UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   -----------

                                    FORM 10-Q

                                   -----------

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
                         COMMISSION FILE NUMBER 0-28118

                                   -----------

                             UnionBanCal Corporation


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


                              400 California Street
                      San Francisco, California 94104-1476
                  Registrant's telephone number (415) 765-2969

                                   -----------

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

  Number of shares of Common Stock outstanding at October 31, 2000: 159,927,344



<PAGE>

<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES

                                TABLE OF CONTENTS


                                                                                         PAGE
                                                                                        NUMBER
                                                                                        ------
PART I
FINANCIAL INFORMATION
   <S>                                                                                     <C>
   Consolidated Financial Highlights....................................................     2
   Item 1. Financial Statements:
      Condensed Consolidated Statements of Income.......................................     4
      Condensed Consolidated Balance Sheets.............................................     5
      Condensed Consolidated Statements of Changes in Shareholders' Equity..............     6
      Condensed Consolidated Statements of Cash Flows...................................     7
      Notes to Condensed Consolidated Financial Statements..............................     8
   Item 2. Management's Discussion and Analysis:
      Introduction......................................................................    14
      Summary...........................................................................    14
      Mission Excel.....................................................................    17
      Business Segments.................................................................    18
      Net Interest Income...............................................................    26
      Noninterest Income................................................................    29
      Noninterest Expense...............................................................    31
      Income Tax Expense................................................................    32
      Loans.............................................................................    32
      Cross-Border Outstandings.........................................................    33
      Provision for Credit Losses.......................................................    34
      Allowance for Credit Losses.......................................................    34
      Nonperforming Assets..............................................................    39
      Loans 90 Days or More Past Due and Still Accruing.................................    39
      Asset Quality Trends..............................................................    39
      Liquidity.........................................................................    40
      Regulatory Capital................................................................    40
      Forward-looking Statements........................................................    41
   Item 3. Market Risk..................................................................    45
PART II
OTHER INFORMATION
   Item 4. Other Information............................................................    46
   Item 5. Exhibits and Reports on Form 8-K.............................................    46
   Signatures...........................................................................    47

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                    UnionBanCal Corporation and Subsidiaries
                       Consolidated Financial Highlights
                                  (Unaudited)

                                                                                              PERCENT CHANGE TO
                                                  AS OF AND FOR THE THREE MONTHS ENDED     SEPTEMBER 30, 2000 FROM:
                                              -------------------------------------------  ------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER             SEPTEMBER 30,    JUNE 30,     SEPTEMBER 30,  SEPTEMBER 30,   JUNE 30,
----------------------------------                1999           2000           2000          1999           2000
SHARE DATA)                                   -------------  -----------    -------------  -------------   --------
----------------------------------
   <S>                                          <C>            <C>            <C>            <C>            <C>
   RESULTS OF OPERATIONS:
   Net interest income(1).........           $    360,760   $    396,929    $    404,626        12.16%         1.94%
   Provision for credit losses....                 20,000         70,000          80,000       300.00         14.29
   Noninterest income.............                148,349        173,070         168,928        13.87         (2.39)
   Noninterest expense, excluding
      restructuring charge (credit)               299,298        290,319         291,378        (2.65)         0.36
   Restructuring charge (credit)..                 85,000         (8,000)              -           nm            nm
                                              -----------    -----------     -----------
   Income before income taxes(1)..                104,811        217,680         202,176        92.90         (7.12)
   Taxable-equivalent adjustment..                    747            637             641       (14.19)         0.63
   Income tax expense.............                 32,483         75,628          69,959       115.37         (7.50)
                                              -----------    -----------     -----------
   Net income.....................           $     71,581   $    141,415    $    131,576        83.81%        (6.96)%
                                              ===========    ===========     ===========
   PER COMMON SHARE:
   Net income-basic...............           $       0.43   $       0.87    $       0.82        90.70%        (5.75)%
   Net income-diluted.............                   0.43           0.87            0.82        90.70         (5.75)
   Dividends(2)...................                   0.19           0.25            0.25        31.58             -
   Book value (end of period).....                  17.72          19.42           20.13        13.60          3.66
   Common shares outstanding (end             164,624,258    161,604,417     160,112,869        (2.74)        (0.92)
      of period)..................
   Weighted average common shares             164,616,369    162,231,696     160,759,916        (2.34)        (0.91)
      outstanding-basic...........
   Weighted average common shares             165,472,346    162,660,994     161,014,901        (2.69)        (1.01)
      outstanding-diluted.........
   BALANCE SHEET (END OF PERIOD):
   Total assets...................           $ 32,518,035   $ 33,895,037    $ 33,745,489         3.77%        (0.44)%
   Total loans....................             25,185,682     26,373,044      26,157,939         3.86         (0.82)
   Nonaccrual loans...............                154,900        203,201         282,999        82.70         39.27
   Nonperforming assets...........                158,257        228,981         299,795        89.44         30.93
   Total deposits.................             25,175,921     25,733,981      25,894,059         2.85          0.62
   Trust preferred securities.....                350,000        350,000         350,000            -             -
   Common equity..................              2,917,583      3,138,690       3,222,770        10.46          2.68
   BALANCE SHEET (PERIOD AVERAGE):
   Total assets...................           $ 32,038,792   $ 33,846,445    $ 33,690,070         5.15%        (0.46)%
   Total loans....................             25,152,550     26,441,412      26,454,975         5.18          0.05
   Earning assets.................             29,007,215     30,575,062      30,399,146         4.80         (0.58)
   Total deposits.................             23,926,472     25,476,764      25,402,036         6.17         (0.29)
   Common equity..................              2,929,140      3,085,227       3,185,167         8.74          3.24
   FINANCIAL RATIOS:
   Return on average assets(3)....                   0.89%          1.68%           1.55%
   Return on average common
      equity(3)...................                   9.70          18.44           16.43
   Efficiency ratio(4)............                  75.62          49.52           50.80
   Net interest margin(1).........                   4.93           5.21            5.30
   Dividend payout ratio..........                  44.19          28.74           30.49
   Tangible equity ratio..........                   8.78           9.13            9.41
   Tier 1 risk-based capital ratio                   9.94          10.23           10.52
   Total risk-based capital ratio.                  11.81          12.05           12.35
   Leverage ratio.................                  10.06          10.26           10.47
   Allowance for credit losses to
      total loans.................                   1.82           1.90            2.01
   Allowance for credit losses to
      nonaccrual loans............                 295.31         246.42          185.83
   Net loans charged off to average
      total loans]................                   0.21           0.80            0.82
   Nonperforming assets to total
      loans, foreclosed assets, and
      distressed loans held for sale                 0.63           0.87            1.15
   Nonperforming assets to total
      assets......................                   0.49           0.68            0.89
<FN>
-----------
(1)      Amounts are on a taxable-equivalent basis using the federal statutory
         tax rate of 35 percent.

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

(3)      Annualized.

(4)      The efficiency ratio is noninterest expense, excluding foreclosed asset
         expense  (income),  as  a  percentage  of  net  interest  income
         (taxable-equivalent)  and noninterest income.  Foreclosed asset expense
         (income) was $(0.7)  million in the third quarter of 1999,  and none in
         the second and third quarters of 2000.

