                                                
|                      |                                                                                                | Loans 90 Days or More Past Due and Still Accruing                   
|                      |                                                                                                | Quantitative and Qualitative Disclosures About Market Risk          
|                      |                                                                                                | Liquidity Risk                                                      
|                      |                                                                                                | Regulatory Capital                                                  
|                      |                                                                                                | Business Segments                                                   
|                      |                                                                                                | Regulatory Matters                                                  
|                      | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                             |                                                                     
|                      | ITEM 4. CONTROLS AND PROCEDURES                                                                |                                                                     
|PART II               |                                                                                                |                                                                     
|Other Information     |                                                                                                |                                                                     
|                      | ITEM 1. LEGAL PROCEEDINGS                                                                      |                                                                     
|                      | ITEM 1A. RISK FACTORS                                                                          |                                                                     
|                      | ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                            |                                                                     
|                      | ITEM 6. EXHIBITS                                                                               |                                                                     
|                      | Signatures                                                                                     |                                                                     

2

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements, which include forecasts of our financial results and condition, expectations for our operations and business, and
our assumptions for those forecasts and expectations. Do not rely unduly on forward-looking statements. Actual results might differ significantly from our forecasts and expectations. For a discussion
of risk factors relating to the Company's business, please refer to Item 1A "Risk Factors" of Part II of this Quarterly Report on Form 10-Q (this
Form 10-Q).

This
document includes forward-looking statements, which are subject to the "safe harbor" created by section 27A of the Securities Act of 1933, as amended, and section 21E
of the Securities Exchange Act of 1934, as amended. We may make forward-looking statements in our Securities and Exchange Commission (SEC) filings, press releases, news articles, conference calls with
analysts and stockholders and when we are speaking on behalf of UnionBanCal Corporation. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or
current facts. Often, they include the words "believe," "expect," "target," "anticipate," "intend," "plan," "seek," "estimate," "potential," "project," or words of similar meaning, or future or
conditional verbs such as "will," "would," "should," "could," "might," or "may." These forward-looking statements are intended to provide investors with additional information with which they may
assess our future potential. All of these forward-looking statements are based on assumptions about an uncertain future and are based on information available to us at the date of these statements. We
do not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made.

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



3

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There
are numerous risks and uncertainties that could and will cause actual results to differ materially from those discussed in our forward-looking statements. Many of these factors are
beyond our ability to control or predict and could have a material adverse effect on our stock price, financial condition, and results of operations or prospects. Such risks and uncertainties include,
but are not limited to those listed in Item 1A "Risk Factors" of Part II and in Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of
Part I of this Form 10-Q.

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

4

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

|                                |                                                           | As of and for the
Three Months Ended |   |             |       
|------------------------------- | --------------------------------------------------------- | ------------------------------------ | - | ----------- | ------
|
|Results of operations:          |                                                           |                                      |   |             |       
|                                | Net interest income(1)                                    |                                      | $ | 460,596     |       
|                                | Provision for loan losses                                 |                                      |   |            |       
|                                | Noninterest income                                        |                                      |   | 217,255     |       
|                                | Noninterest expense                                       |                                      |   | 417,021     |       
|                                |                                                           |                                      |   |             |       
|                                | Income before income taxes(1)                             |                                      |   | 260,830     |       
|                                | Taxable-equivalent adjustment                             |                                      |   | 1,872       |       
|                                | Income tax expense                                        |                                      |   | 87,048      |       
|                                |                                                           |                                      |   |             |       
|                                | Income from continuing operations                         |                                      |   | 171,910     |       
|                                | Loss from discontinued operations, net of taxes           |                                      |   | (1,204      | )     
|                                |                                                           |                                      |   |             |       
|                                | Net income                                                |                                      | $ | 170,706     |       
|                                |                                                           |                                      |   |             |       
|Per common share:               |                                                           |                                      |   |             |       
|                                | Basic earnings:                                           |                                      |   |             |       
|                                |                                                           | From continuing operations           |   | $           | 1.22  
|                                |                                                           | Net income                           |   |             | 1.21  
|                                | Diluted earnings:                                         |                                      |   |             |       
|                                |                                                           | From continuing operations           |   |             | 1.21  
|                                |                                                           | Net income                           |   |             | 1.20  
|                                | Dividends(2)                                              |                                      |   | 0.47        |       
|                                | Book value (end of period)                                |                                      |   | 33.17       |       
|                                | Common shares outstanding (end of period)(3)              |                                      |   | 140,326,737 |       
|                                | Weighted average common shares outstandingbasic(3)       |                                      |   | 140,941,823 |       
|                                | Weighted average common shares outstandingdiluted(3)     |                                      |   | 142,566,089 |       
|Balance sheet (end of period):  |                                                           |                                      |   |             |       
|                                | Total assets(4)                                           |                                      | $ | 52,013,256  |       
|                                | Total loans                                               |                                      |   | 35,673,469  |       
|                                | Nonperforming assets                                      |                                      |   | 47,803      |       
|                                | Total deposits                                            |                                      |   | 41,820,206  |       
|                                | Medium and long-term debt                                 |                                      |   | 1,517,977   |       
|                                | Stockholders' equity                                      |                                      |   | 4,654,789   |       
|Balance sheet (period average): |                                                           |                                      |   |             |       
|                                | Total assets                                              |                                      | $ | 50,777,419  |       
|                                | Total loans                                               |                                      |   | 35,965,823  |       
|                                | Earning assets                                            |                                      |   | 45,854,645  |       
|                                | Total deposits                                            |                                      |   | 40,582,139  |       
|                                | Stockholders' equity                                      |                                      |   | 4,578,635   |       
|Financial ratios(5):            |                                                           |                                      |   |             |       
|                                | Return on average assets(6):                              |                                      |   |             |       
|                                |                                                           | From continuing operations           |   |             | 1.34  
|                                |                                                           | Net income                           |   |             | 1.33  
|                                | Return on average stockholders' equity(6):                |                                      |   |             |       
|                                |                                                           | From continuing operations           |   |             | 14.90 
|                                |                                                           | Net income                           |   |             | 14.79 
|                                | Efficiency ratio(7)                                       |                                      |   | 61.55       |       
|                                | Net interest margin(1)                                    |                                      |   | 4.00        |       
|                                | Dividend payout ratio                                     |                                      |   | 38.52       |       
|                                | Tangible common equity ratio                              |                                      |   | 8.09        |       
|                                | Tier 1 risk-based capital ratio(4)                        |                                      |   | 8.68        |       
|                                | Total risk-based capital ratio(4)                         |                                      |   | 11.74       |       
|                                | Leverage ratio(4)                                         |                                      |   | 8.47        |       
|                                | Allowance for loan losses to:                             |                                      |   |             |       
|                                |                                                           | Total loans                          |   |             | 0.92  
|                                |                                                           | Nonaccrual loans                     |   |             | 683.96
|                                | Allowances for credit losses to(8):                       |                                      |   |             |       
|                                |                                                           | Total loans                          |   |             | 1.14  
|                                |                                                           | Nonaccrual loans                     |   |             | 850.01
|                                | Net loans charged off to average total loans(6)           |                                      |   | 0.02        |       
|                                | Nonperforming assets to total loans and foreclosed assets |                                      |   | 0.13        |       
|                                | Nonperforming assets to total assets(4)                   |                                      |   | 0.09        |       

---

nm = not meaningful

5

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UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Financial Highlights (Continued)  (Unaudited)

|                                |                                                           | As of and for the
Nine Months Ended |   |             |       
|------------------------------- | --------------------------------------------------------- | ----------------------------------- | - | ----------- | ------
|
|Results of operations:          |                                                           |                                     |   |             |       
|                                | Net interest income(1)                                    |                                     | $ | 1,395,937   |       
|                                | (Reversal of) provision for loan losses                   |                                     |   | (8,000      | )     
|                                | Noninterest income                                        |                                     |   | 654,393     |       
|                                | Noninterest expense                                       |                                     |   | 1,244,595   |       
|                                |                                                           |                                     |   |             |       
|                                | Income before income taxes(1)                             |                                     |   | 813,735     |       
|                                | Taxable-equivalent adjustment                             |                                     |   | 4,478       |       
|                                | Income tax expense                                        |                                     |   | 273,255     |       
|                                |                                                           |                                     |   |             |       
|                                | Income from continuing operations                         |                                     |   | 536,002     |       
|                                | Loss from discontinued operations, net of taxes           |                                     |   | (9,440      | )     
|                                |                                                           |                                     |   |             |       
|                                | Net income                                                |                                     | $ | 526,562     |       
|                                |                                                           |                                     |   |             |       
|Per common share:               |                                                           |                                     |   |             |       
|                                | Basic earnings:                                           |                                     |   |             |       
|                                |                                                           | From continuing operations          |   | $           | 3.76  
|                                |                                                           | Net income                          |   |             | 3.70  
|                                | Diluted earnings:                                         |                                     |   |             |       
|                                |                                                           | From continuing operations          |   |             | 3.71  
|                                |                                                           | Net income                          |   |             | 3.65  
|                                | Dividends(2)                                              |                                     |   | 1.35        |       
|                                | Book value (end of period)                                |                                     |   | 33.17       |       
|                                | Common shares outstanding (end of period)(3)              |                                     |   | 140,326,737 |       
|                                | Weighted average common shares outstandingbasic(3)       |                                     |   | 142,371,445 |       
|                                | Weighted average common shares outstandingdiluted(3)     |                                     |   | 144,449,370 |       
|Balance sheet (end of period):  |                                                           |                                     |   |             |       
|                                | Total assets(4)                                           |                                     | $ | 52,013,256  |       
|                                | Total loans                                               |                                     |   | 35,673,469  |       
|                                | Nonperforming assets                                      |                                     |   | 47,803      |       
|                                | Total deposits                                            |                                     |   | 41,820,206  |       
|                                | Medium and long-term debt                                 |                                     |   | 1,517,977   |       
|                                | Stockholders' equity                                      |                                     |   | 4,654,789   |       
|Balance sheet (period average): |                                                           |                                     |   |             |       
|                                | Total assets                                              |                                     | $ | 49,426,668  |       
|                                | Total loans                                               |                                     |   | 35,100,506  |       
|                                | Earning assets                                            |                                     |   | 44,481,217  |       
|                                | Total deposits                                            |                                     |   | 39,716,972  |       
|                                | Stockholders' equity                                      |                                     |   | 4,552,410   |       
|Financial ratios(5):            |                                                           |                                     |   |             |       
|                                | Return on average assets(6):                              |                                     |   |             |       
|                                |                                                           | From continuing operations          |   |             | 1.45  
|                                |                                                           | Net income                          |   |             | 1.42  
|                                | Return on average stockholders' equity(6):                |                                     |   |             |       
|                                |                                                           | From continuing operations          |   |             | 15.74 
|                                |                                                           | Net income                          |   |             | 15.46 
|                                | Efficiency ratio(7)                                       |                                     |   | 61.79       |       
|                                | Net interest margin(1)                                    |                                     |   | 4.19        |       
|                                | Dividend payout ratio                                     |                                     |   | 35.90       |       
|                                | Tangible common equity ratio                              |                                     |   | 8.09        |       
|                                | Tier 1 risk-based capital ratio(4)                        |                                     |   | 8.68        |       
|                                | Total risk-based capital ratio(4)                         |                                     |   | 11.74       |       
|                                | Leverage ratio(4)                                         |                                     |   | 8.47        |       
|                                | Allowance for loan losses to:                             |                                     |   |             |       
|                                |                                                           | Total loans                         |   |             | 0.92  
|                                |                                                           | Nonaccrual loans                    |   |             | 683.96
|                                | Allowances for credit losses to(8):                       |                                     |   |             |       
|                                |                                                           | Total loans                         |   |             | 1.14  
|                                |                                                           | Nonaccrual loans                    |   |             | 850.01
|                                | Net loans charged off to average total loans(6)           |                                     |   | 0.06        |       
|                                | Nonperforming assets to total loans and foreclosed assets |                                     |   | 0.13        |       
|                                | Nonperforming assets to total assets(4)                   |                                     |   | 0.09        |       

---

nm = not meaningful

6

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Item 1.    Financial Statements

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

|                                                           |                                                                         | For the Three Months
Ended September 30,                          |         | For the Nine Months
Ended September 30, |        
|---------------------------------------------------------- | ----------------------------------------------------------------------- | ----------------------------------------------------------------- | ------- | --------------------------------------- | -------
|
|
|Interest Income                                            |                                                                         |                                                                   |         |                                         |        
|                                                           | Loans                                                                   |                                                                   | $       | 574,543                                 |        
|                                                           | Securities                                                              |                                                                   |         | 108,166                                 |        
|                                                           | Interest bearing deposits in banks                                      |                                                                   |         | 411                                     |        
|                                                           | Federal funds sold and securities purchased under resale agreements     |                                                                   |         | 12,024                                  |        
|                                                           | Trading account assets                                                  |                                                                   |         | 1,659                                   |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|                                                           |                                                                         | Total interest income                                             |         |                                         | 696,803
|                                                           |                                                                         |                                                                   |         |                                         |        
|Interest Expense                                           |                                                                         |                                                                   |         |                                         |        
|                                                           | Deposits                                                                |                                                                   |         | 182,298                                 |        
|                                                           | Federal funds purchased and securities sold under repurchase agreements |                                                                   |         | 4,891                                   |        
|                                                           | Commercial paper                                                        |                                                                   |         | 20,835                                  |        
|                                                           | Medium and long-term debt                                               |                                                                   |         | 21,974                                  |        
|                                                           | Trust notes                                                             |                                                                   |         | 239                                     |        
|                                                           | Other borrowed funds                                                    |                                                                   |         | 7,842                                   |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|                                                           |                                                                         | Total interest expense                                            |         |                                         | 238,079
|                                                           |                                                                         |                                                                   |         |                                         |        
|Net Interest Income                                        |                                                                         |                                                                   | 458,724 |                                         |        
|                                                           | (Reversal of) provision for loan losses                                 |                                                                   |         |                                        |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|                                                           |                                                                         | Net interest income after (reversal of) provision for loan losses |         |                                         | 458,724
|                                                           |                                                                         |                                                                   |         |                                         |        
|Noninterest Income                                         |                                                                         |                                                                   |         |                                         |        
|                                                           | Service charges on deposit accounts                                     |                                                                   |         | 79,083                                  |        
|                                                           | Trust and investment management fees                                    |                                                                   |         | 47,555                                  |        
|                                                           | Insurance commissions                                                   |                                                                   |         | 17,301                                  |        
|                                                           | Trading account activities                                              |                                                                   |         | 14,311                                  |        
|                                                           | Brokerage commissions and fees                                          |                                                                   |         | 8,531                                   |        
|                                                           | Merchant banking fees                                                   |                                                                   |         | 11,655                                  |        
|                                                           | Card processing fees, net                                               |                                                                   |         | 7,241                                   |        
|                                                           | Securities gains, net                                                   |                                                                   |         | 43                                      |        
|                                                           | Other                                                                   |                                                                   |         | 31,535                                  |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|                                                           |                                                                         | Total noninterest income                                          |         |                                         | 217,255
|                                                           |                                                                         |                                                                   |         |                                         |        
|Noninterest Expense                                        |                                                                         |                                                                   |         |                                         |        
|                                                           | Salaries and employee benefits                                          |                                                                   |         | 244,613                                 |        
|                                                           | Net occupancy                                                           |                                                                   |         | 35,753                                  |        
|                                                           | Outside services                                                        |                                                                   |         | 31,890                                  |        
|                                                           | Equipment                                                               |                                                                   |         | 17,387                                  |        
|                                                           | Professional services                                                   |                                                                   |         | 12,169                                  |        
|                                                           | Software                                                                |                                                                   |         | 15,334                                  |        
|                                                           | Communications                                                          |                                                                   |         | 9,942                                   |        
|                                                           | Foreclosed asset expense (income)                                       |                                                                   |         | (183                                    | )      
|                                                           | (Reversal of) provision for losses on off-balance sheet commitments     |                                                                   |         |                                        |        
|                                                           | Other                                                                   |                                                                   |         | 50,116                                  |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|                                                           |                                                                         | Total noninterest expense                                         |         |                                         | 417,021
|                                                           |                                                                         |                                                                   |         |                                         |        
|                                                           | Income from continuing operations before income taxes                   |                                                                   |         | 258,958                                 |        
|                                                           | Income tax expense                                                      |                                                                   |         | 87,048                                  |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|Income from Continuing Operations                          |                                                                         |                                                                   | 171,910 |                                         |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|                                                           | Loss from discontinued operations before income taxes                   |                                                                   |         | (2,061                                  | )      
|                                                           | Income tax benefit                                                      |                                                                   |         | (857                                    | )      
|                                                           |                                                                         |                                                                   |         |                                         |        
|Loss from Discontinued Operations                          |                                                                         |                                                                   | (1,204  | )                                       |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|Net Income                                                 |                                                                         | $                                                                 | 170,706 |                                         | $      
|                                                           |                                                                         |                                                                   |         |                                         |        
|Income from continuing operations per common sharebasic   |                                                                         | $                                                                 | 1.22    |                                         | $      
|                                                           |                                                                         |                                                                   |         |                                         |        
|Net Income per common sharebasic                          |                                                                         | $                                                                 | 1.21    |                                         | $      
|                                                           |                                                                         |                                                                   |         |                                         |        
|Income from continuing operations per common sharediluted |                                                                         | $                                                                 | 1.21    |                                         | $      
|                                                           |                                                                         |                                                                   |         |                                         |        
|Net Income per common sharediluted                        |                                                                         | $                                                                 | 1.20    |                                         | $      
|                                                           |                                                                         |                                                                   |         |                                         |        
|Weighted average common shares outstandingbasic           |                                                                         |                                                                   | 140,942 |                                         |        
|                                                           |                                                                         |                                                                   |         |                                         |        
|Weighted average common shares outstandingdiluted         |                                                                         |                                                                   | 142,566 |                                         |        
|                                                           |                                                                         |                                                                   |         |                                         |        

See accompanying notes to condensed consolidated financial statements.

7

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UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Balance Sheets

|(Dollars in thousands)                                                                                                                              |                                                                                                                                                                               | (Unaudited)
September 30, 2006             |            | December 31, 2006 |            | (Unaudited)
September 30, 2007 |           
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ----------------- | ---------- | ------------------------------ | ----------
|Assets                                                                                                                                              |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|Cash and due from banks                                                                                                                             |                                                                                                                                                                               | $                                          | 2,168,245  |                   | $          | 2,213,782                      |           
|Interest bearing deposits in banks                                                                                                                  |                                                                                                                                                                               |                                            | 26,700     |                   |            | 824,456                        |           
|Federal funds sold and securities purchased under resale agreements                                                                                 |                                                                                                                                                                               |                                            | 1,827,000  |                   |            | 943,200                        |           
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    |                                                                                                                                                                               | Total cash and cash equivalents            |            |                   | 4,021,945  |                                |           
|Trading account assets                                                                                                                              |                                                                                                                                                                               |                                            | 360,267    |                   |            | 376,321                        |           
|Securities available for sale:                                                                                                                      |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    | Securities pledged as collateral                                                                                                                                              |                                            |            | 58,877            |            |                                | 89,184    
|                                                                                                                                                    | Held in portfolio                                                                                                                                                             |                                            |            | 8,582,667         |            |                                | 8,667,038 
|Loans (net of allowance for loan losses: September 30, 2006, $326,955; December 31, 2006, $331,077; September 30, 2007, $350,491)                   |                                                                                                                                                                               |                                            | 35,346,514 |                   |            | 36,340,646                     |           
|Due from customers on acceptances                                                                                                                   |                                                                                                                                                                               |                                            | 25,851     |                   |            | 17,834                         |           
|Premises and equipment, net                                                                                                                         |                                                                                                                                                                               |                                            | 499,702    |                   |            | 495,302                        |           
|Intangible assets                                                                                                                                   |                                                                                                                                                                               |                                            | 32,331     |                   |            | 28,930                         |           
|Goodwill                                                                                                                                            |                                                                                                                                                                               |                                            | 453,489    |                   |            | 453,489                        |           
|Other assets                                                                                                                                        |                                                                                                                                                                               |                                            | 2,594,084  |                   |            | 2,148,954                      |           
|Assets of discontinued operations to be disposed or sold                                                                                            |                                                                                                                                                                               |                                            | 37,529     |                   |            | 20,440                         |           
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    |                                                                                                                                                                               | Total assets                               |            | $                 | 52,013,256 |                                | $         
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|Liabilities                                                                                                                                         |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    | Noninterest bearing                                                                                                                                                           |                                            | $          | 17,446,321        |            | $                              | 17,113,890
|                                                                                                                                                    | Interest bearing                                                                                                                                                              |                                            |            | 24,373,885        |            |                                | 24,855,478
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    |                                                                                                                                                                               | Total deposits                             |            |                   | 41,820,206 |                                |           
|Federal funds purchased and securities sold under repurchase agreements                                                                             |                                                                                                                                                                               |                                            | 265,596    |                   |            | 1,083,927                      |           
|Commercial paper                                                                                                                                    |                                                                                                                                                                               |                                            | 1,859,747  |                   |            | 1,661,163                      |           
|Other borrowed funds                                                                                                                                |                                                                                                                                                                               |                                            | 308,164    |                   |            | 432,401                        |           
|Trading account liabilities                                                                                                                         |                                                                                                                                                                               |                                            | 223,332    |                   |            | 258,136                        |           
|Acceptances outstanding                                                                                                                             |                                                                                                                                                                               |                                            | 25,851     |                   |            | 17,834                         |           
|Other liabilities                                                                                                                                   |                                                                                                                                                                               |                                            | 1,319,303  |                   |            | 1,287,029                      |           
|Medium and long-term debt                                                                                                                           |                                                                                                                                                                               |                                            | 1,517,977  |                   |            | 1,318,847                      |           
|Junior subordinated debt payable to subsidiary grantor trust                                                                                        |                                                                                                                                                                               |                                            | 14,998     |                   |            | 14,885                         |           
|Liabilities of discontinued operations to be extinguished or assumed                                                                                |                                                                                                                                                                               |                                            | 3,293      |                   |            | 4,585                          |           
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    |                                                                                                                                                                               | Total liabilities                          |            |                   | 47,358,467 |                                |           
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|Commitments, contingencies and guaranteesSee Note 9                                                                                                |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|Stockholders' Equity                                                                                                                                |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|Preferred stock:                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    | Authorized 5,000,000 shares; no shares issued or outstanding as of September 30, 2006, December 31, 2006 and September 30, 2007                                               |                                            |            |                  |            |                                |          
|Common stock, par value $1 per share:                                                                                                               |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    | Authorized 300,000,000 shares; issued 155,854,756 shares as of September 30, 2006, 156,460,057 shares as of December 31, 2006 and 157,272,167 shares as of September 30, 2007 |                                            |            | 155,855           |            |                                | 156,460   
|Additional paid-in capital                                                                                                                          |                                                                                                                                                                               |                                            | 1,064,993  |                   |            | 1,083,649                      |           
|Treasury stock15,528,019 shares as of September 30, 2006, 17,352,803 shares as of December 31, 2006 and 18,748,501 shares as of September 30, 2007 |                                                                                                                                                                               |                                            | (956,545   | )                 |            | (1,064,606                     | )         
|Retained earnings                                                                                                                                   |                                                                                                                                                                               |                                            | 4,494,698  |                   |            | 4,655,272                      |           
|Accumulated other comprehensive loss                                                                                                                |                                                                                                                                                                               |                                            | (104,212   | )                 |            | (259,374                       | )         
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    |                                                                                                                                                                               | Total stockholders' equity                 |            |                   | 4,654,789  |                                |           
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           
|                                                                                                                                                    |                                                                                                                                                                               | Total liabilities and stockholders' equity |            | $                 | 52,013,256 |                                | $         
|                                                                                                                                                    |                                                                                                                                                                               |                                            |            |                   |            |                                |           

See accompanying notes to condensed consolidated financial statements.

