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 1934For the quarterly period ended March 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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 þ*    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).    Yes o    No o

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

Large accelerated filer o

Accelerated filer oNon-accelerated filer þ(Do not check if a smaller reporting company)

Smaller reporting company o


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

Number of shares of Common Stock outstanding at April 30, 2009: *

*
Effective January 1, 2009, the registrant's filing obligations under the Exchange Act automatically lapsed pursuant to Section 15(d) of the Exchange Act. After such time,
the registrant continued to file all reports which would have otherwise been required to be filed by Section 13 or 15(d) of the Exchange Act and, on February 11, 2009, the registrant
filed a registration statement on Form 8-A with the Securities and Exchange Commission to register its common stock under Section 12(g) of the Exchange Act.

THE
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.



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Table of Contents



UnionBanCal Corporation and Subsidiaries        TABLE OF CONTENTS



Page NumberPART IFinancial InformationCondensed Consolidated Financial Highlights

6ITEM 1. FINANCIAL STATEMENTS:Condensed Consolidated Statements of Income

7Condensed Consolidated Balance Sheets

8Condensed Consolidated Statements of Changes in Stockholder's
Equity

9Condensed Consolidated Statements of Cash Flows

10Notes to Condensed Consolidated Financial Statements:Note 1Basis of Presentation and Nature of Operations

11Note 2Recently Issued Accounting Pronouncements

11Note 3Privatization

14Note 4Securities Held-to-Maturity

14Note 5Loans and Allowance for Loan Losses

15Note 6Goodwill and Intangible Assets

16Note 7Employee Pension and Other Postretirement
Benefits

17Note 8Other Noninterest Income and Noninterest Expense

17Note 9Income Taxes

18Note 10Borrowed Funds

19Note 11Medium- and Long-Term Debt

20Note 12Fair Value of Financial Instruments

21Note 13Derivative Instruments and Other Financial Instruments Used
For Hedging

24Note 14Accumulated Other Comprehensive Loss

30Note 15Discontinued Operations

31Note 16Commitments, Contingencies and Guarantees

34Note 17Business Segments

36ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:Introduction

39Executive Overview

39Critical Accounting Estimates

40Financial Performance

42Net Interest Income

44Noninterest Income and Noninterest Expense

46Income Tax Expense

47Discontinued Operations

47Securities Held-to-Maturity

47Loans

48Cross-Border Outstandings

50Provision for Credit Losses

50Allowances for Credit Losses

50Nonperforming Assets

53Loans 90 Days or More Past Due and Still Accruing

55Fair Value of Financial Instruments

55Quantitative and Qualitative Disclosures About Market Risk

56Liquidity Risk

59Regulatory Capital

60Business Segments

62


2

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Table of Contents

Page NumberITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

68ITEM 4. CONTROLS AND PROCEDURES

68PART IIOther InformationITEM 1. LEGAL PROCEEDINGS

69ITEM 1A. RISK FACTORS

69ITEM 6. EXHIBITS

72SIGNATURES

73


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Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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



4

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Table of Contents



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 financial condition and results of operations or prospects. Such risks and uncertainties include, but are not
limited to, those listed in Item 1A "Risk Factors" of Part II and Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part I
of this Form 10-Q.

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

5

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Table of Contents



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

As of and for the
Three Months Ended(Dollars in thousands)

March 31,
2008

March 31,
2009

Percent
ChangeResults of operations:Net interest income(1)

$
463,104

$
562,620


21.49
%Provision for loan losses


72,000


249,000


nmNoninterest income


195,396


174,716


(10.58
)Noninterest expense


403,206


521,383


29.31Income (loss) before income taxes(1)


183,294


(33,047
)

nmTaxable-equivalent adjustment


2,526


2,617


3.60Income tax expense (benefit)


58,370


(25,856
)

nmIncome (loss) from continuing operations


122,398


(9,808
)

nmLoss from discontinued operations, net of taxes


(13,808
)




100.00Net income

$
108,590

$
(9,808
)

nmBalance sheet (end of period):Total assets(2)

$
57,933,325

$
68,725,270


18.63
%Total loans


43,499,968


49,441,063


13.66Nonperforming assets


131,687


834,738


nmTotal deposits


45,240,821


48,878,733


8.04Medium- and long-term debt


1,963,952


5,140,931


nmStockholder's equity


4,713,206


7,475,472


58.61Balance sheet (period average)(3):Total assets

$
56,632,995

$
67,072,499


18.43
%Total loans


42,701,453


49,789,046


16.60Earning assets


52,188,085


59,626,207


14.25Total deposits


43,613,754


46,633,173


6.92Stockholder's equity


4,718,409


7,336,212


55.48Financial ratios(4):Return on average assets(3):From continuing operations


0.87
%

(0.06
)%Net income (loss)


0.77


(0.06
)Return on average stockholder's equity(3):From continuing operations


10.43


(0.54
)Net income


9.26


(0.54
)Efficiency ratio(5)


58.61


65.69Net interest margin(1)(3)


3.55


3.79Tangible equity ratio


7.42


7.12Tier 1 risk-based capital ratio(2)


8.07


8.74Total risk-based capital ratio(2)


10.97


11.59Leverage ratio(2)


8.09


8.46Allowance for loan losses to:(6)Total loans


1.06


1.76Nonaccrual loans


367.17


107.41Allowance for credit losses to:(7)Total loans


1.29


2.07Nonaccrual loans


445.20


126.10Net loans charged off to average total loans(3)


0.11


0.95Nonperforming assets to total loans and foreclosed assets


0.30


1.69Nonperforming assets to total assets(2)


0.23


1.21


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Table of Contents

Item 1.   Financial Statements

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

For the Three Months
Ended March 31,(Amounts in thousands)

2008

2009Interest IncomeLoans

$
631,586

$
601,842Securities


105,640


102,897Interest bearing deposits in banks


128


900Federal funds sold and securities purchased under resale agreements


2,693


141Trading account assets


2,459


150Total interest income


742,506


705,930Interest ExpenseDeposits


220,660


105,038Federal funds purchased and securities sold under repurchase agreements


15,715


53Commercial paper


9,792


1,592Medium- and long-term debt


19,457


27,529Trust notes


238


238Other borrowed funds


16,066


11,477Total interest expense


281,928


145,927Net Interest Income


460,578


560,003Provision for loan losses


72,000


249,000Net interest income after provision for loan losses


388,578


311,003Noninterest IncomeService charges on deposit accounts


74,736


71,322Trust and investment management fees


43,388


33,907Trading account activities


11,012


22,692Merchant banking fees


11,793


13,832Brokerage commissions and fees


9,859


8,307Card processing fees, net


7,764


7,536Securities losses, net


(2
)

Other


36,846


17,120Total noninterest income


195,396


174,716Noninterest ExpenseSalaries and employee benefits


241,670


243,563Net occupancy


36,202


41,921Intangible asset amortization


670


40,887Outside services


17,009


18,834Regulatory agencies


2,609


17,938Professional services


14,597


15,938Equipment


15,347


15,413Software


14,795


15,038Foreclosed asset expense


89


886Provision for losses on off-balance sheet commitments


8,000


26,000Privatization-related expense





26,819Other


52,218


58,146Total noninterest expense


403,206


521,383Income (loss) from continuing operations before income taxes


180,768


(35,664
)Income tax expense (benefit)


58,370


(25,856
)Income (Loss) from Continuing Operations


122,398


(9,808
)Loss from discontinued operations before income taxes


(17,585
)

Income tax benefit


(3,777
)

Loss from Discontinued Operations


(13,808
)

Net Income (Loss)

$
108,590

$
(9,808
)


See accompanying notes to condensed consolidated financial statements.

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Table of Contents

UnionBanCal Corporation and Subsidiaries  Condensed Consolidated Balance Sheets  (Unaudited)

(Dollars in thousands)

March 31, 2008

December 31, 2008

March 31, 2009AssetsCash and due from banks

$
2,071,969

$
1,568,578

$
1,328,279Interest bearing deposits in banks


999


2,872,698


2,505,861Federal funds sold and securities purchased under resale agreements


125,940


63,069


110,083Total cash and cash equivalents


2,198,908


4,504,345


3,944,223Trading account assets:Pledged as collateral





6,283


8,295Held in portfolio


811,509


1,210,496


1,149,832Securities available for sale:Pledged as collateral


642,346


54,525


43,374Held in portfolio


7,667,959


8,140,013


7,506,069Securities held to maturity (fair value: March 31, 2009, $959,137)








1,150,342Loans (net of allowance for loan losses: March 31, 2008, $462,943; December 31, 2008, $737,767; March 31, 2009, $870,185)


43,037,025


48,847,783


48,570,878Due from customers on acceptances


15,984


23,131


15,077Premises and equipment, net


486,469


680,004


670,376Intangible assets, net


5,788


713,485


672,568Goodwill


355,287


2,369,326


2,369,326Other assets


2,610,131


3,571,995


2,624,910Assets of discontinued operations to be disposed or sold


101,919


4


Total assets

$
57,933,325

$
70,121,390

$
68,725,270LiabilitiesNoninterest bearing

$
13,997,843

$
13,566,873

$
13,543,015Interest bearing


31,242,978


32,482,896


35,335,718Total deposits


45,240,821


46,049,769


48,878,733Federal funds purchased and securities sold under repurchase agreements


1,785,044


172,758


320,376Commercial paper


1,299,930


1,164,327


749,381Other borrowed funds


921,516


8,196,597


3,861,905Trading account liabilities


629,166


1,034,663


965,105Acceptances outstanding


15,984


23,131


15,077Other liabilities


1,214,214


1,685,412


1,304,423Medium- and long-term debt


1,963,952


4,288,488


5,140,931Junior subordinated debt payable to subsidiary grantor trust


14,319


13,980


13,867Liabilities of discontinued operations to be extinguished or assumed


135,173


7,960


Total liabilities


53,220,119


62,637,085


61,249,798Commitments, contingencies and guaranteesSee Note 16Stockholder's EquityPreferred stock:Authorized 5,000,000 shares; no shares issued or outstanding as of March 31, 2008, December 31, 2008 and March 31, 2009








Common stock, par value $1 per share:Authorized 300,000,000 shares; issued 157,670,426 shares as of March 31, 2008, 136,330,829 shares as of December 31, 2008 and 136,330,829 shares as
of March 31, 2009


157,670


136,331


136,331Additional paid-in capital


1,167,391


3,195,023


3,195,023Treasury stock19,725,529 shares as of March 31, 2008, no shares as of December 31, 2008 and March 31, 2009


(1,202,685
)




Retained earnings


4,949,040


4,964,802


4,954,994Accumulated other comprehensive loss


(358,210
)

(811,851
)

(810,876
)Total stockholder's equity


4,713,206


7,484,305


7,475,472Total liabilities and stockholder's equity

$
57,933,325

$
70,121,390

$
68,725,270


See accompanying notes to condensed consolidated financial statements.

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Table of Contents

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

(In thousands, except shares)

Number of shares

Common stock

Additional paid-in capital

Treasury stock

Retained earnings

Accumulated other comprehensive income (loss)

Total stockholder's equityBALANCE DECEMBER 31, 2007


157,559,521

$
157,559

$
1,153,737

$
(1,202,584
)
$
4,912,392

$
(283,123
)
$
4,737,981Comprehensive incomeNet incomeFor the three months ended March 31, 2008














108,590





108,590Other comprehensive income (loss), net of tax:Net change in unrealized gains on cash flow hedges

















75,891


75,891Net change in unrealized losses on securities available for sale

















(153,306
)

(153,306
)Foreign currency translation adjustment

















(265
)

(265
)Net change in pension and other benefits

















2,593


2,593Total comprehensive income (loss)




















33,503EITF 06-4 adjustment














(236
)




(236
)Stock options exercised


109,767


110


4,014











4,124Restricted stock granted, net of forfeitures


1,138


1


(1
)










Excess tax benefitstock-based compensation








545











545Compensation expensestock options








3,387











3,387Compensation expenserestricted stock








4,445











4,445Compensation expenseperformance share units and other share-based compensation








1,264











1,264Common stock repurchased(1)











(101
)







(101
)Dividends declared on common stock, $0.52 per share(2)














(71,706
)




(71,706
)Net change





111


13,654


(101
)

36,648


(75,087
)

(24,775
)BALANCE MARCH 31, 2008


157,670,426

$
157,670

$
1,167,391

$
(1,202,685
)
$
4,949,040

$
(358,210
)
$
4,713,206BALANCE DECEMBER 31, 2008


136,330,829

$
136,331

$
3,195,023

$


$
4,964,802

$
(811,851
)
$
7,484,305Comprehensive incomeNet lossFor the three months ended March 31, 2009














(9,808
)




(9,808
)Other comprehensive income (loss), net of tax:Net change in unrealized gains on cash flow hedges(3)

















(12,972
)

(12,972
)Net change in unrealized losses on securities(3)

















10,490


10,490Foreign currency translation adjustment

















(420
)

(420
)Net change in pension and other benefits

















3,877


3,877Total comprehensive income (loss)




















(8,833
)Net change














(9,808
)

975


(8,833
)BALANCE MARCH 31, 2009


136,330,829

$
136,331

$
3,195,023

$


$
4,954,994

$
(810,876
)
$
7,475,472


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See accompanying notes to condensed consolidated financial statements.

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Table of Contents

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

For the Three Months
Ended March 31,(Dollars in thousands)

2008

2009Cash Flows from Operating Activities:Net income (loss)

$
108,590

$
(9,808
)Loss from discontinued operations, net of taxes


(13,808
)

Income (loss) from continuing operations, net of taxes


122,398


(9,808
)Adjustments to reconcile net income to net cash provided by (used in) operating activities:Provision for loan losses


72,000


249,000Provision for losses on off-balance sheet commitments


8,000


26,000Depreciation, amortization and accretion


28,058


33,937Stock-based compensationstock options and other share-based compensation


9,096


Provision for (reversal of) deferred income taxes


16,388


(39,045
)Gains on sales of securities available for sale, net


2


Net decrease in accrued expenses


(117,602
)

(146,786
)Net (increase) decrease in trading account assets


(208,176
)

58,652Net (decrease) increase in trading account liabilities


278,109


(69,558
)Net increase in prepaid expenses


(1,231
)

(28,058
)Net (increase) decrease in fees and other receivables


(100,815
)

10,189Net (decrease) increase in other liabilities


247,156


(251,929
)Net (increase) decrease in other assets


28,529


(39,800
)Loans originated for resale


(94,000
)

(64,953
)Net proceeds from sale of loans originated for resale


7,232


8,772Excess tax benefitstock-based compensation


(545
)

Other, net


7,695


8,667Discontinued operations, net


1,755


(6,027
)Total adjustments


181,651


(250,939
)Net cash provided by (used in) operating activities


304,049


(260,747
)Cash Flows from Investing Activities:Proceeds from sales of securities available for sale


9,468


5,624Proceeds from matured and called securities available for sale


342,972


533,465Purchases of securities available for sale


(455,332
)

(1,018,444
)Proceeds from matured securities held to maturity





819Purchases of premises and equipment, net


(28,376
)

(19,437
)Net (increase) decrease in loans


(2,230,922
)

100,203Other, net


(30
)

(791
)Discontinued operations, net


(100
)

Net cash used in investing activities


(2,362,320
)

(398,561
)Cash Flows from Financing Activities:Net increase in deposits


2,560,630


2,828,964Net increase in federal funds purchased and securities sold under repurchase agreements


153,442


147,618Net decrease in commercial paper and other borrowed funds


(920,829
)

(3,749,638
)Proceeds from issuance of medium- and long-term debt





1,625,000Repayment of medium-term debt





(750,000
)Common stock repurchased


(101
)

Payments of cash dividends


(71,756
)

Stock options exercised


4,669


Other, net


(265
)

(420
)Discontinued operations, net


9,253


(1,929
)Net cash provided by financing activities


1,735,043


99,595Net decrease in cash and cash equivalents


(323,228
)

(559,713
)Cash and cash equivalents at beginning of period


2,521,633


4,504,345Effect of exchange rate changes on cash and cash equivalents


503


(409
)Cash and cash equivalents at end of period

$
2,198,908

$
3,944,223Cash Paid During the Period For:Interest

$
280,267

$
151,187Income taxes, net


66,640


6,743Supplemental Schedule of Noncash Investing and Financing Activities:Securities available for sale transferred to securities held-to-maturity

$


$
1,144,036Loans transferred to foreclosed assets (OREO)


4,538


8,602


See accompanying notes to condensed consolidated financial statements.

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Table of Contents

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

Note 1Basis of Presentation and Nature of Operations

The unaudited condensed consolidated financial statements of UnionBanCal Corporation and subsidiaries have been prepared in accordance with accounting principles generally accepted in
the United States of America (US GAAP) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission (SEC). However, they do not include all of the disclosures necessary for annual financial
statements in conformity with US GAAP. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.
The results of operations for the period ended March 31, 2009 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, 2008 (2008 Form 10-K). The preparation of financial statements in conformity with US GAAP also requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ compared to those estimates.

UnionBanCal
Corporation is a financial holding company and commercial bank holding company whose major subsidiary, Union Bank, 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.

On
November 4, 2008, the Company became a privately held company (privatization transaction). All of the Company's issued and outstanding shares of common stock are owned by The
Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU). Prior to the transaction, BTMU owned approximately 64 percent of the Company's outstanding shares of common stock.

See
Note 3 to these condensed consolidated financial statements for additional information on the Company's privatization transaction.