nm = not meaningful

</FN>
</TABLE>

                                       2

<PAGE>

<TABLE>
<CAPTION>


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


                                                                                  SEPTEMBER 30,       SEPTEMBER 30,   PERCENT
   (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                                      1999                2000        CHANGE
   --------------------------------------------------------------------------     ------------        ------------   --------
   <S>                                                                            <C>                 <C>             <C>
   RESULTS OF OPERATIONS:
   Net interest income(1)....................................................     $  1,049,485        $  1,187,732     13.17%
   Provision for credit losses...............................................           35,000             190,000    442.86
   Noninterest income........................................................          432,455             494,008     14.23
   Noninterest expense, excluding restructuring charge (credit)..............          905,690             848,735     (6.29)
   Restructuring charge (credit).............................................           85,000             (19,000)       nm
                                                                                  ------------        ------------
   Income before income taxes(1).............................................          456,250             662,005     45.10
   Taxable-equivalent adjustment.............................................            2,488               1,933    (22.31)
   Income tax expense........................................................          148,959             228,610     53.47
                                                                                  ------------        ------------
   Net income................................................................     $    304,803        $    431,462     41.55%
                                                                                  ============        ============
   PER COMMON SHARE:
   Net income-basic..........................................................     $       1.83        $       2.66     45.36%
   Net income-diluted........................................................             1.82                2.65     45.60
   Dividends(2)..............................................................             0.57                0.75     31.58
   Book value (end of period)................................................            17.72               20.13     13.60
   Common shares outstanding (end of period).................................      164,624,258         160,112,869     (2.74)
   Weighted average common shares outstanding-basic..........................      166,983,654         162,259,396     (2.83)
   Weighted average common shares outstanding-diluted........................      167,698,656         162,674,610     (3.00)
   BALANCE SHEET (END OF PERIOD):
   Total assets..............................................................     $ 32,518,035        $ 33,745,489      3.77%
   Total loans...............................................................       25,185,682          26,157,939      3.86
   Nonaccrual loans..........................................................          154,900             282,999     82.70
   Nonperforming assets......................................................          158,257             299,795     89.44
   Total deposits............................................................       25,175,921          25,894,059      2.85
   Trust preferred securities................................................          350,000             350,000         -
   Common equity.............................................................        2,917,583           3,222,770     10.46
   BALANCE SHEET (PERIOD AVERAGE):
   Total assets..............................................................     $ 31,910,097        $ 33,520,179      5.05%
   Total loans...............................................................       24,765,902          26,303,921       6.21
   Earning assets............................................................       28,832,723          30,267,580       4.98
   Total deposits............................................................       23,529,262          25,320,107       7.61
   Common equity.............................................................        2,931,922           3,095,375       5.57
   FINANCIAL RATIOS:
   Return on average assets].................................................             1.28%               1.72%
   Return on average common equity]..........................................            13.90               18.62
   Efficiency ratio].........................................................            66.94               49.34
   Net interest margin]......................................................             4.86                5.23
   Dividend payout ratio.....................................................            31.15               28.20
   Tangible equity ratio.....................................................             8.78                9.41
   Tier 1 risk-based capital ratio...........................................             9.94               10.52
   Total risk-based capital ratio............................................            11.81               12.35
   Leverage ratio............................................................            10.06               10.47
   Allowance for credit losses to total loans................................             1.82                2.01
   Allowance for credit losses to nonaccrual loans...........................           295.31              185.83
   Net loans charged off to average total loans].............................             0.20                0.68
   Nonperforming assets to total loans, foreclosed assets, and distressed                 0.63                1.15
      loans held for sale....................................................
   Nonperforming assets to total assets......................................             0.49                0.89
-----------
<FN>
(1)      Amounts are on a taxable-equivalent basis using the federal statutory
         tax rate of 35 percent.

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

(3)      Annualized.

(4)      The efficiency ratio is noninterest expense, excluding foreclosed asset
         expense   (income),   as  a   percentage   of   net   interest   income
         (taxable-equivalent)  and noninterest income.  Foreclosed asset expense
         (income)  was $(1.3)  million in the first nine months of 1999 and none
         for the first nine months of 2000.

nm = not meaningful
</FN>
</TABLE>


                                       3

<PAGE>

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


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

                                                                           FOR THE THREE MONTHS           FOR THE NINE MONTHS
                                                                            ENDED SEPTEMBER 30,            ENDED SEPTEMBER 30,
                                                                           ----------------------      --------------------------
   (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)                             1999          2000           1999            2000
   --------------------------------------------------------------------    ---------     --------      ----------      ----------
   <S>                                                                     <C>           <C>           <C>             <C>
   INTEREST INCOME
   Loans...............................................................    $491,239      $576,567      $1,416,805      $1,675,900
   Securities..........................................................      50,820        55,706         161,851         162,689
   Interest bearing deposits in banks..................................       2,786         2,775           9,042           7,522
   Federal funds sold and securities purchased under resale agreements.       2,345         1,263           5,237           6,364
   Trading account assets..............................................       3,087         4,170           9,489          12,205
                                                                           ---------     --------      ----------      ----------
      Total interest income............................................     550,277       640,481       1,602,424       1,864,680
                                                                           ---------     --------      ----------      ----------
   INTEREST EXPENSE
   Domestic deposits...................................................     114,345       144,406         331,227         410,625
   Foreign deposits....................................................      18,233        25,506          52,046          76,872
   Federal funds purchased and securities sold under repurchase
      agreements.......................................................      16,493        26,994          57,368          72,383
   Commercial paper....................................................      19,572        26,072          56,766          71,004
   Subordinated capital notes..........................................       4,240         4,060          12,385          13,997
   UnionBanCal Corporation - obligated mandatorily redeemable preferred
      securities of subsidiary grantor trust...........................       7,093         6,414          17,476          19,788
   Other borrowed funds................................................      10,288         3,044          28,159          14,212
                                                                           ---------     --------      ----------      ----------
        Total interest expense.........................................     190,264       236,496         555,427         678,881
                                                                           ---------     --------      ----------      ----------
   NET INTEREST INCOME.................................................     360,013       403,985       1,046,997       1,185,799
   Provision for credit losses.........................................      20,000        80,000          35,000         190,000
                                                                           ---------     --------      ----------      ----------
        Net interest income after provision for credit losses..........     340,013       323,985       1,011,997         995,799
                                                                           ---------     --------      ----------      ----------
   NONINTEREST INCOME
   Service charges on deposit accounts.................................      45,401        53,779         127,981         153,987
   Trust and investment management fees................................      36,353        39,975         102,607         116,163
   Merchant transaction processing fees................................      18,598        19,354          51,256          54,887
   International commissions and fees..................................      17,475        18,012          53,186          53,463
   Merchant banking fees...............................................      10,946        15,353          27,561          40,681
   Brokerage commissions and fees......................................       7,148         8,616          18,825          27,309
   Securities gains, net...............................................       2,004         3,104           3,899           8,804
   Other...............................................................      10,424        10,735          47,140          38,714
                                                                           ---------     --------      ----------      ----------
        Total noninterest income.......................................     148,349       168,928         432,455         494,008
                                                                           ---------     --------      ----------      ----------
   NONINTEREST EXPENSE
   Salaries and employee benefits......................................     165,458       152,227         500,140         444,483
   Net occupancy.......................................................      22,895        24,664          67,273          69,358
   Equipment...........................................................      19,389        15,702          49,405          47,706
   Merchant transaction processing.....................................      12,905        12,784          37,773          37,144
   Communications......................................................      10,666        11,736          31,217          33,048
   Professional services...............................................       8,440        10,760          29,426          29,278
   Data processing.....................................................       7,797         8,577          23,459          26,199
   Foreclosed asset expense (income)...................................        (703)          (14)         (1,256)              7
   Restructuring charge (credit).......................................      85,000             -          85,000         (19,000)
   Other...............................................................      52,451        54,942         168,253         161,512
                                                                           ---------     --------      ----------      ----------
        Total noninterest expense......................................     384,298       291,378         990,690         829,735
                                                                           ---------     --------      ----------      ----------
   Income before income taxes..........................................     104,064       201,535         453,762         660,072
   Income tax expense..................................................      32,483        69,959         148,959         228,610
                                                                           ---------     --------      ----------      ----------
   NET INCOME..........................................................    $ 71,581      $131,576      $  304,803      $  431,462
                                                                           =========     ========      ==========      ==========
   NET INCOME PER COMMON SHARE-BASIC...................................    $    0.43     $   0.82      $     1.83      $     2.66
                                                                           =========     ========      ==========      ==========
   NET INCOME PER COMMON SHARE-DILUTED.................................    $    0.43     $   0.82      $     1.82      $     2.65
                                                                           =========     ========      ==========      ==========
   WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-BASIC....................      164,616      160,760         166,984         162,259
                                                                           =========     ========      ==========      ==========
   WEIGHTED AVERAGE COMMON SHARES OUTSTANDING-DILUTED..................      165,472      161,015         167,699         162,675
                                                                           =========     ========      ==========      ==========
<FN>
     See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>