8

---





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

|(In thousands, except shares)                                                                           |                                                         | Number
of shares                                                 |  | Common stock |         | Additional paid-in capital |   | Treasury stock |   | Retained earnings |            | Accumulated other comprehensive loss |   | Total
stock-
holders' equity |        
|------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------------------------------------- |  | ------------ | ------- | -------------------------- | - | -------------- | - | ----------------- | ---------- | ------------------------------------ | - | ---------------------------- | -------
|BALANCEDECEMBER 31, 2005                                                                               |                                                         | 154,469,215                                                      |  | $            | 154,469 |                            | $ | 994,956        |   | $                 | (612,732   | )                                    | $ | 4,141,400                    |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|Comprehensive income                                                                                    |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        | Net incomeFor the nine months ended September 30, 2006 |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              | 526,562
|                                                                                                        | Other comprehensive loss, net of tax:                   |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         | Net change in unrealized losses on cash flow hedges              |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         | Net change in unrealized losses on securities available for sale |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         | Foreign currency translation adjustment                          |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|Total comprehensive income                                                                              |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|Reclassifications due to adoption of SFAS No. 123(R)(1)                                                 |                                                         |                                                                  |  |              |         |                            |   | (19,035        | ) |                   |            |                                      |   | 19,035                       |        
|Stock options exercised                                                                                 |                                                         | 1,192,874                                                        |  |              | 1,193   |                            |   | 46,783         |   |                   |            |                                      |   |                              |        
|Restricted stock granted, net of forfeitures                                                            |                                                         | 192,667                                                          |  |              | 193     |                            |   | (193           | ) |                   |            |                                      |   |                              |        
|Excess tax benefitstock-based compensation                                                             |                                                         |                                                                  |  |              |         |                            |   | 11,823         |   |                   |            |                                      |   |                              |        
|Compensation expensestock options                                                                      |                                                         |                                                                  |  |              |         |                            |   | 17,341         |   |                   |            |                                      |   |                              |        
|Compensation expenserestricted stock                                                                   |                                                         |                                                                  |  |              |         |                            |   | 10,728         |   |                   |            |                                      |   |                              |        
|Compensation expenserestricted stock units and performance share units                                 |                                                         |                                                                  |  |              |         |                            |   | 2,590          |   |                   |            |                                      |   |                              |        
|Common stock repurchased(2)                                                                             |                                                         |                                                                  |  |              |         |                            |   |                |   |                   | (343,813   | )                                    |   |                              |        
|Dividends declared on common stock, $1.35 per share(3)                                                  |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   | (192,299                     | )      
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|Net change                                                                                              |                                                         |                                                                  |  |              | 1,386   |                            |   | 70,037         |   |                   | (343,813   | )                                    |   | 353,298                      |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|BALANCESEPTEMBER 30, 2006                                                                              |                                                         | 155,854,756                                                      |  | $            | 155,855 |                            | $ | 1,064,993      |   | $                 | (956,545   | )                                    | $ | 4,494,698                    |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|BALANCEDECEMBER 31, 2006                                                                               |                                                         | 156,460,057                                                      |  | $            | 156,460 |                            | $ | 1,083,649      |   | $                 | (1,064,606 | )                                    | $ | 4,655,272                    |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|Comprehensive income                                                                                    |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        | Net incomeFor the nine months ended September 30, 2007 |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              | 442,424
|                                                                                                        | Other comprehensive loss, net of tax:                   |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         | Net change in unrealized losses on cash flow hedges              |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         | Net change in unrealized losses on securities available for sale |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         | Foreign currency translation adjustment                          |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         | Pension and other benefits adjustment                            |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|Total comprehensive income                                                                              |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|FIN No. 48 adjustment(4)                                                                                |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   | (49,300                      | )      
|FSP FAS 13-2 adjustment(5)                                                                              |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   | (20,803                      | )      
|Stock options exercised                                                                                 |                                                         | 785,072                                                          |  |              | 785     |                            |   | 31,936         |   |                   |            |                                      |   |                              |        
|Restricted stock granted, net of forfeitures                                                            |                                                         | 20,062                                                           |  |              | 20      |                            |   | (20            | ) |                   |            |                                      |   |                              |        
|Restricted stock and performance share units vested                                                     |                                                         | 6,976                                                            |  |              | 7       |                            |   | (7             | ) |                   |            |                                      |   |                              |        
|Excess tax benefitstock-based compensation                                                             |                                                         |                                                                  |  |              |         |                            |   | 4,920          |   |                   |            |                                      |   |                              |        
|Compensation expensestock options                                                                      |                                                         |                                                                  |  |              |         |                            |   | 10,366         |   |                   |            |                                      |   |                              |        
|Compensation expenserestricted stock                                                                   |                                                         |                                                                  |  |              |         |                            |   | 10,671         |   |                   |            |                                      |   |                              |        
|Compensation expenserestricted stock units, performance share units and other share-based compensation |                                                         |                                                                  |  |              |         |                            |   | 3,456          |   |                   |            |                                      |   |                              |        
|Common stock repurchased(2)                                                                             |                                                         |                                                                  |  |              |         |                            |   |                |   |                   | (87,551    | )                                    |   |                              |        
|Dividends declared on common stock, $1.51 per share(3)                                                  |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   | (209,116                     | )      
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|Net change                                                                                              |                                                         |                                                                  |  |              | 812     |                            |   | 61,322         |   |                   | (87,551    | )                                    |   | 163,205                      |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        
|BALANCESEPTEMBER 30, 2007                                                                              |                                                         | 157,272,167                                                      |  | $            | 157,272 |                            | $ | 1,144,971      |   | $                 | (1,152,157 | )                                    | $ | 4,818,477                    |        
|                                                                                                        |                                                         |                                                                  |  |              |         |                            |   |                |   |                   |            |                                      |   |                              |        

---

See accompanying notes to condensed consolidated financial statements.

9

---





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

|                                                                     |                                                                                                    | For the Nine Months
Ended September 30,                                   |                  
|-------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | -----------------
|
|
|Cash Flows from Operating Activities:                                |                                                                                                    |                                                                           |                  
|                                                                     | Net income                                                                                         |                                                                           | $                
|                                                                     |                                                                                                    | Loss from discontinued operations, net of taxes                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     |                                                                                                    | Income from continuing operations, net of taxes                           |                  
|                                                                     | Adjustments to reconcile net income to net cash provided by (used in) operating activities:        |                                                                           |                  
|                                                                     |                                                                                                    | (Reversal of) provision for loan losses                                   |                  
|                                                                     |                                                                                                    | (Reversal of) provision for losses on off-balance sheet commitments       |                  
|                                                                     |                                                                                                    | Depreciation, amortization and accretion                                  |                  
|                                                                     |                                                                                                    | Stock-based compensationstock options and other share-based compensation |                  
|                                                                     |                                                                                                    | Provision for deferred income taxes                                       |                  
|                                                                     |                                                                                                    | Gains on sales of securities available for sale, net                      |                  
|                                                                     |                                                                                                    | Net increase in trading account assets                                    |                  
|                                                                     |                                                                                                    | Net increase in fees and other receivables                                |                  
|                                                                     |                                                                                                    | Net increase in other liabilities                                         |                  
|                                                                     |                                                                                                    | Net increase in other assets                                              |                  
|                                                                     |                                                                                                    | Loans originated for resale                                               |                  
|                                                                     |                                                                                                    | Net proceeds from sales of loans originated for resale                    |                  
|                                                                     |                                                                                                    | Excess tax benefitstock-based compensation                               |                  
|                                                                     |                                                                                                    | Other, net                                                                |                  
|                                                                     |                                                                                                    | Discontinued operations, net                                              |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           | Total adjustments
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     | Net cash provided by (used in) operating activities                                                |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|Cash Flows from Investing Activities:                                |                                                                                                    |                                                                           |                  
|                                                                     | Proceeds from sales of securities available for sale                                               |                                                                           |                  
|                                                                     | Proceeds from matured and called securities available for sale                                     |                                                                           |                  
|                                                                     | Purchases of securities available for sale                                                         |                                                                           |                  
|                                                                     | Net increase in loans                                                                              |                                                                           |                  
|                                                                     | Other, net                                                                                         |                                                                           |                  
|                                                                     | Discontinued operations, net                                                                       |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     | Net cash used in investing activities                                                              |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|Cash Flows from Financing Activities:                                |                                                                                                    |                                                                           |                  
|                                                                     | Net increase in deposits                                                                           |                                                                           |                  
|                                                                     | Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements |                                                                           |                  
|                                                                     | Net increase (decrease) in commercial paper and other borrowed funds                               |                                                                           |                  
|                                                                     | Proceeds from issuance of medium-term debt                                                         |                                                                           |                  
|                                                                     | Payment of medium-term debt                                                                        |                                                                           |                  
|                                                                     | Common stock repurchased                                                                           |                                                                           |                  
|                                                                     | Payments of cash dividends                                                                         |                                                                           |                  
|                                                                     | Stock-based compensation exercised                                                                 |                                                                           |                  
|                                                                     | Other, net                                                                                         |                                                                           |                  
|                                                                     | Discontinued operations, net                                                                       |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|                                                                     | Net cash provided by financing activities                                                          |                                                                           |                  
|                                                                     |                                                                                                    |                                                                           |                  
|Net increase (decrease) in cash and cash equivalents                 |                                                                                                    |                                                                           | 50,610           
|Cash and cash equivalents at beginning of period                     |                                                                                                    |                                                                           | 3,969,876        
|Effect of exchange rate changes on cash and cash equivalents         |                                                                                                    |                                                                           | 1,459            
|                                                                     |                                                                                                    |                                                                           |                  
|Cash and cash equivalents at end of period                           |                                                                                                    | $                                                                         | 4,021,945        
|                                                                     |                                                                                                    |                                                                           |                  
|Cash Paid During the Period For:                                     |                                                                                                    |                                                                           |                  
|                                                                     | Interest                                                                                           |                                                                           | $                
|                                                                     | Income taxes                                                                                       |                                                                           |                  
|Supplemental Schedule of Noncash Investing and Financing Activities: |                                                                                                    |                                                                           |                  
|                                                                     | Loans transferred to foreclosed assets (OREO)                                                      |                                                                           | $                

See accompanying notes to condensed consolidated financial statements.

10

---





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

Note 1Basis of Presentation and Nature of Operations

The unaudited condensed consolidated financial statements of UnionBanCal Corporation and subsidiaries have been prepared in accordance with accounting principles
generally accepted in the United States of America (US GAAP) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission (SEC). However, they do not include all of the disclosures necessary for annual financial
statements in conformity with US GAAP. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. The
results of operations for the period ended September 30, 2007 are not necessarily indicative of the operating results anticipated for the full year. Accordingly, these unaudited condensed
consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in UnionBanCal Corporation's Annual Report on Form 10-K
for the year ended December 31, 2006 (2006 Form 10-K). The preparation of financial statements in conformity with US GAAP also requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue
and expense during the reporting period. Actual results could differ from those estimates.

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

Under
a previously announced stock repurchase program, the Company was authorized to repurchase $562.1 million of the Company's common stock as of September 30, 2007. The
Company repurchased $0.2 million of common stock in the third quarter of 2007, compared to $143.0 million in the third quarter of 2006. The Bank of Tokyo-Mitsubishi UFJ, Ltd.
(BTMU), which is a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc., owned approximately 65 percent of the Company's outstanding common stock at September 30, 2007.

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

Note 2Recently Issued Accounting Pronouncements



In July 2006, the FASB issued FIN No. 48 "Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109" (FIN
No. 48), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, "Accounting for
Income Taxes." The Interpretation establishes a "more-likely-than-not" recognition threshold that must be met before a tax benefit can be recognized in the
financial statements. For tax positions that meet the more-likely-than-not threshold, an enterprise should recognize the largest amount of tax benefit that is
greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority. On January 1, 2007, the Company adopted FIN No. 48 and recognized a
$49.3 million reduction to the beginning balance of retained earnings.

11

---



The
total amount of unrecognized tax benefits as of January 1, 2007 was $137.4 million. Included in total unrecognized tax benefits was $83.5 million that, if
recognized, would result in adjustments to other income tax accounts, primarily deferred taxes. The amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, was
$53.9 million.

Interest
and penalties pertaining to unrecognized tax benefits are recognized in income tax expense. The Company had accrued $9.0 million of interest expense and no penalties
related to unrecognized tax benefits as of the date of adoption. The Company does not accrue interest income on income tax refunds until they are realized.

During
the third quarter of 2007, the Company settled audits of prior year tax returns with the State of California. As a result, the total amount of unrecognized tax benefits decreased
by $9.3 million, with a net impact to income tax expense (including interest) of $7.6 million.

The
Company does not expect any material increase or decrease to unrecognized tax benefits over the next 12 months. However, we are subject to ongoing federal and state tax
examinations, as well as ongoing litigation concerning our lease-in/lease-out (LILO) transactions. Therefore, our estimate of unrecognized tax benefits is subject to change
based on new developments and information.

The
Company's years open to examination by major jurisdictions are 2003 and forward.



In July 2006, the FASB issued Staff Position (FSP) FAS 13-2, "Accounting for a Change or Projected Change in the Timing of Cash Flows Relating
to Income Taxes Generated by a Leveraged Lease Transaction." The FSP requires that if, during the lease term, the projected timing of the income tax cash flows generated by a leveraged lease is
revised, the rate of return and the allocation of income must be recalculated from the inception of the lease. At adoption, the change in the net investment balance resulting from the calculation
would be recognized as an adjustment to the beginning balance of retained earnings. Following adoption, a change in the net investment balance resulting from a recalculation would be recognized as a
gain or a loss in the period in which the assumption is changed. The FSP is effective for all leveraged leases on January 1, 2007. The Company invests in LILO transactions that have been
challenged by the Internal Revenue Service (IRS). The Company has paid the IRS the income tax associated with the LILO transactions. However, the Company is defending the initial filing position as to
the timing of the tax benefits associated with these transactions. The Company adopted FSP FAS 13-2 on January 1, 2007 and recalculated these leases to reflect the potential
change in the timing of income tax cash flows in accordance with this FSP. At adoption, the Company's beginning balance of retained earnings was reduced by $20.8 million. The reduction to
beginning retained earnings will be recognized in interest income over the remaining term of the affected leases.



In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of
FASB Statement No. 115." The Statement permits entities to choose to measure many financial instruments and certain other assets and liabilities at fair value on an
instrument-by-instrument basis, with changes in fair value recognized in earnings each reporting period. An entity can elect the fair value option for existing assets and
liabilities at the date of initial adoption and when

12

---



first
recognizing eligible instruments. The Statement is effective January 1, 2008. Management is currently evaluating the potential impact of this Statement on the Company's financial position
and results of operations.

For
additional information on recently issued accounting pronouncements and other significant accounting principles, see Note 1 to the Consolidated Financial Statements in the
Company's 2006 Form 10-K.

Note 3Discontinued Operations

During the third quarter of 2005, the Bank signed a definitive agreement to sell its international correspondent banking operations (previously reported as the
International Banking Group for segment reporting) to Wachovia Bank, N.A., effective October 6, 2005. The Company accounted for this transaction as a discontinued operation and restated its
prior period financial statements. The assets of the discontinued operations were reclassified as "held for sale" and accounted for at the lower of cost or fair value less the costs to sell.

In
the third quarter of 2007, the Bank entered into a Deferred Prosecution Agreement (DPA) with the United States Department of Justice (DOJ) concerning past violations of the Bank
Secrecy Act and other anti-money laundering laws and regulations (BSA/AML) that occurred in its now discontinued international banking business and paid $21.6 million to the DOJ.
For additional information, refer to Note 9 of these Notes to Condensed Consolidated Financial Statements.

Substantially
all assets and liabilities of the discontinued operations were liquidated as of March 31, 2007. At September 30, 2006 and December 31, 2006, the assets
and liabilities identified as discontinued operations were comprised of the following:

|(Dollars in thousands)                                               |  | September 30,
2006 |        | December 31,
2006
|-------------------------------------------------------------------- |  | ------------------ | ------ | -----------------
|Assets                                                               |  |                    |        |                  
|Cash and due from banks                                              |  | $                  | 32,456 |                  
|Loans                                                                |  |                    | 4,338  |                  
|Due from customers on acceptances                                    |  |                    | 376    |                  
|Other assets                                                         |  |                    | 359    |                  
|                                                                     |  |                    |        |                  
|Assets of discontinued operations to be disposed or sold             |  | $                  | 37,529 |                  
|                                                                     |  |                    |        |                  
|Liabilities                                                          |  |                    |        |                  
|Other liabilities                                                    |  | $                  | 3,293  |                  
|                                                                     |  |                    |        |                  
|Liabilities of discontinued operations to be extinguished or assumed |  | $                  | 3,293  |                  
|                                                                     |  |                    |        |                  

13

---



The components of loss from discontinued operations for the three and nine months ended September 30, 2006 and 2007 were:

|                                                      |  | For the Three Months Ended
September 30, |        | For the Nine Months Ended
September 30, |  
|----------------------------------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- | -
|
|
|Net interest (expense) income                         |  | $                                        | (501   | )                                       | $
|Noninterest income                                    |  |                                          | 268    |                                         |  
|Noninterest expense                                   |  |                                          | 1,828  |                                         |  
|                                                      |  |                                          |        |                                         |  
|Loss from discontinued operations before income taxes |  |                                          | (2,061 | )                                       |  
|Income tax benefit                                    |  |                                          | (857   | )                                       |  
|                                                      |  |                                          |        |                                         |  
|Loss from discontinued operations                     |  | $                                        | (1,204 | )                                       | $
|                                                      |  |                                          |        |                                         |  

For the three and nine months ended September 30, 2006, net interest income included the allocation of interest expense from continuing
operations to discontinued operations of approximately $0.5 million and $1.5 million, respectively. Interest expense allocated to discontinued operations is calculated based on its
average net assets and the corresponding cost of funds rate equivalent to the average federal funds purchased rate for the period. Noninterest income for the nine months ended September 30,
2006 included a $4.0 million payment from Wachovia Bank, N.A., reflecting the final settlement upon the conversion of the international correspondent banking customer base to Wachovia Bank,
N.A. Included in noninterest expense was compliance related expenses of $1.4 million and $8.5 million, for the three and nine months ended September 30, 2006, respectively.
Additionally, the Company recorded $1.4 million of expenses related to the termination of lease contracts in the second quarter 2006.

Noninterest
expense for the three and nine months ended September 30, 2007 included the $21.6 million paid to the DOJ and related legal and other outside services costs of
$1.7 million. The income tax benefit of $0.7 million for the three and nine months ended September 30, 2007 reflects the nondeductibility of the $21.6 million DOJ payment.

Note 4Earnings Per Share

Basic earnings per share (EPS) ratio is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS
incorporates the dilutive effect of common stock equivalents outstanding on an average basis during the period. Stock options, nonvested restricted stock, nonvested restricted stock units and
nonvested performance shares are common stock equivalents.