Note 2Recently Issued Accounting Pronouncements



In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 141(R), "Business Combinations," which
replaces SFAS No. 141. The Statement requires that all business combinations be accounted for under the "acquisition method." The Statement requires that the assets, liabilities and
noncontrolling interests of a business combination be measured at fair value at the acquisition date. The acquisition date is defined as the date an acquirer obtains control of the entity, which is
typically the closing date. The Statement requires that all acquisition and restructuring related costs be expensed as incurred and that any contingent consideration be measured at fair value and
recorded as either equity or a liability with the liability remeasured at fair value in subsequent periods. The Statement was effective January 1, 2009. At adoption, there was no impact on the
Company's financial position or results of operations.

11

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 2Recently Issued Accounting Pronouncements (Continued)



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



In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activitiesan
amendment of FASB Statement No. 133." The Statement requires expanded qualitative, quantitative and credit-risk disclosures of derivative instruments and hedging activities. These
disclosures include more detailed information about gains and losses, location of derivative instruments in financial statements, and credit-risk-related contingent features in
derivative instruments. The Statement also clarifies that derivative instruments are subject to concentration of credit risk disclosures under SFAS No. 107, "Disclosure About Fair Value of
Financial Instruments." The Statement, which applies only to disclosures, was effective January 1, 2009. Disclosures required under this Statement are included in Note 13 to these
condensed consolidated financial statements.



In April 2008, the FASB issued Staff Position (FSP) FAS 142-3, "Determination of the Useful Life of Intangible
Assets." The Statement requires that an entity consider its own assumptions about the renewal or extension period, adjusted for entity-specific factors, when determining the useful life of a
recognized intangible asset. In the absence of that experience an entity should consider market participant assumptions. The FSP was effective January 1, 2009. At adoption there was no impact
on the Company's financial position or results of operations.



In December 2008, the FASB issued FSP FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan
Assets," which expands the disclosure requirements related to an employer's defined benefit pension or other postretirement plan set forth in FAS No. 132 (R), "Employers' Disclosures about
Pensions and Other Postretirement Benefits." The FSP requires additional disclosure information, including how a company makes investment allocation decisions, the fair value of each major category of
plan assets and the nature and amount of concentration risk within or across those plan asset categories. Additionally, the FSP requires disclosures about the valuation of plan assets similar to those
required in SFAS No. 157, "Fair Value Measurements," including the level within the fair value hierarchy in which fair value measurements of plan assets fall and information about the inputs
and valuation techniques used to measure the fair value of plan assets. The FSP, which applies only to disclosures, is effective December 31, 2009.

12

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 2Recently Issued Accounting Pronouncements (Continued)



In April 2009, the FASB issued FSP FAS 141(R)-1, "Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies." The FSP requires that an asset or liability assumed in a business combination that arises from a contingency be recognized at fair value on the
acquisition date if fair value can be determined during the measurement period. If fair value cannot be determined during the measurement period, the
accounting for the acquired contingency should follow the guidance of SFAS No. 5, "Accounting for Contingencies." The FSP was effective January 1, 2009. At adoption, there was no impact
on the Company's financial position or results of operations.



In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board Opinion (APB) 28-1,
"Interim Disclosures about Fair Value of Financial Instruments." The FSP requires the fair value disclosure of financial instruments mandated by SFAS No. 107, "Disclosures about Fair Value of
Financial Instruments" to be reported for interim periods. The FSP, which applies only to disclosures, is effective for the quarter ending June 30, 2009 with earlier application permitted. The
Company did not early adopt the FSP.



In April 2009, the FASB issued FSP FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly." The FSP provides additional guidance for estimating fair value under SFAS No. 157, "Fair
Value Measurements," when the volume and level of activity for an asset or liability has significantly decreased. The FSP provides factors to consider when determining whether there has been a
significant decline in volume or level of activity. The FSP also affirms that the objective of a fair value measurement is the price that would be received to sell an asset in an orderly transaction
under current market conditions, even if the market is inactive. The FSP is effective April 1, 2009 with earlier application permitted. The Company did not early adopt the FSP. Management
believes that, upon adoption, this FSP will not have a material impact on the Company's financial position or results of operations.



In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of
Other-Than-Temporary Impairments." The FSP amends guidance for the determination and recognition of other-than-temporary impairment related to debt
securities. The FSP establishes new criteria for determining whether impairment is other-than-temporary and what portion of any such impairment is recognized in earnings. A
company is required to assert whether it intends or it is more likely than not that it will need to sell a security with an unrealized loss before full recovery of the amortized cost basis. If it is
likely that a security will be sold prior to full recovery, the security must be written down to its current fair value and the entire loss recognized in earnings immediately. If it is likely that the
security will not be sold prior to recovery, but the amortized cost basis will not be collected on a timely basis, the security must be written down to its current fair value. However, in that case,
only the credit loss component shall be recognized in earnings immediately with the remaining non-credit related loss portion recorded in other comprehensive income. The FSP is effective

13

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 2Recently Issued Accounting Pronouncements (Continued)

April 1,
2009 with earlier application permitted. The Company did not early adopt the FSP. Management believes that, upon adoption, this FSP will not have a material impact on the Company's
financial position or results of operations.

SEC Staff Accounting Bulletin No. 111: Amendment of Topic 5.M.Other Than Temporary Impairment of Certain Investments in Debt and Equity
Securities (SAB 111)

In
April 2009, the SEC issued SAB 111 which amends and replaces Topic 5.M. to be consistent with the recently issued guidance in FSP FAS 115-2 and
FAS 124-2 on the recognition and presentation of other-than-temporary impairment of debt securities. The new guidance was effective upon issuance. Management
believes that, upon adoption, this SAB will not have a material impact on the Company's financial position or results of operations.

Note 3Privatization

The privatization transaction was accounted for as a business combination and the purchase price was pushed down to the Company's consolidated financial statements. Accordingly, the
purchase price paid by BTMU plus related purchase accounting adjustments were reflected on the Company's consolidated balance sheet as of October 1, 2008. This resulted in a new basis of
accounting which reflects an adjustment for the estimated fair value of the Company's assets and liabilities.

After
all of the fair value adjustments to the Company's assets and liabilities were assigned, the remainder of the purchase price was recorded as goodwill. The fair value adjustments
are subject to revision for up to one year after the close of the privatization transaction in the event that better estimates are developed based on additional information. As of March 31,
2009, there were no revisions to the fair value adjustments.

The
amortization (accretion) of the fair value adjustments by category for the first quarter of 2009 were $41 million for intangibles, $2 million for premises and
equipment, ($33) million for loans, $4 million for cash flow hedges, ($7) million for securities and $1 million for debt.

During
the first quarter of 2009, the Company recorded expenses for the privatization transaction of $26.8 million, which primarily consisted of compensation expense for
amortization of bridge award compensation.

Note 4Securities Held-to-Maturity

The Company's asset-backed securities primarily consist of collateralized loan obligations (CLO) securities, which are known as Cash Flow CLOs. A Cash Flow CLO is a structured finance
product that securitizes a diversified pool of loan assets into multiple classes of notes from the cash flows generated by such loans. Cash Flow CLOs pay the note holders through the receipt of
interest and principal repayments from the underlying loans unlike other types of CLOs that pay note holders through the trading and sale of underlying collateral. During the first quarter of 2009,
management reassessed the classification of its CLOs. On February 28, 2009, the Company reclassified its CLOs, which totaled $1.1 billion at fair value, from available for sale to
held-to-maturity. The related unrealized pre-tax loss of $589 million included in accumulated other comprehensive income (OCI) remained in OCI and is being
amortized as a yield adjustment through earnings over the remaining terms of the CLOs. However, there is no impact on earnings, as an equal fair value discount on the securities is being accreted
through earnings over the remaining terms of the CLOs. No gain or loss was recognized at the time of reclassification. The Company considers the held-to-maturity classification
to be more appropriate because the Company has the ability and the intent to hold these securities to maturity.

14

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 5Loans and Allowance for Loan Losses

A summary of loans, net of unearned interest and deferred fees (costs) of ($14) million, $14 million and $23 million, at March 31, 2008, December 31, 2008 and
March 31, 2009, respectively, is as follows:

(Dollars in thousands)

March 31,
2008

December 31,
2008

March 31,
2009Commercial, financial and industrial

$
15,727,520

$
18,469,023

$
17,902,431Construction


2,556,946


2,744,062


2,781,192Mortgage:Residential


14,174,964


15,880,835


15,998,637Commercial


7,509,765


8,186,388


8,233,371Total mortgage


21,684,729


24,067,223


24,232,008Consumer:Installment


1,447,329


2,201,602


2,336,931Revolving lines of credit


1,287,656


1,435,494


1,451,193Total consumer


2,734,985


3,637,096


3,788,124Lease financing


644,922


645,765


662,295Total loans held to maturity


43,349,102


49,563,169


49,366,050Total loans held for sale


150,866


22,381


75,013Total loans


43,499,968


49,585,550


49,441,063Allowance for loan losses


462,943


737,767


870,185Loans, net

$
43,037,025

$
48,847,783

$
48,570,878


Changes
in the allowance for loan losses were as follows:

For the Three Months
Ended March 31,(Dollars in thousands)

2008

2009Allowance for loan losses, beginning of period

$
402,726

$
737,767Loans charged off


13,101


117,883Recoveries of loans previously charged off


1,575


1,505Total net loans charged off


11,526


116,378Provision for loan losses


72,000


249,000Foreign translation adjustment


(257
)

(204
)Allowance for loan losses, end of period


462,943


870,185Allowance for losses on off-balance sheet commitments


98,374


151,374Allowances for credit losses, end of period

$
561,317

$
1,021,559


Nonaccrual
loans totaled $126.1 million and $810.1 million at March 31, 2008 and 2009, respectively. There were $0.6 million and $2.8 million of
troubled debt restructured loans at March 31, 2008 and 2009, respectively. Effective January 1, 2009, consumer home equity loans and one-to-four single family
residential loans were placed on nonaccrual status when these loans are delinquent 90 days or more, or in foreclosure. Previously, these loans were not placed on nonaccrual status. However,
before and after this nonaccrual

15

---



Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 5Loans and Allowance for Loan Losses (Continued)

accounting
policy change, the loss content was charged off on or before the loans were 180 days past due. As a result of this nonaccrual accounting policy change, $120 million in
nonaccrual loans have been disclosed within these loan categories. Loans 90 days or more past due and still accruing totaled $29.8 million and $23.6 million at March 31,
2008 and 2009, respectively.

Note 6Goodwill and Intangible Assets

As part of the Company's privatization transaction, the Company recorded goodwill of $2,014 million and intangible assets of $752 million. See Note 3 to these
condensed consolidated financial statements for information on the Company's privatization transaction.



There were no changes in the carrying amount of goodwill during the three months ended March 31, 2008 and 2009.

The
Company completed its annual goodwill impairment analysis as of January 1, 2009 and concluded that no impairment exists.



The table below reflects the Company's identifiable intangible assets and accumulated amortization at March 31, 2008 and 2009.

March 31, 2008

March 31, 2009(Dollars in thousands)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying AmountCore deposit intangibles

$
43,114

$
(37,326
)
$
5,788

$
619,398

$
(117,949
)
$
501,449Trade name











108,733


(1,369
)

107,364Customer relationships











53,761


(2,375
)

51,386Other











9,555


(814
)

8,741Subtotalintangibles with a definite useful life

$
43,114

$
(37,326
)
$
5,788

$
791,447

$
(122,507
)
$
668,940Other intangibles with an indefinite useful life











3,628





3,628Total intangibles

$
43,114

$
(37,326
)
$
5,788

$
795,075

$
(122,507
)
$
672,568


Total
amortization expense for the three months ended March 31, 2008 and 2009 was $0.7 million and $40.9 million, respectively.

16

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 6Goodwill and Intangible Assets (Continued)

Estimated
future amortization expense at March 31, 2009 is as follows.

(Dollars in thousands)

Core Deposit
Intangibles (CDI)

Trade Name

Customer
Relationships

Other

Total identifiable
intangible assetsEstimated amortization expense for the years ending:Remaining 2009

$
115,092

$
2,060

$
3,156

$
1,147

$
121,4552010


114,029


2,747


4,246


1,565


122,5872011


88,016


2,747


3,968


1,558


96,2892012


69,259


2,747


3,679


1,558


77,2432013


44,743


2,747


3,436


1,559


52,485Thereafter


70,310


94,316


32,901


1,354


198,881Total estimated amortization expense

$
501,449

$
107,364

$
51,386

$
8,741

$
668,940


Note 7Employee Pension and Other Postretirement Benefits

The following table summarizes the components of net periodic benefit cost for the three months ended March 31, 2008 and 2009.

Pension Benefits

Other BenefitsFor the Three Months
Ended March 31,

For the Three Months
Ended March 31,(Dollars in thousands)

2008

2009

2008

2009Components of net periodic benefit costService cost

$
13,047

$
13,616

$
2,098

$
2,332Interest cost


19,494


20,811


2,943


3,055Expected return on plan assets


(33,408
)

(35,219
)

(3,362
)

(2,501
)Amortization of prior service cost








(25
)

(16
)Amortization of transition amount








508


328Recognized net actuarial loss


2,637


3,055


1,079


2,153Total net periodic benefit cost

$
1,770

$
2,263

$
3,241

$
5,351


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 2008
Form 10-K.

Note 8Other Noninterest Income and Noninterest Expense

The details of other noninterest income and noninterest expense are as follows.

17

---



Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 8Other Noninterest Income and Noninterest Expense (Continued)

Other Noninterest Income

For the Three Months EndedIncrease (Decrease)March 31, 2008

March 31, 2009(Dollars in thousands)

Amount

PercentGains (losses) on private capital investments, net

$
1,070

$
(2,121
)
$
(3,191
)

nm
%Gain on the VISA IPO redemption


14,211





(14,211
)

(100.0
)Other


21,565


19,241


(2,324
)

(10.8
)Total other noninterest income

$
36,846

$
17,120

$
(19,726
)

(53.5
)%


---

Other Noninterest Expense

For the Three Months EndedIncrease (Decrease)March 31, 2008

March 31, 2009(Dollars in thousands)

Amount

PercentAdvertising and public relations

$
8,099

$
10,621

$
2,522


31.1
%Low income housing credit investment amortization


9,139


10,166


1,027


11.2Communications


9,375


8,718


(657
)

(7.0
)Data processing


7,076


8,575


1,499


21.2Other


18,529


20,066


1,537


8.3Total other noninterest expense

$
52,218

$
58,146

$
5,928


11.4
%


Note 9Income Taxes

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

For the Three Months ended March 31,2008

2009Federal income tax rate


35
%

35
%Net tax effects of:State income taxes, net of federal income tax benefit


3


(9
)Tax credits


(7
)

47Tax-exempt interest income


(1
)

5FIN No. 48 unrecognized tax benefits


2


(5
)Effective tax rate


32
%

73
%


The
increase in the effective tax rate from the first quarter of 2008 was primarily due to pre-tax income in the prior year compared to pre-tax loss in the
current year, as well as the impact of tax credits and state income taxes. The Company's effective tax rate for the first quarter of 2009 may not be indicative of the effective tax

18

---



Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 9Income Taxes (Continued)

rate
for future quarters and the full year. In addition, the quarterly effective tax rate in 2009 is being computed on an individual quarterly basis, as compared to the Company's historical
computation, which was based on an estimated average effective tax rate for the year. During 2009, the effective tax rate, which will be impacted by expected tax credits, is expected to vary from
quarter to quarter in relation to changes in the Company's pre-tax income or loss.

Note 10Borrowed Funds

The following is a summary of the major categories of borrowed funds:

(Dollars in thousands)

March 31, 2008

December 31, 2008

March 31, 2009Federal funds purchased and securities sold under repurchase agreements, with weighted average interest rates of 2.69%, 0.53% and 0.10% at March 31,
2008, December 31, 2008 and March 31, 2009, respectively(1)

$
1,785,044

$
172,758

$
320,376Commercial paper, with weighted average interest rates of 2.61%, 1.48%, and 0.77% at March 31, 2008, December 31, 2008 and March 31, 2009,
respectively(1)


1,299,930


1,164,327


749,381Other borrowed funds:Federal Home Loan Bank borrowings, with weighted average interest rates of 4.56%, 2.22% and 1.13% at March 31, 2008, December 31, 2008 and
March 31, 2009, respectively(1)


1,000


1,850,000


650,000Term federal funds purchased, with weighted average interest rates of 3.12%, 2.60% and 0.97% at March 31, 2008, December 31, 2008 and
March 31, 2009, respectively(1)


840,909


1,230,060


105,500Federal Reserve Bank Term Borrowings, with weighted average interest rates of 0.79% and 0.25% at December 31, 2008 and March 31, 2009,
respectively(1)





5,000,000


3,000,000All other borrowed, with weighted average interest rates of 3.60%, 5.42% and 1.67% at March 31, 2008, December 31, 2008 and March 31, 2009,
respectively(1)


79,607


116,537


106,405Total borrowed funds

$
4,006,490

$
9,533,682

$
4,931,662


---

19

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 11Medium- and Long-Term Debt

The following is a summary of the Company's medium-term senior debt and long-term subordinated debt:

(Dollars in thousands)

March 31,
2008

December 31,
2008

March 31,
2009Medium-Term senior debt:Floating rate notes due March 2009. These notes bear interest at 0.02% above 3-month London Interbank Offered Rate (LIBOR)

$
750,000

$
750,000

$
Federal Home Loan Bank Advances: Floating, which is at a spread above 3-month LIBOR, or fixed rate, at a weighted average rate of 3.21% at December 31,
 2008 and 2.42% at March 31, 2009





2,276,000


2,901,000Floating rate notes due March 2011. These notes, which bear interest at 0.08% above 3-month LIBOR, had a rate of 1.40% at March 31, 2009








500,000Floating rate notes due March 2012. These notes, which bear interest at 0.20% above 3-month LIBOR, had a rate of 1.52% at March 31, 2009








500,000Long-Term subordinated debt:Fixed rate 5.25% notes due December 2013


429,047


451,930


445,167Fixed rate 5.95% notes due May 2016


784,905


810,558


794,764Total medium- and long-term debt

$
1,963,952

$
4,288,488

$
5,140,931


In
March 2009, the Company's $750 million of floating rate notes matured at par plus accrued interest.