                                       4


<PAGE>

<TABLE>
<CAPTION>

                    UNIONBANCAL CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                             (UNAUDITED)                            (UNAUDITED)
                                                                            SEPTEMBER 30,       DECEMBER 31,       SEPTEMBER 30,
   (DOLLARS IN THOUSANDS)                                                       1999               1999                2000
   --------------------------------------------------------------------      -----------        -----------         -----------
   <S>                                                                       <C>                <C>                 <C>
   ASSETS
   Cash and due from banks.............................................      $ 2,209,694        $ 2,141,964         $ 2,133,958
   Interest bearing deposits in banks..................................          194,535            182,719             142,106
   Federal funds sold and securities purchased under resale agreements.          371,523            833,450             236,600
                                                                             -----------        -----------         -----------
      Total cash and cash equivalents..................................        2,775,752          3,158,133           2,512,664
   Trading account assets..............................................          245,762            179,935             224,063
   Securities available for sale.......................................        3,096,494          3,210,099           3,588,360
   Securities held to maturity (market value: September 30, 1999,
      $86,611; December 31, 1999, $45,376; September 30, 2000, $23,469)           87,221             46,526              24,173
   Loans (net of allowance for credit losses: September 30, 1999,
      $457,429; December 31, 1999, $470,378; September 30, 2000,
      $525,896)........................................................       24,728,253         25,442,580          25,632,043
   Due from customers on acceptances...................................          272,009            259,340             255,325
   Premises and equipment, net.........................................          437,083            425,021             426,166
   Other assets........................................................          875,461            963,142           1,082,695
                                                                             -----------        -----------         -----------
      Total assets.....................................................      $32,518,035        $33,684,776         $33,745,489
                                                                             ===========        ===========         ===========
   LIABILITIES
   Domestic deposits:
   Noninterest bearing.................................................      $ 9,484,156        $ 9,395,925         $ 9,971,158
   Interest bearing....................................................       13,667,733         14,274,310          13,723,799
   Foreign deposits:
   Noninterest bearing.................................................          270,765            325,415             288,612
   Interest bearing....................................................        1,753,267          2,260,957           1,910,490
                                                                             -----------        -----------         -----------
      Total deposits...................................................       25,175,921         26,256,607          25,894,059
   Federal funds purchased and securities sold under repurchase
      agreements.......................................................          651,170          1,156,799           1,234,541
   Commercial paper....................................................        1,479,939          1,108,258           1,471,815
   Other borrowed funds................................................          629,891            540,496             274,348
   Acceptances outstanding.............................................          272,009            259,340             255,325
   Other liabilities...................................................          743,522            727,808             842,631
   Subordinated capital notes..........................................          298,000            298,000             200,000
   UnionBanCal Corporation-obligated mandatorily redeemable preferred
      securities of subsidiary grantor trust...........................          350,000            350,000             350,000
                                                                             -----------        -----------         -----------
      Total liabilities................................................       29,600,452         30,697,308          30,522,719
                                                                             -----------        -----------         -----------
   Commitments and contingencies
   SHAREHOLDERS' EQUITY
   Preferred stock:
   Authorized 5,000,000 shares, no shares issued or outstanding as of
      September 30, 1999, December 31, 1999, and September 30, 2000....                -                  -                   -
   Common stock-no stated value:
   Authorized 300,000,000 shares, issued 164,624,258 shares as of
      September 30, 1999, 164,282,622 shares as of December 31, 1999,
      and 160,112,869 shares as of September 30, 2000..................        1,416,680          1,404,155           1,294,893
   Retained earnings...................................................        1,528,546          1,625,263           1,936,827
   Accumulated other comprehensive income (loss).......................         (27,643)           (41,950)             (8,950)
                                                                             -----------        -----------         -----------
      Total shareholders' equity.......................................        2,917,583          2,987,468           3,222,770
                                                                             -----------        -----------         -----------
      Total liabilities and shareholders' equity.......................      $32,518,035        $33,684,776         $33,745,489
                                                                             ===========        ===========         ===========
<FN>
     See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>



<PAGE>

<TABLE>
<CAPTION>


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


                                                                                 FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                                         --------------------------------------------------------
   (DOLLARS IN THOUSANDS)                                                         1999                             2000
   -----------------------------------------------------------------     --------------------------       -----------------------
   <S>                                                                   <C>                              <C>
   COMMON STOCK
   Balance, beginning of period.....................................     $1,725,619                       $1,404,155
   Dividend reinvestment plan.......................................             39                               39
   Deferred compensation-restricted stock awards....................            (78)                             247
   Stock options exercised..........................................          2,638                            1,652
   Common stock repurchased.........................................       (311,538)                        (111,200)
                                                                         ----------                       ----------
   Balance, end of period...........................................     $1,416,680                       $1,294,893
                                                                         ----------                       ----------
   RETAINED EARNINGS
   Balance, beginning of period.....................................     $1,314,915                       $1,625,263
   Net income.......................................................        304,803        $304,803          431,462     $431,462
   Dividends on common stock(1).....................................        (93,820)                        (121,402)
   Deferred compensation - restricted stock awards..................          2,648                            1,504
                                                                         ----------                       ----------
   Balance, end of period...........................................     $1,528,546                       $1,936,827
                                                                         ----------                       ----------
   ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
   Balance, beginning of period.....................................     $   17,710                       $  (41,950)
   Unrealized holding (losses) gains arising during the period on
      securities available for sale, net of tax (benefit) expense of
      $(26,878) and $23,587 in the first nine months of 1999 and
      2000, respectively............................................                        (43,391)                       38,078
   Less: reclassification adjustment for gains on securities
      available for sale included in net income, net of tax expense
      of $1,491 and $3,368 in the first nine months of 1999 and 2000,
      respectively                                                                           (2,408)                       (5,436)
                                                                                           --------                      --------
   Net unrealized (losses) gains on securities available for sale...                        (45,799)                       32,642
   Foreign currency translation adjustment, net of tax benefit
      (expense) of $138 and $(222) in the first nine months of 1999
      and 2000, respectively........................................                           (223)                          358
   Minimum pension liability adjustment, net of tax expense of $373
      in the first nine months of 1999..............................                            669                             -
                                                                                           --------                      --------
   Other comprehensive (loss) income................................        (45,353)        (45,353)          33,000       33,000
                                                                         ----------        --------       ----------     --------
   Total comprehensive income.......................................                       $259,450                      $464,462
                                                                                           ========                      ========
   Balance, end of period...........................................     $  (27,643)                      $   (8,950)
                                                                         ----------                       ----------
      TOTAL SHAREHOLDERS' EQUITY....................................     $2,917,583                       $3,222,770
                                                                         ==========                       ==========
-----------
<FN>
(1)      Dividends  per share were $0.57 and $0.75 for the first nine  months of
         1999  and  2000,  respectively.  Dividends  are  based  on  UnionBanCal
         Corporation's shares outstanding as of the declaration date.

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


                                       6

<PAGE>

<TABLE>
<CAPTION>

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

                                                                                                    FOR THE NINE MONTHS ENDED
                                                                                                           SEPTEMBER 30,
                                                                                                   ---------------------------
   (DOLLARS IN THOUSANDS)                                                                              1999           2000
   ---------------------------------------------------------------------------------------------   -----------    ------------
   <S>                                                                                             <C>            <C>
   CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income...................................................................................   $   304,803    $    431,462
   Adjustments to reconcile net income to net cash provided by operating activities:
      Provision for credit losses...............................................................        35,000         190,000
      Depreciation, amortization and accretion..................................................        58,424          53,862
      Provision for deferred income taxes.......................................................       (17,555)        (28,431)
      Gain on sales of securities available for sale............................................        (3,899)         (8,804)
      Utilization (in excess of) less than restructuring charge/credit..........................        82,577         (46,772)
      Net decrease (increase) in trading account assets.........................................        21,956         (44,128)
      Other, net................................................................................      (203,053)         56,786
                                                                                                   -----------    ------------
        Total adjustments.......................................................................       (26,550)        172,513
                                                                                                   -----------    ------------
   Net cash provided by operating activities....................................................       278,253         603,975
                                                                                                   -----------    ------------
   CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sales of securities available for sale.........................................       203,084         393,869
   Proceeds from matured and called securities available for sale...............................       636,916         725,459
   Purchases of securities available for sale...................................................      (364,440)     (1,434,439)
   Proceeds from matured and called securities held to maturity.................................        73,475          22,359
   Net increase in loans........................................................................      (956,464)       (390,627)
   Other, net...................................................................................       (67,867)        (46,486)
                                                                                                   -----------    ------------
        Net cash used in investing activities...................................................      (475,296)       (729,865)
                                                                                                   -----------    ------------
   CASH FLOWS FROM FINANCING ACTIVITIES:
   Net increase (decrease) in deposits..........................................................       668,042        (362,548)
   Net increase (decrease) in federal funds purchased and securities sold under repurchase
      agreements................................................................................      (656,574)         77,742
   Net increase in commercial paper and other borrowed funds....................................       333,920          97,409
   Common stock repurchased.....................................................................      (311,538)       (111,200)
   Proceeds from issuance of trust preferred securities.........................................       350,000               -
   Repayment of subordinated debt...............................................................             -        (98,000)
   Payments of cash dividends...................................................................       (95,840)       (122,556)
   Other, net...................................................................................         2,454           2,049
                                                                                                   -----------    ------------
        Net cash provided by (used in) financing activities.....................................       290,464        (517,104)
                                                                                                   -----------    ------------
   Net increase (decrease) in cash and cash equivalents.........................................        93,421        (642,994)
   Cash and cash equivalents at beginning of period.............................................     2,678,478       3,158,133
   Effect of exchange rate changes on cash and cash equivalents.................................         3,853          (2,475)
                                                                                                   -----------    ------------
   Cash and cash equivalents at end of period...................................................   $ 2,775,752    $  2,512,664
                                                                                                   ===========    ============

   CASH PAID DURING THE PERIOD FOR:
   Interest.....................................................................................   $   508,921    $    667,649
   Income taxes.................................................................................        75,180         179,581
   SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
   Loans transferred to foreclosed assets (OREO) and distressed loans held for sale.............   $     5,039    $     21,875
   Dividends declared but unpaid................................................................        31,279          40,018

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


                                       7


<PAGE>


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

NOTE 1-BASIS OF PRESENTATION AND NATURE OF OPERATIONS

         The   unaudited   condensed   consolidated   financial   statements  of
UnionBanCal  Corporation  and  subsidiaries  (the Company) have been prepared in
accordance with accounting principles generally accepted in the United States of
America (US GAAP) for interim  financial  reporting and the instructions to Form
10-Q and Rule  10-01 of  Regulation  S-X of the  Rules  and  Regulations  of the
Securities  and  Exchange  Commission.  However,  they do not include all of the
disclosures  necessary for annual  financial  statements  in conformity  with US
GAAP. The results of operations for the period ended  September 30, 2000 are not
necessarily  indicative of the operating results  anticipated for the full year.
Accordingly,  these unaudited condensed consolidated financial statements should
be read in  conjunction  with  the  audited  consolidated  financial  statements
included in the Company's  Form 10-K for the year ended  December 31, 1999.  The
preparation  of financial  statements in  conformity  with US GAAP also requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the  financial  statements  and the reported  amounts of revenue and
expense  during the  reporting  period.  Actual  results could differ from those
estimates.