14

---



The
following table presents a reconciliation of basic and diluted EPS for the three and nine months ended September 30, 2006 and 2007.

|                                                    |                                                         | Three Months Ended September 30, |         | Nine Months Ended September 30, |  
|--------------------------------------------------- | ------------------------------------------------------- | -------------------------------- | ------- | ------------------------------- | -
|
|
|
|Income from continuing operations                   |                                                         | $                                | 171,910 |                                 | $
|Loss from discontinued operations                   |                                                         |                                  | (1,204  | )                               |  
|                                                    |                                                         |                                  |         |                                 |  
|Net income                                          |                                                         | $                                | 170,706 |                                 | $
|                                                    |                                                         |                                  |         |                                 |  
|Weighted average common shares outstanding          |                                                         |                                  | 140,942 |                                 |  
|Additional shares due to:                           |                                                         |                                  |         |                                 |  
|                                                    | Assumed conversion of dilutive share-based compensation |                                  |         |                                |  
|                                                    |                                                         |                                  |         |                                 |  
|Adjusted weighted average common shares outstanding |                                                         |                                  | 140,942 |                                 |  
|                                                    |                                                         |                                  |         |                                 |  
|Income from continuing operations per share         |                                                         | $                                | 1.22    |                                 | $
|Loss from discontinued operations per share         |                                                         |                                  | (0.01   | )                               |  
|                                                    |                                                         |                                  |         |                                 |  
|Net income per share                                |                                                         | $                                | 1.21    |                                 | $
|                                                    |                                                         |                                  |         |                                 |  

The following table provides the number of options and the corresponding exercise prices for those options, which were not included in the
computation of diluted earnings per share for the three and nine months ended September 30, 2006 and 2007 because they were anti-dilutive.

|                          |  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
|------------------------- |  | ---------------------------------------- |  | ---------------------------------------
|
|Options outstanding       |  | 1,230,865                                |  | 2,922,892                              
|Exercise price of options |  | $61.56 - $71.23                          |  | $59.74 - $71.23                        

15

---





Note 5Accumulated Other Comprehensive Loss

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

|(Dollars in thousands)                                                             |                                                                                                   | Before
Tax
Amount                   |          | Tax
Effect |        | Net of
Tax |        
|---------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ----------------------------------- | -------- | ---------- | ------ | ---------- | -------
|For the Nine Months Ended September 30, 2006:                                      |                                                                                                   |                                     |          |            |        |            |        
|Cash flow hedge activities:                                                        |                                                                                                   |                                     |          |            |        |            |        
|                                                                                   | Unrealized net losses on hedges arising during the period                                         |                                     | $        | (22,926    | )      | $          | 8,769  
|                                                                                   | Reclassification adjustment for net losses on hedges included in net income                       |                                     |          | 31,501     |        |            | (12,049
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Net change in unrealized losses on hedges                                          |                                                                                                   |                                     | 8,575    |            |        | (3,280     | )      
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Securities available for sale:                                                     |                                                                                                   |                                     |          |            |        |            |        
|                                                                                   | Unrealized holding gains arising during the period on securities available for sale               |                                     |          | 16,112     |        |            | (6,163 
|                                                                                   | Reclassification adjustment for net gains on securities available for sale included in net income |                                     |          | (1,822     | )      |            | 697    
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Net change in unrealized losses on securities available for sale                   |                                                                                                   |                                     | 14,290   |            |        | (5,466     | )      
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Foreign currency translation adjustment                                            |                                                                                                   |                                     | 101      |            |        | (39        | )      
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Net change in accumulated other comprehensive loss                                 |                                                                                                   | $                                   | 22,966   |            | $      | (8,785     | )      
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|For the Nine Months Ended September 30, 2007:                                      |                                                                                                   |                                     |          |            |        |            |        
|Cash flow hedge activities:                                                        |                                                                                                   |                                     |          |            |        |            |        
|                                                                                   | Unrealized net gains on hedges arising during the period                                          |                                     | $        | 13,940     |        | $          | (5,332 
|                                                                                   | Reclassification adjustment for net losses on hedges included in net income                       |                                     |          | 25,395     |        |            | (9,714 
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Net change in unrealized losses on hedges                                          |                                                                                                   |                                     | 39,335   |            |        | (15,046    | )      
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Securities available for sale:                                                     |                                                                                                   |                                     |          |            |        |            |        
|                                                                                   | Unrealized holding losses arising during the period on securities available for sale              |                                     |          | (119,521   | )      |            | 45,717 
|                                                                                   | Reclassification adjustment for net gains on securities available for sale included in net income |                                     |          | (1,621     | )      |            | 620    
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Net change in unrealized losses on securities available for sale                   |                                                                                                   |                                     | (121,142 | )          |        | 46,337     |        
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Foreign currency translation adjustment                                            |                                                                                                   |                                     | 975      |            |        | (373       | )      
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Reclassification adjustment for pension and other benefits included in net income: |                                                                                                   |                                     |          |            |        |            |        
|                                                                                   |                                                                                                   | Amortization of prior service costs |          |            | 120    |            |        
|                                                                                   |                                                                                                   | Amortization of transition amount   |          |            | 1,526  |            |        
|                                                                                   |                                                                                                   | Recognized net actuarial loss       |          |            | 14,837 |            |        
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Net change in pension and other benefits                                           |                                                                                                   |                                     | 16,483   |            |        | (6,304     | )      
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        
|Net change in accumulated other comprehensive loss                                 |                                                                                                   | $                                   | (64,349  | )          | $      | 24,614     |        
|                                                                                   |                                                                                                   |                                     |          |            |        |            |        

16

---



The following table presents accumulated other comprehensive loss balances.

|(Dollars in thousands)      |  | Net Unrealized Losses on Cash Flow Hedges |         | Net Unrealized Losses on Securities Available For Sale |   | Foreign Currency Translation Adjustment |   | Pension and Other Benefits Adjustment(1) |     | Accumulated Other Comprehensive Loss |  
|--------------------------- |  | ----------------------------------------- | ------- | ------------------------------------------------------ | - | --------------------------------------- | - | ---------------------------------------- | --- | ------------------------------------ | -
|Balance, December 31, 2005  |  | $                                         | (34,308 | )                                                      | $ | (74,099                                 | ) | $                                        | 264 |                                      | $
|Change during the period    |  |                                           | 5,295   |                                                        |   | 8,824                                   |   |                                          | 62  |                                      |  
|                            |  |                                           |         |                                                        |   |                                         |   |                                          |     |                                      |  
|Balance, September 30, 2006 |  | $                                         | (29,013 | )                                                      | $ | (65,275                                 | ) | $                                        | 326 |                                      | $
|                            |  |                                           |         |                                                        |   |                                         |   |                                          |     |                                      |  
|Balance, December 31, 2006  |  | $                                         | (27,405 | )                                                      | $ | (57,878                                 | ) | $                                        | 223 |                                      | $
|Change during the period    |  |                                           | 24,289  |                                                        |   | (74,805                                 | ) |                                          | 602 |                                      |  
|                            |  |                                           |         |                                                        |   |                                         |   |                                          |     |                                      |  
|Balance, September 30, 2007 |  | $                                         | (3,116  | )                                                      | $ | (132,683                                | ) | $                                        | 825 |                                      | $
|                            |  |                                           |         |                                                        |   |                                         |   |                                          |     |                                      |  

---

Note 6Goodwill and Intangible Assets

The table below reflects the Company's identifiable intangible assets and accumulated amortization at September 30, 2006 and 2007.

|                         |       | September 30, 2006 |        | September 30, 2007
|------------------------ | ----- | ------------------ | ------ | ------------------
|
|Core Deposit Intangibles |       | $                  | 67,237 |                   
|Rights-to-Expiration     |       |                    | 36,608 |                   
|Other                    |       |                    | 2,100  |                   
|                         |       |                    |        |                   
|                         | Total |                    | $      | 105,945           
|                         |       |                    |        |                   

Total amortization expense for the three months ended September 30, 2006 and 2007 was $3.4 million and $2.2 million,
respectively. For the nine months ended September 30, 2006 and 2007, the expense was $10.3 million and $6.7 million, respectively.

|(Dollars in thousands)                               |                | Core Deposit Intangibles |       | Rights-to-Expiration |   | Other  |       | Total Identifiable Intangibles
|---------------------------------------------------- | -------------- | ------------------------ | ----- | -------------------- | - | ------ | ----- | ------------------------------
|Estimated amortization expense for the years ending: |                |                          |       |                      |   |        |       |                               
|                                                     | Remaining 2007 |                          | $     | 1,368                |   | $      | 777   |                               
|                                                     | 2008           |                          |       | 3,245                |   |        | 2,687 |                               
|                                                     | 2009           |                          |       | 1,764                |   |        | 2,254 |                               
|                                                     | 2010           |                          |       | 807                  |   |        | 1,870 |                               
|                                                     | 2011           |                          |       | 443                  |   |        | 1,531 |                               
|                                                     | 2012           |                          |       | 336                  |   |        | 1,229 |                               
|                                                     | thereafter     |                          |       | 626                  |   |        | 2,539 |                               
|                                                     |                |                          |       |                      |   |        |       |                               
|Total amortization expense after September 30, 2007  |                | $                        | 8,589 |                      | $ | 12,887 |       | $                             
|                                                     |                |                          |       |                      |   |        |       |                               

17

---



The changes in the carrying amount of goodwill during the nine months ended September 30, 2006 and 2007 are shown below.

|(Dollars in thousands)                  |  | 2006 |         | 2007
|--------------------------------------- |  | ---- | ------- | ----
|Balance, January 1,                     |  | $    | 454,015 |     
|Adjustment for contingent consideration |  |      | (526    | )   
|                                        |  |      |         |     
|Balance, September 30,                  |  | $    | 453,489 |     
|                                        |  |      |         |     

Note 7Business Segments

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



The
information, set forth in the tables that follow, reflects selected income statement and balance sheet items by reportable business segment. The information presented does not
necessarily represent the business units' financial condition and results of operations were they independent entities. Unlike financial accounting, there is no authoritative body of guidance for
management accounting equivalent to US GAAP. Consequently, reported results are not necessarily comparable with those presented by other companies. Included in the tables, within total assets, are the
amounts of goodwill for each reportable business segment as of September 30, 2006 and 2007.

The
information in the tables is derived from the internal management reporting system used by management to measure the performance of the individual segments and the Company overall.
The management reporting system assigns balance sheet and income statement items to each operating segment based on internal management accounting policies. Net interest income is determined by the
Company's internal funds transfer pricing system, which assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics. Noninterest
income and expense directly attributable to an operating segment are assigned to that operating segment. Certain indirect costs, such as operations and

18

---



technology
expense, are allocated to the segments based on studies of billable unit costs for product or data processing. Other indirect costs, such as corporate overhead, are allocated to the
operating segment based on a predetermined percentage of usage. Under the Company's risk-adjusted return on capital (RAROC) methodology, credit expense is charged to an operating segment
based upon expected losses arising from credit risk. In addition, the attribution of economic capital is related to unexpected losses arising from credit, market and operational risks.

"Other"
is comprised of certain non-bank subsidiaries of UnionBanCal Corporation, the elimination of the fully taxable-equivalent basis amount, the transfer pricing center,
the amount of the provision for credit losses over/(under) the RAROC expected loss for the period, the earnings associated with the unallocated equity capital and allowances for credit losses and the
residual costs of support groups. In addition, "Other" includes Corporate Treasury, which is responsible for Asset Liability Management (ALM), wholesale funding, and the ALM investment securities and
derivatives hedging portfolios, and the results of discontinued operations. Except as discussed above, none of the items in "Other" is significant to the Company's business.

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

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

19

---



|                                                          |                                                                | Retail Banking |   | Wholesale Banking
|--------------------------------------------------------- | -------------------------------------------------------------- | -------------- | - | -----------------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                                |                |   |                  
|                                                          | Net interest income (expense)                                  |                | $ | 240,741          
|                                                          | Noninterest income (expense)                                   |                |   | 127,266          
|                                                          |                                                                |                |   |                  
|                                                          | Total revenue                                                  |                |   | 368,007          
|                                                          | Noninterest expense (income)                                   |                |   | 241,264          
|                                                          | Credit expense (income)                                        |                |   | 6,249            
|                                                          |                                                                |                |   |                  
|                                                          | Income (loss) from continuing operations before income taxes   |                |   | 120,494          
|                                                          | Income tax expense (benefit)                                   |                |   | 46,089           
|                                                          |                                                                |                |   |                  
|                                                          | Income (loss) from continuing operations                       |                |   | 74,405           
|                                                          | Loss from discontinued operations, net of income taxes         |                |   |                 
|                                                          |                                                                |                |   |                  
|                                                          | Net income (loss)                                              |                | $ | 74,405           
|                                                          |                                                                |                |   |                  
|                                                          | Total assets, end of periodMarket View (dollars in millions): |                | $ | 17,059           
|                                                          |                                                                |                |   |                  

|                                                          |                                                                | Other |   | Reconciling Items |   | UnionBanCal
Corporation |        
|--------------------------------------------------------- | -------------------------------------------------------------- | ----- | - | ----------------- | - | ----------------------- | -------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                                |       |   |                   |   |                         |        
|                                                          | Net interest income (expense)                                  |       | $ | (45,497           | ) | $                       | (35,780
|                                                          | Noninterest income (expense)                                   |       |   | 459               |   |                         | 7,074  
|                                                          |                                                                |       |   |                   |   |                         |        
|                                                          | Total revenue                                                  |       |   | (45,038           | ) |                         | (28,706
|                                                          | Noninterest expense (income)                                   |       |   | 15,534            |   |                         | 25,242 
|                                                          | Credit expense (income)                                        |       |   | (29,421           | ) |                         | (18,569
|                                                          |                                                                |       |   |                   |   |                         |        
|                                                          | Income (loss) from continuing operations before income taxes   |       |   | (31,151           | ) |                         | (35,379
|                                                          | Income tax expense (benefit)                                   |       |   | (15,342           | ) |                         | (3,797 
|                                                          |                                                                |       |   |                   |   |                         |        
|                                                          | Income (loss) from continuing operations                       |       |   | (15,809           | ) |                         | (31,582
|                                                          | Loss from discontinued operations, net of income taxes         |       |   | (1,204            | ) |                         | (22,636
|                                                          |                                                                |       |   |                   |   |                         |        
|                                                          | Net income (loss)                                              |       | $ | (17,013           | ) | $                       | (54,218
|                                                          |                                                                |       |   |                   |   |                         |        
|                                                          | Total assets, end of periodMarket View (dollars in millions): |       | $ | 10,588            |   | $                       | 8,500  
|                                                          |                                                                |       |   |                   |   |                         |        

20

---



|                                                          |                                                                | Retail Banking |   | Wholesale Banking
|--------------------------------------------------------- | -------------------------------------------------------------- | -------------- | - | -----------------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                                |                |   |                  
|                                                          | Net interest income (expense)                                  |                | $ | 708,539          
|                                                          | Noninterest income (expense)                                   |                |   | 393,239          
|                                                          |                                                                |                |   |                  
|                                                          | Total revenue                                                  |                |   | 1,101,778        
|                                                          | Noninterest expense (income)                                   |                |   | 723,247          
|                                                          | Credit expense (income)                                        |                |   | 19,221           
|                                                          |                                                                |                |   |                  
|                                                          | Income (loss) from continuing operations before income taxes   |                |   | 359,310          
|                                                          | Income tax expense (benefit)                                   |                |   | 137,436          
|                                                          |                                                                |                |   |                  
|                                                          | Income (loss) from continuing operations                       |                |   | 221,874          
|                                                          | Loss from discontinued operations, net of income taxes         |                |   |                 
|                                                          |                                                                |                |   |                  
|                                                          | Net income (loss)                                              |                | $ | 221,874          
|                                                          |                                                                |                |   |                  
|                                                          | Total assets, end of periodMarket View (dollars in millions): |                | $ | 17,059           
|                                                          |                                                                |                |   |                  

|                                                          |                                                                | Other |   | Reconciling Items |   | UnionBanCal Corporation |         
|--------------------------------------------------------- | -------------------------------------------------------------- | ----- | - | ----------------- | - | ----------------------- | --------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                                |       |   |                   |   |                         |         
|                                                          | Net interest income (expense)                                  |       | $ | (91,039           | ) | $                       | (114,389
|                                                          | Noninterest income (expense)                                   |       |   | 5,929             |   |                         | 14,812  
|                                                          |                                                                |       |   |                   |   |                         |         
|                                                          | Total revenue                                                  |       |   | (85,110           | ) |                         | (99,577 
|                                                          | Noninterest expense (income)                                   |       |   | 51,836            |   |                         | 71,087  
|                                                          | Credit expense (income)                                        |       |   | (98,701           | ) |                         | (73,982 
|                                                          |                                                                |       |   |                   |   |                         |         
|                                                          | Income (loss) from continuing operations before income taxes   |       |   | (38,245           | ) |                         | (96,682 
|                                                          | Income tax expense (benefit)                                   |       |   | (27,784           | ) |                         | (29,296 
|                                                          |                                                                |       |   |                   |   |                         |         
|                                                          | Income (loss) from continuing operations                       |       |   | (10,461           | ) |                         | (67,386 
|                                                          | Loss from discontinued operations, net of income taxes         |       |   | (9,440            | ) |                         | (22,636 
|                                                          |                                                                |       |   |                   |   |                         |         
|                                                          | Net income (loss)                                              |       | $ | (19,901           | ) | $                       | (90,022 
|                                                          |                                                                |       |   |                   |   |                         |         
|                                                          | Total assets, end of periodMarket View (dollars in millions): |       | $ | 10,588            |   | $                       | 8,500   
|                                                          |                                                                |       |   |                   |   |                         |         

21

---





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

Derivative positions are integral components of the Company's designated ALM activities. The Company uses interest rate derivatives to manage the sensitivity of
the Company's net interest income to changes in interest rates. These instruments are used to manage interest rate risk relating to specified groups of assets and liabilities, primarily London
Interbank Offered Rate (LIBOR) indexed commercial loans, certificates of deposit and other time deposits (CDs) and subordinated debt. The following describes the significant hedging strategies of the
Company.



The Company engages in several types of cash flow hedging strategies for which the hedged transactions are forecasted future loan interest payments, and the
hedged risk is the variability in those payments due to changes in the designated benchmark rate, i.e. U.S. dollar LIBOR. In these strategies, the hedging instruments are matched with groups of
variable rate loans such that the tenor of the variable rate loans and that of the hedging instrument are identical. Cash flow hedging strategies include the utilization of purchased floor, cap and
corridor options and interest rate swaps. At September 30, 2007, the weighted average remaining life of the currently active (excluding any forward positions) cash flow hedges was approximately
1.7 years.

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

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

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

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

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

The
Company uses interest rate cap corridors to hedge the variable cash flows associated with the forecasted issuance and rollover of short-term, fixed rate CDs. In these
hedging relationships, the Company

22

---



hedges
the LIBOR component of the CD rates, either 1-month LIBOR, 3-month LIBOR, or 6-month LIBOR, based on the original term to maturity of the CDs, which reflects
their repricing frequency. Net payments to be received under the cap corridor contract offset the increase in deposit interest expense caused by the relevant LIBOR index rising above the corridor's
lower strike rate, but only to the extent the index rises to the upper strike rate. The corridor will not provide protection from increases in the relevant LIBOR index to the extent it rises above the
corridor's upper strike rate.

Hedging
transactions are structured at inception so that the notional amounts of the hedge are matched with an equal principal amount of loans or CDs, the index and repricing frequencies
of the hedge matches those of the loans or CDs and the period in which the designated hedged cash flows occurs is equal to the term of the hedge. As such, most of the ineffectiveness in the hedging
relationship results from the mismatch between the timing of reset dates on the hedge versus those of the loans or CDs. In the third quarter of 2007, the Company recognized a net gain of
$16 thousand due to ineffectiveness, which is recognized in other noninterest expense, compared to a net gain of $0.2 million in the third quarter of 2006.



In December 2006, the Company's medium-term debt matured. Prior to maturity, the Company engaged in an interest rate hedging strategy in which
an interest rate swap is associated with a specified interest bearing liability, UnionBanCal Corporation's five-year, medium-term debt issuance, in order to convert the
liability from a fixed rate to a floating rate instrument. This strategy mitigated the changes in fair value of the hedged liability caused by changes in the designated benchmark interest rate, U.S.
dollar LIBOR.

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



The Company engages in an interest rate hedging strategy in which an interest rate swap is associated with a specified interest bearing liability, UnionBanCal
Corporation's ten-year, subordinated debt issuance, and in a separate transaction, Union Bank of California, N.A.'s ten-year, subordinated debt issuance, in order to convert
these liabilities from fixed rate to floating rate instruments. This strategy mitigates the changes in fair value of the hedged liability caused by changes in the designated benchmark interest rate,
U.S. dollar LIBOR.

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



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

23

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Note 9Commitments, Contingencies and Guarantees

Commitments to extend credit are legally binding agreements to lend to a customer provided there are no violations of any condition established in the contract.
Commitments have fixed expiration dates or other termination clauses and may require maintenance of compensatory balances. Since many of the commitments to extend credit may expire without being
drawn, the total commitment amounts do not
necessarily represent future cash-flow requirements. At September 30, 2007, the Company had total commitments to extend credit under legally binding agreements of
$23.5 billion. Exposure to loss related to these commitments is covered by the allowance for losses on off-balance sheet commitments.

Standby
and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are
contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate
foreign or domestic trade transactions. Additionally, the Company enters into risk participations in bankers' acceptances wherein a fee is received to guarantee a portion of the credit risk on an
acceptance of another bank. The majority of these types of commitments have terms of one year or less. As of September 30, 2007, the Company's maximum exposure to loss for risk participations
in bankers' acceptances, standby and commercial letters of credit was $30.3 million, $3.6 billion and $71.1 million, respectively. At September 30, 2007, the carrying value
of the Company's risk participations in bankers' acceptances, standby and commercial letters of credit totaled $6.3 million. Exposure to loss related to these commitments is covered by the
allowance for losses on off-balance sheet commitments. The carrying value of the risk participation on bankers' acceptances, standby and commercial letters of credit and the allowance for
losses on off-balance sheet commitments are included in other liabilities on the condensed consolidated balance sheet.

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

Principal
investments include direct investments in private and public companies and indirect investments in private equity funds. The Company issues commitments to provide equity and
mezzanine capital financing to private and public companies through either direct investments in specific companies or through investment funds. The timing of future cash requirements to fund such
commitments is generally dependent on the investment cycle. This cycle, the period over which privately-held companies are funded by private equity investors and ultimately sold, merged,
or taken public through an initial offering, can vary based on overall market conditions as well as the nature and type of industry in which the companies operate. At September 30, 2007, the
Company had commitments to fund principal investments of $111.2 million.

The
Company is fund manager for limited liability companies issuing low-income housing credit (LIHC) investments. LIHC investments provide tax benefits to investors in the
form of tax deductions from operating losses and tax credits. To facilitate the sale of these LIHC investments, the Company guarantees the timely completion of projects and delivery of tax benefits
throughout the investment term. Guarantees may include a minimum rate of return, the availability of tax credits and operating deficit thresholds over an eleven-year weighted average
period. Additionally, the Company receives project completion and tax credit guarantees from the limited liability companies issuing the LIHC investments that reduce the Company's ultimate exposure to
loss. As of September 30, 2007, the Company's maximum exposure to loss under these

24

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guarantees
is limited to a return of investor capital and minimum investment yield, or $139.7 million. The Company maintains a reserve of $5.8 million for these guarantees.

The
Company has guarantees that obligate it to perform if its affiliates are unable to discharge their obligations. These obligations include guarantees of commercial paper obligations
and leveraged lease transactions. The guarantee issued by the Bank for an affiliate's commercial paper program is done in order to facilitate the sale of the commercial paper. As of
September 30, 2007, the Bank had a maximum exposure to loss under the commercial paper program guarantee of $1.7 billion. The Bank's guarantee has an average term of less than nine
months and is fully collateralized by a pledged deposit. The Company guarantees its subsidiaries' leveraged lease transactions with terms ranging from fifteen to thirty years. Following the original
funding of these leveraged lease transactions, the Company has no material obligation to be satisfied. As of September 30, 2007, the Company had no exposure to loss for these agreements.

The
Company conducts securities lending transactions for institutional customers as a fully disclosed agent. At times, securities lending indemnifications are issued to guarantee that a
security lending customer will be made whole in the event the borrower does not return the security subject to the lending agreement and collateral held is insufficient to cover the market value of
the security. All lending transactions are collateralized, primarily by cash. The amount of securities lent with indemnifications was $2.6 billion at September 30, 2007. The market value
of the associated collateral was $2.7 billion at September 30, 2007.

The
Company occasionally enters into financial guarantee contracts where a premium is received from another financial institution counterparty to guarantee a portion of the credit risk
on interest rate swap contracts entered into between the financial institution and its customer. The Company becomes liable to pay the financial institution only if the financial institution is unable
to collect amounts owed to them by their customer. As of September 30, 2007, the maximum exposure to loss under these contracts totaled $8.1 million. At September 30, 2007, the
Company maintained a reserve of $0.3 million for losses related to these guarantees.

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

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

25

---



For
further discussion of the Company's commitments, contingencies and guarantees, see Note 24 to the Consolidated Financial Statements in the Company's 2006
Form 10-K.