In
October 2008, the Federal Deposit Insurance Corporation (FDIC) established the Temporary Liquidity Guarantee (TLG) Program. On March 16, 2009, the Bank issued
$1.0 billion principal amount of Senior Floating Rate Notes under the TLG Program with the proceeds thereof to be used for general corporate purposes. Of the $1.0 billion of senior
notes, $500 million in principal amount bear interest at a rate equal to three-month LIBOR plus 0.08% per annum and mature on March 16, 2011 (2011 Notes). The remaining
$500 million in principal amount bear interest at a rate equal to three-month LIBOR plus 0.20% per annum and mature on March 16, 2012 (2012 Notes). In connection with the FDIC guarantee
under the TLG Program, a fee of 1% per annum is charged on the $1.0 billion of senior notes. The interest on the 2011 Notes and the 2012 Notes is payable and reset quarterly on the
16th of March, June, September and December of each year.

Under
the TLG Program, the Bank's senior unsecured debt with a maturity date greater than 30 days and issued between October 14, 2008 and June 30, 2009 is guaranteed
by the full faith and credit of the United States. As of March 31, 2009, the Company had $1.3 billion of remaining capacity to issue guaranteed debt under the TLG Program through
June 30, 2009. The FDIC guarantee expires upon the earlier of either the maturity date of the debt or June 30, 2012. Effective March 23, 2009, the FDIC adopted an Interim Rule
that extends the TLG Program issuance date through October 31, 2009 and the final maturity date from June 30, 2012 to December 31, 2012.

20

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 12Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements," for all fair value measurements required for financial assets and liabilities. After
deferring the effective date for one year under FASB Staff Position No. FAS 157-2, "Effective Date of FASB Statement No. 157," the Company has adopted the standard effective
January 1, 2009 for nonrecurring measurements of fair value for non-financial assets and liabilities, such as goodwill, intangible assets and other real estate owned. At adoption,
there was no effect on the Company's financial position or results of operations.



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



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

21

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 12Fair Value of Financial Instruments (Continued)



The following tables present financial assets and financial liabilities measured at fair value on a recurring basis as of
March 31, 2008, December 31, 2008 and March 31, 2009, by caption on the consolidated balance sheet and by SFAS No. 157 valuation hierarchy.

March 31, 2008(Dollars in thousands)

Level 1

Level 2

Level 3

Netting Adjustment(1)

Fair ValueAssetsTrading account assets

$
5,028

$
829,020

$


$
(22,539
)
$
811,509Securities available for sale


809,301


6,006,901


1,494,114





8,310,316Other assets(2)





322,590





(59,922
)

262,668Total assets

$
814,329

$
7,158,511

$
1,494,114

$
(82,461
)
$
9,384,493LiabilitiesTrading account liabilities

$
3,392

$
708,235

$


$
(82,461
)
$
629,166Total liabilities

$
3,392

$
708,235

$


$
(82,461
)
$
629,166


---

December 31, 2008(Dollars in thousands)

Level 1

Level 2

Level 3

Netting Adjustment(1)

Fair ValueAssetsTrading account assets

$
72,860

$
1,203,697

$


$
(59,778
)
$
1,216,779Securities available for sale


888,675


6,102,771


1,203,092





8,194,538Other assets(2)





317,569





(93,599
)

223,970Total assets

$
961,535

$
7,624,037

$
1,203,092

$
(153,377
)
$
9,635,287LiabilitiesTrading account liabilities

$
56,470

$
1,131,570

$


$
(153,377
)
$
1,034,663Total liabilities

$
56,470

$
1,131,570

$


$
(153,377
)
$
1,034,663


---

22

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 12Fair Value of Financial Instruments (Continued)

March 31, 2009(Dollars in thousands)

Level 1

Level 2

Level 3

Netting Adjustment(1)

Fair ValueAssetsTrading account assets

$
48,275

$
1,167,710

$


$
(57,858
)
$
1,158,127Securities available for sale


826,652


6,718,060


4,731





7,549,443Other assets(2)





130,045





(47,475
)

82,570Total assets

$
874,927

$
8,015,815

$
4,731

$
(105,333
)
$
8,790,140LiabilitiesTrading account liabilities

$
21,126

$
1,049,312

$


$
(105,333
)
$
965,105Total liabilities

$
21,126

$
1,049,312

$


$
(105,333
)
$
965,105


---

The following table presents a reconciliation of the assets measured at fair value on a recurring basis using significant unobservable inputs
(Level 3) for the three months ended March 31, 2008 and 2009. Level 3 available for sale securities at March 31, 2009 primarily consist of community redevelopment bonds.
These bonds were carried at cost, which approximates fair value.

For the Three Months Ended(Dollars in thousands)

March 31, 2008

March 31, 2009Balance, beginning of period

$
1,765,497

$
1,203,092Total gains/(losses) (realized/unrealized):Included in income before taxes


61


20Included in other comprehensive loss


(271,432
)

(54,749
)Purchases, issuances and settlements


(12
)

126Transfers in/out Level 3(1)





(1,143,758
)Balance, end of period

$
1,494,114

$
4,731Changes in unrealized gains (losses) included in income before taxes for assets and liabilities still held at period end

$
29

$



---



Certain financial assets may be measured at fair value on a nonrecurring basis. These assets are subject to fair value adjustments that
result from the application of the lower of cost or fair value accounting or write-downs of individual assets. The following tables present the carrying value of financial instruments by level

23

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 12Fair Value of Financial Instruments (Continued)

within
the fair value hierarchy as of March 31, 2008, December 31, 2008 and March 31, 2009, for which a nonrecurring change in fair value has been recorded.

March 31, 2008(Dollars in thousands)

Carrying Value

Level 1

Level 2

Level 3

Losses for the Three
Months Ended
March 31, 2008Loans.

$
20,911

$


$
5,394

$
15,517

$
(394
)Other assets


1,102








1,102


(957
)Total.

$
22,013

$


$
5,394

$
16,619

$
(1,351
)




December 31, 2008(Dollars in thousands)

Carrying Value

Level 1

Level 2

Level 3Loans

$
41,074

$


$


$
41,074Other assets


16,239








16,239Total

$
57,313

$


$


$
57,313




March 31, 2009(Dollars in thousands)

Carrying Value

Level 1

Level 2

Level 3

Losses for the Three
Months Ended
March 31, 2009Loans

$
178,859

$


$


$
178,859

$
(40,290
)Other assets


14,959








14,959


(3,404
)Total

$
193,818

$


$


$
193,818

$
(43,694
)


Loans
include residential mortgage and commercial loans held for sale measured at the lower of cost or fair value and loans impaired under SFAS No. 114 that are valued based on
the fair value of the underlying collateral. The fair value of the fixed-rate residential mortgage loans was determined using whole loan forward prices obtained from government sponsored
enterprises. The fair value of commercial loans was determined using market pricing for similar assets, adjusted for management judgment. The fair value of SFAS No. 114 loans was determined
based on appraised values of the underlying collateral. Other assets include private equity and CRA related investments that were written down to fair value during the period as a result of
impairments and, as of March 31, 2009, include OREO that was measured at fair value subsequent to the initial classification as foreclosed properties. The fair value of private equity and CRA
related investments was estimated based on the underlying company's current and projected financial performance. The fair value of OREO was primarily based on independent appraisals.

Note 13Derivative Instruments and Other Financial Instruments Used For Hedging

The Company is a party to certain derivative and other financial instruments that are entered into for the purpose of trading, meeting the needs of customers, and changing the impact on
the Company's operating results due to market fluctuations in currency and/or interest rates.

Credit
and market risks are inherent in derivative instruments. Credit risk is defined as the possibility that a loss may occur from the failure of another party to perform in accordance
with the terms of the contract,

24

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 13Derivative Instruments and Other Financial Instruments Used For Hedging (Continued)

which
exceeds the value of the existing collateral, if any. The Company utilizes master netting agreements in order to reduce its exposure to credit risk. Master netting agreements mitigate credit
risk by permitting the offset of amounts due from and to individual counterparties in the event of default. Additionally, the Company establishes a credit reserve for potential losses in the event of
counterparty default. This reserve is reflected in the fair value amount of the derivative instruments. Market risk is the possibility that future changes in market conditions may make the financial
instrument less valuable.

On
a limited basis, the Company also 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. For further information on this guarantee, see Note 16 to these condensed consolidated financial statements.

Derivatives
are used to manage exposure to interest rate and foreign currency risk, generate profits from proprietary trading and assist customers with their risk management objectives.
The Company designates derivative instruments as those used for SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," hedge accounting purposes, trading or economic
hedge purposes based on SFAS No. 133. All derivative instruments are recognized as assets or liabilities on the condensed consolidated balance sheet at fair value.

The
table below presents the location and fair value amounts of the Company's derivative instruments reported on the consolidated balance sheet, segregated by derivative instruments
designated and qualifying as hedging instruments under SFAS No. 133 and all other derivative instruments as of March 31, 2009.

March 31, 2009Asset Derivatives(1)

Liability Derivatives(1)(Dollars in thousands)

Balance
Sheet
Location

Fair Value

Balance
Sheet
Location

Fair ValueDerivatives designated as hedging instruments under SFAS No. 133:Interest rate contracts(2)

Other assets

$
130,045

Other liabilities

$
Total derivatives designated as hedging instruments under SFAS No. 133:



$
130,045



$
Derivatives not designated as hedging instruments under SFAS No. 133:Foreign exchange contracts

Trading account assets

$
84,712

Trading account liabilities

$
59,238Energy contracts

Trading account assets


368,292

Trading account liabilities


367,491Interest rate contracts

Trading account assets


649,688

Trading account liabilities


618,880Equity contracts

Trading account assets


1,900

Trading account liabilities


1,900Other contracts

Other assets


157

Other liabilities


(1,080
)Total derivatives not designated as hedging instruments under SFAS No. 133



$
1,104,749



$
1,046,429


---

25

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 13Derivative Instruments and Other Financial Instruments Used For Hedging (Continued)

Certain of the Company's derivative instruments contain provisions that require the Company to maintain a specified credit rating. If the Company's credit rating was to fall below the
specified rating, the counterparties to these derivative instruments could terminate the contract and demand immediate payment or demand immediate and ongoing full overnight collateralization for
those derivative instruments in net liability positions. At March 31, 2009, the aggregate fair value of all derivative instruments with credit-risk- related contingent
features that are in a liability position was $398.5 million for which the Company has posted collateral of $259.0 million in the normal course of business. If all of the
credit-risk-related contingent features underlying these agreements were triggered on March 31, 2009, the Company would be required to provide an additional
$139.5 million of collateral to settle these contracts.



Derivative instruments are integral components of the Company's asset and liability management activities. The Company uses interest
rate derivatives to manage the Company's net interest income sensitivity to changes in market interest rates. These instruments are used to manage interest rate risk relating to specified groups of
assets and liabilities, primarily LIBOR-based commercial loans, certificates of deposit and subordinated debt. The following describes the significant hedging strategies of the Company.



The Company engages in several types of cash flow hedging strategies related to forecasted future loan interest payments, with the
hedged risk being 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 similar variable rate loans such that the reset tenor of the variable rate loans and that of the hedging instrument are identical. Cash flow hedging strategies include the utilization of
purchased floor, cap, collars and corridor options and interest rate swaps. At
March 31, 2009, the weighted average remaining life of the currently active (excluding any forward positions) cash flow hedges was approximately 2 years.

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

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

The
Company uses interest rate collars to hedge the variable cash flows associated with 1-month or 3-month LIBOR indexed loans. Net payments received under the collar contract offset
declines in loan interest income if the relevant LIBOR index falls below the collar's floor strike rate, while net payments paid reduce the increase in loan interest income if the LIBOR index rises
above the collar's cap strike rate.

The
Company uses interest rate swaps to hedge the variable cash flows associated with 1-month or 3-month LIBOR indexed loans. Payments received (or paid) under
the swap contract offset fluctuations in loan

26

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 13Derivative Instruments and Other Financial Instruments Used For Hedging (Continued)

interest
income caused by changes in the relevant LIBOR index. As such, these instruments hedge all fluctuations in the loans' interest income caused by changes in the relevant LIBOR index.

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

The
Company uses interest rate cap corridors to hedge the variable cash flows associated with the forecasted issuance and rollover of short-term, fixed rate CDs. In these
hedging relationships, the Company hedges changes in interest rates, either 1-month,
3-month, or 6-month LIBOR, based on the original term to maturity of the CDs. Net payments received under the cap corridor contract offset increases 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 does not exceed 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 hedging instruments are matched to an equal principal amount of loans or CDs, the index and repricing
frequencies of the hedging instruments match those of the loans or CDs, and the period in which the designated hedged cash flows occurs is equal to the term of the hedge. As such, most of the
ineffectiveness in the hedging relationship results from the mismatch between the timing of reset dates on the hedging instruments versus those of the loans or CDs.

For
cash flow hedges, the effective portion of the gain or loss on the hedging instruments is reported as a component of other comprehensive income and reclassified into earnings in the
same period or periods during which the hedged cash flows are recognized in net interest income. Gains and losses representing hedge ineffectiveness or hedge components excluded from the assessment of
hedge effectiveness are recognized in noninterest expense in the period in which they arise. At March 31, 2009, the total notional amount of the Company's cash flow hedges was
$5.0 billion. Based upon amounts included in accumulated other comprehensive income at March 31, 2009, the Company expects to realize approximately $82.6 million in net interest
income during the twelve months ending March 31, 2010. This amount could differ from amounts actually realized due to changes in interest rates and the addition of other hedges subsequent to
March 31, 2009.

27

---



Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 13Derivative Instruments and Other Financial Instruments Used For Hedging (Continued)

The
following table presents the amount and location of the gains and losses recorded in the company's condensed consolidated statement of income for derivatives designated as cash flow
hedges for the three months ended March 31, 2009.

For the Three Months Ended March 31, 2009Gain or (Loss) Recognized in
Income on Derivative
Instruments (Ineffective
Portion and Amount Excluded
from Effectiveness Testing)Gain or (Loss) Reclassified
from Accumulated OCI into
Income (Effective Portion)Amount of Gain or (Loss)
Recognized in OCI on
Derivative Instruments
(Effective Portion)(Dollars in thousands)

Location

Amount

Location

AmountDerivatives in SFAS No. 133 Cash Flow Hedging RelationshipsInterest Income

$
32,138Interest rate contracts

$
6,982

Interest Expense


(26
)
Noninterest Expense

$
14Total

$
6,982



$
32,112



$
14




In the first quarter of 2009, the Company terminated all of its interest rate swaps, which were previously used to hedge subordinated
debt. The notional amount of the terminated swaps was $950 million. These swaps were not replaced. As a result of the termination, the Company received $167.7 million in cash, which is
treated as a deferred gain and recognized over the remaining contractual life of the swaps prior to termination.



Derivative instruments classified as trading include both derivatives entered into for the Company's own account and as an
accommodation for customers. Derivatives held for trading purposes are included in trading assets or trading liabilities with changes in fair value reflected in trading income or losses. The majority
of the Company's derivative transactions for customers were essentially offset by contracts with third parties that reduce or eliminate market risk exposures. At March 31, 2009, the total
notional amount of the Company's derivatives classified as trading was $30.3 billion.

Derivatives
used for economic hedges but not designated in a hedging relationship for accounting purposes, are included in derivative assets or derivative liabilities and include CDs
tied to the changes in the Standard and Poor's 500 Index (S&P 500).

The
Company engages in an economic hedging strategy in which interest bearing CDs issued to customers, which are tied to the changes in the S&P 500, are exchanged for a fixed rate
of interest. The Company accounts for the derivative embedded in the CD separately at fair value. A total return swap that encompasses the value of a series of options that had individually hedged
each CD is recorded at fair value. The changes in the fair value of the embedded derivative and the hedge instrument are recognized as interest expense. At March 31, 2009, the total notional
amount of these derivatives was $6.5 million.

28

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 13Derivative Instruments and Other Financial Instruments Used For Hedging (Continued)

Beginning
in late 2008, the Company began offering market-linked certificates of deposit. The terms of the market-linked CD allow the client to earn the higher of either a minimum fixed
rate of interest or a return tied to the S&P 500. The Company hedges its exposure to the embedded derivative contained in market-linked CDs with a perfectly matched
over-the-counter call option. Both the embedded derivative and call option are recorded at fair value with the realized and unrealized changes in fair value recorded in
noninterest income within trading account activities. At March 31, 2009, the total notional amount of these derivatives was $53.9 million.

The
following table presents the amount and location of the gains and losses reported in the condensed consolidated statement of income for derivative instruments classified as trading
and derivatives used as economic hedges for the three months ended March 31, 2009.