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

         The Company  completed  the  repurchase of $100 million in common stock
between December 1999 and July 2000, under a stock repurchase plan authorized in
November  1999. In July 2000, the Company  announced an additional  $100 million
stock  repurchase  plan. The amount purchased under the new plan as of September
30, 2000 was $32.5 million.

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

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

NOTE 2-RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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


                                       8

<PAGE>


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


NOTE 2-RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

value of cash flow hedges will be recognized in other comprehensive income until
realization of the cash flows of the hedged item through current  earnings.  Any
ineffective  portion of hedges will be recognized in current  earnings.  In June
1999,  the FASB issued SFAS No. 137,  "Deferral  of the  Effective  Date of FASB
Statement No. 133", to defer for one year the effective  date of  implementation
of SFAS No. 133. In June 2000, FASB issued SFAS No. 138, "Accounting for Certain
Derivative  Instruments  and  Certain  Hedging  Activities",  which  amends  the
accounting  and  reporting  standards  of SFAS No.  133 for  certain  derivative
instruments and certain hedging  activity.  SFAS No. 133, as amended by SFAS No.
137 and SFAS No. 138, is  effective  for fiscal years  beginning  after June 15,
2000, with earlier application encouraged.  The Company's hedging strategies are
primarily  related to hedges of cash flows from variable rate loans.  The impact
on net income and other comprehensive income is not expected to be material. The
Company may also be impacted  by the outcome of several  issues,  which have not
yet been  resolved by the FASB.  However,  management  does not believe that the
resolution  of  these  issues  will  have a  material  impact  on the  Company's
financial  position  or its net income.  The Company  will adopt SFAS No. 133 on
January 1, 2001.

         In  September  2000,  the FASB  issued SFAS No.  140,  "Accounting  for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
which replaces SFAS No. 125. The Statement  revises the standards for accounting
for the  securitization  and other transfers of financial assets and collateral,
and  requires  certain  disclosures,  but  carries  over most of SFAS No.  125's
provisions without reconsideration.  SFAS No. 140 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. However,  for recognition and reclassification of collateral and
for  disclosures  relating to  securitization  transactions  and collateral this
Statement is effective for fiscal years ending after December 15, 2000. SFAS No.
140 must be applied  prospectively.  Management  believes that adopting SFAS No.
140 will not have a  material  impact on the  Company's  financial  position  or
results of operation.

NOTE 3-EARNINGS PER SHARE

         Basic  earnings  per share (EPS) is computed by dividing  net income by
the weighted  average  number of common  shares  outstanding  during the period.
Diluted  EPS  incorporates  the  dilutive  effect  of common  stock  equivalents
outstanding  on an average  basis during the period.  Stock options are a common
stock  equivalent.  The following table presents a  reconciliation  of basic and
diluted EPS for the three  months and nine months ended  September  30, 1999 and
2000:

<TABLE>
<CAPTION>

                                      THREE MONTHS ENDED SEPTEMBER 30,                      NINE MONTHS ENDED SEPTEMBER 30,
                              -------------------------------------------------     ------------------------------------------------
(AMOUNTS IN THOUSANDS,                1999                       2000                      1999                        2000
-----------------------      ----------------------     ----------------------     ----------------------      ---------------------
EXCEPT PER SHARE DATA)         BASIC        DILUTED       BASIC        DILUTED       BASIC        DILUTED        BASIC       DILUTED
-----------------------      --------      --------     --------      --------     --------      --------      --------     --------

<S>                          <C>           <C>          <C>           <C>          <C>           <C>           <C>          <C>
Net Income............       $ 71,581      $ 71,581     $131,576      $131,576     $304,803      $304,803      $431,462     $431,462
                             ========      ========     ========      ========     ========      ========      ========     ========
Weighted average
   common shares
   outstanding........        164,616       164,616      160,760       160,760      166,984       166,984       162,259      162,259
Additional shares due
   to:
   Assumed conversion
      of dilutive
      stock options...              -           856            -           255            -           715             -          415
                             --------      --------     --------      --------     --------      --------      --------     --------
Adjusted weighted
   average common
   shares outstanding.        164,616       165,472      160,760       161,015      166,984       167,699       162,259      162,675
                             ========      ========     ========      ========     ========      ========      ========     ========
Net income per share..       $   0.43      $   0.43     $   0.82      $   0.82     $   1.83      $   1.82      $   2.66     $   2.65
                             ========      ========     ========      ========     ========      ========      ========     ========
</TABLE>

                                       9

<PAGE>

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


NOTE 4-COMPREHENSIVE INCOME

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

<TABLE>
<CAPTION>

                                        NET UNREALIZED                                     MINIMUM                 ACCUMULATED
                                      GAINS (LOSSES) ON            FOREIGN                 PENSION                   OTHER
                                     SECURITIES AVAILABLE          CURRENCY               LIABILITY               COMPREHENSIVE
                                           FOR SALE               TRANSLATION             ADJUSTMENT                 INCOME
                                    ---------------------     -------------------     ------------------      ---------------------
                                                                FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                    -----------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                 1999         2000        1999        2000        1999       2000         1999        2000
------------------------------      --------     --------     -------     -------     -------    -------      --------    --------
<S>                                 <C>          <C>          <C>         <C>         <C>         <C>         <C>         <C>
Beginning balance.............      $ 29,109     $(32,548)    $(9,651)    $(8,713)    $(1,748)    $(689)      $ 17,710    $(41,950)
Change during the period......       (45,799)      32,642        (223)        358         669         -        (45,353)     33,000
                                    --------     --------     -------     -------     -------     -----       --------    --------
Ending balance................      $(16,690)    $     94     $(9,874)    $(8,355)    $(1,079)    $(689)      $(27,643)   $ (8,950)
                                    ========     ========     =======     =======     =======     =====       ========    ========
</TABLE>


NOTE 5-BUSINESS SEGMENTS

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

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

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

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

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

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

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

                                       10

<PAGE>


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


NOTE 5-BUSINESS SEGMENTS (CONTINUED)

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

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

<TABLE>
<CAPTION>

                                                              COMMUNITY
                                                             BANKING AND                 COMMERCIAL
                                                              INVESTMENT                  FINANCIAL                INTERNATIONAL
                                                            SERVICES GROUP              SERVICES GROUP             BANKING GROUP
                                                        ----------------------     ------------------------   ---------------------
                                                                     AS OF AND FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                        ---------------------------------------------------------------------------
                                                           1999         2000          1999           2000        1999        2000
                                                        ---------    ---------     ---------      ---------   ---------   ---------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                     <C>          <C>           <C>            <C>         <C>         <C>
Total revenue(1)...................................     $273,472     $295,226      $186,500       $226,896    $ 23,812    $ 22,637
Net income.........................................     $ 42,317     $ 63,069      $ 57,296       $ 77,394    $  4,681    $  4,217
Total assets at period end (dollars in millions)...     $  9,350     $  9,118      $ 16,612       $ 18,444    $  1,516    $  1,369

<CAPTION>

                                                                GLOBAL                                            UNIONBANCAL
                                                            MARKETS GROUP                   OTHER                 CORPORATION
                                                        ----------------------     ------------------------   ---------------------
                                                                     AS OF AND FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                        ---------------------------------------------------------------------------
                                                           1999         2000          1999           2000        1999        2000
                                                        ---------    ---------     ---------      ---------   ---------   ---------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                     <C>          <C>           <C>            <C>         <C>          <C>
Total revenue(1).................................       $ 16,520     $ 15,107      $  8,058       $ 13,047    $508,362     $572,913
Net income.......................................       $  7,179     $  6,924      $(39,892)      $(20,028)   $ 71,581     $131,576
Total assets at period end (dollars in millions).       $  3,447     $  3,960      $  1,593       $    854    $ 32,518     $ 33,745
-----------
<FN>
(1)      Total revenue is comprised of net interest income and noninterest income
</FN>
</TABLE>