Note 10Employee Pension and Other Postretirement Benefits

The following tables summarize the components of net periodic benefit cost for the three and nine months ended September 30, 2006 and 2007.

|                                        |                                 | Pension Benefits |         | Other Benefits |  
|--------------------------------------- | ------------------------------- | ---------------- | ------- | -------------- | -
|
|
|
|Components of net periodic benefit cost |                                 |                  |         |                |  
|Service cost                            |                                 | $                | 13,501  |                | $
|Interest cost                           |                                 |                  | 16,287  |                |  
|Expected return on plan assets          |                                 |                  | (28,359 | )              |  
|Amortization of prior service cost      |                                 |                  | 266     |                |  
|Amortization of transition amount       |                                 |                  |        |                |  
|Recognized net actuarial loss           |                                 |                  | 8,090   |                |  
|                                        |                                 |                  |         |                |  
|                                        | Total net periodic benefit cost |                  | $       | 9,785          |  
|                                        |                                 |                  |         |                |  

|                                        |                                 | Pension Benefits |         | Other Benefits |  
|--------------------------------------- | ------------------------------- | ---------------- | ------- | -------------- | -
|
|
|
|Components of net periodic benefit cost |                                 |                  |         |                |  
|Service cost                            |                                 | $                | 40,505  |                | $
|Interest cost                           |                                 |                  | 48,860  |                |  
|Expected return on plan assets          |                                 |                  | (85,079 | )              |  
|Amortization of prior service cost      |                                 |                  | 800     |                |  
|Amortization of transition amount       |                                 |                  |        |                |  
|Recognized net actuarial loss           |                                 |                  | 24,271  |                |  
|                                        |                                 |                  |         |                |  
|                                        | Total net periodic benefit cost |                  | $       | 29,357         |  
|                                        |                                 |                  |         |                |  

For further discussion of the Company's employee pension and other postretirement benefits, see Note 9 to the Consolidated Financial
Statements in the Company's 2006 Form 10-K.

Note 11Medium and Long-Term Debt

On March 23, 2007, the Bank issued $750 million of Floating Rate Senior Bank Notes due on March 23, 2009. The Senior Notes were issued at
100 percent of their face value, and bear a floating interest rate of 3-month LIBOR plus 2 basis points. Interest is payable and reset quarterly on the 23rd of
March, June, September and December of each year, with the first interest payment and interest reset date on June 23,

26

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2007.
The Senior Notes are not redeemable at the option of the Bank prior to maturity or subject to repayment at the option of the holders prior to maturity.

On
June 25, 2007, the Company retired $200 million of floating rate subordinated debt, payable to BTMU. This note had an interest rate of 0.325% above the
3-month LIBOR. The debt was retired at par plus accrued interest.

Note 12Management Stock Plans

The Company has two management stock plans, the Year 2000 UnionBanCal Corporation Management Stock Plan, as amended (the 2000 Stock Plan), and the UnionBanCal
Corporation Management Stock Plan, restated effective September 1, 1997 (the 1997 Stock Plan). Under these plans, the Company's common stock is authorized to be awarded to key employees,
outside directors and consultants of the Company at the discretion of the Executive Compensation & Benefits Committee of the Board of Directors (the Committee). Employees on rotational
assignment from BTMU are not eligible for stock awards. For further discussion of the Company's stock plans, see Note 16 to the Consolidated Financial Statements in the Company's 2006
Form 10-K.

The
Committee determines the term of each stock option grant, up to a maximum of ten years from the date of grant. The exercise price of the options issued under the stock plans may not
be less than the fair market value on the date the option is granted.

Under
the 2000 Stock Plan, the Company grants stock options and restricted stock and issues shares of common stock upon vesting of performance shares and restricted stock units that are
settled in common stock. The Company issues new shares of common stock upon exercise of outstanding stock options, granting of restricted stock awards and settlement of other awards under the stock
plans. At September 30, 2007, a total of 3,118,398 shares were available for future grants under the 2000 Stock Plan as stock options, restricted stock or shares of common stock issued
upon vesting of performance shares and restricted stock units settled in common stock. The remaining shares under the 1997 Stock Plan are not available for future grants.

27

---





The following is a summary of stock option transactions under the stock plans for the nine months ended September 30, 2007.

|                                                |           | For the Nine Months Ended September 30, 2007
|----------------------------------------------- | --------- | --------------------------------------------
|
|
|Options outstanding, beginning of the period(1) |           | 8,326,241                                   
|                                                | Granted   |                                             
|                                                | Exercised |                                             
|                                                | Forfeited |                                             
|                                                |           |                                             
|Options outstanding, end of the period(1)       |           | 8,221,482                                   
|                                                |           |                                             
|Options exercisable, end of the period          |           | 6,530,898                                   
|                                                |           |                                             

---

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model using the assumptions noted in
the following table. The Black-Scholes option pricing model is applied to option tranches based on expected terms that result in ranges of input assumptions, such ranges are disclosed below. Expected
volatilities are based on historical data and implied volatilities from traded options on the Company's stock and other factors. The Company uses historical data to estimate option exercise and
employee terminations within the valuation model. The expected term of an option granted is derived from the output of the option valuation model, which is based on historical data and represents the
period of time that the option granted is expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in
effect at the time of grant based on the expected term.

|                                      |  | For the Nine Months Ended
September 30, 2007 |            
|------------------------------------- |  | -------------------------------------------- | -----------
|Weighted-average fair valueper share |  | $                                            | 8.79       
|Risk-free interest rate               |  |                                              | 4.6        
|Expected volatility                   |  |                                              | 16.9 - 17.8
|Weighted-average expected volatility  |  |                                              | 17.4       
|Expected term (in years)              |  |                                              | 3.8 - 4.4  
|Expected dividend yield               |  |                                              | 3.5        

The weighted-average fair value of options granted during the nine months ended September 30, 2006 and 2007 was $12.31 and $8.79 per share,
respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2006 and 2007 was $33.7 million and $15.7 million, respectively. The total
fair value of options vested during the nine months ended September 30, 2006 and 2007 was $27.8 million and $20.2 million, respectively.

28

---



The
Company recognized $10.4 million of compensation cost for share-based payment arrangements related to stock option awards with $4.0 million of corresponding tax benefit
for the nine months ended September 30, 2007. As of September 30, 2007, the total unrecognized compensation cost related to nonvested stock option awards was $11.4 million and the
weighted-average period over which it is expected to be recognized was one year.



In general, restricted stock awards are granted under the 2000 Stock Plan to key employees. The awards of restricted stock granted to employees vest
pro-rata on each anniversary of the grant
date and become fully vested four years from the grant date, provided that the employee has completed the specified continuous service requirement. They vest earlier if the employee dies, is
permanently and totally disabled, retires under certain grant, age and service conditions or terminates employment under certain conditions. Restricted stockholders have the right to vote their
restricted shares and receive dividends.

The
following is a summary of the Company's nonvested restricted stock awards as of September 30, 2007 and changes during the period ended September 30, 2007.

|                                                     |           | For the Nine Months Ended
September 30, 2007
|---------------------------------------------------- | --------- | --------------------------------------------
|
|Nonvested restricted awards, beginning of the period |           | 840,003                                     
|                                                     | Granted   |                                             
|                                                     | Vested    |                                             
|                                                     | Forfeited |                                             
|                                                     |           |                                             
|Nonvested restricted awards, end of the period       |           | 753,485                                     
|                                                     |           |                                             

The total fair value of the restricted stock awards that vested during the nine months ended September 30, 2006 and 2007 was
$4.2 million and $7.0 million, respectively.

The
Company recognized $10.7 million of compensation cost for share-based payment arrangements related to restricted stock awards with $4.2 million of corresponding tax
benefit for the nine months ended September 30, 2007. As of September 30, 2007, the total unrecognized compensation cost related to nonvested restricted awards was $31.1 million
and the weighted-average period over which it is expected to be recognized was 1.5 years.



Starting in July 2006, the Company granted restricted stock units to non-employee directors. These restricted stock units consist of an annual
grant, and in the case of new non-employee directors, an annual grant and an initial grant. In general, the annual grant vests in full on the first anniversary of the grant date, and the
initial grant vests in three equal installments on each of the first three anniversaries of the grant date. During the nine months ended September 30, 2007, the Company granted 13,671
restricted stock units with a weighted-average grant date fair value of $59.24 per unit. There were no restricted stock units forfeited during the nine months ended September 30, 2007. The
total fair value of the restricted stock units that vested during the nine months ended September 30, 2007 was $0.7 million. For the nine months ended September 30, 2007, the
Company recognized $0.6 million of compensation cost with a corresponding

29

---



$0.3 million
in tax benefits related to these grants. As of September 30, 2007, the total unrecognized compensation cost related to restricted stock units was $0.7 million and the
weighted-average period over which it is expected to be recognized was 9 months.

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



Effective January 1, 1997, the Company established a Performance Share Plan. At the discretion of the Committee, eligible participants may earn performance
share awards to be redeemed in cash and/or shares three years after the date of grant. Performance shares are linked to stockholder value in two ways: (1) the market price of the Company's
common stock; and (2) return on equity, a performance measure closely linked to value creation. Eligible participants generally receive grants of performance shares annually. The plan was
amended in 2004, increasing the total number of shares that can be granted under the plan to 2.6 million shares. There were 2,065,156 performance shares remaining for future awards as of
September 30, 2007.

All
performance shares granted prior to 2006 are redeemable in cash and are therefore being accounted for as liabilities. The value of a performance share under the liability method is
equal to the average month-end closing price of the Company's common stock for the final six months of the performance period. All cancelled or forfeited performance shares become
available for future grants. The total fair value of the performance shares that vested during the nine months ended September 30, 2006 and 2007 was $4.7 million and $7.4 million,
respectively. These amounts were paid in cash during the respective quarters, except for $0.3 million, which was deferred during the nine months ended September 30, 2006. There were no
performance shares forfeited during the nine months ended September 30, 2007. At September 30, 2006 and 2007, the Company's liability for the cash settlement of the performance shares
was $12.5 million and $5.1 million, respectively. The Company recognized $0.8 million of compensation cost related to these grants with $0.3 million of corresponding tax
benefit for the nine months ended September 30, 2007. As of September 30, 2007, the total unrecognized compensation cost related to these grants that are redeemable in cash was
$0.3 million and the weighted-average period over which it is expected to be recognized was 3 months.

During
the nine months ended September 30, 2007, the Company granted 68,677 performance shares that are redeemable in shares, with a weighted-average grant date fair value of
$63.42 per unit. There were 1,500 performance shares that are redeemable in shares forfeited during the nine months ended September 30, 2007. The total fair value of these performance shares
which vested was $0.3 million during the nine months ended September 30, 2007. For the nine months ended September 30, 2007, the Company recognized $2.7 million of
compensation cost with a corresponding $1.1 million in tax benefits related to these grants. As of September 30, 2007, the total unrecognized compensation cost related to grants that are
redeemable in shares was $4.2 million and the weighted-average period over which it is expected to be recognized was one year. The Company issues new shares under the 2000 Stock Plan upon
vesting of these grants that are redeemable in shares.

Note 13Subsequent Events

On October 24, 2007, the Company's Board of Directors declared a quarterly cash dividend of $0.52 per share of common stock. The dividend will be paid on
January 4, 2008 to stockholders of record as of December 7, 2007.

30

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

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

You
should read the following discussion and analysis of our condensed consolidated financial condition and results of operations for the period ended September 30, 2007 in this
Form 10-Q together with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for
the year ended December 31, 2006 (2006 Form 10-K). Averages, as presented in the following tables, are substantially all based upon daily average balances.

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

Introduction

We are a California-based, bank holding company whose major subsidiary, Union Bank of California, N.A. (the Bank), is a commercial bank. We had consolidated
assets of $54 billion at September 30, 2007. At September 30, 2007, The Bank of Tokyo-Mitsubishi UFJ, Ltd., our majority owner, owned approximately 65 percent of our
outstanding common stock.

Executive Overview

We are providing you with an overview of what we believe are the most significant factors and developments that impacted our third quarter 2007 results and that
could impact our future results. Further detailed information can be found elsewhere in this Form 10-Q. In addition, we ask that you carefully read any other reports that we refer
to in this Form 10-Q that will assist your understanding of trends, events and uncertainties that could impact us.

Average
loans grew 10 percent over the third quarter of 2006, primarily from the growth in commercial, residential mortgage and commercial mortgage lending. Our residential
mortgage portfolio grew 10 percent over the third quarter of 2006, primarily from the increased demand experienced in the third quarter of 2007.

Our
overall credit quality continues to be strong. Our nonperforming assets were $53 million, up 10 percent compared to third quarter 2006. Our net charge offs were
$2 million in the third quarter of 2007 compared to $1 million in the third quarter of 2006. We provided $20 million for credit losses in the third quarter of 2007, compared to no
provision in the third quarter of 2006. As our credit portfolio continues to grow and as we believe that we have passed the turning point in credit quality trends, we anticipate that we will continue
to provide for credit losses during the remainder of 2007.

Offsetting
our strong loan growth and continued good credit quality was the decline in our noninterest bearing deposits. Compared to the third quarter 2006, average noninterest bearing
deposits declined by $3.2 billion as a result of our customers shifting their balances to interest bearing deposits or other investment alternatives, as well as a decline in our title and
escrow deposit balances. In addition, the average cost of interest bearing deposits rose from 3.07 percent to 3.64 percent from the third quarter 2006 to the third quarter 2007. However,
we believe that pricing has stabilized as indicated by the more modest sequential quarter increase in our average cost of interest bearing deposits of 7 basis points from 3.57 percent in the
second quarter 2007. Although our noninterest bearing deposits have declined, we continue to enjoy a relatively high proportion of average noninterest bearing deposits to total deposits compared to
our peers.

31

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Based
on the most recent statistics available, our percentage of average noninterest bearing deposits to average total deposits ranked us third among the 50 largest U.S. banks.

In
the third quarter of 2007, our net interest income was $426 million, a decline of $32 million from the third quarter of 2006, continuing the trend experienced during
2006 and 2007 as our higher funding costs resulting from a decline in noninterest bearing deposits outstripped interest income earned on our loan growth.

Noninterest
income grew 8.5 percent in the third quarter of 2007 over the third quarter of 2006 as gains on trading account activities, gains on private capital investments and
higher trust and investment management fees offset reductions in our service charges on deposits.

Noninterest
expense declined slightly in the third quarter of 2007 compared to the third quarter of 2006 primarily due to the decreased cost for outside services stemming from lower cost
of services related to title and escrow deposit balances, and a 3.3 percent decline in salary and employee benefits expense, mainly due to lower workers compensation expense and employee
pension expense.

In
the third quarter of 2007, we made a $10 million payment for the civil money penalty, previously accrued in the second quarter of 2007 as part of the order entered into with
the Office of the Comptroller of the Currency (OCC) and the assessment by the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department related to compliance with Bank Secrecy Act
and other anti-money laundering laws and regulations (BSA/AML). In addition, we entered into a Deferred Prosecution Agreement with the Department of Justice (DOJ) relating to past
violations of BSA/AML that occurred in the Bank's now discontinued international banking business. As part of this agreement, we paid $21.6 million to the DOJ in the third quarter of 2007. For
additional information, see "Regulatory Matters" in this Form 10-Q.

Our
effective tax rate increased to 36.9 percent compared to 33.6 percent in the third quarter of 2006. The higher effective tax rate in third quarter 2007 was primarily
due to $15.5 million of adjustments to California state tax expense filed on the worldwide unitary basis for 2006 and 2007, partially offset by the recognition of $7.6 million of state
tax benefits due to the settlement of a prior year audit.

Discontinued Operations

During 2005, we committed to a plan to exit our international correspondent banking business and entered into a definitive agreement to sell this business to
Wachovia Bank, N.A. This business consisted of international payment and trade processing along with the related lending activities. The principal legal closing of the transaction occurred on
October 6, 2005 and we received $245 million. During the second quarter of 2006, we received an additional $4 million as a contingent purchase price payment.

This
transaction has been accounted for as a discontinued operation and all prior periods, except where specifically mentioned, have been restated to reflect this accounting treatment.
All of the assets and liabilities of the discontinued operations have been separately identified on our condensed consolidated balance sheet and the assets are accounted for at the lower of cost or
fair value less costs to sell. The average net assets or liabilities of our discontinued operations are reflected in our analysis of net interest margin. All of our offices designated for disposal
were closed as of June 30, 2006. For the detailed components of our assets and liabilities from discontinued operations at September 30, 2006 and December 31, 2006, see
Note 3 to the Condensed Consolidated Financial Statements of this
Form 10-Q. Substantially all assets and liabilities of the discontinued operations were liquidated as of March 31, 2007.

As
described in the "Executive Overview" in this Form 10-Q, in the third quarter of 2007, we entered into a Deferred Prosecution Agreement with the DOJ relating to
past violations of BSA/AML that occurred in the Bank's now discontinued international banking business. As part of this agreement, we paid the DOJ $21.6 million in the third quarter of 2007.
The $21.6 million payment and related legal and other outside services costs were allocated to discontinued operations as these past violations pertained to our international banking business.
For additional information, refer to "Regulatory Matters" in this Form 10-Q.

32

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For
the three and nine months ended September 30, 2006 and 2007, loss from discontinued operations included the following:

|                                                      |  | For the Three Months Ended
September 30, |        | For the Nine Months Ended
September 30, |  
|----------------------------------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- | -
|
|
|Net interest (expense) income                         |  | $                                        | (501   | )                                       | $
|Noninterest income                                    |  |                                          | 268    |                                         |  
|Noninterest expense                                   |  |                                          | 1,828  |                                         |  
|                                                      |  |                                          |        |                                         |  
|Loss from discontinued operations before income taxes |  |                                          | (2,061 | )                                       |  
|Income tax benefit                                    |  |                                          | (857   | )                                       |  
|                                                      |  |                                          |        |                                         |  
|Loss from discontinued operations                     |  | $                                        | (1,204 | )                                       | $
|                                                      |  |                                          |        |                                         |  

For the three and nine months ended September 30, 2006, net interest income included the allocation of interest expense from continuing
operations to discontinued operations of approximately $0.5 million and $1.5 million, respectively. Interest expense allocated to discontinued operations is calculated based on its
average net assets and the corresponding cost of funds rate equivalent to the average federal funds purchased rate for the period.

Noninterest
income for the nine months ended September 30, 2006 included a $4.0 million payment from Wachovia Bank, N.A., reflecting the final settlement upon the
conversion of the international correspondent banking customer base to Wachovia Bank, N.A. Included in noninterest expense was compliance related expenses of $1.4 million and
$8.5 million, for the three and nine months ended September 30, 2006, respectively. Additionally, the Company recorded $1.4 million of expenses related to the termination of lease
contracts in the second quarter 2006. Noninterest expense for the three and nine months ended September 30, 2007 included the $21.6 million paid to the DOJ and $1.7 million in
related legal and other outside services costs. The income tax benefit of $0.7 million for the three and nine months ended September 30, 2007 reflects the impact of the nondeductibility
of the $21.6 million DOJ payment.

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

Critical Accounting Estimates

UnionBanCal Corporation's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of
America (US GAAP) and the general practices of the banking industry. The financial information contained within our statements is, to a significant extent, financial information that is based
on approximate measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning
income, recognizing an expense, recovering an asset or relieving a liability. In many instances, we use a discount factor to determine the present value of assets and liabilities. A change in the
discount factor could increase or decrease the values of those assets and liabilities and such a change would result in either a beneficial or adverse impact to our financial results. We use
historical loss factors, adjusted for current conditions, to determine the inherent loss that may be present in our loan and lease portfolio. Actual losses could differ significantly from the loss
factors that we use. Other significant estimates that we use are employee turnover factors for pension purposes, residual values in our leasing portfolio, fair value of our derivatives and securities,
expected useful lives of our depreciable assets and assumptions regarding our effective income tax rates. We enter into derivative contracts to accommodate our customers and for our own risk
management purposes. The derivative contracts are generally swaps and option contracts indexed to energy commodities, interest rates or foreign currencies, although we could enter into other types of
derivative contracts. We value these contracts at fair value, using either readily available, market quoted prices or information that can be

33

---



extrapolated
to approximate a market price. We are subject to US GAAP that may change from one previously acceptable method to another method. Although the economics of our transactions would be the
same, the timing of events that would impact our transactions could change.

Our
most significant estimates are approved by our Chief Executive Officer Forum (CEO Forum), which is comprised of our most senior officers. For each financial reporting period,
a review of these estimates is presented to and discussed with the Audit Committee of our Board of Directors.

Understanding
our accounting policies is fundamental to understanding our consolidated financial condition and consolidated results of operations. Accordingly, both our Critical
Accounting Estimates and our significant accounting policies are discussed in detail in our 2006 Form 10-K filed with the Securities and Exchange Commission (the SEC).

Financial Performance

Summary of Financial Performance

|                                                      |                                                                     |   |         |         |   | Increase (Decrease) |         |   |         |         |       | Increase (Decrease) |  
|----------------------------------------------------- | ------------------------------------------------------------------- | - | ------- | ------- | - | ------------------- | ------- | - | ------- | ------- | ----- | ------------------- | -
|
|
|
|Results of Operations                                 |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|Net interest income(1)                                |                                                                     | $ | 458,724 |         | $ | 426,445             |         | $ | (32,279 | )       | (7.0  | )%                  | $
|Noninterest income                                    |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|                                                      | Service charges on deposit accounts                                 |   |         | 79,083  |   |                     | 76,210  |   |         | (2,873  | )     | (3.6                | )
|                                                      | Trust and investment management fees                                |   |         | 47,555  |   |                     | 51,262  |   |         | 3,707   |       | 7.8                 |  
|                                                      | Trading account activities                                          |   |         | 14,311  |   |                     | 21,795  |   |         | 7,484   |       | 52.3                |  
|                                                      | Gains on private capital investments, net                           |   |         | 7,681   |   |                     | 12,203  |   |         | 4,522   |       | 58.9                |  
|                                                      | Other noninterest income                                            |   |         | 68,625  |   |                     | 74,262  |   |         | 5,637   |       | 8.2                 |  
|                                                      |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|Total noninterest income                              |                                                                     |   | 217,255 |         |   | 235,732             |         |   | 18,477  |         | 8.5   |                     |  
|                                                      |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|Total revenue                                         |                                                                     |   | 675,979 |         |   | 662,177             |         |   | (13,802 | )       | (2.0  | )                   |  
|(Reversal of) provision for loan losses               |                                                                     |   |        |         |   | 16,000              |         |   | 16,000  |         | nm    |                     |  
|Noninterest expense                                   |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|                                                      | Salaries and employee benefits                                      |   |         | 244,613 |   |                     | 236,575 |   |         | (8,038  | )     | (3.3                | )
|                                                      | Net occupancy                                                       |   |         | 35,753  |   |                     | 39,017  |   |         | 3,264   |       | 9.1                 |  
|                                                      | Outside services                                                    |   |         | 31,890  |   |                     | 21,394  |   |         | (10,496 | )     | (32.9               | )
|                                                      | Professional services                                               |   |         | 12,169  |   |                     | 18,162  |   |         | 5,993   |       | 49.2                |  
|                                                      | Foreclosed asset expense (income)                                   |   |         | (183    | ) |                     | 37      |   |         | 220     |       | nm                  |  
|                                                      | (Reversal of) provision for losses on off-balance sheet commitments |   |         |        |   |                     | 4,000   |   |         | 4,000   |       | nm                  |  
|                                                      | Other noninterest expense                                           |   |         | 92,779  |   |                     | 89,235  |   |         | (3,544  | )     | (3.8                | )
|                                                      |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|Total noninterest expense                             |                                                                     |   | 417,021 |         |   | 408,420             |         |   | (8,601  | )       | (2.1  | )                   |  
|                                                      |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|Income from continuing operations before income taxes |                                                                     |   | 258,958 |         |   | 237,757             |         |   | (21,201 | )       | (8.2  | )                   |  
|Income tax expense                                    |                                                                     |   | 87,048  |         |   | 87,662              |         |   | 614     |         | 0.7   |                     |  
|                                                      |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  
|Income from continuing operations                     |                                                                     | $ | 171,910 |         | $ | 150,095             |         | $ | (21,815 | )       | (12.7 | )%                  | $
|                                                      |                                                                     |   |         |         |   |                     |         |   |         |         |       |                     |  

---

nm = not meaningful

The primary contributors to our financial performance for the third quarter of 2007 compared to the third quarter of 2006 are presented
below.