For the Three Months
Ended March 31, 2009Gain or (Loss) Recognized in Income
on Derivative Instruments(Dollars in thousands)

Location

AmountDerivatives not Designated as Hedging
Instruments under SFAS No. 133:
Interest rate contracts

Trading account activities

$
4,557Foreign exchange contracts

Trading account activities


8,071Energy contracts

Trading account activities


4,335Equity contracts

Trading account activities


427Other contracts

Interest expense


(38
)Total



$
17,352


29

---



Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 14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 TaxFor the Three Months Ended March 31, 2008:Cash flow hedge activities:Unrealized net gains on hedges arising during the period

$
132,005

$
(50,492
)
$
81,513Reclassification adjustment for net losses on hedges included in net income


(9,105
)

3,483


(5,622
)Net change in unrealized losses on hedges


122,900


(47,009
)

75,891Securities:Unrealized holding losses arising during the period on securities available for sale


(248,267
)

94,962


(153,305
)Reclassification adjustment for net gains on securities available for sale included in net income


(2
)

1


(1
)Net change in unrealized losses on securities


(248,269
)

94,963


(153,306
)Foreign currency translation adjustment


(429
)

164


(265
)Reclassification adjustment for pension and other benefits included in net income:Amortization of prior service costs


508


(194
)

314Amortization of transition amount


(25
)

9


(16
)Recognized net actuarial loss


3,716


(1,421
)

2,295Net change in pension and other benefits


4,199


(1,606
)

2,593Net change in accumulated other comprehensive loss

$
(121,599
)
$
46,512

$
(75,087
)For the Three Months Ended March 31, 2009:Cash flow hedge activities:Unrealized net gains on hedges arising during the period

$
6,982

$
(2,743
)
$
4,239Less: accretion of fair value adjustment


3,765


(1,441
)

2,324Less: Reclassification adjustment for net gains on hedges included in net income


(32,112
)

12,577


(19,535
)Net change in unrealized gains on hedges


(21,365
)

8,393


(12,972
)Securities:Unrealized holding gains arising during the period on securities available for sale


16,738


(6,576
)

10,162Less: accretion of fair value adjustment on securities available for sale


(6,788
)

2,666


(4,122
)Less: accretion of net unrealized losses on securities held-to-maturity


7,330


(2,880
)

4,450Net change in unrealized losses on securities


17,280


(6,790
)

10,490Foreign currency translation adjustment


(692
)

272


(420
)Reclassification adjustment for pension and other benefits included in net income:Amortization of prior service costs


(16
)

6


(10
)Amortization of transition amount


328


(129
)

199Recognized net actuarial loss


6,074


(2,386
)

3,688Net change in pension and other benefits


6,386


(2,509
)

3,877Net change in accumulated other comprehensive loss

$
1,609

$
(634
)
$
975


30

---



Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 14Accumulated Other Comprehensive Loss (Continued)

The following table presents accumulated other comprehensive loss balances.

(Dollars in thousands)

Net Unrealized Gains (Losses) on Cash Flow Hedges

Net Unrealized Gains (Losses) on Securities

Foreign Currency Translation Adjustment

Pension and Other Benefits Adjustment

Accumulated Other Comprehensive LossBalance, December 31, 2007

$
23,563

$
(129,163
)
$
740

$
(178,263
)
$
(283,123
)Change during the period


75,891


(153,306
)

(265
)

2,593


(75,087
)Balance, March 31, 2008

$
99,454

$
(282,469
)
$
475

$
(175,670
)
$
(358,210
)Balance, December 31, 2008

$
73,308

$
(352,710
)
$
(1,113
)
$
(531,336
)
$
(811,851
)Change during the period


(12,972
)

10,490


(420
)

3,877


975Balance, March 31, 2009

$
60,336

$
(342,220
)
$
(1,533
)
$
(527,459
)
$
(810,876
)


Note 15Discontinued Operations

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

In
June 2008, the Company sold its insurance brokerage business (IBB) subsidiary, UnionBanc Insurance Services, Inc., to a wholly-owned subsidiary of BB&T Corporation. The Company
recorded a total pre-tax gain of $10.0 million, net of $1.6 million in transaction costs, and an elimination of intangible assets consisting of goodwill of
$74.7 million and other intangibles of $11.0 million. The IBB was previously included in the Wholesale Banking reportable business segment.

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

Substantially
all of the assets and liabilities of the retirement recordkeeping and insurance brokerage businesses were liquidated by the end of the first quarter of 2009.

31

---





Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 15Discontinued Operations (Continued)



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

(Dollars in thousands)

March 31, 2008

December 31, 2008AssetsPremises and equipment

$
615

$
Other assets


10,198


Assets of discontinued operations to be disposed or sold

$
10,813

$
LiabilitiesInterest bearing deposits

$
107,770

$
1,929Other liabilities


10,629


5,217Liabilities of discontinued operations to be extinguished or assumed

$
118,399

$
7,146


The
components of income from the RRB discontinued operations for the three months ended March 31, 2008 are presented in the table below. There was no impact in 2009.

(Dollars in thousands)

For the
Three Months Ended
March 31, 2008Net interest income

$
837Noninterest income


11,001Noninterest expense


12,069Loss from discontinued operations before income taxes


(231
)Income tax benefit


(69
)Loss from discontinued operations

$
(162
)


The
RRB's net interest income for the three months ended March 31, 2008 included the allocation of interest income (based on its average net liabilities) of $0.9 million.
Noninterest income for the three months ended March 31, 2008 included trust fees of $3.3 million and $7.7 million in servicing revenues from Prudential. For the three months ended
March 31, 2008, noninterest expense included salaries and benefits expense of $6.6 million.

32

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 15Discontinued Operations (Continued)



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

(Dollars in thousands)

March 31, 2008

December 31, 2008AssetsCash and due from banks

$
3

$
Securities available for sale


11


Premises and equipment


3,950


Intangible assets


11,433


Goodwill


74,700


Other assets


1,009


4Assets of discontinued operations to be disposed or sold

$
91,106

$
4LiabilitiesOther borrowed funds

$
3

$
Other liabilities


16,771


814Liabilities of discontinued operations to be extinguished or assumed

$
16,774

$
814


The
components of income from the IBB discontinued operations for the three months ended March 31, 2008 are presented in the table below. There was no impact in 2009.

(Dollars in thousands)

For the
Three Months Ended
March 31, 2008Net interest expense

$
(780
)Noninterest income


17,222Noninterest expense


33,796Loss from discontinued operations before income taxes


(17,354
)Income tax benefit


(3,708
)Loss from discontinued operations

$
(13,646
)


The
IBB's net interest expense for the three months ended March 31, 2008 was mainly comprised of the allocation of interest expense (based on its average net assets). Noninterest
income for the three months ended March 31, 2008 included insurance commissions of $17.2 million. Noninterest expense for the three months ended March 31, 2008 included salaries
and benefits expense of $11.7 million and an $18.7 million goodwill impairment charge. This charge was recorded when the Company determined that the value of the net assets was greater
than the fair value of IBB, which was based on indicative prices for insurance agencies.

33

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 16Commitments, Contingencies and Guarantees

The following table summarizes the Company's significant commitments.

(Dollars in thousands)

March 31, 2009Commitments to extend credit

$
21,354,492Standby letters of credit


4,722,269Commercial letters of credit


56,919Risk participations in bankers' acceptances


17,041Commitments to fund principal investments


112,150Commitments to fund low-income housing credit (LIHC) investments


155,381


Commitments
to extend credit are legally binding agreements to lend to a customer provided there are no violations of any condition established in the contract. Commitments have fixed
expiration dates or other termination clauses and may require maintenance of compensatory balances. Since many of the commitments to extend credit may expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash flow requirements.

Standby
and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are
contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate
foreign or domestic trade transactions. Additionally, the Company enters into risk participations in bankers' acceptances wherein a fee is received to guarantee a portion of the credit risk on an
acceptance of another bank. The majority of these types of commitments have terms of one year or less. At March 31, 2009, the carrying value of the Company's risk participations in bankers'
acceptances and standby and commercial letters of credit totaled $5.2 million. Estimated exposure to loss related to these commitments is covered by the allowance for losses on
off-balance sheet commitments. The carrying value of the standby and commercial letters of credit and the allowance for losses on off-balance sheet commitments are included in
other liabilities on the condensed consolidated balance sheet.

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

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

The
Company invests in either guaranteed or unguaranteed LIHC investments. The guaranteed LIHC investments carry a minimum rate of return guarantee by a creditworthy entity. The
unguaranteed LIHC investments carry partial guarantees covering the timely completion of projects, availability of tax credits and

34

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 16Commitments, Contingencies and Guarantees (Continued)

operating
deficit thresholds from the issuer. For these LIHC investments, the Company has committed to provide additional funding as stipulated by its investment participation.

The
Company is a fund manager for LIHC investments. LIHC investments provide tax benefits to investors in the form of tax deductions from operating losses and tax credits. To facilitate
the sale of these LIHC investments, the Company guarantees a minimum rate of return throughout the investment term of over a twelve-year weighted average period. Additionally, the Company
receives guarantees which include the timely completion of projects, availability of tax credits and operating deficit thresholds from the limited liability partnerships/corporations issuing the LIHC
investments that reduce the Company's ultimate exposure to loss. As of March 31, 2009, the Company's maximum exposure to loss under these guarantees is limited to a return of investor capital
and minimum investment yield, or $203.9 million. The risk that the Company would be required to pay investors for a yield deficiency is low, based on the continued satisfactory performance of
the underlying properties. The Company has a reserve of $7.2 million recorded related to these guarantees, which represents the remaining unamortized fair value of the guarantee fees that were
recognized at inception.

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 facilitates the sale of the commercial paper. As of March 31, 2009, the Bank had a
maximum exposure to loss under the commercial paper program guarantee of $763.8 million. The Bank's guarantee has an average term of less than nine months and is fully collateralized by a
pledged deposit placed with the Bank. The Company guarantees its subsidiaries' leveraged lease transactions with terms ranging from fifteen to thirty years. Following the original funding of these
leveraged lease transactions, the Company does not have any material obligation to be satisfied. As of March 31, 2009, the Company did not have any exposure to loss for these agreements.

The
Company conducts securities lending transactions for institutional customers as a fully disclosed agent. At times, securities lending indemnifications are issued to guarantee that a
security lending customer will be made whole in the event the borrower does not return the security subject to the lending agreement and collateral held is insufficient to cover the market value of
the security. All lending transactions are collateralized, primarily by cash. The amount of securities lent with indemnifications was $1.7 billion at March 31, 2009. The market value of
the associated collateral was $1.8 billion at March 31, 2009. As of March 31, 2009, the Company had no exposure that would require it to pay under this securities lending
indemnification, since the collateral market value exceeds the securities lent.

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 March 31, 2009, the maximum exposure to loss under these contracts totaled $81.7 million. The risk that the Company would be
required to perform under these guarantees varies based on the creditworthiness of the other financial institution's customer. Credit risk grades are assigned by the Company based on the estimated
probability of default. The risk of default is considered low for those with superior to good credit ratings, moderate for those with satisfactory to adequate credit ratings, and high for those
considered special mention, substandard, doubtful and loss. Based on these criteria, at March 31, 2009 the Company had a maximum exposure to loss under these contracts with a low, moderate, and
high risk of

35

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 16Commitments, Contingencies and Guarantees (Continued)

payment
exposure of $22.8 million, $48.2 million, and $10.6 million, respectively. At March 31, 2009, the Company maintained a reserve of $2.7 million for losses
related to these guarantees.

The
Company is a member of the Visa USA network (Visa). Visa's bylaws obligate its members to indemnify Visa for losses in connection with the settlement of certain antitrust
lawsuits. The Company's indemnification obligation is limited to its proportionate share. Under FIN No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of OthersAn Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34," the Company had a
liability of $4.3 million and $4.9 million at December 31, 2008 and March 31, 2009, respectively, representing the estimated fair value of the Company's obligations under
the indemnity provisions. The increase in this liability from December 31, 2008 to March 31, 2009 was primarily due to the revised assessment of the likely settlement amount in the
interchange fee litigation. The $4.9 million liability represents the Company's estimate of the fair value of its proportionate share of the sum of Visa's remaining amounts owed to American
Express and Discover Card under previously executed settlement agreements plus the Company's estimate of Visa's future settlements under pending lawsuits, after subtracting the balance in Visa's
escrow account. The Company's maximum exposure to loss for the remaining pending Visa antitrust lawsuits is not determinable, as it is dependent on the outcome of the litigation, but any loss will be
proportionate to the Company's ownership interest in Visa. At March 31, 2009, the risk that the Company would be required to pay as a result of this guarantee is considered to be low, based on
Visa's continued cash funding of the escrow account to pay its antitrust lawsuit settlements.

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.

Note 17Business Segments

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

As
part of the Company's privatization transaction in 2008, goodwill of $980 million and $1,034 million was recorded in the reportable business segments Retail Banking and
Wholesale Banking, respectively. See Note 3 to these condensed consolidated financial statements for further detail on the Company's privatization transaction.



36

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 17Business Segments (Continued)



The
information, set forth in the table that follows, reflects selected income statement and balance sheet items by reportable business segment. The information presented does not
necessarily represent the business units' financial condition and results of operations were they independent entities. Unlike financial accounting, there is no authoritative body of guidance for
management accounting equivalent to US GAAP. Consequently, reported results are not necessarily comparable with those presented by other companies. Included in the table, within total assets,
are the amounts of goodwill for both reportable business segments as of March 31, 2008 and 2009.

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

"Other"
is comprised of certain non-bank subsidiaries of UnionBanCal Corporation, the elimination of the fully taxable-equivalent basis amount, the transfer
pricing center, the amount of the provision for credit losses 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. The discontinued operations consist of two separate businesses: retirement recordkeeping
services and insurance brokerage services. For further detail on discontinued operations, see Note 15 to these condensed consolidated financial statements. Except as discussed above, none of
the items in "Other" is significant to the Company's business.

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

37

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Table of Contents

UnionBanCal Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Note 17Business Segments (Continued)

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

Retail Banking

Wholesale BankingAs of and for the
Three Months Ended
March 31,

As of and for the
Three Months Ended
March 31,2008

2009

2008

2009Results of operationsMarket View (dollars in thousands):Net interest income (expense)

$
221,026

$
248,706

$
257,542

$
343,075Noninterest income (expense)


120,662


105,251


77,661


84,677Total revenue


341,688


353,957


335,203


427,752Noninterest expense (income)


231,471


287,370


147,717


174,798Credit expense (income)


6,439


7,779


37,152


68,601Income (loss) from continuing operations before income taxes


103,778


58,808


150,334


184,353Income tax expense (benefit)


39,695


22,994


41,638


50,576Income (loss) from continuing operations


64,083


35,814


108,696


133,777Loss from discontinued operations, net of income taxes











Net income (loss)

$
64,083

$
35,814

$
108,696

$
133,777Total assets, end of periodMarket View (dollars in millions):

$
19,077

$
23,529

$
30,020

$
34,231




Other

Reconciling Items

UnionBanCal
CorporationAs of and for the
Three Months Ended
March 31,

As of and for the
Three Months Ended
March 31,

As of and for the
Three Months Ended
March 31,2008

2009

2008

2009

2008

2009Results of operationsMarket View (dollars in thousands):Net interest income (expense)

$
(16,068
)
$
(29,484
)
$
(1,922
)
$
(2,294
)
$
460,578

$
560,003Noninterest income (expense)


14,346


2,949


(17,273
)

(18,161
)

195,396


174,716Total revenue


(1,722
)

(26,535
)

(19,195
)

(20,455
)

655,974


734,719Noninterest expense (income)


34,297


70,488


(10,279
)

(11,273
)

403,206


521,383Credit expense (income)


28,434


172,681


(25
)

(61
)

72,000


249,000Income (loss) from continuing operations before income taxes


(64,453
)

(269,704
)

(8,891
)

(9,121
)

180,768


(35,664
)Income tax expense (benefit)


(19,562
)

(95,860
)

(3,401
)

(3,566
)

58,370


(25,856
)Income (loss) from continuing operations


(44,891
)

(173,844
)

(5,490
)

(5,555
)

122,398


(9,808
)Loss from discontinued operations, net of income taxes


(13,808
)










(13,808
)

Net income (loss)

$
(58,699
)
$
(173,844
)
$
(5,490
)
$
(5,555
)
$
108,590

$
(9,808
)Total assets, end of periodMarket View (dollars in millions):

$
8,882

$
11,103

$
(46
)
$
(138
)
$
57,933

$
68,725


38

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Table of Contents

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

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

You
should read the following discussion and analysis of our consolidated financial condition and results of operations for the period ended March 31, 2009 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, 2008 (2008 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, N.A., one or more of
their condensed consolidated subsidiaries, or to all of them together.

Introduction

We are a California-based, financial holding company and bank holding company whose major subsidiary, Union
Bank, N.A. (the Bank), is a commercial bank. We had consolidated assets of approximately $69 billion at March 31, 2009.

On
November 4, 2008, we became a privately held company (privatization transaction). All of our issued and outstanding shares of common stock are owned by the Bank of
Tokyo-Mitsubishi UFJ, Ltd. (BTMU). Prior to the transaction, BTMU owned approximately 64 percent of our outstanding shares of common stock. Refer to Note 3 to our
condensed consolidated financial statements for further information on UnionBanCal's privatization transaction.