                                       11


<PAGE>

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


NOTE 5-BUSINESS SEGMENTS (CONTINUED)

<TABLE>
<CAPTION>

                                                           COMMUNITY BANKING             COMMERCIAL
                                                            AND INVESTMENT                FINANCIAL               INTERNATIONAL
                                                               SERVICES                   SERVICES                   BANKING
                                                                GROUP                       GROUP                     GROUP
                                                        --------------------      ----------------------    -----------------------
                                                                      AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                        ---------------------------------------------------------------------------
                                                          1999        2000          1999          2000         1999        2000
                                                        --------    --------      --------     ---------    ----------   ----------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                     <C>         <C>           <C>           <C>         <C>          <C>
Total revenue(1)...................................     $783,456    $863,254      $532,331      $674,663    $   76,046   $   70,916
Net income.........................................     $106,896    $180,051      $155,576      $234,213    $   15,315   $   14,375
Total assets at period end (dollars in millions)...     $  9,350    $  9,118      $ 16,612      $ 18,444    $    1,516   $    1,369

<CAPTION>

                                                              GLOBAL                                               UNIONBANCAL
                                                           MARKETS GROUP                   OTHER                   CORPORATION
                                                        --------------------      ----------------------    -----------------------
                                                                      AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                        ---------------------------------------------------------------------------
                                                          1999        2000          1999          2000         1999        2000
                                                        --------    --------      --------     ---------    ----------   ----------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
<S>                                                     <C>         <C>           <C>           <C>         <C>          <C>
Total revenue(1).................................       $59,220     $24,545       $ 28,399      $ 46,429    $1,479,452   $1,679,807
Net income.......................................       $26,107     $ 7,897       $    909      $ (5,074)   $  304,803   $  431,462
Total assets at period end (dollars in millions).       $ 3,447     $ 3,960       $  1,593      $    854    $   32,518   $   33,745
-----------
<FN>
(1)      Total revenue is comprised of net interest income and noninterest income
</FN>
</TABLE>


NOTE 6-RESTRUCTURING CHARGE (CREDIT)

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

         The total  cumulative  reduction to the  restructuring  charge is $19.0
million, the same as reported at June 30, 2000. The reductions made in the prior
quarters  were  primarily  related  to the  severance  portion  of the  reserve,
reflecting continuing changes in attrition assumptions. Management believes that
the  current  strength of the  California  economy  resulted in markedly  higher
attrition  rates  than the  Company  had  anticipated.  At the end of the  third
quarter of 2000, the number of employees  remaining to be severed under the plan
is not expected to significantly change.



                                       12

<PAGE>


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

NOTE 6-RESTRUCTURING CHARGE (CREDIT) (CONTINUED)

         The  table  below  provides  details  of  the   restructuring   related
liability.

<TABLE>
<CAPTION>

                                                                                          OCCUPANCY
(DOLLARS IN THOUSANDS)                                                     PERSONNEL      AND OTHER    TOTAL
-----------------------------------------------------------------          ---------      ---------   --------
<S>                                                                        <C>             <C>        <C>
Balances at December 31, 1999....................................          $59,525         $9,834     $69,359
Less:
Cash.............................................................           21,646          6,114      27,760
Noncash..........................................................                -             11          11
                                                                           --------        -------    --------
   Total utilization.............................................           21,646          6,125      27,771
Restructuring credit.............................................           18,000          1,000      19,000
                                                                           --------        -------    --------
Balances at September 30, 2000...................................          $19,879         $2,709     $22,588
                                                                           ========        =======    ========
</TABLE>

         Personnel expense consists of severance and related benefits to be paid
under the  Company's  enhanced  severance  plan.  The  Company  expects to sever
approximately  800  employees  under the plan of which 663  employees  have been
terminated  as of September  30,  2000.  Occupancy  and other  consists of lease
termination  costs and the cost of  professional  services  incurred  during the
assessment phase of the project.



                                       13

<PAGE>


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

         THIS DOCUMENT CONTAINS  FORWARD-LOOKING  STATEMENTS THAT ARE SUBJECT TO
RISKS AND  UNCERTAINTIES  THAT COULD CAUSE ACTUAL  RESULTS TO DIFFER  MATERIALLY
FROM THOSE  INDICATED.  FOR A  DISCUSSION  OF FACTORS  THAT COULD  CAUSE  ACTUAL
RESULTS TO DIFFER,  PLEASE SEE THE DISCUSSION CONTAINED HEREIN ON PAGE 41 AND IN
OUR PUBLICLY  AVAILABLE  SECURITIES  AND EXCHANGE  COMMISSION  FILINGS AND PRESS
RELEASES.

INTRODUCTION

         We  are  a  California-based   commercial  bank  holding  company  with
consolidated  assets of $33.7  billion at September 30, 2000.  Our  wholly-owned
subsidiary, Union Bank of California, N.A., is the third largest commercial bank
in California,  based on total assets and total deposits in California,  and one
of the 30 largest  commercial banks in the United States. At September 30, 2000,
we operated 242 banking  offices in California,  6 banking offices in Oregon and
Washington,  and 18 overseas  facilities.  At  September  30,  2000,  we were 66
percent  owned by The Bank of  Tokyo-Mitsubishi,  Ltd.  and 34 percent  owned by
other shareholders.

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

SUMMARY

         To  facilitate  the  discussion  of  the  results  of  operations,  the
following  table  includes  certain pro forma earnings  disclosures  and ratios.
These presentations  supplement the Condensed Consolidated  Statements of Income
on page 4, which are prepared in accordance with accounting principles generally
accepted in the United  States of America (US GAAP),  primarily  with respect to
the treatment of the restructuring  charge recorded in the third quarter of 1999
and the  restructuring  credits,  which  were  recorded  in the first and second
quarters  of 2000,  as well as  reflecting  the taxable  equivalent  adjustment.
Management  believes that it is meaningful to understand  the operating  results
and trends excluding these credits and, therefore,  has included  information in
this table and in  management's  discussion  and analysis  (MD&A) which follows,
that presents  income  excluding these items and related pro forma ratio and per
share  calculations.


                                       14

<PAGE>


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

<TABLE>
<CAPTION>

                                                                              FOR THE THREE MONTHS        FOR THE NINE MONTHS
                                                                               ENDED SEPTEMBER 30,        ENDED SEPTEMBER 30,
                                                                            ------------------------    -----------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                                  1999          2000          1999         2000
---------------------------------------------                               ----------    ----------    ----------   ----------
<S>                                                                         <C>           <C>           <C>          <C>
INCOME BEFORE INCOME TAXES............................................      $ 104,811     $ 202,176     $ 456,250    $ 662,005
   Restructuring charge/credits.......................................         85,000             -        85,000      (19,000)
   Taxable equivalent adjustment......................................           (747)         (641)       (2,488)      (1,933)
   Income tax expense(1)..............................................        (62,298)      (69,959)     (178,774)    (221,452)
                                                                            ---------     ---------     ----------   ----------
PRO FORMA EARNINGS....................................................      $ 126,766     $ 131,576     $ 359,988    $ 419,620
                                                                            =========     =========     ==========   ==========

PER COMMON SHARE, EXCLUDING RESTRUCTURING CHARGE/CREDITS
   Pro forma earnings (basic).........................................      $    0.77     $    0.82     $    2.16    $    2.59
   Pro forma earnings (diluted).......................................           0.77          0.82          2.15         2.58

SELECTED FINANCIAL RATIOS, EXCLUDING RESTRUCTURING CHARGE/CREDITS
   Pro forma return on average assets.................................           1.57%         1.55%         1.51%        1.67%
   Pro forma return on average common equity..........................          17.17         16.43         16.42        18.11
   Pro forma efficiency ratio(2)......................................          58.93         50.80         61.20        50.47
   Pro forma dividend payout ratio....................................          24.68         30.49         26.39        28.96
-----------
<FN>
(1)      Excludes an income tax benefit of $29.815 million in the three and nine
         months ending  September 30, 1999 related to the  restructuring  charge
         recorded  in the third  quarter  of 1999 and an income  tax  expense of
         $7.159 million for the nine months ending September 30, 2000 related to
         restructuring reserve credits recorded in the first and second quarters
         of the year 2000.

(2)      The pro  forma  efficiency  ratio  is  noninterest  expense,  excluding
         foreclosed  asset  income  and  restructuring   charge/credits,   as  a
         percentage of net interest income  (taxable-equivalent) and noninterest
         income.  Foreclosed  asset  expense/(income)  was $(0.703)  million and
         $(0.014) million for the third quarter of 1999 and 2000,  respectively,
         and  ($1.256)  million and $0.007  million for the first nine months of
         1999 and 2000, respectively.
</FN>
</TABLE>


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

         Reported  net income was $131.6  million,  or $0.82 per diluted  common
share,  in the third quarter of 2000 compared with $71.6  million,  or $0.43 per
diluted common share, in the third quarter of 1999. Return on average assets was
1.55  percent for the quarter  ending  September  30, 2000,  compared  with 0.89
percent for the same  period in 1999,  and return on average  common  equity was
16.43  percent for the quarter  ending  September  30, 2000,  compared with 9.70
percent for the same period in 1999.