34

---





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



Our
lower noninterest expense was due to several factors:



The primary contributors to our financial performance for the first nine months of 2007 compared to the first nine months of 2006 are presented
below.



35

---





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



Our
lower noninterest expense was due to several factors:



36

---





Net Interest Income

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

|                                                                        |                                      | For the Three Months Ended                 |            | Increase (Decrease) in |           
|----------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------- | ---------------------- | ----------
|
|
|
|Assets                                                                  |                                      |                                            |            |                        |           
|Loans:(3)                                                               |                                      |                                            |            |                        |           
|                                                                        | Commercial, financial and industrial |                                            | $          | 13,244,947             |           
|                                                                        | Construction                         |                                            |            | 1,990,535              |           
|                                                                        | Residential mortgage                 |                                            |            | 11,972,024             |           
|                                                                        | Commercial mortgage                  |                                            |            | 5,680,603              |           
|                                                                        | Consumer                             |                                            |            | 2,507,524              |           
|                                                                        | Lease financing                      |                                            |            | 570,190                |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        | Total Loans                          |                                            |            | 35,965,823             |           
|Securitiestaxable                                                      |                                      |                                            | 8,548,420  |                        |           
|Securitiestax-exempt                                                   |                                      |                                            | 59,644     |                        |           
|Interest bearing deposits in banks                                      |                                      |                                            | 37,351     |                        |           
|Federal funds sold and securities purchased under resale agreements     |                                      |                                            | 894,039    |                        |           
|Trading account assets                                                  |                                      |                                            | 349,368    |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total earning assets                       |            |                        | 45,854,645
|                                                                        |                                      |                                            |            |                        |           
|Allowance for loan losses                                               |                                      |                                            | (328,399   | )                      |           
|Cash and due from banks                                                 |                                      |                                            | 2,063,653  |                        |           
|Premises and equipment, net                                             |                                      |                                            | 497,957    |                        |           
|Other assets                                                            |                                      |                                            | 2,689,563  |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total assets                               |            | $                      | 50,777,419
|                                                                        |                                      |                                            |            |                        |           
|Liabilities                                                             |                                      |                                            |            |                        |           
|Deposits:                                                               |                                      |                                            |            |                        |           
|                                                                        | Transaction accounts                 |                                            | $          | 12,405,367             |           
|                                                                        | Savings and consumer time            |                                            |            | 4,493,082              |           
|                                                                        | Large time                           |                                            |            | 6,692,874              |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total interest bearing deposits            |            |                        | 23,591,323
|                                                                        |                                      |                                            |            |                        |           
|Federal funds purchased and securities sold under repurchase agreements |                                      |                                            | 419,665    |                        |           
|Net funding allocated from (to) discontinued operations(4)              |                                      |                                            | (34,738    | )                      |           
|Commercial paper                                                        |                                      |                                            | 1,645,428  |                        |           
|Other borrowed funds                                                    |                                      |                                            | 577,533    |                        |           
|Medium and long-term debt                                               |                                      |                                            | 1,496,207  |                        |           
|Trust notes                                                             |                                      |                                            | 15,054     |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total borrowed funds                       |            |                        | 4,119,149 
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total interest bearing liabilities         |            |                        | 27,710,472
|                                                                        |                                      |                                            |            |                        |           
|Noninterest bearing deposits                                            |                                      |                                            | 16,990,816 |                        |           
|Other liabilities                                                       |                                      |                                            | 1,497,496  |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total liabilities                          |            |                        | 46,198,784
|Stockholders' Equity                                                    |                                      |                                            |            |                        |           
|Common equity                                                           |                                      |                                            | 4,578,635  |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total stockholders' equity                 |            |                        | 4,578,635 
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Total liabilities and stockholders' equity |            | $                      | 50,777,419
|                                                                        |                                      |                                            |            |                        |           
|Net Interest Income/Margin                                              |                                      |                                            |            |                        |           
|Net interest income/margin (taxable-equivalent basis)                   |                                      |                                            |            |                        |           
|Less: taxable-equivalent adjustment                                     |                                      |                                            |            |                        |           
|                                                                        |                                      |                                            |            |                        |           
|                                                                        |                                      | Net interest income                        |            |                        |           
|                                                                        |                                      |                                            |            |                        |           

|Average Assets and Liabilities of
Discontinued Operations for the
Three Months Ended: |  | September 30,
2006 |        | 
|------------------------------------------------------------------------------------- |  | ------------------ | ------ | 
|Assets                                                                                |  | $                  | 41,135 | 
|Liabilities                                                                           |  | $                  | 6,397  | 
|Net assets                                                                            |  | $                  | 34,738 | 

---

nm = not meaningful

37

---



|                                                                    |                                      | For the Nine Months Ended                  |            | Increase (Decrease) in |           
|------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ---------- | ---------------------- | ----------
|
|
|
|Assets                                                              |                                      |                                            |            |                        |           
|Loans:(3)                                                           |                                      |                                            |            |                        |           
|                                                                    | Commercial, financial and industrial |                                            | $          | 12,899,687             |           
|                                                                    | Construction                         |                                            |            | 1,747,603              |           
|                                                                    | Residential mortgage                 |                                            |            | 11,719,852             |           
|                                                                    | Commercial mortgage                  |                                            |            | 5,664,966              |           
|                                                                    | Consumer                             |                                            |            | 2,500,890              |           
|                                                                    | Lease financing                      |                                            |            | 567,508                |           
|                                                                    |                                      |                                            |            |                        |           
|                                                                    | Total Loans                          |                                            |            | 35,100,506             |           
|Securitiestaxable                                                  |                                      |                                            | 8,378,496  |                        |           
|Securitiestax-exempt                                               |                                      |                                            | 62,670     |                        |           
|Interest bearing deposits in banks                                  |                                      |                                            | 43,804     |                        |           
|Federal funds sold and securities purchased under resale agreements |                                      |                                            | 541,607    |                        |           
|Trading account assets                                              |                                      |                                            | 354,134    |                        |           
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total earning assets                       |            |                        | 44,481,217
|                                                                    |                                      |                                            |            |                        |           
|Allowance for loan losses                                           |                                      |                                            | (337,145   | )                      |           
|Cash and due from banks                                             |                                      |                                            | 2,096,935  |                        |           
|Premises and equipment, net                                         |                                      |                                            | 510,416    |                        |           
|Other assets                                                        |                                      |                                            | 2,675,245  |                        |           
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total assets                               |            | $                      | 49,426,668
|                                                                    |                                      |                                            |            |                        |           
|Liabilities                                                         |                                      |                                            |            |                        |           
|Deposits:                                                           |                                      |                                            |            |                        |           
|                                                                    | Transaction accounts                 |                                            | $          | 12,757,571             |           
|                                                                    | Savings and consumer time            |                                            |            | 4,477,251              |           
|                                                                    | Large time                           |                                            |            | 5,133,186              |           
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total interest bearing deposits            |            |                        | 22,368,008
|                                                                    |                                      |                                            |            |                        |           
|Federal funds purchased and securities                              |                                      |                                            |            |                        |           
|sold under repurchase agreements                                    |                                      |                                            | 678,926    |                        |           
|Net funding allocated from (to) discontinued operations(4)          |                                      |                                            | (42,570    | )                      |           
|Commercial paper                                                    |                                      |                                            | 1,514,196  |                        |           
|Other borrowed funds                                                |                                      |                                            | 319,096    |                        |           
|Medium and long-term debt                                           |                                      |                                            | 1,164,090  |                        |           
|Trust notes                                                         |                                      |                                            | 15,166     |                        |           
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total borrowed funds                       |            |                        | 3,648,904 
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total interest bearing liabilities         |            |                        | 26,016,912
|                                                                    |                                      |                                            |            |                        |           
|Noninterest bearing deposits                                        |                                      |                                            | 17,348,964 |                        |           
|Other liabilities                                                   |                                      |                                            | 1,508,382  |                        |           
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total liabilities                          |            |                        | 44,874,258
|Stockholders' Equity                                                |                                      |                                            |            |                        |           
|Common equity                                                       |                                      |                                            | 4,552,410  |                        |           
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total stockholders' equity                 |            |                        | 4,552,410 
|                                                                    |                                      |                                            |            |                        |           
|                                                                    |                                      | Total liabilities and stockholders' equity |            | $                      | 49,426,668
|                                                                    |                                      |                                            |            |                        |           
|Net Interest Income/Margin                                          |                                      |                                            |            |                        |           
|Net interest income/margin (taxable-equivalent basis)               |                                      |                                            |            |                        |           
|Less: taxable-equivalent adjustment                                 |                                      |                                            |            |                        |           
|                                                                    |                                      |                                            |            |                        |           
|Net interest income                                                 |                                      |                                            |            |                        | $         
|                                                                    |                                      |                                            |            |                        |           

|Average Assets and Liabilities
of Discontinued Operations for the
Nine Months Ended: |  | September 30, 2006 |         | 
|------------------------------------------------------------------------------------ |  | ------------------ | ------- | 
|Assets                                                                               |  | $                  | 244,210 | 
|Liabilities                                                                          |  | $                  | 201,640 | 
|Net assets                                                                           |  | $                  | 42,570  | 

---

nm
= not meaningful

38

---



Net interest income in the third quarter of 2007, on a taxable-equivalent basis, decreased 7 percent from the third quarter of 2006. Our net interest margin decreased by
50 basis points. These results were primarily due to the following:



We
use derivatives to hedge expected changes in the yields on our variable rate loans and term certificates of deposit and other time deposits (CDs), and to convert our
long-term, fixed-rate borrowings to floating rate. For loans, we had hedge expense of $14.8 million and $9.0 million for the quarters ended September 30,
2006 and 2007, respectively. For deposits and long-term fixed rate borrowings, we had hedge expense of $0.2 million and $0.6 million for the quarters ended
September 30, 2006 and 2007, respectively.

Net
interest income in the first nine months of 2007, on a taxable-equivalent basis, decreased 8 percent from the first nine months of 2006. Our net interest margin decreased by
64 basis points. These results were primarily due to the following:



39

---





We
use derivatives to hedge expected changes in the yields on our variable rate loans and CDs, and to convert our long-term, fixed-rate borrowings to floating
rate. For loans, we had hedge expense of $34.6 million and $29.3 million for the first nine months of 2006 and 2007, respectively. For deposits and long-term fixed rate
borrowings, we had hedge income of $0.6 million and hedge expense of $0.5 million for the first nine months of 2006 and 2007, respectively.

Noninterest Income and Noninterest Expense

The following tables detail our noninterest income and noninterest expense that exceeded 1 percent of our total revenues for the three and nine months
ended September 30, 2006 and 2007.

Noninterest Income

|                                          |                          | For the Three Months Ended |        | For the Nine Months Ended |  
|----------------------------------------- | ------------------------ | -------------------------- | ------ | ------------------------- | -
|
|
|
|Service charges on deposit
accounts       |                          | $                          | 79,083 |                           | $
|Trust and investment
management fees      |                          |                            | 47,555 |                           |  
|Insurance commissions                     |                          |                            | 17,301 |                           |  
|Trading account activities                |                          |                            | 14,311 |                           |  
|Brokerage commissions and fees            |                          |                            | 8,531  |                           |  
|Merchant banking fees                     |                          |                            | 11,655 |                           |  
|Card processing fees, net                 |                          |                            | 7,241  |                           |  
|Securities gains, net                     |                          |                            | 43     |                           |  
|Gains on private capital investments, net |                          |                            | 7,681  |                           |  
|Other                                     |                          |                            | 23,854 |                           |  
|                                          |                          |                            |        |                           |  
|                                          | Total noninterest income |                            | $      | 217,255                   |  
|                                          |                          |                            |        |                           |  

---

nm = not meaningful

40

---



Noninterest Expense

|                                                                    |                                | For the Three Months Ended |         | For the Nine Months Ended |  
|------------------------------------------------------------------- | ------------------------------ | -------------------------- | ------- | ------------------------- | -
|
|
|
|Salaries and other compensation                                     |                                | $                          | 200,591 |                           | $
|Employee benefits                                                   |                                |                            | 44,022  |                           |  
|                                                                    |                                |                            |         |                           |  
|                                                                    | Salaries and employee benefits |                            |         | 244,613                   |  
|Net occupancy                                                       |                                |                            | 35,753  |                           |  
|Outside services                                                    |                                |                            | 31,890  |                           |  
|Equipment                                                           |                                |                            | 17,387  |                           |  
|Professional services                                               |                                |                            | 12,169  |                           |  
|Software                                                            |                                |                            | 15,334  |                           |  
|Advertising and public relations                                    |                                |                            | 11,726  |                           |  
|Communications                                                      |                                |                            | 9,942   |                           |  
|Data processing                                                     |                                |                            | 7,933   |                           |  
|Intangible asset amortization                                       |                                |                            | 3,427   |                           |  
|Foreclosed asset expense
(income)                                   |                                |                            | (183    | )                         |  
|(Reversal of) provision for
losses on off-balance
sheet commitments |                                |                            |        |                           |  
|Other                                                               |                                |                            | 27,030  |                           |  
|                                                                    |                                |                            |         |                           |  
|                                                                    | Total noninterest expense      |                            | $       | 417,021                   |  
|                                                                    |                                |                            |         |                           |  

---

nm = not meaningful

41

---



Income Tax Expense

Our effective tax rate on continuing operations in the third quarter of 2007 was 36.9 percent compared to 33.6 percent for the third quarter of
2006.

The
higher effective tax rate was primarily due to an adjustment of $11.6 million to income tax expense for 2006 to recognize the difference between the estimate of California
state tax expense for last year and the taxes reported in our 2006 tax return, which was filed on the worldwide unitary basis. The State of California requires us to file franchise tax returns as a
member of either a worldwide or a water's edge unitary group that includes our majority stockholder, The Bank of Tokyo-Mitsubishi-UFJ, Ltd. (BTMU) and other affiliates of
Mitsubishi-UFJ Financial Group, Inc. (MUFG). Changes between MUFG's estimated and actual income for the fiscal year ended March 31, 2007, as reported in their
Form 20-F filed with the SEC on September 21, 2007, affected our California state taxes for 2006 and 2007. During the third quarter 2007, we increased our accrual of
California state tax expense for 2007 by approximately $3.9 million, primarily as a result of the increased income reported by MUFG for its most recent reporting period, as well as MUFG's
estimated income for its fiscal year ending March 31, 2008. Partially offsetting the two items summarized above was a $7.6 million state tax benefit recognized in the third quarter of
2007 as a result of the settlement of an audit of our tax returns for the tax year 2002.

Our
effective tax rate on continuing operations in the first nine months of 2007 increased to 34.0 percent from 33.8 percent for the first nine months of 2006. The slight
increase was due to the $7.9 million net tax increase in the third quarter 2007 identified above, partially offset by a $4.6 million net tax decrease in the second quarter of 2007
(consisting of the recognition of $8.4 million of tax benefits resulting from the expiration of the statute of limitations on uncertain tax positions, partially offset by $3.8 million in
additional taxes due to the non-deductibility of the reserve for pending regulatory actions).

For
further information regarding income tax expense, see "Management's Discussion and Analysis of Financial Condition and Results of OperationsIncome Tax Expense" in our
2006 Form 10-K.

42

---



Loans

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

|                                     |                           |                              |             |            |            |            |            | Increase (Decrease)
September 30, 2007 from: |           
|------------------------------------ | ------------------------- | ---------------------------- | ----------- | ---------- | ---------- | ---------- | ---------- | -------------------------------------------- | ----------
|
|
|
|Commercial, financial and industrial |                           | $                            | 12,513,749  |            | $          | 12,944,771 |            | $                                            | 13,837,388
|Construction                         |                           |                              | 2,074,320   |            |            | 2,175,545  |            |                                              | 2,411,434 
|Mortgage:                            |                           |                              |             |            |            |            |            |                                              |           
|                                     | Residential               |                              |             | 12,101,517 |            |            | 12,343,792 |                                              |           
|                                     | Commercial                |                              |             | 5,760,046  |            |            | 6,028,242  |                                              |           
|                                     |                           |                              |             |            |            |            |            |                                              |           
|                                     |                           | Total mortgage               |             |            | 17,861,563 |            |            | 18,372,034                                   |           
|Consumer:                            |                           |                              |             |            |            |            |            |                                              |           
|                                     | Installment               |                              |             | 1,078,671  |            |            | 1,137,401  |                                              |           
|                                     | Revolving lines of credit |                              |             | 1,428,317  |            |            | 1,401,173  |                                              |           
|                                     |                           |                              |             |            |            |            |            |                                              |           
|                                     |                           | Total consumer               |             |            | 2,506,988  |            |            | 2,538,574                                    |           
|Lease financing                      |                           |                              | 573,516     |            |            | 581,203    |            |                                              | 634,524   
|                                     |                           |                              |             |            |            |            |            |                                              |           
|                                     |                           | Total loans held to maturity |             |            | 35,530,136 |            |            | 36,612,127                                   |           
|                                     |                           | Total loans held for sale    |             |            | 143,333    |            |            | 59,596                                       |           
|                                     |                           |                              |             |            |            |            |            |                                              |           
|                                     |                           |                              | Total loans |            | $          | 35,673,469 |            | $                                            | 36,671,723
|                                     |                           |                              |             |            |            |            |            |                                              |           

---

nm = not meaningful



The commercial, financial and industrial loan portfolio continues to represent the largest category in our loan portfolio. These loans are extended principally to
corporations, middle-market businesses and small businesses, with no industry concentration exceeding 10 percent of total loans. Although many of our customers are located in California, the
portfolio has a high degree of geographic diversification based upon our customers' revenue bases, which we believe lowers our vulnerability to changes in the economic outlook of any particular region
of the U.S.

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

The
commercial, financial and industrial loan portfolio increased from September 30, 2006 to September 30, 2007 due to increased loan demand primarily in the oil and gas,
national corporate and California middle market segments.



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

43

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The
construction loan portfolio increase from September 30, 2006 to September 30, 2007 was primarily due to increased demand for income property projects with office and
apartment financing representing the largest components.

The
commercial mortgage loan portfolio consists of loans on commercial income properties primarily in California. The increase in commercial mortgages from September 30, 2006 to
September 30, 2007 was mainly due to increased demand in the California middle market for real estate related financing.



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

At
September 30, 2007, 68 percent of our residential mortgage loans were interest only, of which none are negative amortizing. At origination, these interest only loans had
relatively high credit scores and had weighted average loan-to-value (LTV) ratios of approximately 66 percent. The remainder of the portfolio consists of balloon or
regular amortizing loans.

We
do not offer subprime loan products. However, we do have several loan products that allow a customer to move more quickly through the loan origination process by reducing or
eliminating the need to verify the income or assets of the customer. We refer to these loans as "no doc" or "low doc" loans. "No doc" loans are only available for owner-occupied properties and
eliminate the verification of both income and assets, while "low doc" loans require the verification of assets. In both cases, these loans require lower LTV ratios and higher FICO® credit
scores than for fully documented residential loans. Although these loans comprise nearly half of our residential loan portfolio, the delinquency rates relative to the outstanding balances at
September 30, 2007 were lower than fully documented loans. At September 30, 2007, the total amount of "no doc" and "low doc" loans past due 30 days or more was
$13.2 million compared to $5.7 million at December 31, 2006. The total amount of residential mortgages delinquent 30 days or more was $32.8 million at
September 30, 2007 compared to $27.9 million at December 31, 2006.

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



We originate consumer loans, such as auto loans and home equity loans and lines, through our branch network. The increase in consumer loans from
September 30, 2006 was primarily in our "Flex Equity Line/Loan" product. The "Flex Equity Line/Loan" allows our customers the flexibility to manage a line of credit with as many as four fixed
rate loans under a single product. When customers convert their "Flex Equity Lines/Loans" to fixed rate loans, these new loans are classified as installment loans. In addition, we offer a "Flex Equity
High LTV" product, which allows our customers to draw up to 100 percent of the value of their real estate or $150 thousand, whichever is less. At September 30, 2007, the total
amount of "Flex Equity High LTV" loans was $5.4 million with $0.1 million delinquent 30 days or more. Our total home equity loans and lines delinquent 30 days or more were
$5.9 million at September 30, 2007 compared to $4.6 million at December 31, 2006.



We offer two types of leases to our customers: direct financing leases, where the assets leased are acquired without additional financing from other sources; and
leveraged leases, where a substantial portion of the financing is provided by debt with no recourse to us. Included in our lease portfolio at September 30, 2007 are leveraged leases of
$551 million, which are net of non-recourse debt of approximately $1.0 billion. We utilize a number of special purpose entities for our leveraged leases. These entities serve
legal and tax purposes

44

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and
do not function as vehicles to shift liabilities to other parties or to deconsolidate affiliates for financial reporting purposes. As allowed by US GAAP and by law, the gross lease receivable is
offset by the qualifying non-recourse debt. In leveraged lease transactions, the third-party lender may only look to the collateral value of the leased assets for repayment.

On
January 1, 2007, we adopted FASB Staff Position (FSP) FAS 13-2, "Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income
Taxes Generated by a Leveraged Lease Transaction." See Note 2 to the Condensed Consolidated Financial Statements in this Form 10-Q for information regarding the
adoption of this FSP.

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 September 30, 2007 for one country where
such outstandings exceeded 1 percent of total assets. For the periods ended September 30, 2006 and December 31, 2006 there were no countries where such cross-border outstandings
exceeded 1 percent of total assets. The cross-border outstandings were compiled based upon category and domicile of ultimate risk and are comprised of balances with banks, trading account
assets, securities available for sale, securities purchased under resale agreements, loans, accrued interest receivable, acceptances outstanding and investments with foreign entities. For the country
shown in the table below, any significant local currency outstandings are either hedged or funded by local currency borrowings.

|(Dollars in millions) |        | Financial Institutions |   | Public Sector Entities |  | Corporations and Other Borrowers |   | Total Outstandings
|--------------------- | ------ | ---------------------- | - | ---------------------- |  | -------------------------------- | - | ------------------
|September 30, 2007    |        |                        |   |                        |  |                                  |   |                   
|                      | Canada |                        | $ | 8                      |  | $                                |  |                   

Provision for Credit Losses

We recorded a provision for loan losses of $16 million in the third quarter of 2007, compared with no provision for loan losses in the third quarter of
2006. There was a $4 million provision for losses related to the allowance for losses on off-balance sheet commitments in the third quarter of 2007 compared to no provision in the
third quarter of 2006. The provisions for loan losses and for losses on off-balance sheet commitments are charged to income to bring our total allowances for
credit losses to a level deemed appropriate by management based on the factors discussed under "Allowances for Credit Losses" below.