Executive Overview

We are providing you with an overview of what we believe are the most significant factors and developments that impacted our first
quarter 2009 results and that could impact our future results. Further detailed information can be found elsewhere in this Form 10-Q. In addition, we ask that you carefully read
this entire document and any other reports that we refer to in this Form 10-Q for more detailed information that will assist your understanding of trends, events and uncertainties
that impact us.

Overall
financial market conditions continued to deteriorate and afflict the banking industry in the first quarter of 2009. Despite the challenging and uncertain market conditions, we
continued to generate loan and deposit growth, as well as grow net interest income. In the first quarter of 2009, our average total loans grew 17 percent from the first quarter of 2008 to
$49.8 billion. This strong growth was spread across all major categories, including commercial, residential real estate and commercial real estate, due to increased loan demand and reduced
competition.

During
the first quarter of 2009, we provided $275 million for our allowances for credit losses compared to $80 million in the first quarter of 2008. The increase was
primarily attributable to higher criticized assets and increases in certain loss factors related to our consumer and small business portfolios. We anticipate a continued recessionary environment
during the remainder of 2009, resulting in additional deterioration in our loan portfolio. See further discussion below in "Allowances for Credit Losses."

Our
nonperforming assets totaled $437 million and $835 million at December 31, 2008 and March 31, 2009, respectively. The increase in nonperforming assets was
primarily due to increases in the commercial and industrial portfolio of $87 million, construction portfolio of $119 million, commercial real estate portfolio

39

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Table of Contents

of
$69 million and residential mortgage portfolio of $102 million. (See discussion below in "Nonperforming Assets" regarding our accounting policy change related to nonaccrual status of
residential mortgage loans.) Net charge offs were $116 million in the first quarter of 2009, compared to $12 million in the first quarter of 2008.

At
December 31, 2008 and March 31, 2009, our allowances for credit losses as a percent of total loans were 1.74 percent and 2.07 percent, respectively. At
December 31, 2008 and March 31, 2009, our allowances for credit losses as a percent of nonaccrual loans were 208 percent and 126 percent, respectively. At
December 31, 2008 and March 31, 2009, our allowance for loan losses as a percent of total loans were 1.49 percent and 1.76 percent, respectively. At December 31,
2008 and March 31, 2009, our allowance for loan losses as a percent of nonaccrual loans were 178 percent and 107 percent, respectively.

In
the first quarter of 2009, our average noninterest bearing deposits declined 1 percent compared to the first quarter of 2008 to $12.5 billion. The decline was primarily
due to lower title and escrow deposits resulting from reduced residential real estate activity. Average interest bearing deposits increased by 10 percent in the first quarter of 2009 compared
to the first quarter of 2008 to $34.1 billion. The increase was primarily due to higher transaction accounts, partially offset by lower large time deposits. Average noninterest bearing deposits
represented 27 percent of average total deposits in the first quarter of 2009, compared to 29 percent in the first quarter of 2008. The annualized average
all-in-cost of funds improved to 1.03 percent, compared to 2.26 percent in the first quarter of 2008.

In
the first quarter of 2009, our net interest income increased 21 percent from the first quarter of 2008 to $563 million, primarily due to lower rates paid on interest
bearing liabilities, and strong loan growth, partially offset by lower yields on earning assets.

In
the first quarter of 2009, our noninterest income declined 11 percent from the first quarter of 2008 to $175 million primarily due to a $14.2 million
pre-tax gain on the partial redemption of Visa Inc. common stock recorded in the first quarter of 2008.

In
the first quarter of 2009, our noninterest expense grew by 29 percent from the first quarter of 2008 to $521 million. The increase was primarily due to
privatization-related expenses and related intangible asset amortization, higher regulatory agencies expenses resulting from the industry-wide FDIC deposit insurance assessment
rate increase, and higher provision for losses on off-balance sheet commitments.

Our
effective tax rate was 72.5 percent in the first quarter of 2009, compared to 32.3 percent in the first quarter of 2008. The increase in the effective tax rate was
primarily due to pre-tax income in the prior year compared to pre-tax loss in the current year, as well as the impact of tax credits and state income taxes.

In
the fourth quarter of 2008, we elected to participate in the voluntary Temporary Liquidity Guarantee (TLG) Program established by the FDIC in October 2008. Under the
TLG Program, all senior unsecured debt issued by insured depository institutions between October 14, 2008 and June 30, 2009 with a maturity of more than 30 days is
guaranteed by the FDIC. In the first quarter of 2009, the Bank issued $1.0 billion principal amount of Senior Floating Rate Notes guaranteed through the TLG Program. As of
March 31, 2009, the Company had $1.3 billion of remaining capacity to issue guaranteed debt under the TLG Program. Effective March 23, 2009, the FDIC adopted an Interim
Rule that extends the TLG Program issuance date through October 31, 2009 and the final maturity date from June 30, 2012 to December 31, 2012.

The
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,

40

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Table of Contents

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 and other assumptions to determine the fair value
of assets and liabilities. A change in the discount factor or in an assumption could increase or decrease the values of those assets and liabilities and result in either a beneficial or adverse impact
to our financial results. We use historical loss factors, adjusted for current conditions, to estimate the inherent credit loss 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 include employee turnover factors for our pension obligation, residual values in our leasing portfolio, fair
value of certain 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 primarily swaps and option contracts indexed to
energy commodities, interest rates or foreign currencies. We record these contracts at fair value. When readily available quoted market prices are unavailable, we must extrapolate or estimate a market
price from available observable market data.

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

Understanding
our accounting policies is fundamental to understanding our consolidated financial condition and consolidated results of operations. Accordingly, both our Critical
Accounting Policies and our significant accounting policies are discussed in detail in our 2008 Form 10-K filed with the Securities and Exchange Commission (the SEC).

We
completed our annual goodwill impairment analysis as of January 1, 2009 and concluded that no impairment exists.

41

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Table of Contents

Financial Performance

Summary of Financial Performance

Increase (Decrease)For the Three Months
Ended March 31,2009 versus 2008(Dollars in thousands)

2008

2009

Amount

PercentResults of OperationsNet interest income(1)

$
460,578

$
560,003

$
99,425


21.6
%Noninterest incomeService charges on deposit accounts


74,736


71,322


(3,414
)

(4.6
)Trust and investment management fees


43,388


33,907


(9,481
)

(21.9
)Trading account activities


11,012


22,692


11,680


nmGains (losses) on private capital investments, net


1,070


(2,121
)

(3,191
)

nmGain on the VISA IPO redemption


14,211





(14,211
)

(100.0
)Other noninterest income


50,979


48,916


(2,063
)

(4.0
)Total noninterest income


195,396


174,716


(20,680
)

(10.6
)Total revenue


655,974


734,719


78,745


12.0Provision for loan losses


72,000


249,000


177,000


nmNoninterest expenseSalaries and other compensation


192,011


188,223


(3,788
)

(2.0
)Employee benefits


49,659


55,340


5,681


11.4Salaries and employee benefits


241,670


243,563


1,893


0.8Net occupancy


36,202


41,921


5,719


15.8Intangible asset amortization


670


40,887


40,217


nmRegulatory agencies


2,609


17,938


15,329


nmProvision for losses on off-balance sheet commitments


8,000


26,000


18,000


nmPrivatization-related expense





26,819


26,819


nmOther noninterest expense


114,055


124,255


10,200


8.9Total noninterest expense


403,206


521,383


118,177


29.3Income (loss) from continuing operations before income taxes


180,768


(35,664
)

(216,432
)

nmIncome tax expense (benefit)


58,370


(25,856
)

(84,226
)

nmIncome (loss) from continuing operations

$
122,398

$
(9,808
)
$
(132,206
)

nm
%


---

nm = not meaningful

The primary contributors to our financial performance for the first quarter of 2009 compared to the first quarter of 2008
are presented below.



42

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Table of Contents



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



The
increase in noninterest expense was due to several factors:



43

---







Table of Contents

Net Interest Income

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

For the Three Months Ended

Increase (Decrease) inMarch 31, 2008

March 31, 2009

Average
Balance

Interest
Income/
Expense(1)Average
Balance

Interest
Income/
Expense(1)

Average
Yield/
Rate(1)(2)

Average
Balance

Interest
Income/
Expense(1)

Average
Yield/
Rate(1)(2)(Dollars in thousands)

Amount

Percent

Amount

PercentAssetsLoans:(3)Commercial, financial and industrial

$
15,647,162

$
238,303


6.13
%
$
18,503,965

$
193,787


4.25
%
$
2,856,803


18
%
$
(44,516
)

(19
)%Construction


2,474,323


36,617


5.95


2,733,630


19,261


2.86


259,307


10


(17,356
)

(47
)MortgageResidential


13,992,743


192,785


5.51


15,923,191


234,438


5.89


1,930,448


14


41,653


22MortgageCommercial


7,250,747


112,970


6.23


8,253,324


102,389


4.96


1,002,577


14


(10,581
)

(9
)Consumer


2,686,635


46,390


6.94


3,722,252


46,539


5.07


1,035,617


39


149


0Lease financing


649,843


6,297


3.88


652,684


7,653


4.69


2,841


0


1,356


22Total Loans


42,701,453


633,362


5.95


49,789,046


604,067


4.88


7,087,593


17


(29,295
)

(5
)Securitiestaxable


8,355,943


104,963


5.02


8,319,754


102,256


4.92


(36,189
)

(0
)

(2,707
)

(3
)Securitiestax-exempt


53,359


1,082


8.11


50,417


1,025


8.13


(2,942
)

(6
)

(57
)

(5
)Interest bearing deposits in banks(4)


29,869


128


1.72


4,220


900


0.48


(25,649
)

(86
)

772


603Federal funds sold and securitiespurchased under resale agreements


328,145


2,693


3.30


196,567


141


0.29


(131,578
)

(40
)

(2,552
)

(95
)Trading account assets


719,316


2,804


1.57


1,266,203


158


0.05


546,887


76


(2,646
)

(94
)Total earning assets


52,188,085


745,032


5.72


59,626,207


708,547


4.78


7,438,122


14


(36,485
)

(5
)Allowance for loan losses


(399,280
)







(708,736
)







(309,456
)

(78
)Cash and due from banks(4)


1,757,362








2,142,198








384,836


22Premises and equipment, net


483,815








674,021








190,206


39Other assets


2,603,013








5,338,809








2,735,796


nmTotal assets

$
56,632,995







$
67,072,499







$
10,439,504


18
%LiabilitiesDeposits:Transaction accounts

$
14,864,561

$
82,915


2.24

$
22,497,062

$
61,097


1.10

$
7,632,501


51
%
$
(21,818
)

(26
)Savings and consumer time


4,179,663


23,529


2.26


4,367,945


15,939


1.48


188,282


5


(7,590
)

(32
)Large time


11,962,678


114,216


3.84


7,232,767


28,002


1.57


(4,729,911
)

(40
)

(86,214
)

(75
)Total interest bearing deposits


31,006,902


220,660


2.86


34,097,774


105,038


1.25


3,090,872


10


(115,622
)

(52
)Federal funds purchased and securities sold under repurchase agreements


1,950,692


15,566


3.21


251,946


53


0.09


(1,698,746
)

(87
)

(15,513
)

(100
)Net funding allocated from (to) discontinued operations(5)


16,992


149


3.53











(16,992
)

nm


(149
)

nmCommercial paper


1,207,510


9,792


3.26


721,416


1,592


0.89


(486,094
)

(40
)

(8,200
)

(84
)Other borrowed funds


1,566,297


16,066


4.13


5,083,086


11,477


0.92


3,516,789


nm


(4,589
)

(29
)Medium and long-term debt


1,846,885


19,457


4.24


4,743,352


27,529


2.35


2,896,467


nm


8,072


41Trust notes


14,374


238


6.63


13,922


238


6.84


(452
)

(3
)




Total borrowed funds


6,602,750


61,268


3.73


10,813,722


40,889


1.53


4,210,972


64


(20,379
)

(33
)Total interest bearing liabilities


37,609,652


281,928


3.01


44,911,496


145,927


1.32


7,301,844


19


(136,001
)

(48
)Noninterest bearing deposits


12,606,852








12,535,399








(71,453
)

(1
)Other liabilities


1,698,082








2,289,392








591,310


35Total liabilities


51,914,586








59,736,287








7,821,701


15Stockholders' EquityCommon equity


4,718,409








7,336,212








2,617,803


55Total stockholders' equity


4,718,409








7,336,212








2,617,803


55Total liabilities and stockholders' equity

$
56,632,995







$
67,072,499







$
10,439,504


18
%Net Interest Income/MarginNet interest income/margin (taxable-equivalent basis)





463,104


3.55
%




562,620


3.79
%







99,516


21Less: taxable-equivalent adjustment





2,526








2,617











91


4Net interest income




$
460,578







$
560,003










$
99,425


22
%Average Assets and Liabilities of
Discontinued Operations for the
Three Months Ended:

March 31, 2008

March 31, 2009Assets




$
123,169







$
Liabilities




$
140,161







$
Net assets (liabilities)




$
(16,992
)






$



---

nm = not meaningful

44

---





Table of Contents

Net interest income in the first quarter of 2009, on a taxable-equivalent basis, increased 21 percent compared to the first quarter of 2008. Our net
interest margin increased by 24 basis points. These results were primarily due to the following:



We
use derivatives to hedge expected changes in the yields on our variable rate loans and term certificates of deposit and other time deposits (CDs), and to convert certain
fixed-rate borrowings to floating rate. For loans, we had hedge income of $5.7 million and $26.9 million for the quarters ended March 31, 2008 and 2009, respectively.
For long-term fixed rate borrowings, we had hedge income of $5.5 million and $10.1 million for the first quarters of 2008 and 2009, respectively. In the first quarter of
2009, we terminated all of our fair value swaps, which were used to hedge our long-term fixed rate borrowings. These swaps were not replaced.

45

---



Table of Contents

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 months ended March 31, 2008 and 2009.

Noninterest Income

For the Three Months EndedIncrease (Decrease)March 31, 2008

March 31, 2009(Dollars in thousands)

Amount

PercentService charges on deposit accounts

$
74,736

$
71,322

$
(3,414
)

(4.6
)%Trust and investment management fees


43,388


33,907


(9,481
)

(21.9
)Trading account activities


11,012


22,692


11,680


nmMerchant banking fees


11,793


13,832


2,039


17.3Brokerage commissions and fees


9,859


8,307


(1,552
)

(15.7
)Card processing fees, net


7,764


7,536


(228
)

(2.9
)Securities losses, net


(2
)




2


100.0Gains (losses) on private capital investments, net


1,070


(2,121
)

(3,191
)

nmGain on the VISA IPO redemption


14,211





(14,211
)

(100.0
)Other


21,565


19,241


(2,324
)

(10.8
)Total noninterest income

$
195,396

$
174,716

$
(20,680
)

(10.6
)%


---

Noninterest Expense

For the Three Months EndedIncrease (Decrease)March 31,
2008

March 31,
2009(Dollars in thousands)

Amount

PercentSalaries and other compensation

$
192,011

$
188,223

$
(3,788
)

(2.0
)%Employee benefits


49,659


55,340


5,681


11.4Salaries and employee benefits


241,670


243,563


1,893


0.8Net occupancy


36,202


41,921


5,719


15.8Intangible asset amortization


670


40,887


40,217


nmOutside services


17,009


18,834


1,825


10.7Regulatory agencies


2,609


17,938


15,329


nmProfessional services


14,597


15,938


1,341


9.2Equipment


15,347


15,413


66


0.4Software


14,795


15,038


243


1.6Advertising and public relations


8,099


10,621


2,522


31.1Low income housing credit investment amortization


9,139


10,166


1,027


11.2Communications


9,375


8,718


(657
)

(7.0
)Data processing


7,076


8,575


1,499


21.2Foreclosed asset expense


89


886


797


nmProvision for losses on off-balance sheet commitments


8,000


26,000


18,000


nmPrivatization-related expense





26,819


26,819


nmOther


18,529


20,066


1,537


8.3Total noninterest expense

$
403,206

$
521,383

$
118,177


29.3
%


---

46

---



Table of Contents

Income Tax Expense

Our effective tax rate in the first quarter of 2009 was 72.5 percent, compared to 32.3 percent for the first quarter of
2008. The increase in the effective tax rate was primarily due to pre-tax income in the prior year compared to pre-tax loss in the current year, as well as the impact of tax
credits and state income taxes. Our effective tax rate for the first quarter of 2009 may not be indicative of the effective tax rate for future quarters and the full
year. In addition, the quarterly effective tax rate in 2009 is being computed on an individual quarterly basis, as compared to our historical computation, which was based on an estimated average
effective tax rate for the year. During 2009, our effective tax rate, which will be impacted by our expected tax credits, is expected to vary from quarter to quarter in relation to changes in our
pre-tax income or loss.

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
2008 Form 10-K and Note 9 to the condensed consolidated financial statements in this Form 10-Q.

Discontinued Operations

Our discontinued operations consist of two separate businesses: retirement recordkeeping business (RRB) and insurance brokerage
services (IBB). In the fourth quarter of 2007, we sold our RRB to Prudential Retirement, a subsidiary of Prudential Financial, Inc., for $103.0 million. We recorded a pre-tax
gain of $94.7 million, net of $2.1 million in transaction costs and a $6.2 million elimination of intangible assets, which included goodwill of $4.8 million attributed to
this business. The RRB was previously included in the Retail Banking reportable business segment.