         Pro forma  earnings were $131.6  million  or  $0.82 per diluted  common
share in the third  quarter  of 2000  compared  to $126.8  million  or $0.77 per
diluted  common  share in the same  period of 1999,  excluding  a  restructuring
charge of $85.0  ($55.2  million,  net of tax) million  recognized  in the third
quarter of 1999. In the third  quarter of 2000,  our pro forma return on average
assets  decreased to 1.55 percent from 1.57 percent a year earlier,  and our pro
forma return on average  common  equity  decreased  to 16.43  percent from 17.17
percent a year earlier.

         Major  factors  affecting  the pro forma  earnings  trend  were:

         o    Total  interest  income  during the third  quarter  of 2000,  on a
              taxable-equivalent  basis,  was  $404.6  million  or 12.2  percent
              higher than the same  period in 1999.  Increased  average  earning
              asset balances and the increasing  interest rate  environment were
              the main contributors to the higher net interest income.

         o    Net  interest  margin  for the third  quarter of 2000 was 37 basis
              points  or 7.5  percent  higher  than  the  same  period  in 1999.
              Increased yields on earning assets partially offset by higher cost
              of funds on interest bearing liabilities,  both resulting from the
              increasing  interest  rate  environment,  and  higher  noninterest
              bearing deposit  balances,  were the main contributors to a higher
              net interest margin.


                                       15

<PAGE>


         o    Growth in several fee revenue  businesses  was strong with service
              charges on deposit accounts up $8.4 million or 18.5 percent, trust
              and  investment  management  fees up $3.6 million or 10.0 percent,
              merchant  banking fees up $4.4 million or 40.3 percent,  brokerage
              fees and  commission  up $1.5  million  or 20.5  percent,  and net
              securities  gains  of  $1.1  million  or  54.9  percent.   Overall
              noninterest  income grew $19.5 million or 13.3 percent,  excluding
              net securities gains in both years.

         o    The  provision  for loan losses  increased to $80.0 million in the
              third  quarter  of 2000 from $20.0  million in the same  period in
              1999.  The change is attributed  to an increase in our  criticized
              credits and in our impairment allowance.

         o    Pro forma  noninterest  expenses  decreased  $7.9  million  or 2.6
              percent  from the same  period  in 1999.  The  decrease  is mainly
              attributed to lower direct expenses  realized  through our Mission
              Excel  expense  reduction  efforts and higher prior year  expenses
              related to the Year 2000 conversion.

       COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 2000

         Reported  net  income was $431.5  million or $2.65 per  diluted  common
share,  for the first nine months of 2000 compared with $304.8  million or $1.82
per diluted common share,  for the first nine months of 1999.  Return on average
assets was 1.72 percent for the nine months ending September 30, 2000,  compared
with 1.28  percent  for the same  period in 1999,  and return on average  common
equity was 18.62 percent for the nine months ending September 30, 2000, compared
with 13.90 percent for the same period in 1999.

         Pro forma  earnings  were $419.6  million or $2.58 per  diluted  common
share for the first nine months of 2000, compared to $360.0 million or $2.08 per
diluted  common  share for the first  nine  months of 1999.  For the first  nine
months of 2000, our pro forma return on average assets increased to 1.67 percent
from 1.46 percent a year  earlier,  and our pro forma  return on average  common
equity increased to 18.11 percent from 16.42 percent a year earlier.

         Major  factors  affecting  the pro forma  earnings  trend  were:

         o    Total  interest  income during the first nine months of 2000, on a
              taxable-equivalent  basis,  was  $138.2  million  or 13.2  percent
              higher than the same  period in 1999.  Increased  average  earning
              asset balances and the increasing  interest rate  environment were
              the main contributors to the higher total interest income.

         o    Net interest margin for the first nine months of 2000 was 37 basis
              points,  or 7.1  percent  higher  than  the same  period  in 1999.
              Increased  yields on earning  assets,  partially  offset by higher
              cost of funds on interest bearing liabilities, both resulting from
              the increasing  interest rate environment,  and higher noninterest
              bearing  deposits  were the  main  contributors  to a  higher  net
              interest margin.

         o    Growth in several fee revenue  businesses  continued  with service
              charges  on deposit  accounts  up $26.0  million or 20.3  percent,
              trust and  investment  management  fees up $13.6  million  or 13.2
              percent,  merchant  banking fees up $13.1 million or 47.6 percent,
              brokerage fees and commission up $8.5 million or 45.0 percent, and
              foreign   exchange  profits  up  $8.5  million  or  41.6  percent,
              partially  offset by an $8.4 million or 17.9  percent  decrease in
              other  income.  Overall  noninterest  income grew $56.6 million or
              13.2 percent, excluding net securities gains in both years.

         o    The provision for loan losses  increased to $190.0  million in the
              first nine months of 2000 from $35.0 million in the same period in
              1999.  The change is attributed  to an increase in our  criticized
              credits and in our impairment allowance.


                                       16

<PAGE>


         o    Pro forma  noninterest  expenses  decreased  $57.0  million or 6.3
              percent.  The  decrease  is  mainly  attributed  to  lower  direct
              expenses  realized  through our Mission  Excel  expense  reduction
              efforts and higher  prior year  expenses  related to the Year 2000
              conversion.

         o    Nonperforming assets increased $141.5 million, or 89 percent, from
              September  30,  1999 to $299.8  million  at  September  30,  2000.
              Nonperforming  assets as a percentage of total assets increased to
              0.89 percent at September 30, 2000, compared with 0.49 percent one
              year  earlier.  Total  nonaccrual  loans  were  $154.9  million at
              September 30, 1999,  compared with $283.0 million at September 30,
              2000, resulting in an increase in the ratio of nonaccrual loans to
              total  loans  from 0.62  percent  at  September  30,  1999 to 1.08
              percent at September 30, 2000.

         o    Our Tier 1 and total  risk-based  capital ratios were 9.94 percent
              and 11.81 percent,  respectively,  at September 30, 1999, compared
              with 10.52 percent and 12.35 percent,  respectively,  at September
              30, 2000.  Our leverage  ratio was 10.06  percent at September 30,
              1999 compared with 10.47 percent at September 30, 2000

MISSION EXCEL

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

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

         During the third quarter 2000, we evaluated the  restructuring  reserve
and  concluded  that  the  remaining  reserve  amount  is  adequate  and that no
significant change is expected at this time.

         The total  cumulative  reduction  made in the prior  quarters was $19.0
million,  the same as reported at June 30,  2000.  The  reductions  in the prior
quarters arose primarily in the severance portion of our reserve due to a change
in the attrition  assumptions.  The recent  strength of the California  economy,
coupled with a tight labor market,  resulted in a markedly higher attrition rate
than we had anticipated.  As we continue to evaluate the impact of the attrition
assumptions  utilized in estimating the severance reserve,  further  adjustments
may be necessary.

         At  the   completion  of  the  plan,  we  currently   expect  to  sever
approximately  800 employees who are not  concentrated in any one group or class
of staff. Of the total, 663 employees have been severed as of September 30, 2000
and the  remaining  137  employees  are  expected  to be severed in the next two
quarters.

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

<TABLE>
<CAPTION>

                                                       FOR THE THREE          FOR THE NINE
                                                        MONTHS ENDED          MONTHS ENDED
(DOLLARS IN THOUSANDS)                               SEPTEMBER 30, 2000    SEPTEMBER 30, 2000
-------------------------------------------------    ------------------    ------------------
<S>                                                      <C>                   <C>
Balance, beginning of period......................       $ 30,024              $ 69,359
Restructuring credit..............................            -                 (19,000)
Utilization.......................................         (7,436)              (27,771)
                                                         ---------             ---------
Balance, end of period............................       $ 22,588              $ 22,588
                                                         =========             =========
</TABLE>



                                       17

<PAGE>


BUSINESS SEGMENTS

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

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

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

         The  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.  Credit
expense  related to expected  losses can differ  significantly  from the current
period  provision for credit losses.  However,  over an economic cycle,  the two
amounts should be substantially the same.  Business unit results are based on an
internal  management   reporting  system  used  by  management  to  measure  the
performance of the units and UnionBanCal  Corporation as a whole. The management
reporting  system  identifies  balance sheet and income  statement items to each
business unit based on internal  management  accounting  policies.  Net interest
income is determined  using our internal funds transfer  pricing  system,  which
assigns  a cost of funds to  assets or a credit  for  funds to  liabilities  and
capital, based on their type, maturity or repricing characteristics. Noninterest
income and expense  directly or indirectly  attributable  to a business unit are
assigned to that business.



                                       18

<PAGE>

         We have restated the business  units'  results for the prior periods to
reflect any reorganizational changes that have occurred.