Allowances for Credit Losses



We maintain allowances for credit losses (defined as both the allowance for loan losses and the allowance for off-balance sheet commitment losses) to
absorb losses inherent in the loan portfolio as well as for leases and off-balance sheet commitments. Understanding our policies on the allowances for credit losses is fundamental to
understanding our consolidated financial condition and consolidated results of operations. Accordingly, our significant policies and methodology on the allowances for credit losses are discussed in
detail in Note 1 to our Consolidated Financial Statements and in the section "Allowances for Credit Losses" included in our "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our 2006 Form 10-K.

45

---





At September 30, 2007, our total allowances for credit losses were $437 million, which consisted of $351 million related to loans and
$86 million related to off-balance sheet commitments. The allowances for credit losses were comprised of $375 million and $62 million of allocated and unallocated
allowance, respectively. At September 30, 2007, our allowances for credit loss coverage ratios were 1.10 percent of total loans and 853 percent of total nonaccrual loans. At
December 31, 2006, our total allowances for credit losses were $412 million, or 1.12 percent of the total loan portfolio and 987 percent of total nonaccrual loans.

In
addition, the allowances include the results of measuring impaired loans as provided in SFAS No. 114, "Accounting by Creditors for Impairment of a Loan" as amended by
SFAS No. 118, "Accounting by Creditors for Impairment of a LoanIncome Recognition and Disclosures." These
accounting standards prescribe the measurement methods, income recognition and disclosures related to impaired loans. At September 30, 2007, our total impaired loans were $51 million and
the associated impairment allowance was $11 million compared to total impaired loans of $27 million and an associated impairment allowance of $3 million on December 31,
2006.

At
September 30, 2007 and December 31, 2006, the allowance for losses related to off-balance sheet commitments included within our discussion of the total
allowances for credit losses, was $86 million and $81 million, respectively. In determining the adequacy of our allowances for credit losses, we consider both the allowance for loan
losses and for off-balance sheet commitment losses.

We
recorded a provision for credit losses of $20 million in the third quarter of 2007, as a result of management's assessment of factors, including the credit quality of our
credit portfolio, impact of slower growth in the U.S. economy (including a continued slow down in the housing market and the potential adverse impact of higher fuel prices on the economy), growth of
and changes in the composition of our credit portfolio and the amount of net charge offs and changes in loss factors.

During
the third quarter of 2007, there were no material changes in estimation methods or assumptions that affected our methodology for assessing the appropriateness of our allowances
for credit losses.



At September 30, 2007, the formula allowance increased to $364 million from $347 million at December 31, 2006. The net increase
included an increase in criticized credits and growth in our loan portfolio, offset by declines in certain loss factors. At September 30, 2007, the specific allowance was $11 million
compared to $6 million at December 31, 2006.



At September 30, 2007, the unallocated allowance increased to $62 million from $59 million at December 31, 2006, reflecting
management's belief that maintaining the unallocated allowance near our December 31, 2006 assessment is appropriate based on continuing uncertainty associated with our principal portfolio
segments, as we believe we have passed the turning point in credit quality trends. Additionally, the primary reasons for which we believe an unallocated allowance is warranted are detailed below.

In
our assessment as of September 30, 2007, management focused, in particular, on the factors and conditions set out below. There can be no assurance that the adverse impact of
any of these conditions on us will not be in excess of the ranges set forth.

Although
in certain instances the downgrading of a loan resulting from the effects of the conditions described below has been reflected in the formula allowance, management believes that
the impact of these events on the collectibility of the applicable loans may not have been reflected in the level of nonperforming loans or in the internal risk grading process with respect to such
loans. In addition, our formula allowance does

46

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not
take into consideration sector-specific changes in the severity of losses that are expected to arise from current economic conditions compared with our historical losses. Accordingly, our
evaluation of the probable losses related to the impact of these factors was reflected in the unallocated allowance. The evaluations of the inherent losses with respect to these factors are subject to
higher degrees of uncertainty because they are not identified with specific problem credits.

The
following describes some of the specific conditions we considered.



Accordingly,
our evaluation of the probable losses related to the impact of these factors was reflected in the unallocated allowance.

47

---





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

|                                                                     |                                      | For the Three Months
Ended September 30,         |                       |       |       |         |       | For the Nine Months
Ended September 30, |        |        |      |       |      
|-------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------------ | --------------------- | ----- | ----- | ------- | ----- | --------------------------------------- | ------ | ------ | ---- | ----- | -----
|
|
|
|Balance, beginning of period                                         |                                      | $                                                | 328,338               |       | $     | 335,952 |       | $                                       | 7,614  |        | 2.3  | %     | $    
|Loans charged off:                                                   |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|                                                                     | Commercial, financial and industrial |                                                  |                       | 4,105 |       |         | 2,719 |                                         |        | (1,386 | )    | (33.8 | )    
|                                                                     | Mortgage                             |                                                  |                       |      |       |         | 86    |                                         |        | 86     |      | nm    |      
|                                                                     | Consumer                             |                                                  |                       | 929   |       |         | 1,696 |                                         |        | 767    |      | 82.6  |      
|                                                                     | Lease financing                      |                                                  |                       |      |       |         |      |                                         |        |       |      |      |      
|                                                                     |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|                                                                     |                                      | Total loans charged off                          |                       |       | 5,034 |         |       | 4,501                                   |        |        | (533 | )     | (10.6
|                                                                     |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|Recoveries of loans previously charged off:                          |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|                                                                     | Commercial, financial and industrial |                                                  |                       | 3,179 |       |         | 2,098 |                                         |        | (1,081 | )    | (34.0 | )    
|                                                                     | Mortgage                             |                                                  |                       |      |       |         | 336   |                                         |        | 336    |      | nm    |      
|                                                                     | Consumer                             |                                                  |                       | 456   |       |         | 245   |                                         |        | (211   | )    | (46.3 | )    
|                                                                     | Lease financing                      |                                                  |                       | 20    |       |         | 2     |                                         |        | (18    | )    | (90.0 | )    
|                                                                     |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|                                                                     |                                      | Total recoveries of loans previously charged off |                       |       | 3,655 |         |       | 2,681                                   |        |        | (974 | )     | (26.6
|                                                                     |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|                                                                     |                                      |                                                  | Net loans charged off |       |       | 1,379   |       |                                         | 1,820  |        |      | 441   |      
|(Reversal of) provision for loan losses                              |                                      |                                                  |                      |       |       | 16,000  |       |                                         | 16,000 |        | nm   |       |      
|Foreign translation adjustment and other net additions               |                                      |                                                  | (4                    | )     |       | 359     |       |                                         | 363    |        | nm   |       |      
|                                                                     |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|Ending balance of allowance for loan losses                          |                                      | $                                                | 326,955               |       | $     | 350,491 |       | $                                       | 23,536 |        | 7.2  | %     | $    
|Allowance for losses on off-balance sheet commitments                |                                      |                                                  | 79,374                |       |       | 86,374  |       |                                         | 7,000  |        | 8.8  |       |      
|                                                                     |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|Allowances for credit losses                                         |                                      | $                                                | 406,329               |       | $     | 436,865 |       | $                                       | 30,536 |        | 7.5  | %     | $    
|                                                                     |                                      |                                                  |                       |       |       |         |       |                                         |        |        |      |       |      
|Allowance for loan losses to total loans                             |                                      |                                                  | 0.92                  | %     |       | 0.88    | %     |                                         |        |        |      |       |      
|Allowances for credit losses to total loans(1)                       |                                      |                                                  | 1.14                  |       |       | 1.10    |       |                                         |        |        |      |       |      
|(Reversal of) provision for loan losses to net loans charged off     |                                      |                                                  | nm                    |       |       | 879.12  |       |                                         |        |        |      |       |      
|Net loans charged off to average loans outstanding for the period(2) |                                      |                                                  | 0.02                  |       |       | 0.02    |       |                                         |        |        |      |       |      

---

nm = not meaningful

Total loans charged off in the third quarter of 2007 decreased from the third quarter of 2006. Charge offs reflect the realization of losses in
the portfolio that were recognized previously through provision for credit losses. In addition, third quarter 2007 recoveries of loans previously charged off decreased from the third quarter of 2006
primarily as result of the higher levels of loans charged off in periods prior to September 30, 2006. Such fluctuations in loan recoveries from year-to-year are due to
variability in timing of recoveries and tend to trail the periods in which charge offs are recorded.

48

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Nonperforming Assets

Nonperforming assets consist of nonaccrual loans and foreclosed assets. Nonaccrual loans are those for which management has discontinued accrual of interest
because there exists significant uncertainty as to the full and timely collection of either principal or interest or such loans have become contractually past due 90 days with respect to
principal or interest. For a more detailed discussion of the accounting for nonaccrual loans, see Note 1 to the Consolidated Financial Statements included in our 2006
Form 10-K.

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

The
following table sets forth an analysis of nonperforming assets.

|                                                          |                            |   |         |        |   |         |        | Increase (Decrease)
September 30, 2007 from: |        
|--------------------------------------------------------- | -------------------------- | - | ------- | ------ | - | ------- | ------ | -------------------------------------------- | -------
|
|
|
|Commercial, financial and industrial                      |                            | $ | 14,171  |        | $ | 7,552   |        | $                                            | 36,979 
|Commercial mortgage                                       |                            |   | 18,538  |        |   | 19,187  |        |                                              | 14,265 
|Lease financing                                           |                            |   | 15,094  |        |   | 15,047  |        |                                              |       
|                                                          |                            |   |         |        |   |         |        |                                              |        
|                                                          | Total nonaccrual loans     |   |         | 47,803 |   |         | 41,786 |                                              |        
|Foreclosed assets                                         |                            |   |        |        |   | 579     |        |                                              | 1,318  
|                                                          |                            |   |         |        |   |         |        |                                              |        
|                                                          | Total nonperforming assets |   | $       | 47,803 |   | $       | 42,365 |                                              | $      
|                                                          |                            |   |         |        |   |         |        |                                              |        
|Allowance for loan losses                                 |                            | $ | 326,955 |        | $ | 331,077 |        | $                                            | 350,491
|                                                          |                            |   |         |        |   |         |        |                                              |        
|Allowances for credit losses(1)                           |                            | $ | 406,329 |        | $ | 412,451 |        | $                                            | 436,865
|                                                          |                            |   |         |        |   |         |        |                                              |        
|Nonaccrual loans to total loans                           |                            |   | 0.13    | %      |   | 0.11    | %      |                                              | 0.13   
|Allowance for loan losses to nonaccrual loans             |                            |   | 683.96  |        |   | 792.32  |        |                                              | 683.96 
|Allowances for credit losses to nonaccrual loans          |                            |   | 850.01  |        |   | 987.06  |        |                                              | 852.52 
|Nonperforming assets to total loans and foreclosed assets |                            |   | 0.13    |        |   | 0.12    |        |                                              | 0.13   
|Nonperforming assets to total assets                      |                            |   | 0.09    |        |   | 0.08    |        |                                              | 0.10   

---

nm =
not meaningful

The increase in commercial, financial and industrial nonperforming loans was primarily due to the addition of two nonperforming loans, which
included an energy company (for $12 million) and a medical equipment rental company (for $11 million). We had no sales of nonperforming loans during the third quarters of
2006 and 2007. Losses and recoveries that result when the sale decision is made are reflected in our net charge offs.

49

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Loans 90 Days or More Past Due and Still Accruing

|                                     |                                                         |                |       |       |       |       |       | Increase (Decrease)
September 30, 2007 from: |      
|------------------------------------ | ------------------------------------------------------- | -------------- | ----- | ----- | ----- | ----- | ----- | -------------------------------------------- | -----
|
|
|
|Commercial, financial and industrial |                                                         | $              | 563   |       | $     | 3,085 |       | $                                            | 3,076
|Construction                         |                                                         |                |      |       |       |      |       |                                              | 3,052
|Mortgage:                            |                                                         |                |       |       |       |       |       |                                              |      
|                                     | Residential                                             |                |       | 2,259 |       |       | 2,359 |                                              |      
|                                     | Commercial                                              |                |       |      |       |       | 2,155 |                                              |      
|                                     |                                                         |                |       |       |       |       |       |                                              |      
|                                     |                                                         | Total mortgage |       |       | 2,259 |       |       | 4,514                                        |      
|Consumer and other                   |                                                         |                | 1,342 |       |       | 1,706 |       |                                              | 819  
|                                     |                                                         |                |       |       |       |       |       |                                              |      
|                                     | Total loans 90 days or more past due and still accruing |                | $     | 4,164 |       | $     | 9,305 |                                              | $    
|                                     |                                                         |                |       |       |       |       |       |                                              |      

---

nm =
not meaningful

Quantitative and Qualitative Disclosures About Market Risk

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

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

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

The
Treasurer is primarily responsible for the implementation of Asset Liability risk management strategies approved by ALCO and for operating management of market risk through the
funding, investment and derivatives hedging activities of Corporate Treasury. The manager of the Global Markets Division is responsible for operating management of price risk through the trading
activities conducted in that division. The Market Risk Monitoring unit is responsible for the monitoring of market risk and functions independently of all operating and management units.

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

50

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"Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our 2006 Form 10-K.



During the first nine months of 2007, our interest rate risk profile remained neutral to slightly liability-sensitive primarily as a result of trends in our
unhedged, core balance sheet including wholesale funding replacing declining noninterest bearing deposit balances. In February and April 2007, we added $500 million and
$900 million, respectively, of new floor hedges to maintain our downside neutral to liability sensitivity (see our discussion of "ALM Derivatives" below).

At
September 30, 2007, Economic Net Interest Income (NII) sensitivity was neutral to slightly liability-sensitive to parallel rate shifts. A +200 basis point parallel shift
would reduce 12-month Economic NII by 0.13 percent, while a similar downward shift would increase it by 0.74 percent. At September 30, 2006, a +200 basis point
parallel shift would reduce the 12-month Economic NII by 1.02 percent, while a -200 basis point shift would increase it by 0.18 percent. We caution that
ongoing enhancements or changes in assumptions to our interest rate risk modeling may make prior year comparisons of Economic NII less meaningful. Economic NII adjusts our reported NII for the effect
of certain noninterest bearing deposit related fee and expense items. Those adjustment items are innately liability-sensitive, meaning that reported NII is more asset-sensitive or less
liability-sensitive than Economic NII.

Economic NII

|(Dollars in millions)            |  | September 30, 2006 |       | December 31, 2006 |   | September 30, 2007 |   
|-------------------------------- |  | ------------------ | ----- | ----------------- | - | ------------------ | --
|+200 basis points                |  | $                  | (19.6 | )                 | $ | (7.0               | ) 
|as a percentage of base case NII |  |                    | (1.02 | )%                |   | (0.37              | )%
|-200 basis points                |  | $                  | 3.4   |                   | $ | 20.5               |   
|as a percentage of base case NII |  |                    | 0.18  | %                 |   | 1.09               | % 

The figures in the above table are reported on a continuing operations basis, with all assets and liabilities associated with the disposal of the
international correspondent banking business eliminated. We believe that this approach provides the best representation of our risk profiles.

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



During the first nine months of 2007, our unhedged, core balance sheet became less asset-sensitive compared to the first nine months of 2006. The change in the
risk profile of the core balance sheet resulted primarily from a decline in core deposit balances and increased asset growth funded by proportionally more short-term wholesale liabilities.
At September 30, 2007, the core balance sheet continues to be asset-sensitive, meaning that the current mix of assets reprices faster than our current mix of liabilities. In managing the
interest rate sensitivity of our balance sheet, we use the ALM investment securities portfolio and derivatives positions as the primary tools to adjust our interest rate risk profile, if necessary.
During the first nine months of 2007, we reinvested proceeds from maturing ALM securities into securities with like terms and asset allocation. New derivative hedges were also added during the year as
described below.

51

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At both September 30, 2006 and 2007, our available for sale securities portfolio included $6.6 billion of securities for ALM purposes. At
September 30, 2007, approximately $3.7 billion of the portfolio was pledged to secure trust and public deposits and for other purposes as required or permitted by law. During the first
nine months of 2007, we purchased approximately $1.3 billion of securities, while approximately $1.4 billion of securities matured or were called during the same period. The composition
of the portfolio is expected to remain relatively stable in 2007. Based on current prepayment projections, the estimated ALM portfolio effective duration was 2.2 at September 30, 2007,
compared to 2.0 at September 30, 2006.

Effective
duration is a measure of price sensitivity of a bond portfolio to immediate parallel shifts in interest rates. An effective duration of 2.2 suggests an expected price
change of approximately minus 2.2 percent for an immediate 1.0 percent increase in interest rates.



During the first nine months of 2007, the ALM derivatives portfolio decreased by a net $500 million notional amount, as $1.4 billion of notional
amount of LIBOR floor contracts were purchased to maintain the downside neutral to liability sensitivity of our overall risk position, offset by maturities of $1.7 billion notional amount of
receive fixed interest rate swaps and $200 million notional amount in LIBOR floors.

The
fair value of the ALM derivative contracts increased during the third quarter of 2007 as the value of our receive fixed interest rate swaps and floor option contracts increased with
the Fed easing in September and the expectation of lower future interest rates. For additional discussion of derivative instruments and our hedging strategies, see Note 8 to the
Condensed Consolidated Financial Statements included in this Form 10-Q and Note 19 to the Consolidated Financial Statements included in our 2006
Form 10-K.

The
following table provides the notional value and the fair value of our ALM derivatives portfolio as of September 30, 2006, December 31, 2006 and September 30,
2007 and the change in fair value between December 31, 2006 and September 30, 2007.

|(Dollars in thousands)                                                         |                                                            | September 30, 2006                               |           | December 31, 2006 |         | September 30, 2007 |        | Increase / (Decrease) From December 31, 2006 to September 30, 2007 |          
|------------------------------------------------------------------------------ | ---------------------------------------------------------- | ------------------------------------------------ | --------- | ----------------- | ------- | ------------------ | ------ | ------------------------------------------------------------------ | ---------
|Total gross notional amount of positions held for purposes other than trading: |                                                            | $                                                | 7,200,000 |                   | $       | 8,250,000          |        | $                                                                  | 7,750,000
|                                                                               | Of which, interest rate swaps pay fixed rates of interest: |                                                  | $         |                  |         | $                  |       |                                                                    | $        
|                                                                               |                                                            |                                                  |           |                   |         |                    |        |                                                                    |          
|Fair value of positions held for purposes other than trading:                  |                                                            |                                                  |           |                   |         |                    |        |                                                                    |          
|                                                                               | Gross positive fair value                                  |                                                  | $         | 31,956            |         | $                  | 44,720 |                                                                    | $        
|                                                                               | Gross negative fair value                                  |                                                  | $         | 46,890            |         | $                  | 37,682 |                                                                    | $        
|                                                                               |                                                            |                                                  |           |                   |         |                    |        |                                                                    |          
|                                                                               |                                                            | Positive (Negative) Fair value of positions, net |           | $                 | (14,934 | )                  | $      | 7,038                                                              |          
|                                                                               |                                                            |                                                  |           |                   |         |                    |        |                                                                    |          



We enter into trading account activities primarily as a financial intermediary for customers and, to a minor extent, for our own account. By acting as a financial
intermediary, we are able to provide our customers with access to a range of products from the securities, foreign exchange and derivatives markets. In acting for our own account, we may take
positions in certain securities and foreign exchange instruments, subject to various limits in amount, tenor and other respects, with the objective of generating trading profits.

52

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As of September 30, 2007, we had approximately $11.3 billion notional amount of interest rate derivative contracts, which included approximately $5.6 billion
notional amount of derivative contracts entered into as an accommodation for customers. We act as an intermediary and entered into approximately $5.7 billion notional amount of offsetting
contracts with major dealers, at a credit spread, thus neutralizing substantially all of the related market risk on our customer accommodation transactions.

We
market energy derivative contracts to existing energy industry customers, primarily oil and gas producers, in order to meet their hedging needs. All transactions are fully matched to
remove our exposure to market risk, with income earned on the credit spread. As of September 30, 2007, we had $3.0 billion notional amount of energy derivative contracts with half of
these energy derivative contacts entered into as an accommodation for customers and the remaining half entered into as matching contracts to remove our exposure to market risk on our customer
accommodation transactions.

Liquidity Risk

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

Core
deposits provide us with a sizable source of relatively stable and low-cost funds. Our $32.6 billion in average core deposits (which consist of demand deposits,
money market demand accounts, savings and consumer time deposits under $100,000), combined with average common stockholders' equity, funded 70 percent of average total assets of
$53.5 billion in the third quarter of 2007. Most of the remaining funding was provided by short-term borrowings in the form of certificates of deposit, large time deposits, federal
funds purchased, securities sold under repurchase agreements, commercial paper and other borrowings. During the first nine months of 2007, we extended the weighted average maturity of our wholesale
borrowing position to enhance our overall liquidity profile.

Our
securities portfolio provides additional enhancement to our liquidity position, which may be created through either securities sales or repurchase agreements. At September 30,
2007, we could have sold or transferred under repurchase agreements approximately $3.6 billion of our available for sale securities including excess pledged securities available for withdrawal
on short notice. Liquidity may also be provided by the sale or maturity of other assets such as interest-bearing deposits in banks, federal funds sold and trading account securities. The aggregate
balance of these assets averaged $767.5 million in the third quarter of 2007. Additional liquidity may be provided through loan maturities and sales.

On
March 23, 2007, the Bank issued $750 million of two-year floating rate senior notes under the $4 billion Bank Note Program initiated in 2006. Combined
with the $700 million, ten-year, fixed rate subordinated note issuance in 2006, the remaining available funding from the Bank Note Program is $2.6 billion. In the third
quarter 2007, the Bank pledged collateral to establish an operational funding capacity with the Federal Home Loan Bank of San Francisco.

In
addition to the funding provided by our bank subsidiary, we raise funds at the holding company level. UnionBanCal Corporation has in place a shelf registration statement with the SEC
permitting ready access to the public debt markets. As of September 30, 2007, $600 million of debt or other securities were available for issuance under this shelf registration. Although
we do not have firm commitments in place to sell securities

53

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under
the Bank Note Program or the shelf registration statement, these sources, in addition to our core deposit and equity capital, provide a stable funding base. Management does not rely on any
single source of liquidity and manages availability in response to changing balance sheet needs.