In
June 2008, we sold our IBB subsidiary, UnionBanc Insurance Services, Inc., to a wholly-owned subsidiary of BB&T Corporation. We recorded a total pre-tax gain of
$10.0 million, net of $1.6 million in transaction costs, and an elimination of intangible assets, consisting of goodwill of $74.7 million and other intangibles of
$11.0 million. The IBB was previously included in the Wholesale Banking reportable business segment.

These
transactions have been accounted for as discontinued operations. All prior period financial statements have been restated to reflect this accounting treatment. The assets and
liabilities of the discontinued operations have been separately identified on our condensed consolidated balance sheet and the assets are shown at the lower of cost or fair value less costs to
dispose. The average net assets or liabilities of our discontinued operations are reflected in our analysis of net interest margin.

Substantially
all of the assets and liabilities of the retirement recordkeeping and insurance brokerage businesses were liquidated by the end of the first quarter of 2009.

Securities Held-to-Maturity

Our asset-backed securities primarily consist of collateralized loan obligations (CLO) securities, which are known as Cash Flow CLOs. A
Cash Flow CLO is a structured finance product that securitizes a diversified pool of loan assets into multiple classes of notes from the cash flows generated by such loans. Cash Flow CLOs pay the note
holders through the receipt of interest and principal repayments from the underlying loans unlike other types of CLOs that pay note holders through the trading and sale of underlying collateral.
During the first quarter of 2009, we reassessed the classification of our CLOs. On February 28, 2009, we reclassified $1.1 billion at fair value, from available for sale to
held-to-maturity. The related unrealized pre-tax loss of $589 million included in accumulated other comprehensive income (OCI) remained in OCI and is being
amortized as a yield adjustment through earnings over the remaining terms of the CLOs. However, there is no impact on earnings, as an equal fair value discount on the securities is being accreted
through earnings over the remaining terms of the CLOs. No gain or loss was recognized at the time of reclassification. We consider the held-to-maturity classification to be
more appropriate because we have the ability and the intent to hold these securities to maturity.

47

---



Table of Contents

Loans

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

Increase (Decrease)
March 31, 2009 From:March 31, 2008

December 31, 2008March 31,
2008

December 31, 2008

March 31, 2009(Dollars in thousands)

Amount

Percent

Amount

PercentCommercial, financial and industrial

$
15,727,520

$
18,469,023

$
17,902,431

$
2,174,911


13.8
%
$
(566,592
)

(3.1
)%Construction


2,556,946


2,744,062


2,781,192


224,246


8.8


37,130


1.4Mortgage:Residential


14,174,964


15,880,835


15,998,637


1,823,673


12.9


117,802


0.7Commercial


7,509,765


8,186,388


8,233,371


723,606


9.6


46,983


0.6Total mortgage


21,684,729


24,067,223


24,232,008


2,547,279


11.7


164,785


0.7Consumer:Installment


1,447,329


2,201,602


2,336,931


889,602


61.5


135,329


6.1Revolving lines of credit


1,287,656


1,435,494


1,451,193


163,537


12.7


15,699


1.1Total consumer


2,734,985


3,637,096


3,788,124


1,053,139


38.5


151,028


4.2Lease financing


644,922


645,765


662,295


17,373


2.7


16,530


2.6Total loans held to maturity


43,349,102


49,563,169


49,366,050


6,016,948


13.9


(197,119
)

(0.4
)Total loans held for sale


150,866


22,381


75,013


(75,853
)

(50.3
)

52,632


nmTotal loans

$
43,499,968

$
49,585,550

$
49,441,063

$
5,941,095


13.7
%
$
(144,487
)

(0.3
)%


---

nm = not meaningful



Commercial, financial and industrial loans represent one of the largest categories in the loan portfolio. These loans are extended
principally to corporations, middle-market businesses and small businesses, with no industry concentration exceeding 10 percent of total loans.

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

The
commercial, financial and industrial loan portfolio increased from March 31, 2008 to March 31, 2009 mainly due to increased loan demand and reduced competition
primarily in the power and utilities, oil and gas and national corporate customers, as well as in the California middle market.



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

Construction
loans are extended primarily to commercial property developers and to residential builders. As of March 31, 2009, the construction loan portfolio consisted of
approximately 82 percent in the commercial income producing real estate industry and 18 percent with residential homebuilders. The construction loan portfolio increased from
March 31, 2008 to March 31, 2009 primarily due to loan advances for income property projects with apartment financing representing the largest component. During the same period, the
homebuilder portfolio fell by approximately 38 percent, or $303 million. Operating conditions

48

---



Table of Contents

continue
to weaken for our commercial property developers and residential homebuilders, and, as a result, we continue to experience negative risk grade trends in the overall portfolio.

Geographically,
the outstanding construction loan portfolio is concentrated 52 percent in California and 48 percent out of state. The California outstandings are
distributed as follows: 37 percent in the Los Angeles/Orange County region, including the Inland Empire, 27 percent in the San Francisco Bay Area, 17 percent from Sacramento and
Central Valley, 13 percent in San Diego, and 5 percent in the Central Coast region.

The
commercial mortgage loan portfolio consists of loans secured by commercial income properties primarily in California. The commercial mortgage portfolio increased from
March 31, 2008 to March 31, 2009 due to increased demand and reduced competition in the California Middle Market sector for real estate related financing and a reduced rate of early loan
repayments associated with the tightening of the credit markets.



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

At
March 31, 2009, 69 percent of our residential mortgage loans were interest only, none of which are negative amortizing. At origination, these interest only loans had
relatively high credit scores and had weighted average loan-to-value (LTV) ratios of approximately 66 percent. The remainder of the portfolio consists of balloon or
regular amortizing loans.

We
do not have a program for originating or purchasing subprime loan products. However, we do have loan products that allow a customer to move more quickly through the loan origination
process by reducing the need to verify the income or assets of the customer. We refer to these as portfolio express loans. Portfolio express loans are only available to existing clients for
no-cash-out/rate and term refinance of existing residential mortgages with the Bank and eliminate the verification of both income and assets. "Low doc" and "no doc"
(discontinued in 2008) loans comprise nearly half of our residential loan portfolio, and the delinquency rates relative to the outstanding balances at March 31, 2009 were nearly the same as
fully documented loans. At March 31, 2009, the total amount of "no doc" and "low doc" loans past due 30 days or more was $122.6 million, compared to $19.4 million at
March 31, 2008. The total amount of residential mortgages delinquent 30 days or more was $242.7 million at March 31, 2009, compared to $61.4 million at
March 31, 2008. Although delinquencies have risen since March 31, 2008 as a result of the declining real estate market and downturn in the economy, the delinquency rate remains low
compared to the industry average for California prime loans. Our underwriting standards remain conservative and as described above, programs with higher risk have been suspended.

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



We originate consumer loans, such as auto loans and home equity loans and lines, through our branch network and Private Banking
Offices. The increase in consumer loans from March 31, 2008 was primarily in our FlexEquity line/loan product. The FlexEquity 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 all or a portion of their FlexEquity lines to fixed rate loans, these new loans are classified as
installment loans. As a result of the continuing decline in the overall property values in California, we have reduced our maximum loan to value limits on all second trust deed programs we offer. At
origination, these loans had relatively high credit scores and had weighted-average loan-to-value (LTV) ratios of approximately 60 percent. Our total home equity loans
and lines delinquent 30 days or more were $36.2 million at March 31, 2009, compared to $10.3 million at

49

---



Table of Contents

March 31,
2008. Our annual review program includes obtaining new appraisals to reassess our LTV position. Action is taken to reduce or freeze limits, as applicable, to minimize additional
exposure in a declining market.



We offer two types of leases to our customers: direct financing leases, where the assets leased are acquired without additional
financing from other sources; and leveraged leases, where a substantial portion of the financing is provided by debt with no recourse to us. At March 31, 2009, we had leveraged leases of
$551.0 million, which were net of non-recourse debt of approximately $1.1 billion. We utilize a number of special purpose entities for our leveraged leases. These entities
serve legal and tax purposes and do not function as vehicles to shift liabilities to other parties or to deconsolidate affiliates for financial reporting purposes. As allowed by US GAAP and by
law, the gross lease receivable is offset by the qualifying non-recourse debt. In leveraged lease transactions, the third-party lender may only look to the collateral value of the leased
assets for repayment.

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 March 31 and
December 31, 2008 and March 31, 2009 for Canada, the only country where such outstandings exceeded 1 percent of total assets. The cross-border outstandings were compiled based
upon category and domicile of ultimate risk and are comprised of balances with banks, trading account assets, securities available for sale, securities purchased under resale agreements, loans,
accrued interest receivable, acceptances outstanding and investments with foreign entities. 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
OutstandingsMarch 31, 2008Canada

$
26

$


$
795

$
821December 31, 2008Canada

$
111

$


$
796

$
907March 31, 2009Canada

$
124

$


$
813

$
937


Provision for Credit Losses

We recorded a provision for loan losses of $72 million and $249 million in the first quarters of 2008 and 2009,
respectively. We recorded a provision for losses on off-balance sheet commitments of $8 million and $26 million in the first quarters of 2008 and 2009, respectively. 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

50

---



Table of Contents

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 2008 Form 10-K.



At March 31, 2009, our total allowances for credit losses were $1.0 billion, which consisted of $870 million for
loan losses and $151 million for losses on off-balance sheet commitments. The allowances for credit losses consisted of $954 million and $68 million of allocated and
unallocated allowance, respectively. At March 31, 2009, our allowances for credit loss coverage ratios were 2.07 percent of total loans and 126 percent of total nonaccrual loans.
At December 31, 2008, our total allowances for credit losses were $863 million, or 1.74 percent of the total loan portfolio, and 208 percent of total nonaccrual loans.

In
addition, the allowances incorporate the results of measuring impaired loans as provided in SFAS No. 114, "Accounting by Creditors for Impairment of a Loan" as amended by SFAS
No. 118, "Accounting by Creditors for Impairment of a LoanIncome Recognition and Disclosures." These accounting standards prescribe the measurement methods, income recognition and
disclosures related to impaired loans. At March 31, 2009 and December 31, 2008, total impaired loans were $813 million and $416 million, respectively, and the associated
impairment allowances were $130 million and $107 million, respectively.

At
March 31, 2009 and December 31, 2008, the allowance for losses on off-balance sheet commitments included within our total allowances for credit losses was
$151 million and $125 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. Net charge offs were $116 million in the first quarter of 2009, compared to $12 million in the first
quarter of 2008.

As
a result of management's assessment of the relevant factors, including the credit quality of our loan portfolio, the negative impact from the economic slowdown on our lending
portfolios (especially our commercial real estate portfolio) and changes in the composition of the loan portfolio, we recorded a provision for loan losses of $249 million in the first quarter
of 2009, compared to a provision for loan losses of $72 million in the first quarter of 2008. Overall, our loan portfolio experienced higher criticized assets and increases in certain loss
factors related to our consumer and small business portfolios, reflecting the continued deterioration in the economic environment.

We
expect the elevated levels of quarterly provisions for credit losses, which we experienced in the first quarter of 2009, to continue during 2009. The factors driving the increase in
our projected provision during 2009 include management's belief that we are in a continued recessionary economic environment, which we believe will result in further deterioration in our loan
portfolio.

During
the first quarter of 2009, the loss confirmation period (LCP) for residential mortgages and home equity loans and lines of credit products was updated to better reflect the impact
of recent economic conditions on losses within these portfolios. As a result of our analyses and peer surveys, the LCP for consumer home equity loans and residential mortgages was changed from between
1.5 years and 2 years, to 1 year. The provisions for credit losses for the first quarter of 2009 would have been $57 million higher if the update had not been implemented.

Other
than the above mentioned LCP change, there were no other significant changes in estimation methods or assumptions that affected our methodology for assessing the appropriateness of
the formula and specific or unallocated allowances for credit losses, except for the refinement in estimates and assumptions regarding the effects of economic and business conditions on borrowers and
other factors, which affected the assessment of the unallocated allowance.

51

---





Table of Contents



At March 31, 2009, the formula allowance increased to $816 million, compared to $682 million at
December 31, 2008. The net increase was primarily due to an increase in criticized assets and higher loss factors for our consumer loan and small business portfolios. At March 31, 2009,
the specific allowance was $138 million, compared to $112 million at December 31, 2008.



At March 31, 2009, the unallocated allowance decreased slightly to $68 million, compared to $69 million at
December 31, 2008. Management believes that the current level of unallocated allowance is appropriate based on the weakening credit cycle and the level of uncertainty of the impact of the
current economic conditions on our principal portfolio segments. Additionally, the reasons for which we believe an unallocated allowance is warranted are detailed below.

In
our assessment as of March 31, 2009, 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 fully reflected in the level of nonperforming loans or in the internal risk grading process with respect to
such loans. In addition, our formula allowance does not take into consideration sector-specific changes in the severity of losses that are expected to arise from 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.

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



52

---



Table of Contents





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

For the Three Months
Ended March 31,

Increase
(Decrease)(Dollars in thousands)

2008

2009

Amount

PercentBalance, beginning of period

$
402,726

$
737,767

$
335,041


83.2
%Loans charged off:Commercial, financial and industrial


9,805


95,768


85,963


nmConstruction





2,316


2,316


nmMortgage


240


10,389


10,149


nmConsumer


3,056


9,410


6,354


207.9Total loans charged off


13,101


117,883


104,782


nmRecoveries of loans previously charged off:Commercial, financial and industrial


1,177


1,151


(26
)

(2.2
)Mortgage





222


222


nmConsumer


383


132


(251
)

(65.5
)Lease financing


15





(15
)

(100.0
)Total recoveries of loans previously charged off


1,575


1,505


(70
)

(4.4
)Net loans charged off


11,526


116,378


104,852


nmProvision for loan losses


72,000


249,000


177,000


nmForeign translation adjustment and other net additions


(257
)

(204
)

53


(20.6
)Ending balance of allowance for loan losses

$
462,943

$
870,185

$
407,242


88.0
%Allowance for losses on off-balance sheet commitments


98,374


151,374


53,000


53.9Allowances for credit losses

$
561,317

$
1,021,559

$
460,242


82.0
%Allowance for loan losses to total loans(1)


1.06
%

1.76
%Allowances for credit losses to total loans(2)


1.29


2.07(Reversal of) provision for loan losses to net loans charged off


624.67


213.96Net loans charged off to average loans outstanding for the period(3)


0.11


0.95


---

nm = not meaningful

Nonperforming Assets

Nonperforming assets consist of nonaccrual loans, restructured loans and foreclosed assets. Nonaccrual loans are those for which
management has discontinued accrual of interest because there exists significant uncertainty as to the full and timely collection of either principal or interest or such loans have become

53

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Table of Contents

contractually
past due 90 days with respect to principal or interest. Effective on January 1, 2009, consumer home equity loans and one-to-four single family
residential loans were placed on nonaccrual status when these loans are delinquent 90 days or more, or in foreclosure. Previously, these loans were not placed on nonaccrual status. However,
before and after this nonaccrual accounting policy change, the loss content was charged off on or before the loans were 180 days past due. As a result of this nonaccrual accounting policy
change, we have reflected $120 million in nonaccrual loans within these loan categories. For a more detailed discussion of the accounting for nonaccrual loans, see Note 1 to the
Consolidated Financial Statements included in our 2008 Form 10-K.

Restructured
loans are loans in which the Bank has formally restructured all or a significant portion of the loan and provided a concession in the form of debt forgiveness, a
modification of interest rate and/or payment terms. The impairment (the shortfall between the present value of the loan under modified terms and the carrying value) is normally recorded in noninterest
expense at the date of restructuring. Restructured loans are disclosed as nonperforming assets for the calendar year of restructuring, and, if in current status during this period, may be disclosed as
performing assets thereafter.

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

The
following table sets forth an analysis of nonperforming assets.

Increase (Decrease)
March 31, 2009 From:March 31,
2008

December 31,
2008March 31,
2008

December 31,
2008

March 31,
2009(Dollars in thousands)

Amount

Percent

Amount

PercentCommercial, financial and industrial

$
46,780

$
260,272

$
347,073

$
300,293


nm

$
86,801


33.4
%Construction


55,464


98,934


218,228


162,764


nm


119,294


nmMortgageCommercial


23,839


55,750


124,772


100,933


nm


69,022


nmMortgageResidential








101,810


101,810


nm


101,810


nmConsumer








18,256


18,256


nm


18,256


nmTotal nonaccrual loans


126,083


414,956


810,139


684,056


nm


395,183


95.2
%Restructured LoansMortgageResidential


620


1,345


2,790


2,170


nm


1,445


nmForeclosed assets


4,984


20,214


21,809


16,825


nm


1,595


7.9Total nonperforming assets

$
131,687

$
436,515

$
834,738

$
703,051


nm

$
398,223


91.2
%Allowance for loan losses

$
462,943

$
737,767

$
870,185

$
407,242


88.0
%
$
132,418


17.9
%Allowances for credit losses

$
561,317

$
863,141

$
1,021,559

$
460,242


82.0
%
$
158,418


18.4
%Nonaccrual loans to total loans


0.29
%

0.84
%

1.64
%Allowance for loan losses to nonaccrual loans(1)


367.17


177.79


107.41Allowances for credit losses to nonaccrual loans(2)


445.20


208.01


126.10Nonperforming assets to total loans and foreclosed assets


0.30


0.88


1.69Nonperforming assets to total assets


0.23


0.62


1.21


---

nm = not meaningful

54

---



Table of Contents

The increase in nonaccrual loans from March 31, 2008 to March 31, 2009 was primarily due to an increase in commercial, construction
and commercial mortgage loans, primarily within the commercial real estate industry sector. Additionally, we had increases in residential and consumer home equity nonaccrual loans due to the change in
our nonaccrual accounting policy effective January 1, 2009. During the first quarters of 2008 and 2009, we had no sales and $6.9 million in sales of nonperforming loans, respectively.
Losses from these sales were reflected in charge offs.