<TABLE>
<CAPTION>

                                                           COMMUNITY BANKING
                                                            AND INVESTMENT               COMMERCIAL               INTERNATIONAL
                                                                 GROUP                  SERVICES GROUP                GROUP
                                                         -----------------------    -----------------------    -------------------
                                                                     AS OF AND FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                         -------------------------------------------------------------------------
                                                           1999          2000         1999          2000         1999       2000
                                                         --------      ---------    ---------     ---------    --------   --------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   <S>                                                   <C>           <C>          <C>           <C>          <C>        <C>
   Net interest income...............................    $175,756      $184,753     $152,739      $185,717     $10,522    $ 9,129
   Noninterest income................................      97,716       110,473       33,761        41,179      13,290     13,508
                                                         ---------     ---------    ---------     ---------    --------   --------
   Total revenue.....................................     273,472       295,226      186,500       226,896      23,812     22,637
   Noninterest expense(1)............................     190,506       181,038       69,560        74,048      12,823     14,320
   Credit expense (income)...........................      13,633        12,052       26,615        31,829       3,338      1,488
                                                         ---------     ---------    ---------     ---------    --------   --------
   Income before income tax expense (benefit)........      69,333       102,136       90,325       121,019       7,651      6,829
   Income tax expense (benefit)......................      27,016        39,067       33,029        43,625       2,970      2,612
                                                         ---------     ---------    ---------     ---------    --------   --------
   Net income........................................    $ 42,317      $ 63,069     $ 57,296      $ 77,394     $ 4,681    $ 4,217
                                                         =========     =========    =========     =========    ========   ========
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans.......................................    $  8,330      $  8,057     $ 14,988      $ 17,054     $ 1,017    $   928
   Total assets......................................       9,328         8,952       16,421        18,909       1,540      1,426
   Total deposits....................................      14,309        13,957        5,870         6,485         840      1,070
FINANCIAL RATIOS:
   Return on risk adjusted capital]..................          28%           42%          18%           19%         16%        19%
   Return on average assets].........................        1.80          2.80         1.38          1.63        1.21       1.18
   Efficiency ratio].................................       69.66         61.32        37.30         32.64       53.85      63.26

<CAPTION>

                                                                 GLOBAL
                                                                MARKETS                                            UNIONBANCAL
                                                                 GROUP                      OTHER                  CORPORATION
                                                         -----------------------    -----------------------    -------------------
                                                                       AS OF AND FOR THE THREE MONTHS ENDED SEPTEMBER 30,
                                                         -------------------------------------------------------------------------
                                                           1999          2000         1999          2000         1999       2000
                                                         --------      ---------    ---------     ---------    --------   --------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   <S>                                                   <C>          <C>           <C>           <C>          <C>        <C>
   Net interest income...........................        $ 12,545     $  12,242     $  8,451      $ 12,144     $360,013   $403,985
   Noninterest income............................           3,975         2,865         (393)          903      148,349    168,928
                                                         --------     ---------     --------      --------     --------   --------
   Total revenue.................................          16,520        15,107        8,058        13,048      508,362    572,913
   Noninterest expense]..........................           4,777         3,894      106,632        18,079      384,298    291,378
   Credit expense (income).......................               -             -      (23,586)       34,631       20,000     80,000
                                                         --------     ---------     --------      --------     --------   --------
   Income before income tax expense (benefit)....          11,743        11,213      (74,988)      (39,662)     104,064    201,535
   Income tax expense (benefit)..................           4,564         4,289      (35,096)      (19,634)      32,483     69,959
                                                         --------     ---------     --------      --------     --------   --------
   Net income....................................        $  7,179     $   6,924     $(39,892)     $(20,028)    $ 71,581   $131,576
                                                         ========     =========     ========      ========     ========   ========
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans...................................        $      -     $       -     $    818      $    416     $ 25,153   $ 26,455
   Total assets..................................           3,615         3,593        1,135           810       32,039     33,690
   Total deposits................................           2,823         3,099           84           791       23,926     25,402
FINANCIAL RATIOS:
   Return on risk adjusted capital]..............              20%           17%          na            na           na         na
   Return on average assets].....................            0.79          0.77           na            na         0.89%      1.55%
   Efficiency ratio].............................           28.92         25.78           na            na        75.60      50.86
-----------
<FN>
(1)  "Other" includes a third quarter 1999 restructuring charge of $85.0 million ($55.2 million, net of tax).

(2)   Annualized.

(3)  The efficiency ratio is noninterest expense, excluding foreclosed asset
     expense  (income),  as a percentage  of net interest  income  (taxable-
     equivalent) and noninterest  income.  Foreclosed asset expense (income)
     was $(0.7) million in the third quarter of 1999, and none in the second
     and third quarters of 2000.

 na = not applicable
</FN>
</TABLE>


                                       19

<PAGE>


<TABLE>
<CAPTION>

                                                        COMMUNITY BANKING             COMMERCIAL               INTERNATIONAL
                                                         AND INVESTMENT               FINANCIAL                   BANKING
                                                         SERVICES GROUP              SERVICES GROUP                GROUP
                                                      ---------------------      ----------------------     -------------------
                                                                   AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                      -------------------------------------------------------------------------
                                                        1999          2000         1999          2000         1999       2000
                                                      --------     --------      --------      --------     -------     -------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   <S>                                                <C>          <C>           <C>           <C>          <C>         <C>
   Net interest income.............................   $509,742     $544,784      $436,562      $540,649     $33,388     $25,901
   Noninterest income..............................    273,714      318,470        95,769       134,014      42,658      45,015
                                                      --------     --------      --------      --------     -------     -------
   Total revenue...................................    783,456      863,254       532,331       674,663      76,046      70,916
   Noninterest expense]............................    569,981      535,218       213,325       218,955      41,919      41,427
   Credit expense (income).........................     39,554       36,456        71,459        89,510       9,215       6,210
                                                      --------     --------      --------      --------     -------     -------
   Income before income tax expense (benefit)......    173,921      291,580       247,547       366,198      24,912      23,279
   Income tax expense (benefit)....................     67,025      111,529        91,971       131,985       9,597       8,904
                                                      --------     --------      --------      --------     -------     -------
   Net income......................................   $106,896     $180,051      $155,576      $234,213     $15,315     $14,375
                                                      ========     ========      ========      ========     =======     =======
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans.....................................   $  8,322     $  8,013      $ 14,435      $ 16,858     $ 1,066     $   953
   Total assets....................................      9,303        8,935        15,812        18,650       1,633       1,511
   Total deposits..................................     14,037       14,163         5,811         6,248         803         946
FINANCIAL RATIOS:
   Return on risk adjusted capital]................         24%          43%           18%           21%         17%         19%
   Return on average assets].......................       1.54         2.69          1.32          1.68        1.25        1.27
   Efficiency ratio]...............................      72.75        62.00         40.07         32.45       55.12       58.42

<CAPTION>

                                                            GLOBAL                                              UNIONBANCAL
                                                         MARKETS GROUP                   OTHER                  CORPORATION
                                                      ---------------------      ----------------------     -------------------
                                                                   AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                      -------------------------------------------------------------------------
                                                        1999          2000         1999          2000          1999        2000
                                                      --------     --------      --------      --------     ----------  ----------
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS):
   <S>                                                <C>          <C>           <C>           <C>          <C>         <C>
   Net interest income...........................     $ 46,842     $ 34,334      $ 20,463      $ 40,131     $1,046,997  $1,185,799
   Noninterest income............................       12,378       (9,789)        7,936         6,298        432,455     494,008
                                                      --------     --------      --------     ---------     ----------  ----------
   Total revenue.................................       59,220       24,545        28,399        46,429      1,479,452   1,679,807
   Noninterest expense]..........................       16,752       11,756       148,713        22,379        990,690     829,735
   Credit expense (income).......................            -            -       (85,228)       57,824         35,000     190,000
                                                      --------     --------      --------     ---------     ----------  ----------
   Income before income tax expense (benefit)....       42,469       12,789       (35,086)      (33,774)       453,762     660,072
   Income tax expense (benefit)..................       16,361        4,892       (35,995)      (28,700)       148,959     228,610
                                                      --------     --------      --------     ---------     ----------  ----------
   Net income ...................................     $ 26,107     $  7,897      $    909     $  (5,074)    $  304,803  $  431,462
                                                      ========     ========      ========     =========     ==========  ==========
AVERAGE BALANCES (DOLLARS IN MILLIONS):
   Total loans...................................     $      -     $      -      $    943      $    480     $   24,766  $   26,304
   Total assets..................................        3,839        3,604         1,323           820         31,910      33,520
   Total deposits................................        2,820        3,306            58           657         23,529      25,320
FINANCIAL RATIOS:
   Return on risk adjusted capital]..............           21%           6%           na            na             na          na
   Return on average assets].....................         0.91         0.29            na            na           1.28%       1.72%
   Efficiency ratio].............................        28.29        47.90            na            na          66.96       49.39
-----------
<FN>
(1)   "Other" includes  restructuring  credits of $19.0 million  ($11.8 million,
      net of tax) in 2000 and a restructuring charge of $85.0 million ($55.2
      million, net of tax).