Effective
May 2007, Moody's upgraded the long-term rating of Union Bank of California, N.A. as shown in the table below. The following table reflects our credit
ratings as of September 30, 2007.

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

Regulatory Capital

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

UnionBanCal Corporation

|(Dollars in thousands)   |  | September 30, 2006 |            | December 31, 2006 |   | September 30, 2007 |  | Minimum Regulatory Requirement
|------------------------ |  | ------------------ | ---------- | ----------------- | - | ------------------ |  | ------------------------------
|Capital Components       |  |                    |            |                   |   |                    |  |                               
|Tier 1 capital           |  | $                  | 4,261,221  |                   | $ | 4,333,865          |  | $                             
|Tier 2 capital           |  |                    | 1,502,587  |                   |   | 1,509,338          |  |                               
|                         |  |                    |            |                   |   |                    |  |                               
|Total risk-based capital |  | $                  | 5,763,808  |                   | $ | 5,843,203          |  | $                             
|                         |  |                    |            |                   |   |                    |  |                               
|Risk-weighted assets     |  | $                  | 49,079,079 |                   | $ | 49,904,203         |  | $                             
|                         |  |                    |            |                   |   |                    |  |                               
|Quarterly average assets |  | $                  | 50,324,270 |                   | $ | 51,353,681         |  | $                             
|                         |  |                    |            |                   |   |                    |  |                               

|                                         |  | Amount |           | Ratio |       | Amount |   | Ratio     |  | Amount |   | Ratio |           | Amount |       | Ratio |   
|---------------------------------------- |  | ------ | --------- | ----- | ----- | ------ | - | --------- |  | ------ | - | ----- | --------- | ------ | ----- | ----- | --
|Capital Ratios                           |  |        |           |       |       |        |   |           |  |        |   |       |           |        |       |       |   
|Total capital (to risk-weighted assets)  |  | $      | 5,763,808 |       | 11.74 | %      | $ | 5,843,203 |  | 11.71  | % | $     | 6,010,650 |        | 11.28 | %     | 3$
|Tier 1 capital (to risk-weighted assets) |  |        | 4,261,221 |       | 8.68  |        |   | 4,333,865 |  | 8.68   |   |       | 4,476,759 |        | 8.40  |       |   
|Leverage(1)                              |  |        | 4,261,221 |       | 8.47  |        |   | 4,333,865 |  | 8.44   |   |       | 4,476,759 |        | 8.39  |       |   

---

54

---



Union Bank of California, N.A.

|(Dollars in thousands)   |  | September 30, 2006 |            | December 31, 2006 |   | September 30, 2007 |  | Minimum Regulatory Requirement |            | "Well-Capitalized" Regulatory Requirement
|------------------------ |  | ------------------ | ---------- | ----------------- | - | ------------------ |  | ------------------------------ | ---------- | -----------------------------------------
|Capital Components       |  |                    |            |                   |   |                    |  |                                |            |                                          
|Tier 1 capital           |  | $                  | 4,261,541  |                   | $ | 4,179,359          |  | $                              | 4,351,532  |                                          
|Tier 2 capital           |  |                    | 1,093,876  |                   |   | 1,100,287          |  |                                | 1,125,260  |                                          
|                         |  |                    |            |                   |   |                    |  |                                |            |                                          
|Total risk-based capital |  | $                  | 5,355,417  |                   | $ | 5,279,646          |  | $                              | 5,476,792  |                                          
|                         |  |                    |            |                   |   |                    |  |                                |            |                                          
|Risk-weighted assets     |  | $                  | 48,472,149 |                   | $ | 49,385,397         |  | $                              | 52,802,713 |                                          
|                         |  |                    |            |                   |   |                    |  |                                |            |                                          
|Quarterly average assets |  | $                  | 49,674,643 |                   | $ | 50,686,185         |  | $                              | 52,775,720 |                                          
|                         |  |                    |            |                   |   |                    |  |                                |            |                                          

|                                         |  | Amount |           | Ratio |       | Amount |   | Ratio     |  | Amount |   | Ratio |           | Amount |       | Ratio |    | Amount       |  | Ratio |  
|---------------------------------------- |  | ------ | --------- | ----- | ----- | ------ | - | --------- |  | ------ | - | ----- | --------- | ------ | ----- | ----- | -- | ------------ |  | ----- | -
|Capital Ratios                           |  |        |           |       |       |        |   |           |  |        |   |       |           |        |       |       |    |              |  |       |  
|Total capital (to risk-weighted assets)  |  | $      | 5,355,417 |       | 11.05 | %      | $ | 5,279,646 |  | 10.69  | % | $     | 5,476,792 |        | 10.37 | %     | 3$ | 4,224,217    |  | 8.0   | %
|Tier 1 capital (to risk-weighted assets) |  |        | 4,261,541 |       | 8.79  |        |   | 4,179,359 |  | 8.46   |   |       | 4,351,532 |        | 8.24  |       |    | 3  2,112,109 |  | 4.0   |  
|Leverage(1)                              |  |        | 4,261,541 |       | 8.58  |        |   | 4,179,359 |  | 8.25   |   |       | 4,351,532 |        | 8.25  |       |    | 3  2,111,029 |  | 4.0   |  

---

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

The
decrease in the Tier 1 and Total capital ratios from September 30, 2006 and December 31, 2006 was primarily due to an increase in risk-weighted
assets stemming from growth in our loan portfolio and unfunded commitments. The decrease in our Leverage ratios from September 30, 2006 and December 31, 2006 was primarily due to the
increase in our quarterly average assets resulting from the growth in our loan portfolio.

As
of September 30, 2007, management believes the capital ratios of Union Bank of California met all regulatory requirements of "well-capitalized" institutions, which
are 10 percent for the Total risk-based capital ratio, 6 percent for the Tier 1 risk-based capital ratio and 5 percent for the Leverage ratio.

Business Segments

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

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

The
tables that follow reflect the condensed income statements, selected average balance sheet items and selected financial ratios, including changes from the prior year, for each of our
reportable business segments. The information presented does not necessarily represent the businesses' financial condition and results of operations as if they were independent entities. Our reporting
reflects a "market view" perspective in measuring the profitability of our operating segments. The market view is a measurement of our customer markets aggregated to show all revenues generated and
expenses incurred from all products and services sold

55

---



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

Unlike
financial accounting, there is no authoritative body of guidance for management accounting equivalent to US GAAP. Consequently, reported results are not necessarily comparable
with those presented by other companies.

The
RAROC measurement methodology recognizes credit expense for expected losses arising from credit risk and attributes economic capital related to unexpected losses arising from credit,
market and operational risks. As a result of the methodology used by the RAROC model to calculate expected losses, differences between the provision for credit losses and credit expense in any one
period could be significant.

However,
over an economic cycle, the cumulative provision for credit losses and credit expense for expected losses should be substantially the same. Business unit results are based on an
internal management reporting system used by management to measure the performance of the units and UnionBanCal Corporation as a whole. Our management reporting system identifies balance sheet and
income statement items for each business unit based on internal management accounting policies. Net interest income is determined using our internal funds transfer pricing system, which assigns a cost
of funds to assets or a credit for funds to liabilities and capital, based on their type, maturity or repricing characteristics. Noninterest income and expense directly or indirectly attributable to a
business unit are assigned to that business. The business units are assigned the costs of products and services directly attributable to their business activity through standard unit cost accounting
based on volume of usage. All other corporate expenses (overhead) are allocated to the business units based on a predetermined percentage of usage.

56

---



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

|                                                          |                                                              | Retail Banking |        |         |   |        |         | Wholesale Banking |        |         |    |    |   
|--------------------------------------------------------- | ------------------------------------------------------------ | -------------- | ------ | ------- | - | ------ | ------- | ----------------- | ------ | ------- | -- | -- | --
|
|
|Results of operationsMarket View (dollars in thousands): |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|                                                          | Net interest income (expense)                                |                | $      | 240,741 |   | $      | 222,971 |                   | $      | (17,770 | )  | (7 | )%
|                                                          | Noninterest income (expense)                                 |                |        | 127,266 |   |        | 135,448 |                   |        | 8,182   |    | 6  |   
|                                                          |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|                                                          | Total revenue                                                |                |        | 368,007 |   |        | 358,419 |                   |        | (9,588  | )  | (3 | ) 
|                                                          | Noninterest expense (income)                                 |                |        | 241,264 |   |        | 233,630 |                   |        | (7,634  | )  | (3 | ) 
|                                                          | Credit expense (income)                                      |                |        | 6,249   |   |        | 6,361   |                   |        | 112     |    | 2  |   
|                                                          |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|                                                          | Income (loss) from continuing operations before income taxes |                |        | 120,494 |   |        | 118,428 |                   |        | (2,066  | )  | (2 | ) 
|                                                          | Income tax expense (benefit)                                 |                |        | 46,089  |   |        | 45,299  |                   |        | (790    | )  | (2 | ) 
|                                                          |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|                                                          | Income (loss) from continuing operations                     |                |        | 74,405  |   |        | 73,129  |                   |        | (1,276  | )  | (2 | ) 
|                                                          | Loss from discontinued operations, net of income taxes       |                |        |        |   |        |        |                   |        |        |    | na |   
|                                                          |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|Net income (loss)                                         |                                                              | $              | 74,405 |         | $ | 73,129 |         | $                 | (1,276 | )       | (2 | )  | $ 
|                                                          |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|Average balancesMarket View (dollars in millions):       |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|                                                          | Total loans                                                  |                | $      | 15,810  |   | $      | 17,050  |                   | $      | 1,240   |    | 8  |   
|                                                          | Total assets                                                 |                |        | 16,669  |   |        | 17,874  |                   |        | 1,205   |    | 7  |   
|                                                          | Total deposits                                               |                |        | 18,886  |   |        | 19,066  |                   |        | 180     |    | 1  |   
|Financial ratiosMarket View                              |                                                              |                |        |         |   |        |         |                   |        |         |    |    |   
|                                                          | Risk adjusted return on capital(1)                           |                |        | 45.00   | % |        | 45.00   | %                 |        |         |    |    |   
|                                                          | Return on average assets(1)                                  |                |        | 1.77    |   |        | 1.62    |                   |        |         |    |    |   
|                                                          | Efficiency ratio(2)                                          |                |        | 65.56   |   |        | 65.17   |                   |        |         |    |    |   

|                                                          |                                                              | Other |   |         |   |   |         | Reconciling Items |   | UnionBanCal Corporation |   |      |   |   |        
|--------------------------------------------------------- | ------------------------------------------------------------ | ----- | - | ------- | - | - | ------- | ----------------- | - | ----------------------- | - | ---- | - | - | -------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Net interest income (expense)                                |       | $ | (45,497 | ) | $ | (35,780 | )                 | $ | 9,717                   |   | 21   | % | $ | (2,445 
|                                                          | Noninterest income (expense)                                 |       |   | 459     |   |   | 7,074   |                   |   | 6,615                   |   | nm   |   |   | (16,033
|                                                          |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Total revenue                                                |       |   | (45,038 | ) |   | (28,706 | )                 |   | 16,332                  |   | 36   |   |   | (18,478
|                                                          | Noninterest expense (income)                                 |       |   | 15,534  |   |   | 25,242  |                   |   | 9,708                   |   | 62   |   |   | (9,047 
|                                                          | Credit expense (income)                                      |       |   | (29,421 | ) |   | (18,569 | )                 |   | 10,852                  |   | 37   |   |   | (24    
|                                                          |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Income (loss) from continuing operations before income taxes |       |   | (31,151 | ) |   | (35,379 | )                 |   | (4,228                  | ) | (14  | ) |   | (9,407 
|                                                          | Income tax expense (benefit)                                 |       |   | (15,342 | ) |   | (3,797  | )                 |   | 11,545                  |   | 75   |   |   | (3,598 
|                                                          |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Income (loss) from continuing operations                     |       |   | (15,809 | ) |   | (31,582 | )                 |   | (15,773                 | ) | (100 | ) |   | (5,809 
|                                                          | Loss from discontinued operations, net of income taxes       |       |   | (1,204  | ) |   | (22,636 | )                 |   | (21,432                 | ) | nm   |   |   |       
|                                                          |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Net income (loss)                                            |       | $ | (17,013 | ) | $ | (54,218 | )                 | $ | (37,205                 | ) | nm   |   | $ | (5,809 
|                                                          |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|Average balancesMarket View (dollars in millions):       |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Total loans                                                  |       | $ | 32      |   | $ | 8       |                   | $ | (24                     | ) | (75  | ) | $ | (21    
|                                                          | Total assets                                                 |       |   | 9,360   |   |   | 8,446   |                   |   | (914                    | ) | (10  | ) |   | (25    
|                                                          | Total deposits                                               |       |   | 6,082   |   |   | 5,246   |                   |   | (836                    | ) | (14  | ) |   | (2,723 
|Financial ratiosMarket View                              |                                                              |       |   |         |   |   |         |                   |   |                         |   |      |   |   |        
|                                                          | Risk adjusted return on capital(1)                           |       |   | na      |   |   | na      |                   |   |                         |   |      |   |   | na     
|                                                          | Return on average assets(1)                                  |       |   | na      |   |   | na      |                   |   |                         |   |      |   |   | na     
|                                                          | Efficiency ratio(2)                                          |       |   | na      |   |   | na      |                   |   |                         |   |      |   |   | na     

---

na =
not applicable

nm =
not meaningful

57

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|                                                          |                                                              | Retail Banking |   |           |   |   |           | Wholesale Banking |   |         |   |    |   
|--------------------------------------------------------- | ------------------------------------------------------------ | -------------- | - | --------- | - | - | --------- | ----------------- | - | ------- | - | -- | --
|
|
|Results of operationsMarket View (dollars in thousands): |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|                                                          | Net interest income (expense)                                |                | $ | 708,539   |   | $ | 678,808   |                   | $ | (29,731 | ) | (4 | )%
|                                                          | Noninterest income (expense)                                 |                |   | 393,239   |   |   | 393,718   |                   |   | 479     |   | 0  |   
|                                                          |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|                                                          | Total revenue                                                |                |   | 1,101,778 |   |   | 1,072,526 |                   |   | (29,252 | ) | (3 | ) 
|                                                          | Noninterest expense (income)                                 |                |   | 723,247   |   |   | 717,986   |                   |   | (5,261  | ) | (1 | ) 
|                                                          | Credit expense (income)                                      |                |   | 19,221    |   |   | 18,896    |                   |   | (325    | ) | (2 | ) 
|                                                          |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|                                                          | Income (loss) from continuing operations before income taxes |                |   | 359,310   |   |   | 335,644   |                   |   | (23,666 | ) | (7 | ) 
|                                                          | Income tax expense (benefit)                                 |                |   | 137,436   |   |   | 128,384   |                   |   | (9,052  | ) | (7 | ) 
|                                                          |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|                                                          | Income (loss) from continuing operations                     |                |   | 221,874   |   |   | 207,260   |                   |   | (14,614 | ) | (7 | ) 
|                                                          | Loss from discontinued operations, net of income taxes       |                |   |          |   |   |          |                   |   |        |   | na |   
|                                                          |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|                                                          | Net income (loss)                                            |                | $ | 221,874   |   | $ | 207,260   |                   | $ | (14,614 | ) | (7 | ) 
|                                                          |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|Average balancesMarket View (dollars in millions):       |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|                                                          | Total loans                                                  |                | $ | 15,559    |   | $ | 16,590    |                   | $ | 1,031   |   | 7  |   
|                                                          | Total assets                                                 |                |   | 16,428    |   |   | 17,422    |                   |   | 994     |   | 6  |   
|                                                          | Total deposits                                               |                |   | 19,022    |   |   | 18,911    |                   |   | (111    | ) | (1 | ) 
|Financial ratiosMarket View                              |                                                              |                |   |           |   |   |           |                   |   |         |   |    |   
|                                                          | Risk adjusted return on capital(1)                           |                |   | 46.00     | % |   | 42.00     | %                 |   |         |   |    |   
|                                                          | Return on average assets(1)                                  |                |   | 1.81      |   |   | 1.59      |                   |   |         |   |    |   
|                                                          | Efficiency ratio(2)                                          |                |   | 65.64     |   |   | 66.94     |                   |   |         |   |    |   

|                                                          |                                                              | Other |   |         |   |   |          | Reconciling Items |   | UnionBanCal Corporation |   |      |    |   |        
|--------------------------------------------------------- | ------------------------------------------------------------ | ----- | - | ------- | - | - | -------- | ----------------- | - | ----------------------- | - | ---- | -- | - | -------
|
|
|Results of operationsMarket View (dollars in thousands): |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|                                                          | Net interest income (expense)                                |       | $ | (91,039 | ) | $ | (114,389 | )                 | $ | (23,350                 | ) | (26  | )% | $ | (7,282 
|                                                          | Noninterest income (expense)                                 |       |   | 5,929   |   |   | 14,812   |                   |   | 8,883                   |   | 150  |    |   | (54,874
|                                                          |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|                                                          | Total revenue                                                |       |   | (85,110 | ) |   | (99,577  | )                 |   | (14,467                 | ) | (17  | )  |   | (62,156
|                                                          | Noninterest expense (income)                                 |       |   | 51,836  |   |   | 71,087   |                   |   | 19,251                  |   | 37   |    |   | (32,983
|                                                          | Credit expense (income)                                      |       |   | (98,701 | ) |   | (73,982  | )                 |   | 24,719                  |   | 25   |    |   | (69    
|                                                          |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|                                                          | Income (loss) from continuing operations before income taxes |       |   | (38,245 | ) |   | (96,682  | )                 |   | (58,437                 | ) | nm   |    |   | (29,104
|                                                          | Income tax expense (benefit)                                 |       |   | (27,784 | ) |   | (29,296  | )                 |   | (1,512                  | ) | (5   | )  |   | (11,132
|                                                          |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|                                                          | Income (loss) from continuing operations                     |       |   | (10,461 | ) |   | (67,386  | )                 |   | (56,925                 | ) | nm   |    |   | (17,972
|                                                          | Loss from discontinued operations, net of income taxes       |       |   | (9,440  | ) |   | (22,636  | )                 |   | (13,196                 | ) | (140 | )  |   |       
|                                                          |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|                                                          | Net income (loss)                                            |       | $ | (19,901 | ) | $ | (90,022  | )                 | $ | (70,121                 | ) | nm   |    | $ | (17,972
|                                                          |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|Average balancesMarket View (dollars in millions):       |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|                                                          | Total loans                                                  |       | $ | 31      |   | $ | 22       |                   | $ | (9                      | ) | (29  | )  | $ | (19    
|                                                          | Total assets                                                 |       |   | 8,814   |   |   | 8,593    |                   |   | (221                    | ) | (3   | )  |   | (23    
|                                                          | Total deposits                                               |       |   | 2,976   |   |   | 5,357    |                   |   | 2,381                   |   | 80   |    |   | (582   
|Financial ratiosMarket View                              |                                                              |       |   |         |   |   |          |                   |   |                         |   |      |    |   |        
|                                                          | Risk adjusted return on capital(1)                           |       |   | na      |   |   | na       |                   |   |                         |   |      |    |   | na     
|                                                          | Return on average assets(1)                                  |       |   | na      |   |   | na       |                   |   |                         |   |      |    |   | na     
|                                                          | Efficiency ratio(2)                                          |       |   | na      |   |   | na       |                   |   |                         |   |      |    |   | na     

---

na =
not applicable

nm =
not meaningful

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

During
the nine months ended September 30, 2007, Retail Banking net income decreased 7 percent from the same period in 2006, primarily due to lower net interest income. Net
interest income declined 4 percent as a result of lower noninterest bearing deposits and higher interest expense.

Average
total deposits were essentially flat during the nine months ended September 30, 2007, compared to the same period in 2006. Retail Banking's customer segmentation strategy
continues to focus on retaining and attracting consumer and small business deposits through marketing activities, increasing customer cross-sell, relationship management, increasing and
improving sales resources, establishing new locations and new products.

Noninterest
income increased slightly for the nine months ended September 30, 2007 compared to the same period in 2006.

Noninterest
expense decreased 1 percent for the nine months ended September 30, 2007 compared to the prior year primarily from lower non-personnel related
operating expenses.

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



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



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

Our
Retail Banking Branches and Consumer Asset Management divisions operate in a highly competitive environment including traditional banking institutions as well as
non-traditional competitors such as investment brokerage companies, consumer finance companies and residential real estate lenders.

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We
have an extensive branch network that provides convenient banking hours and a full menu of products and services to meet the needs of consumers and small businesses.



Wholesale Banking offers financing, depository, cash management and insurance services to middle market and large corporate businesses primarily headquartered in
the western United States. Wholesale Banking continues to focus on specific geographic markets and industry segments such as energy, entertainment and real estate. Relationship managers provide credit
services, including commercial loans, accounts receivable and inventory financing, project financing, lease financing, trade financing and real estate financing. In addition to credit services,
Wholesale Banking offers cash management services delivered through deposit managers with significant industry expertise and experience in cash management solutions for businesses, U.S. correspondent
banks and government entities, as well as investment and risk management products.

During
the nine months ended September 30, 2007, Wholesale Banking net income increased slightly from the same period in 2006, due to higher tax credits associated with the
financing of low income housing projects, partly offset by lower total revenue.

For
the nine months ended September 30, 2007, net interest income decreased 7 percent compared to the same period in 2006. The decrease in net interest income was partly
due to an increase in the title and escrow loan portfolio, which is highly rate-advantaged compared to other commercial loans.

Noninterest
income was 9 percent higher for the nine months ended September 30, 2007 compared to the prior year primarily due to higher net gains on private capital
investments.

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Noninterest
expense for the nine months ended September 30, 2007 decreased 3 percent from prior year primarily as a result of lower deposit balances of title and escrow
customers along with their increased usage of title and escrow loans, which when combined resulted in lower vendor billing expense incurred on behalf of these customers. Offsetting this decrease in
noninterest expense were foreclosed asset recoveries in the nine months ended September 30, 2006, which did not occur in the same period in 2007.

Wholesale
Banking initiatives continue to include expanding deposit activities and loan strategies that include originating, underwriting and syndicating loans in core competency
markets, such as the California middle-market, corporate banking, commercial real estate, energy, equipment leasing and commercial finance.

Wholesale Bankingis comprised of the following main divisions:



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

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and
our reputation as a "business bank." We also compete with a variety of other financial services companies as well as non-bank companies. Competitors include other major California
banks, as well as regional, national and international banks. In addition, we compete with investment banks, commercial finance companies, leasing companies and insurance companies.



Net loss for "Other" increased by $70.1 million for the nine months ended September 30, 2007 compared to the same period in 2006. Net interest
expense was $23.4 million higher primarily due to the impact of higher market rates on transfer pricing results. Credit expense on expected loan and lease losses increased by
$24.7 million due to higher loan loss provisions taken at the Corporate level. Noninterest expense was $19.3 million higher, primarily due to higher compliance related expenses. The loss
from discontinued operations increased $13.2 million mainly due to a $21.6 million payment to the DOJ. For additional information, refer to "Regulatory Matters" in this
Form 10-Q.