Loans 90 Days or More Past Due and Still Accruing

Increase (Decrease)
March 31, 2009 From:March 31,
2008

December 31,
2008March 31,
2008

December 31,
2008

March 31,
2009(Dollars in thousands)

Amount

Percent

Amount

PercentCommercial, financial and industrial

$
1,311

$
2,529

$
3,262

$
1,951


nm
%
$
733


29.0
%Construction


3,904





18,421


14,517


nm


18,421


nmMortgage:Residential(1)


19,435


59,940





(19,435
)

(100.0
)

(59,940
)

(100.0
)Commercial





181


1,468


1,468


nm


1,287


nmTotal mortgage


19,435


60,121


1,468


(17,967
)

(92.4
)

(58,653
)

(97.6
)Consumer and other(1)


5,119


8,097


427


(4,692
)

(91.7
)

(7,670
)

(94.7
)Total loans 90 days or more past due and still accruing

$
29,769

$
70,747

$
23,578

$
(6,191
)

(20.8
)
$
(47,169
)

(66.7
)


---

nm =
not meaningful

Fair Value of Financial Instruments

The following table reflects financial instruments measured at fair value on a recurring basis as of March 31, 2008,
December 31, 2008 and March 31, 2009. For additional information on the fair value of financial instruments, see Note 12 to these condensed consolidated financial statements.

March 31, 2008

December 31, 2008

March 31, 2009(Dollars in thousands)

Fair Value

Percentage
of Total

Fair Value

Percentage
of Total

Fair Value

Percentage
of TotalFinancial instruments recorded at fair value on a recurring basisAssets:Level 1

$
814,329


9
%
$
961,535


10
%
$
874,927


10
%Level 2


7,158,511


76
%

7,624,037


79
%

8,015,815


91
%Level 3


1,494,114


16
%

1,203,092


13
%

4,731



%Netting Adjustment(1)


(82,461
)

(1
)%

(153,377
)

(2
)%

(105,333
)

(1
)%Total

$
9,384,493


100
%
$
9,635,287


100
%
$
8,790,140


100
%As a percentage of total Company assets





16
%




14
%




13
%Liabilities:Level 1

$
3,392



%
$
56,470


6
%
$
21,126


2
%Level 2


708,235


113
%

1,131,570


109
%

1,049,312


109
%Level 3






%





%





%Netting Adjustment(1)


(82,461
)

(13
)%

(153,377
)

(15
)%

(105,333
)

(11
)%Total

$
629,166


100
%
$
1,034,663


100
%
$
965,105


100
%As a percentage of total Company liabilities





1
%




2
%




2
%


---

55

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Table of Contents

Quantitative and Qualitative Disclosures About Market Risk

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

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

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

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

We
have separate and distinct methods for managing the market risk associated with our asset and liability management activities and our trading activities, as described below. For
additional information about our market risk management, please see "Quantitative and Qualitative Disclosures about Market Risk" in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our 2008 Form 10-K.



During the first quarter of 2009, our interest rate risk profile shifted to asset sensitive due to significant core deposit growth and
the termination of long-term interest rate swaps during the period. (See discussion of "ALM Derivatives" below.)

At
March 31, 2009, Economic Net Interest Income (NII) sensitivity was asset sensitive to parallel rate shifts. A +200 basis point parallel shift would increase
12-month Economic NII by 0.81 percent, while a similar downward shift would decrease it by 2.21 percent. At March 31, 2008, a +200 basis point parallel shift
would reduce 12-month Economic NII by 2.85 percent, while a similar downward shift would increase it by 2.87 percent. We caution that significant low levels of current
interest rates and ongoing enhancements to our interest rate risk modeling may make prior-year comparisons of Economic NII less meaningful. Economic NII adjusts our
reported NII for the effect of certain noninterest bearing deposit related fee and expense items. Those adjustment items are innately liability sensitive, meaning that reported NII is less
liability sensitive than Economic NII.

56

---



Table of Contents

Economic NII

(Dollars in millions)

March 31,
2008

December 31,
2008

March 31,
2009+200 basis points

$
(60.3
)
$
0.2

$
19.9as a percentage of base case NII


(2.85
)%

0.01
%

0.81
%-200 basis points

$
60.9

$
(40.8
)
$
(53.9
)as a percentage of base case NII


2.87
%

(1.75
)%

(2.21
)%


The above table is presented on a continuing operations basis, with all assets and liabilities associated with the insurance brokerage business
eliminated for December 31, 2008 and March 31, 2009. 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 will benefit from curve steepening with short-term rates dropping and
long-term rates rising. Conversely, Economic NII will contract if the curve is inverted with short-term rates rising and long-term rates dropping.



During the first quarter of 2009, the Bank moved towards an asset sensitive interest rate risk profile to position the Bank for rising
rates in the future. The termination of ALM fair value swaps, the unprecedented low level of interest rates towards the end of 2008, and strong core deposit growth continued to shift the
interest rate risk profile towards asset sensitive during the period. The remaining ALM derivatives portfolio continues to partially offset the risk of lower interest rates. In managing the
interest rate sensitivity of our balance sheet, we use the ALM investment securities portfolio and derivatives positions as the primary tools to adjust our interest rate risk profile, if
necessary. During the first quarter of 2009, the Bank purchased interest rate caps to mitigate the risk from rising rates.



At March 31, 2008 and 2009, our available for sale securities portfolio included $6.6 billion and $7.4 billion,
respectively, of securities for ALM purposes. At March 31, 2009, approximately $4.3 billion of the portfolio was pledged to secure trust and public deposits and for other purposes
as required or permitted by law. During the first quarter of 2009, we purchased $1.0 billion par value of securities, as part of our investment portfolio strategy, while approximately
$533 million par value of ALM securities matured or were called.

The
composition of the portfolio is expected to remain relatively stable during the remainder of 2009. Based on current prepayment projections, the estimated ALM portfolio's
effective duration was 1.9 at March 31, 2009, compared to 2.3 at March 31, 2008. Effective duration is a measure of price sensitivity of a bond portfolio to immediate parallel shifts in
interest rates. An effective duration of 1.9 suggests an expected price decrease of approximately 1.9 percent for an immediate 1.0 percent parallel increase in interest rates.



During the first quarter of 2009, the ALM derivatives portfolio decreased by $400 million notional amount due to
maturities of $900 million and terminations of $950 million notional amount of receive fixed interest rate swaps and floors, partially offset by the purchase of $1.5 billion
notional amount of LIBOR cap contracts.

The
fair value of the ALM derivative contracts decreased primarily due to maturities and terminations of interest rate swaps and floor option contracts, the market expectation of
higher future interest rates and the realization of income. For additional discussion of derivative instruments and our hedging strategies, see Note 13 to the condensed consolidated financial
statements in this Form 10-Q and Note 19 to our consolidated financial statements included in our 2008 Form 10-K.

57

---



Table of Contents

The
following table provides the notional value and the fair value of our ALM derivatives portfolio as of March 31, 2008, December 31, 2008, and March 31,
2009 and the change in fair value between December 31, 2008 and March 31, 2009.

(Dollars in thousands)

March 31,
2008

December 31,
2008

March 31,
2009

Decrease
From December 31,
2008
to March 31,
2009Total gross notional amount of positions held for purposes other than trading:

$
9,450,000

$
5,400,000

$
5,000,000

$
(400,000
)of which, interest rate swaps pay fixed rates of interest











Fair value of positions held for purposes other than trading:Gross positive fair value

$
322,590

$
317,569

$
130,045

$
(187,524
)Gross negative fair value











Positive (Negative) fair value of positions, net

$
322,590

$
317,569

$
130,045

$
(187,524
)




We enter into trading account activities primarily as a financial intermediary for customers and, to some 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 supporting the securities, foreign exchange and derivatives markets. In acting for our
own account, we may take positions in certain securities, foreign exchange and interest rate instruments, subject to various limits in amount, tenor and other respects, with the objective of
generating trading profits.

As
of March 31, 2009, we had $23.3 billion notional amount of interest rate derivative contracts. We enter into these agreements for customer accommodations and for our own
account, accepting risks up to management approved VaR levels.

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
offsetting (mirror) derivative contracts with third parties to remove our exposure to market risk, with income earned on the credit spread. As of March 31, 2009, we had $3.2 billion
notional amount of energy derivative contracts with approximately half of these energy derivative contracts entered into as an accommodation for customers and the remaining half entered into as
matching contracts to remove our exposure to market risk on our customer accommodation transactions.

58

---



Table of Contents

The
following table provides the notional value and the fair value of our trading derivatives portfolio, net of credit reserve, as of March 31, 2008, December 31, 2008, and
March 31, 2009 and the change in fair value between December 31, 2008 and March 31, 2009.

(Dollars in thousands)

March 31,
2008

December 31,
2008

March 31,
2009

Increase / (Decrease)
From December 31, 2008
to March 31, 2009Total gross notional amount of positions held for trading purposes:Interest rate

$
13,511,772

$
20,398,695

$
23,304,525

$
2,905,830Foreign exchange


4,442,707


7,112,873


3,739,319


(3,373,554
)Equity





10,914


53,910


42,996Energy


4,250,194


3,757,674


3,214,646


(543,028
)Total

$
22,204,673

$
31,280,156

$
30,312,400

$
(967,756
)Fair value of positions held for trading purposes:Gross positive fair value

$
730,460

$
1,145,208

$
1,104,592

$
(40,616
)Gross negative fair value


705,114


1,137,724


1,047,509


(90,215
)Positive fair value of positions, net

$
25,346

$
7,484

$
57,083

$
49,599


Liquidity Risk

Liquidity risk is the undue risk to the Bank's earnings and capital, which would result from the Bank's inability to meet its
obligations as they come due without incurring unacceptable costs. The management of liquidity risk is governed by the ALM Policy under the oversight of ALCO. The Treasurer is responsible for
operational management of liquidity through the funding and investment functions of Corporate Treasury. ALCO also maintains a Liquidity Contingency Plan that identifies actions to be taken to ensure
adequate liquidity if an event should occur that disrupts or adversely affects the Bank's normal funding activities.

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 international. We maintain borrowing capacity in excess of our wholesale funding requirements to meet our contingency funding needs.

Core
deposits provide us with a sizable source of relatively stable and low-cost funds. Our $39.4 billion in average core deposits, which includes demand deposits,
money market demand accounts, savings and consumer time deposits; combined with average stockholder's equity, funded 69.7 percent of average total assets of $67.1 billion in the first
quarter of 2009. Most of the remaining funding was provided by wholesale borrowings from secured and unsecured sources of varying maturities.

The
Bank has pledged collateral under secured borrowing facilities with the Federal Home Loan Bank of San Francisco (FHLB) and the Federal Reserve Bank of San Francisco (FRB). The Bank
increased its reliance on secured funding during 2008 due to rate advantages compared to other financing sources. As of March 31, 2009, the Bank had $3.6 billion of borrowings
outstanding with the FHLB, of which $0.7 billion is short-term and included in Other Borrowed Funds. As of March 31, 2009, the Bank had $3.0 billion in
short-term borrowing outstanding with the FRB under the Term Auction Facility program, which provides access to short-term funds at generally favorable rates. As of
March 31, 2009, the Bank had remaining unused borrowing capacity totaling a combined $19.6 billion from the FHLB and the FRB. The Bank has the capability

59

---



Table of Contents

to
pledge additional portions of its unencumbered loan and securities portfolios to the FHLB and the FRB, which would increase the Bank's borrowing capacity.

Our
securities portfolio provides additional enhancement to our liquidity position, which may be created through either securities sales or repurchase agreements. At March 31,
2009, we could have sold or transferred under repurchase agreements approximately $3.7 billion of our available for sale securities. However, we do not intend to sell any of our securities.
Liquidity may also be provided by the sale or maturity of other assets such as interest-bearing deposits in banks, federal funds sold and trading account assets. The aggregate balance of
these assets averaged $1.5 billion in the first quarter of 2009. Additional liquidity may be provided through loan maturities and sales.

The
Bank has a $4.0 billion unsecured Bank Note Program. As of March 31, 2009, the remaining available funding under the Bank Note Program was $3.3 billion. We do
not have any firm commitments in place to sell securities under the Bank Note Program.

The
Temporary Liquidity Guarantee (TLG) Program was established by the Federal Deposit Insurance Corporation (FDIC) in October 2008. Under the TLG Program, the Bank's senior unsecured
debt with a maturity date of more than 30 days and issued between October 14, 2008 and June 30, 2009 is guaranteed and backed by the full faith and credit of the United States.
The maximum amount of senior unsecured debt the Bank is eligible to issue under the TLG Program is $2.4 billion. At March 31, 2009, a total of $1.1 billion of TLG Program
guaranteed debt was outstanding, comprised of $1 billion in medium-term notes and the remainder of which are term fed funds. For debt issued prior to April 1, 2009, the FDIC
guarantee expires upon the earlier of either the maturity date of the debt or June 30, 2012. Effective March 23, 2009, the FDIC adopted an Interim Rule that extends the TLG Program
issuance date through October 31, 2009 and the final maturity date from June 30, 2012 to December 31, 2012.

We
believe that these sources, in addition to our core deposit and equity capital, provide a stable funding base. Management does not rely on any one source of liquidity and manages
availability in response to changing balance sheet needs. The costs and ability to raise funds are influenced by our credit ratings. The following table provides our credit ratings as of
March 31, 2009.

Union Bank, N.A.

UnionBanCal
CorporationStandard & Poor's

Long-term

A+

AShort-term

A-1

A-1Moody's

Long-term

Aa3

Short-term

P-1

Fitch

Long-term

A+

A+Short-term

F1

F1DBRS

Long-term

A (high)

AShort-term

R-1 (middle)

R-1 (low)


On April 13, 2009, Moody's Investors Service (Moody's) lowered Union Bank's long-term debt rating to A2. This action was
expected as Moody's had recently announced that it was reviewing for downgrade the credit rating of many U.S. regional banks.

Regulatory Capital

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

60

---



Table of Contents

UnionBanCal Corporation

(Dollars in thousands)

March 31,
2008

December 31,
2008

March 31,
2009

Minimum
Regulatory
RequirementCapital ComponentsTier 1 capital

$
4,603,703

$
5,466,713

$
5,470,880Tier 2 capital


1,658,356


1,773,391


1,781,977Total risk-based capital

$
6,262,059

$
7,240,104

$
7,252,857Risk-weighted assets

$
57,070,540

$
62,251,070

$
62,605,281Quarterly average assets

$
56,907,693

$
64,917,854

$
64,643,660




Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

RatioCapital RatiosTotal capital (to risk-weighted assets)

$
6,262,059


10.97
%
$
7,240,104


11.63
%
$
7,252,857


11.59
%
3
$5,008,329


8.0
%Tier 1 capital (to risk-weighted assets)


4,603,703


8.07


5,466,713


8.78


5,470,880


8.74

3
2,504,165


4.0Leverage(1)


4,603,703


8.09


5,466,713


8.42


5,470,880


8.46

3
2,585,746


4.0


---

Union Bank, N.A.

(Dollars in thousands)

March 31,
2008

December 31,
2008

March 31,
2009

Minimum
Regulatory
Requirement

"Well-Capitalized"
Regulatory
RequirementCapital ComponentsTier 1 capital

$
4,543,850

$
5,380,075

$
5,345,825Tier 2 capital


1,252,860


1,451,024


1,465,276Total risk-based capital

$
5,796,710

$
6,831,099

$
6,811,101Risk-weighted assets

$
56,740,071

$
62,025,970

$
62,436,991Quarterly average assets

$
56,431,504

$
64,737,767

$
64,807,704




Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

RatioCapital RatiosTotal capital (to risk-weighted assets)

$
5,796,710


10.22
%
$
6,831,099


11.01
%
$
6,811,101


10.91
%
3
$4,994,959


8.0
%
3
$6,243,699


10.0
%Tier 1 capital (to risk-weighted assets)


4,543,850


8.01


5,380,075


8.67


5,345,825


8.56

3
2,497,480


4.0

3
3,746,219


6.0Leverage(1)


4,543,850


8.05


5,380,075


8.31


5,345,825


8.25

3
2,592,308


4.0

3
3,240,385


5.0


---

We and Union Bank 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).

As
of March 31, 2009, management believes the capital ratios of Union Bank 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.

61

---





Table of Contents

Business Segments

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

As
part of our privatization transaction in 2008, goodwill of $980 million and $1,034 million was recorded in the reportable business segments Retail Banking and Wholesale
Banking, respectively. See Note 3 to the condensed consolidated financial statements in this Form 10-Q for more detail on our privatization transaction.

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

The
table that follows reflects the condensed income statements, selected average balance sheet items, and selected financial ratios, including changes 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. We
reflect a "market view" perspective in measuring our business 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 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 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 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.

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The
reportable business segment results for the prior periods have been adjusted to reflect changes in the transfer pricing methodology, the organizational changes that have occurred,
our discontinued operations and the market view contribution. Our discontinued operations consist of two separate businesses: retirement recordkeeping services and insurance brokerage business. For
further information on discontinued operations, see Note 15 to the condensed consolidated financial statements in this Form 10-Q.