"Other"
includes the following items:



The
financial results for the nine months ended September 30, 2007 were impacted by the following factors:



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The
financial results for the nine months ended September 30, 2006 were impacted by the following factors:



Regulatory Matters

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

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

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

Notwithstanding
these efforts, on September 14, 2007, Union Bank of California entered into a Stipulation and Consent to the Issuance of a Consent Order, and a Consent Order to a
Civil Money Penalty and to Cease and Desist (the Order) with the OCC. The Order supersedes the March 2005 memorandum of understanding described above. The Order imposes a civil money
penalty of $10 million and requires Union Bank of California to take actions to improve Bank Secrecy Act compliance. On the same day, the U.S. Treasury Department's Financial Crimes Enforcement
Network (FinCEN) executed an Assessment of Civil Money

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

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

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

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

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

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

Item 4.    Controls and Procedures

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that the design
and operation of our disclosure controls and procedures are effective as of September 30, 2007. This conclusion is based on an evaluation conducted under the supervision and with the
participation of management. Disclosure controls and procedures are those controls and procedures which ensure that information required to be disclosed in this filing is accumulated and communicated
to management and is recorded, processed, summarized and reported in a timely manner and in accordance with Securities and Exchange Commission rules and regulations.

During
the quarter ended September 30, 2007, there were no changes in our internal controls over financial reporting that materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

For a discussion of the action filed against us by DataTreasury Corporation, refer to Item 3 of Part I of our 2006
Form 10-K.

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

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

Item 1A.    Risk Factors

We are subject to numerous risks and uncertainties, including but not limited to those risks set forth in "Management's Discussion and Analysis of
Financial Condition and Results of OperationsRegulatory Matters" in Item 2 of Part I of this Form 10-Q and the following information:



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



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



The banking industry and we are facing increasing deposit-pricing pressures. Checking and savings account balances and other forms of deposits can decrease when
our deposit customers perceive alternative investments, such as the stock market, other non-depository investments or higher yielding deposits, as providing superior expected returns.
Technology and other changes have made it more convenient for bank customers to transfer funds into alternative investments or other deposit accounts, including products offered by other financial
institutions or non-bank service providers. Additional increases in short-term interest rates could increase such transfers of deposits to higher yielding deposits or other
investments either with us or with external providers. Efforts and initiatives we undertake to retain and increase deposits, including deposit pricing, can increase our costs. When bank customers move
money out of bank deposits in favor of alternative

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investments
or into higher yielding deposits, we can lose a relatively inexpensive source of funds, increasing our funding cost.



Deposits of Union Bank of California, N.A. are insured up to statutory limits by the Federal Deposit Insurance Corporation (FDIC), and, accordingly, are subjected
to deposit insurance assessments to maintain the Deposit Insurance Fund. In November 2006, the FDIC issued a final rule, effective January 1, 2007, that created a new assessment system
designed to more closely tie what banks pay for deposit insurance to the risks they pose and adopted a new base schedule of rates that the FDIC can adjust up or down, depending on the revenue needs of
the insurance fund. This new assessment system is expected to result in annual assessments on deposits of Union Bank of California of 5 to 7 basis points. Prior to this change, Union Bank of
California was not paying any insurance assessments on deposits under the FDIC's risk-related assessment system. An FDIC credit for prior contributions is expected to offset the assessment
for 2007. Once the credit is exceeded, which we presently expect to occur in the first half of 2008, the deposit insurance assessments Union Bank of California pays will increase our costs. Any future
increases in the deposit insurance assessments Union Bank of California pays would further increase our costs.



Acts or threats of terrorism and actions taken by the U.S. or other governments as a result of such acts or threats and other international hostilities may result
in a disruption of U.S. and global economic and financial conditions and could adversely affect business, economic and financial conditions in the U.S. and globally and in our principal markets.



Banking is a highly competitive business. We compete actively for loan, deposit, and other financial services business in California, Oregon and Washington, as
well as nationally and internationally. Our competitors include a large number of state and national banks, thrift institutions, credit unions and major foreign-affiliated or foreign banks, as well as
many financial and nonfinancial firms that offer services similar to those offered by us, including many large securities firms. Some of our competitors are community or regional banks that have
strong local market positions. Other competitors include large financial institutions that have substantial capital, technology and marketing resources that are well in excess of ours. 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. We also experience competition, especially for
deposits, from internet-based banking institutions, which have grown rapidly in recent years.



We are subject to significant federal and state regulation and supervision, which is primarily for the benefit and protection of our customers and the Deposit
Insurance Fund and not for the benefit of investors in our stock or other securities. In the past, our business has been materially affected by these regulations. This will likely continue in the
future. Laws, regulations or policies, including accounting standards and interpretations, currently affecting us and our subsidiaries may change at any time. Regulatory authorities may also change
their interpretation of these statutes and regulations. Therefore, our business may be adversely affected by changes in laws, regulations, policies or interpretations or regulatory approaches to
compliance and enforcement, as well as by supervisory action or criminal proceedings taken as a result of noncompliance which could result in the imposition of significant civil money penalties or
fines. International laws, regulations and policies affecting us, our subsidiaries and the business we conduct may change at any time and affect our

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business
opportunities and competitiveness in these jurisdictions. Due to The Bank of Tokyo-Mitsubishi UFJ's controlling ownership of us, laws, regulations, policies, fines and other supervisory
actions adopted or enforced by the Government of Japan and the Federal Reserve Board may adversely affect our activities and investments and those of our subsidiaries in the future.

We
maintain systems and procedures designed to comply with applicable laws and regulations. However, some legal/regulatory frameworks provide for the imposition of criminal or civil
penalties (which can be substantial) for noncompliance. In some cases, liability may attach even if the noncompliance was inadvertent or unintentional and even if there were in place at the time
compliance systems and procedures. There may be other negative consequences from a finding of noncompliance, including restrictions on certain activities and damage to our reputation.

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

Refer
to "Supervision and Regulation" in our 2006 Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations
(MD&A)Regulatory Matters" in this Form 10-Q for discussion of other laws and regulations that may affect our business, and certain pending or threatened
regulatory or other governmental matters, including those relating to the Bank Secrecy Act and other anti-money laundering laws and regulations (BSA/AML). Such matters include a
Stipulation and Consent to the Issuance of a Consent Order, and a Consent Order to a Civil Money Penalty and to Cease and Desist (the Order) entered into by Union Bank of California with the
OCC, an Assessment of Civil Money Penalty by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), and a Deferred Prosecution Agreement entered into by Union Bank of California
with the Department of Justice with respect to BSA/AML matters.



From time to time the Financial Accounting Standards Board and the SEC change the financial accounting and reporting standards that govern the preparation of our
financial statements. These changes can be very difficult to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be
required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements.



Technology and other changes increasingly allow parties to complete financial transactions electronically, and in many cases, without banks. For example,
consumers can pay bills and transfer funds over the internet and by telephone without banks. Many non-bank financial service providers have lower overhead costs and are subject to fewer
regulatory constraints. If consumers do not use banks to complete their financial transactions, we could potentially lose fee income, deposits and income generated from those deposits.

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A substantial majority of our assets, deposits and fee income are generated in California, and a substantial majority of our residential real estate loans are in
California. As a result, poor economic conditions in California may cause us to incur losses associated with higher default rates and decreased collateral values in our loan portfolio. Economic
conditions in California are subject to various uncertainties at this time and from time to time, including the softening in the California real estate market and housing industry and natural
disasters. If economic conditions in California decline, our level of problem assets could increase and our prospects for growth could be impaired.



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

We
provide financing to businesses in a number of other industries that may be particularly vulnerable to industry-specific economic factors, including the commercial real estate
industry, the communications/media industry, the retail industry, the energy industry and the technology industry. Increases in fuel prices and energy costs could adversely affect businesses in
several of these industries. Industry-specific risks are beyond our control and could adversely affect our portfolio of loans, potentially resulting in an increase in nonperforming loans or charge
offs and a slowing of growth or reduction in our loan portfolio.



When we loan money or commit to loan money, we incur credit risk, or the risk of losses if our borrowers do not repay their loans. We reserve for credit losses by
establishing an allowance through a charge to earnings. The amount of this allowance is based on our assessment of credit losses inherent in our loan portfolio and our unfunded credit commitments. The
process for determining the amount of the allowance is critical to our financial results and condition. It requires difficult, subjective and complex judgments about the future impact from current
economic conditions that might impair the ability of our borrowers to repay their loans.

We
might underestimate the credit losses inherent in our loan portfolio and have credit losses in excess of the amount reserved. Or, we might increase the allowance because of changing
economic conditions, which we conclude have caused losses to be sustained in our portfolio. For example, in a rising interest rate environment, borrowers with adjustable rate loans could see their
payments increase. In the absence of offsetting factors such as increased economic activity and higher wages, this could reduce borrowers' ability to repay their loans, resulting in our increasing the
allowance. Increased fuel and energy costs could also adversely impact some borrowers' ability to repay their loans. We might also increase the allowance because of unexpected events. Any increase in
the allowance would result in a charge to earnings.

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Banks, securities firms, and insurance companies can now combine as a "financial holding company." Financial holding companies can offer virtually any type of
financial service, including banking, securities underwriting, insurance (both agency and underwriting), and merchant banking. Many of our competitors have elected to become financial holding
companies. A number of foreign banks have acquired financial holding companies in the U.S., further increasing competition in the U.S. market. Under current regulatory interpretations, Mitsubishi UFJ
Financial Group, Inc. would be required to make a financial holding company election in order for us to have the benefits of this status. Mitsubishi UFJ Financial Group is not presently a
financial holding company.



The Bank of Tokyo-Mitsubishi UFJ, a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, owns a majority of the outstanding shares of our common stock. As a
result, The Bank of Tokyo-Mitsubishi UFJ can elect all of our directors and can control the vote on all matters, including: approval of mergers or other business combinations; a sale of all or
substantially all of our assets; 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 our common stock or other equity securities; and other matters that might be favorable to The Bank of Tokyo-Mitsubishi UFJ or Mitsubishi
UFJ Financial Group.

The
Bank of Tokyo-Mitsubishi UFJ's ability to prevent an unsolicited bid for us or any other change in control could also have an adverse effect on the market price for our common stock.
A majority of our directors are independent of The Bank of Tokyo-Mitsubishi UFJ and are not officers or employees of UnionBanCal Corporation or any of our affiliates, including The Bank of
Tokyo-Mitsubishi UFJ. However, because of The Bank of Tokyo-Mitsubishi UFJ's control over the election of our directors, we could designate ourselves as a "controlled company" under the New York Stock
Exchange rules and could change the composition of our Board of Directors so that the Board would not have a majority of independent directors. We have not done so.



The Bank of Tokyo-Mitsubishi UFJ may sell shares of our common stock. By virtue of The Bank of Tokyo-Mitsubishi UFJ's current control of us, The Bank of
Tokyo-Mitsubishi UFJ could sell large amounts of shares of our common stock by causing us to file a registration statement that would allow it to sell shares more easily. In addition, The Bank
of Tokyo-Mitsubishi UFJ could sell shares of our common stock without registration under certain circumstances, such as in a private transaction. Although we can make no prediction as to the effect,
if any, that such sales would have on the market price of our common stock, sales of substantial amounts of our common stock, or the perception that such sales could occur, could adversely affect the
market price of our common stock. If The Bank of Tokyo-Mitsubishi UFJ sells or transfers shares of our common stock as a block, another person or entity could become our controlling stockholder.



We fund our operations independently of The Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Financial Group and believe our business is not necessarily closely
related to the business or outlook of The Bank of Tokyo-Mitsubishi UFJ or Mitsubishi UFJ Financial Group. However, The Bank of Tokyo-Mitsubishi UFJ's and Mitsubishi UFJ Financial Group's credit
ratings may affect our credit ratings.

The
Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Financial Group are also subject to regulatory oversight, review and supervisory action (which can include fines or penalties) by
Japanese and U.S.

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regulatory
authorities. Our business operations and expansion plans could be negatively affected by regulatory concerns or supervisory action in the U.S. and in Japan against The Bank of
Tokyo-Mitsubishi UFJ or Mitsubishi UFJ Financial Group. For additional information, see "MD&ARegulatory Matters."



The views of The Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Financial Group regarding possible new businesses, strategies, acquisitions, divestitures or
other initiatives, including compliance and risk management processes, may differ from ours. This may delay or hinder us from pursuing individual initiatives or cause us to incur additional costs and
subject us to additional oversight.

Also,
as part of The Bank of Tokyo-Mitsubishi UFJ's risk management processes, The Bank of Tokyo-Mitsubishi UFJ manages global credit and other types of exposures and concentrations on
an aggregate basis, including exposures and concentrations at UnionBanCal. Therefore, at certain levels or in certain circumstances, our ability to approve certain credits or other banking
transactions and categories of customers is subject to the concurrence of The Bank of Tokyo-Mitsubishi UFJ. We may wish to extend credit or furnish other banking services to the same customers as The
Bank of Tokyo-Mitsubishi UFJ. Our ability to do so may be limited for various reasons, including The Bank of Tokyo-Mitsubishi UFJ's aggregate exposure and marketing policies.

Certain
directors' and officers' ownership interests in Mitsubishi UFJ Financial Group's common stock or service as a director or officer or other employee of both us and The Bank of
Tokyo-Mitsubishi UFJ could
create or appear to create potential conflicts of interest, especially since both of us compete in U.S. banking markets.



As a holding company, a substantial portion of our cash flow typically comes from dividends our bank and non-bank 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 were to liquidate, that subsidiary's creditors
will be entitled to receive distributions from the assets of that subsidiary to satisfy their claims against it before we, as a holder of an equity interest in the subsidiary, will be entitled to
receive any of the assets of the subsidiary.



Our ability to obtain regulatory approval of acquisitions is severely constrained while the OCC's Order, described in "MD&ARegulatory Matters" in
this Form 10-Q, is in effect. As soon as we have successfully addressed the OCC's regulatory concerns, we may seek to acquire or invest in financial and non-financial
companies that complement our business.

We
may not be successful in completing any such acquisition or investment as this will depend on the availability of prospective target opportunities at valuation levels we find
attractive and the competition for such opportunities from other parties. In addition, we continue to evaluate the performance of all of our businesses and business lines and may sell or restructure a
business or business line. Any acquisitions, divestitures or restructurings may result in the issuance of potentially dilutive equity securities, significant write-offs, including those
related to goodwill and other intangible assets, and/or the incurrence of debt, any of which could have a material adverse effect on our business, results of operations and financial condition.

Acquisitions,
divestitures or restructurings could involve numerous additional risks including difficulties in obtaining any required regulatory approvals and in the assimilation or
separation of operations, services, products and personnel, the diversion of management's attention from other business concerns, higher than expected deposit attrition, divestitures required by
regulatory authorities, the disruption of our business, the potential loss of key employees and unexpected contingent liabilities arising from any business we might

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acquire.
We may not be successful in addressing these or any other significant risks encountered in connection with any acquisition we might make.



Our business model relies, in part, upon cross-marketing the products and services offered by us and our subsidiaries to our customers. Laws that restrict our
ability to share information about customers within our corporate organization could adversely affect our business, results of operations and financial condition.



Third-party vendors provide key components of our business infrastructure such as internet connections, network access and mutual fund distribution and we do not
control their actions. Any problems caused by these third parties, including as a result of their not providing us their services for any reason or their performing their services poorly, could
adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. Replacing these third-party vendors could also entail significant delay and
expense.



Our success depends, in large part, on our ability to attract and retain key personnel, including executives. Any of our current employees, including our senior
management, may terminate their employment with us at any time. Competition for qualified personnel in our industry can be intense. We may not be successful in attracting and retaining sufficient
qualified personnel. We may also incur
increased expenses and be required to divert the attention of other senior executives to recruit replacements for the loss of any key personnel.



We are from time to time subject to claims and proceedings related to our present or previous operations. These claims, which could include supervisory or
enforcement actions by bank regulatory authorities, or criminal proceedings by prosecutorial authorities, could involve demands for large monetary amounts, including civil money penalties or fines
imposed by government authorities, and significant defense costs. To mitigate the cost of some of these claims, we maintain insurance coverage in amounts and with deductibles that we believe are
appropriate for our operations. However, our insurance coverage does not cover any civil money penalties or fines imposed by government authorities and may not cover all other claims against us or
continue to be available to us at a reasonable cost. As a result, we may be exposed to substantial uninsured liabilities, which could adversely affect our business, prospects, results of operations
and financial condition.



The State of California requires us to file our franchise tax returns as a member of a unitary group that includes Mitsubishi UFJ Financial Group and either all
worldwide affiliates or only U.S. affiliates. Our future effective tax rates could be favorably or unfavorably affected by increases or decreases in Mitsubishi UFJ Financial Group's taxable profits,
which in turn are affected by changes in the worldwide economy, especially in Japan, and decisions that they may make about the timing of the recognition of credit losses or other matters. Our
effective tax rates could also be affected by changes in the valuation of our deferred tax assets and liabilities, changes in tax laws or their interpretation, by the outcomes of examinations of our
income tax returns by the Internal Revenue Service and other tax authorities and with respect to our California state tax liability, by adjustments that may be necessary from time to time to recognize
differences in estimated California state tax expense based on MUFG's estimated worldwide income and its actual results.

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We are subject to many types of operational risks throughout our organization. Operational risk is the potential loss from our operations due to factors, such as
failures in internal control, systems failures or external events, that do not fall into the market risk or credit risk categories described in "MD&ABusiness Segments." Operational risk
includes reputational risk, legal and compliance risk, the risk of fraud or theft by employees, customers or outsiders, unauthorized transactions by employees or operational errors, including clerical
or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems. A discussion of risks associated with regulatory compliance appears above under the caption
"The effects of, changes in or supervisory enforcement of, banking or other laws and regulations or governmental fiscal or monetary policies could adversely affect
us."

We
depend on the continued efficacy of our technical systems, operational infrastructure, relationships with third parties and our employees in our day-to-day and
ongoing operations. Our dependence upon automated systems to record and process transactions may further increase the risk that technical system flaws or employee tampering or manipulation of those
systems will result in losses that are difficult to detect. Failures in our internal control or operational systems could impair our ability to operate our business and result in potential liability
to customers, reputational damage and regulatory intervention, any of which could harm our operating results and financial condition.

We
may also be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, such as computer hacking or viruses or electrical or
telecommunications outages, which may give rise to disruption of service to customers and to financial loss or liability. Our business recovery plan may not work as intended or may not prevent
significant interruptions of our operations.



As a financial institution, our earnings and capital are subject to risks associated with negative public opinion. Negative public opinion could result from our
actual or alleged conduct in any number of activities, including lending practices, the failure of any product or service sold by us to meet our customers' expectations or applicable regulatory
requirements, governmental enforcement actions, corporate governance and acquisitions, or from actions taken by regulators and community organizations in response to those activities. We fund our
operations independently of The Bank of Tokyo-Mitsubishi UFJ and Mitsubishi UFJ Financial Group and believe our business is not necessarily closely related to the business or outlook of The Bank of
Tokyo-Mitsubishi UFJ or Mitsubishi UFJ Financial Group. However, negative public opinion could also result from regulatory concerns regarding, or supervisory or other governmental actions in the U.S.
or Japan against, us or Union Bank of California, or The Bank of Tokyo-
Mitsubishi UFJ or Mitsubishi UFJ Financial Group. Negative public opinion can adversely affect our ability to keep and attract and/or retain customers and can expose us to litigation and regulatory
action. Actual or alleged conduct by one of our businesses can result in negative public opinion about our other businesses. Negative public opinion could also affect our credit ratings, which are
important to our access to unsecured wholesale or other borrowings; significant changes in these ratings could change the cost and availability of these sources of funding.



Our risk management framework is made up of various processes and strategies to manage our risk exposure. Types of risk to which we are subject include liquidity
risk, credit risk, market risk, interest rate risk, operational risk, legal risk, compliance risk, reputation risk, fiduciary risk and private equity risk, among others. Our framework to manage risk,
including the framework's underlying assumptions, may not be effective under all conditions and circumstances. If our risk management framework proves ineffective, we could suffer unexpected losses
and could be materially adversely affected.

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Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports we file or submit
under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Any disclosure
controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system
are met.

These
inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our
control system, misstatements due to error or fraud may occur and not be detected.

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



The following table presents repurchases by us of our equity securities during the third quarter 2007.

|Period         |                        | Total Number of
Shares Purchased(1) |       | Average Price Paid
per Share |       | Total Number
of Shares Purchased
as Part of Publicly
Announced Programs |   | Approximate Dollar
Value of Shares that
May Yet Be Purchased
under the Programs
|-------------- | ---------------------- | ----------------------------------- | ----- | ---------------------------- | ----- | ----------------------------------------------------------------------- | - | -------------------------------------------------------------------------------
|July 2007      |                        |                                     |       |                              |       |                                                                         |   |                                                                                
|               | (July 2-23, 2007)      |                                     | 325   |                              | $     | 58.49                                                                   |   |                                                                               
|August 2007    |                        |                                     |       |                              |       |                                                                         |   |                                                                                
|               | (August 1-30, 2007)    |                                     | 1,860 |                              | $     | 58.03                                                                   |   |                                                                               
|September 2007 |                        |                                     |       |                              |       |                                                                         |   |                                                                                
|               | (September 4-17, 2007) |                                     | 778   |                              | $     | 58.72                                                                   |   |                                                                               
|               |                        |                                     |       |                              |       |                                                                         |   |                                                                                
|               |                        |                                     | Total |                              | 2,963 |                                                                         | $ | 58.26                                                                          
|               |                        |                                     |       |                              |       |                                                                         |   |                                                                                

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Item 6.    Exhibits

|No.  |  | Description                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Amendment to 2007 Restricted Stock Unit Agreements for Non-Employee Directors under the Year 2000 UnionBanCal Corporation Management Stock Plan(1)      
|10.2 |  | Forms of Restricted Stock Unit Agreement for Non-Employee Directors under the Year 2000 UnionBanCal Corporation Management Stock Plan(1)                
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1)                                               
|31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1)                                               
|32.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(1)
|32.2 |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(1)

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SIGNATURES

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

|                          | UNIONBANCAL CORPORATION (Registrant)
|------------------------- | ------------------------------------
|Date:    November 7, 2007 | By:                                 
|Date:    November 7, 2007 | By:                                 
|Date:    November 7, 2007 | By:                                 

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EXHIBIT INDEX

|No.  |  | Description                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Amendment to 2007 Restricted Stock Unit Agreements for Non-Employee Directors under the Year 2000 UnionBanCal Corporation Management Stock Plan(1)      
|10.2 |  | Forms of Restricted Stock Unit Agreement for Non-Employee Directors under the Year 2000 UnionBanCal Corporation Management Stock Plan(1)                
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1)                                               
|31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(1)                                               
|32.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(1)
|32.2 |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(1)

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