Retail Banking





Wholesale BankingAs of and for the
Three Months Ended
March 31,

Increase/
(decrease)

As of and for the
Three Months Ended
March 31,

Increase/
(decrease)2008

2009

Amount

Percent

2008

2009

Amount

PercentResults of operationsMarket View (dollars in thousands):Net interest income (expense)

$
221,026

$
248,706

$
27,680


13
%
$
257,542

$
343,075

$
85,533


33
%Noninterest income (expense)


120,662


105,251


(15,411
)

(13
)

77,661


84,677


7,016


9Total revenue


341,688


353,957


12,269


4


335,203


427,752


92,549


28Noninterest expense (income)


231,471


287,370


55,899


24


147,717


174,798


27,081


18Credit expense (income)


6,439


7,779


1,340


21


37,152


68,601


31,449


85Income (loss) from continuing operations before income taxes


103,778


58,808


(44,970
)

(43
)

150,334


184,353


34,019


23Income tax expense (benefit)


39,695


22,994


(16,701
)

(42
)

41,638


50,576


8,938


21Income (loss) from continuing operations


64,083


35,814


(28,269
)

(44
)

108,696


133,777


25,081


23Loss from discontinued operations, net of income taxes











na











naNet income (loss)

$
64,083

$
35,814

$
(28,269
)

(44
)
$
108,696

$
133,777

$
25,081


23Average balancesMarket View (dollars in millions):Total loans

$
17,987

$
21,100

$
3,113


17

$
24,741

$
28,857

$
4,116


17Total assets


18,783


23,355


4,572


24


29,512


35,524


6,012


20Total deposits


18,398


23,394


4,996


27


18,307


21,497


3,190


17Financial ratiosMarket ViewRisk adjusted return on capital(1)


43
%

20
%







19
%

18
%Return on average assets(1)


1.37


0.62








1.48


1.53Efficiency ratio(2)


67.72


81.06








41.34


38.49




Other





Reconciling Items

UnionBanCal
CorporationAs of and for the
Three Months Ended
March 31,

Increase/
(decrease)

As of and for the
Three Months Ended
March 31,

As of and for the
Three Months Ended
March 31,

Increase/
(decrease)2008

2009

Amount

Percent

2008

2009

2008

2009

Amount

PercentResults of operationsMarket View (dollars in thousands):Net interest income (expense)

$
(16,068
)
$
(29,484
)
$
(13,416
)

(83
)%
$
(1,922
)
$
(2,294
)
$
460,578

$
560,003

$
99,425


22
%Noninterest income (expense)


14,346


2,949


(11,397
)

(79
)

(17,273
)

(18,161
)

195,396


174,716


(20,680
)

(11
)Total revenue


(1,722
)

(26,535
)

(24,813
)

nm


(19,195
)

(20,455
)

655,974


734,719


78,745


12Noninterest expense (income)


34,297


70,488


36,191


106


(10,279
)

(11,273
)

403,206


521,383


118,177


29Credit expense (income)


28,434


172,681


144,247


nm


(25
)

(61
)

72,000


249,000


177,000


nmIncome (loss) from continuing operations before income taxes


(64,453
)

(269,704
)

(205,251
)

nm


(8,891
)

(9,121
)

180,768


(35,664
)

(216,432
)

(120
)Income tax expense (benefit)


(19,562
)

(95,860
)

(76,298
)

nm


(3,401
)

(3,566
)

58,370


(25,856
)

(84,226
)

(144
)Income (loss) from continuing operations


(44,891
)

(173,844
)

(128,953
)

nm


(5,490
)

(5,555
)

122,398


(9,808
)

(132,206
)

(108
)Loss from discontinued operations, net of income taxes


(13,808
)




13,808


100








(13,808
)




13,808


100Net income (loss)

$
(58,699
)
$
(173,844
)
$
(115,145
)

nm

$
(5,490
)
$
(5,555
)
$
108,590

$
(9,808
)
$
(118,398
)

(109
)Average balancesMarket View (dollars in millions):Total loans

$
6

$
(59
)
$
(65
)

nm

$
(33
)
$
(109
)
$
42,701

$
49,789

$
7,088


17Total assets


8,372


8,305


(67
)

(1
)

(34
)

(112
)

56,633


67,072


10,439


18Total deposits


7,522


2,432


(5,090
)

(68
)

(613
)

(690
)

43,614


46,633


3,019


7Financial ratiosMarket ViewRisk adjusted return on capital(1)


na


na








na


na


na


naReturn on average assets(1)


na


na








na


na


0.87
%

(0.06
)%Efficiency ratio(2)


na


na








na


na


58.61


65.69


---

na = not applicable

nm = not meaningful

63

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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 strategy
that will identify targeted opportunities within the consumer and small business markets, and develop product, marketing and sales strategies to attract new customers in these identified target
markets. While the primary focus of Retail Banking's strategy is deposit growth, an additional focus continues to be consumer and small business loan generation.

During
the first quarter of 2009, net income of Retail Banking decreased compared to the same period in 2008, reflecting a 24 percent increase in noninterest expense and a
13 percent decrease in noninterest income, partially offset by a 13 percent increase in net interest income.

Asset
growth for 2009 was primarily driven by a 17 percent growth in average loans. Additionally, the focus on home equity loans and more effective cross-selling efforts resulted
in an overall growth in consumer loans.

Average
deposits increased 27 percent in the first quarter of 2009 compared to the same period in 2008. Retail Banking's strategy continues to focus on attracting consumer and
small business deposits through marketing activities, increasing customer cross-sell, relationship management, increasing and improving sales resources, establishing new locations and new
products. We expect that a larger branch network, along with this Retail Banking strategy, will improve growth prospects when combined with more robust efforts in the telephone and internet channels.

Noninterest
income decreased in the first quarter of 2009 compared to 2008 by 13 percent mainly as a result of lower trust and deposit fees. Noninterest expense increased by
24 percent in the first quarter of 2009, compared to 2008. This increase was primarily due to intangible asset amortization related to our privatization, staff costs, FDIC deposit insurance
assessment rate increase and costs associated with an increasing deposit and customer base, including advertising and facilities.

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:



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

Our
Retail Banking Branches and Consumer Asset Management divisions compete with larger banks by attempting to provide service quality superior to that of our major competitors. The
primary means of competing with community banks include our branch network and our technology to deliver banking services. We also offer convenient banking hours to consumers through our drive-through
banking locations and selected branches that are open seven days a week.

These
divisions compete with a number of commercial banks, internet banks, savings associations and credit unions, as well as more specialized financial service providers such as
investment brokerage companies, consumer finance companies, and residential real estate lenders.



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

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In the first quarter of 2009, net income of Wholesale Banking increased 23 percent, compared to the same period in 2008, due to higher net interest income
and higher noninterest income, partially offset by higher noninterest expense and higher credit expense. Net interest income increased by 33 percent in the first quarter of 2009, compared to
the same period in 2008, due to higher loan volume in our commercial and industrial portfolio, an increasing deposit base, and prudent deposit pricing.

In
the first quarter of 2009, average loans increased 17 percent compared to the same period in 2008. This increase was primarily in the Energy Capital Services and National
Banking divisions, as well as the California Middle Market.

Noninterest
income increased 9 percent in the first quarter of 2009, compared to the same period in 2008, primarily due to losses in a trading portfolio reflected in the first
quarter of 2008. Noninterest expense increased in the first quarter of 2009 compared to 2008 primarily due to intangible asset amortization related to our privatization.

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

Wholesale Bankingis comprised of the following main divisions:



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



The net loss increased by $115.1 million in the three months ended March 31, 2009, compared to the same period in 2008,
primarily due to a higher loan loss provision and higher noninterest expense.

"Other"
includes the following items:



The
first quarter 2009 financial results were impacted by the following factors:



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



Item 3.   Quantitative and Qualitative Disclosures About Market Risk

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

Item 4.   Controls and Procedures

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer)
have concluded that the design and operation of our disclosure controls and procedures are effective as of March 31, 2009. This conclusion is based on an evaluation conducted under the
supervision and with the participation of management. Disclosure controls and procedures are those controls and procedures which ensure that information required to be disclosed in this filing is
accumulated and communicated to management and is recorded, processed, summarized and reported in a timely manner and in accordance with Securities and Exchange Commission rules and regulations.

During
the quarter ended March 31, 2009, 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

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

Item 1A.   Risk Factors

For a discussion of risk factors relating to our business, please refer to Item 1A of Part I of our 2008
Form 10-K, which is incorporated by reference herein, in addition to the following information.



Commencing
in 2007 and continuing throughout 2008 and into 2009, certain adverse financial developments have impacted the U.S. and global economies and financial markets and present
challenges for the banking and financial services industry and for UnionBanCal Corporation. These developments include a general recession both globally and in the U.S. and have contributed to
substantial volatility in the equity securities markets, as well as volatility and a tightening of liquidity in the credit markets. In response, Congress adopted economic stimulus measures that former
President Bush and President Obama signed into law at various times in 2008 and 2009, and the Federal Reserve Board was prompted to decrease its discount rate and the federal funds rate numerous times
during 2008.

In
addition, financial and credit conditions in the domestic residential real estate markets have deteriorated significantly, which has led to significant deterioration in certain
financial markets,
particularly the markets for residential mortgage-backed securities and for collateralized debt obligations backed by residential mortgage-backed securities and collateralized debt obligations secured
by nonconforming loans. These conditions have rendered it more difficult for financial institutions and others to obtain transparent valuations for various portfolio debt securities, especially
collateralized debt obligations backed by residential mortgage-backed securities or other collateral, including corporate obligations. Credit spreads have widened and a general lack of liquidity has
existed in the marketplace. This has resulted in decreases in the fair value of investment securities of these types. To help mitigate these conditions, on July 30, 2008, former President Bush
signed into law a housing bill which grants the Treasury Department broad authority to safeguard Fannie Mae and Freddie Mac and authorizes the Federal Housing Administration to insure up to
$300 billion in refinanced mortgages. In addition, commencing in 2008 and continuing into 2009, the Federal Reserve Board implemented a variety of measures which seek to enhance market
liquidity, including enhanced discount window lending, a term auction facility, term repurchase transactions, a term securities lending facility and a primary dealer credit facility.

In
the third quarter of 2008, the volatility and disruption in the capital and credit markets reached unprecedented levels. On October 3, 2008, former President Bush signed into
law the Emergency Economic Stabilization Act of 2008 (the EESA) in response to the financial crises affecting the banking system and financial markets. The EESA was the result of a proposal by former
Treasury Secretary Henry Paulson to the U.S. Congress on September 20, 2008, in response to the financial crises affecting the banking system and financial markets and going concern threats to
investment banks and other financial institutions. Pursuant to

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the
EESA, the U.S. Treasury has the authority to, among other things, purchase up to $700 billion of mortgages, mortgage-backed securities and certain other financial instruments from financial
institutions for the purpose of stabilizing and providing liquidity to the U.S. financial markets. Pursuant to the EESA, the maximum deposit insurance amount was temporarily increased from $100,000 to
$250,000 per depositor through December 31, 2009. On October 14, 2008, the FDIC announced the establishment of a Temporary Liquidity Guarantee Program under which the FDIC will fully
guarantee until December 31, 2009, all non-interest-bearing transaction accounts of insured depository institutions that do not opt out of the program by December 5, 2008.
Pursuant to the Temporary Liquidity Guarantee Program, the FDIC will also guarantee newly issued senior unsecured debt of participating financial institutions and their qualifying holding companies.
All eligible institutions participated in the program without cost for the first 30 days of the program. After December 5, 2008, institutions are assessed at the rate of ten basis points
for transaction account balances in excess of $250,000 and at the rate, on an annualized basis, of 50 to 100 basis points of the amount of debt issued (on a sliding scale, depending on length of
maturity of the debt). Union Bank has elected to participate in the Temporary Liquidity Guarantee Program and during the first quarter of 2009, Union Bank issued $1 billion principal amount of
FDIC-guaranteed senior notes under this program. Further, pursuant to the EESA, on October 14, 2008, the U.S. Treasury announced a voluntary Capital Purchase Program under its
Troubled Asset Relief Program (TARP) pursuant to which the Treasury will purchase up to $250 billion in senior preferred stock of qualifying U.S. financial institutions. The nine largest
commercial and investment banks in the U.S. initially agreed to participate in this program, with the U.S. Treasury purchasing an aggregate of $125 billion in senior preferred stock in such
banks and allocating an additional $125 billion to the purchase of senior preferred stock in other banking institutions. The purpose of the program is to provide substantial new capital to the
U.S. banking industry. Many banks and bank holding companies have participated in this program. On January 19, 2009, the Senate voted to approve the release of an additional $350 billion
in TARP funds, making a vote by the House of Representatives unnecessary and
resulting in the availability of such additional funds to the U.S. Treasury. UnionBanCal Corporation, as a wholly-owned subsidiary of a foreign bank, is not eligible to participate in the Capital
Purchase Program.

On
February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA) in an attempt to reverse the U.S. economic downturn. A large
portion of the ARRA is devoted to new federal spending programs designed to increase economic output, decrease unemployment and invest in national infrastructure. Of the $787 billion in federal
spending appropriated by the ARRA, $286 billion will be devoted to tax cuts, $120 billion will be used to fund infrastructure projects and $381 billion will be allocated for
social programs and other spending. A substantial portion of the appropriation funds will go directly to the states, which was a key element in the budget approved by the California Legislature and
signed by Governor Schwarzenegger on February 20, 2009.

On
March 31, 2009, the U.S. Treasury and the FDIC announced the Public-Private Investment Program (PPIP) that seeks to eliminate "toxic" real estate-backed assets from the balance
sheets of United States financial institutions through partnerships with private investors in an attempt to restore the normal functioning of secondary markets for securities backed by such assets,
encourage the extension of credit and restore investor confidence in financial institutions. The PPIP will create Public-Private Investment Funds that will use private equity investment, equity
investment from the U.S. Treasury, U.S. Treasury debt financing, and FDIC-guaranteed debt to purchase "toxic" real estate assets and securities backed by such assets. The U.S. Treasury has
committed to furnish up to $100 billion of capital for the PPIP. As a foreign-owned bank holding company, we and Union Bank will not be authorized to participate in the "Legacy Loan" portion of
this program but may be able to participate in the "Legacy Securities" portion of it.

It
cannot be predicted whether these recent governmental actions will result in significant improvement in financial and economic conditions affecting the banking industry and the U.S.
economy. If, notwithstanding the federal government's recent fiscal and monetary measures, the U.S. economy were to remain in a recessionary condition for an extended period, this would present
additional significant challenges for the U.S. banking and financial services industry and for our company. In addition, as a wholly-owned subsidiary of a

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foreign
bank, we have not been eligible to participate in some federal programs such as TARP and may not qualify for participation in future federal programs. While it is difficult to predict how long
these conditions will exist and which markets and businesses of our company may be affected, these factors could continue to present risks for some time for the industry and our company.



Dramatic declines in the housing market in the U.S. in general, and in California in particular, during 2008 and continuing into 2009,
with falling home prices and increasing foreclosures, unemployment and under-employment, have negatively impacted the credit performance of mortgage loans and resulted in significant write-downs of
asset values by financial institutions, including government-sponsored entities as well as major commercial and investment banks. These write-downs, initially of mortgage-backed securities but
spreading to credit default swaps and other derivative and cash securities and, more recently, commercial real estate loans, in turn, have caused many financial institutions to seek additional
capital, to merge with larger and stronger institutions and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many
lenders and institutional investors have reduced or ceased providing funding to borrowers, including to other financial institutions. This market turmoil and tightening of credit have led to an
increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. The resulting economic
pressure on consumers and lack of confidence in the financial markets has adversely affected our business, financial condition and results of operations. We cannot predict whether the difficult
conditions in the financial markets are likely to improve in the near future. A worsening of these conditions would likely exacerbate the adverse effects of these difficult market conditions on us and
others in the financial institutions industry. In particular, we may face the following risks in connection with these events:



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In particular, there have been proposals made by President Obama, members of Congress and others that could reduce the amount
distressed borrowers are otherwise contractually obligated to pay under their mortgage loans and limit an institution's ability to foreclose on mortgage collateral. For example, on February 18,
2009, President Obama announced "The Homeowner Affordability and Stability Plan" as part of a plan designed to help up to 7 to 9 million families restructure or refinance their mortgages to
avoid foreclosure. On April 28, 2009, the Obama Administration announced additional details of the "Making Home Affordable Program", a comprehensive three-part plan intended to
stabilize the U.S. housing market that includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which
will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for
up to 3 to 4 million at-risk homeowners. The Administration has also published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin
modifications under the plan immediately. A Second Lien Program coordinates with the first mortgage modification program to lower payments on second liens. Twelve servicers, including the five
largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than
75 percent of all loans in the country are now covered by the Making Home Affordable Program. The implementation of these proposals, or other proposals limiting our rights as a creditor, could
increase our credit losses or increase our expense in pursuing our remedies as a creditor.

Item 6.   Exhibits

| |      |  |                                                                                                                                                         
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 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:    May 20, 2009

By:

/s/ MASAAKI TANAKA Masaaki Tanaka President and Chief Executive Officer
(Principal Executive Officer)Date:    May 20, 2009

By:

/s/ DAVID I. MATSON David I. Matson Vice Chairman and Chief Financial Officer
(Principal Financial Officer)Date:    May 20, 2009

By:

/s/ DAVID A. ANDERSON David A. Anderson Executive Vice President and Controller
(Chief Accounting Officer)


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EXHIBIT INDEX

No.

Description31.1

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)


---

74

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