(2)   Annualized.

(3)   The efficiency ratio is noninterest expense, excluding foreclosed asset
      expense  (income),  as a percentage  of net interest  income  (taxable-
      equivalent) and noninterest  income.  Foreclosed asset expense (income)
      was $(1.3)  million  in the first nine  months of 1999 and none for the
      first nine months of 2000.

      na = not applicable
</FN>
</TABLE>


                                       20

<PAGE>


COMMUNITY BANKING AND INVESTMENT SERVICES GROUP

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

         In addition to our traditional network channels,  the Community Banking
and Investment  Services Group announced  earlier this year the establishment of
an  alliance  with NIX  Check  Cashing  and  Operation  Hope  designed  to bring
convenient banking services to a broader community. This alliance will allow our
small  business  and  consumer  clients  access to a unique  blend of  financial
services  combining  the NIX Check  Cashing  services,  Union Bank of California
Banking Services and Operation Hope small business education services.  Checking
and savings account  services are available today through selected NIX locations
with future services planned to include  applications for consumer loans, credit
cards, new and used car loans, home equity loans and residential mortgages.  The
NIX alliance complements our current network of 15 cash and save outlets located
throughout Southern and Central California.

         Operating  expenses  decreased in the Community  Banking and Investment
Services  Group  by  $9.5  million,  due  to  a  combination  of  the  continued
implementation  of Mission Excel cost reduction  efforts and the introduction of
technology improvements in back office operations and call centers.

         Continued  success  in  these  strategies  has  resulted  in  increased
revenues,  reduced  costs,  improved  efficiency  ratios and  higher  returns on
capital.  In the third quarter of 2000, net income  increased $20.8 million,  an
increase  of over 49 percent  compared  to third  quarter  1999.  Total  revenue
increased  $21.8  million  compared  to a year  ago with  the  majority  of that
increase coming from a $12.8 million increase in noninterest income. Noninterest
income  increases  arose from a strategic  repricing  effort  initiated  through
Mission  Excel,  and from the  purchase of trust  assets of the  Imperial  Trust
Company,  which occurred in mid-1999. Net interest income increased $9.0 million
over the prior year due to a  combination  of higher  earning asset volume and a
higher rate environment.

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

         COMMUNITY  BANKING  serves over one  million  consumer  households  and
businesses through its 242 full-service  branches in California,  6 full-service
branches in Oregon and  Washington,  3 full-service  branches in Guam and Saipan
and its  network of over 425  proprietary  ATMs.  Customers  may also access our
services  24 hours a day by  telephone  or  through  our  Bank@Home  product  at
www.UBOC.com.   In  addition,   the  division   offers   automated   teller  and
point-of-sale  debit  services  through  our  founding  membership  in the  Star
System(R), the largest shared ATM network in the Western United States.

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

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

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


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

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


                                       21

<PAGE>


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

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

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

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

         o    HighMark  Capital  Management,   Inc.,  a  registered   investment
              adviser,  provides  investment  advisory  services  to  affiliated
              domestic and offshore mutual funds,  including the HighMark Funds.
              It  also  provides   advisory  services  to  UBOC  trust  clients,
              including  corporations,  pension funds and individuals.  HighMark
              Capital  Management  also provides  mutual fund support  services.
              HighMark Capital Management's strategy is to increase assets under
              management by broadening its client base and helping to expand the
              distribution of shares of its mutual fund clients.

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

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

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

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

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

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


                                       22


<PAGE>


COMMERCIAL FINANCIAL SERVICES GROUP

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

         The  group's  continued  success  in  their  focused  approach  to  the
wholesale  market  has led to third  quarter  2000 net  income  growth  of $20.1
million over a year ago.  Revenues  increased by $40.4 million  primarily due to
strong loan  growth,  higher  interest  rates and improved  noninterest  income.
Operating  expenses  increased $4.5 million over the third quarter last year due
to higher expenses to support increased  deposit volume.  Despite this increase,
the group  continues to improve  efficiency  with revenue  growth  significantly
outpacing expense growth.  Credit expenses increased $5.2 million in response to
the loan growth over the prior year, and  deterioration  in the syndicated  loan
portfolio.

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

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

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

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

         o    the Corporate  Capital Markets  Division,  which provides merchant
              and investment banking related products and services.  In addition
              to a product and service  focus,  the  Corporate  Capital  Markets
              Division  is  responsible  for  credit  services  to a variety  of
              specialized industries including retailers,  finance companies and
              insurance companies;

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

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

         o    the  Communications  and Media  Division,  which  provides  custom
              financing  to middle  market  and large  corporate  clients in the
              communications, entertainment and media industries; and

         o    the  Commercial  Finance  and  National  Banking  Division,  which
              provides  asset based and selected  leveraged  financing to middle
              market  companies.  The National  Division focuses on select large
              corporate clients headquartered outside California.

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

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


                                       23


<PAGE>


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

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

INTERNATIONAL BANKING GROUP

         The International  Banking Group mainly provides  correspondent banking
and trade  finance-related  products  and  services to  international  financial
institutions worldwide,  primarily in Asia. This includes providing products and
services  that  facilitate  trade  finance  transactions,   including  payments,
collection  and the  extension  of  short-term  credit.  The group  also  serves
selected  foreign  firms  and  U.S.  corporate  clients  in  selected  countries
worldwide,  particularly in Asia. In the U.S., the group serves subsidiaries and
affiliates of  non-Japanese  Asian  companies and U.S.  branches and agencies of
foreign  banks.  The group also  provides  international  services  to  domestic
corporate  clients  along the West  Coast.  The  group's  revenue  predominately
relates  to foreign  customers.  In the first  nine  months of 2000,  net income
decreased by $0.9 million compared to the same period last year primarily due to
the  continued  economic  recovery in Asia and a related  increase in  liquidity
which have put  pressure on spreads in the region.  Partially  offsetting  these
narrower spreads,  the group benefited from a lower portfolio exposure which has
resulted in lower credit expenses of $3.0 million and lower  operating  expenses
of $0.5 million as Mission Excel initiatives continue to be implemented.

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

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

GLOBAL MARKETS GROUP

         The Global  Markets Group  conducts  business  activities  primarily to
support the previously described business groups and their customers. This group
offers a broad range of risk management  products,  such as foreign exchange and
interest rate swaps, caps and floors.  Additionally,  it places debt securities,
including Union Bank of California,  N.A.'s own liabilities,  with institutional
investors and trades debt instruments in the secondary market. At the same time,
this group manages our market-related  risks as part of its responsibilities for
asset/liability  management including wholesale funding,  liquidity,  securities
portfolio, and off-balance sheet interest rate risk hedges. In the third quarter
of 2000,  net income  decreased  $0.3 million  compared to the third  quarter of
1999.  Total  revenue  in the  third  quarter  of 2000  decreased  $1.4  million
primarily  due to a higher  distribution  of foreign  exchange  revenue to other
business  segments  of the bank  compared  to the  third  quarter  of  1999.  In
addition,  noninterest income for the first nine months of 2000, decreased $22.2
million  compared  to the first  nine  months of 1999  mainly due to the sale of
securities  in our  portfolio  in order to  replace  low  yielding  with  higher
yielding securities.  Noninterest expense in the third quarter of 2000 decreased
$0.9 million largely due to personnel expense  reductions  compared to the third
quarter of 1999.


                                       24

<PAGE>


 OTHER

         "Other" includes the following items:

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

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

         o    the Credit  Management  Group,  which includes  $158.3 million and
              $299.8 million of average  nonperforming assets for the first nine
              months of September 30, 1999 and 2000, respectively;

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

         o    the residual costs of support groups.






                                       25

<PAGE>



NET INTEREST INCOME

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

<TABLE>
<CAPTION>
                                                                        FOR THE THREE MONTHS ENDED
                                            ----------------------------------------------------------------------------------------
                                                       SEPTEMBER 30, 1999                              SEPTEMBER 30, 2000
                                            ------------------------------------------     -----------------------------------------
                                                               INTEREST       AVERAGE                          INTEREST     AVERAGE
                                              AVERAGE           INCOME/        YIELD/        AVERAGE            INCOME/      YIELD/
(DOLLARS IN THOUSANDS)                        BALANCE          EXPENSE(1)      RATE(1)       BALANCE           EXPENSE(1)    RATE(1)
-----------------------------------         -----------        ----------      -------     -----------         ----------    -------
<S>                                         <C>                 <C>             <C>        <C>                  <C>            <C>
ASSETS
Loans:(2)
   Domestic........................         $24,073,361         $474,460         7.82%     $25,440,873          $559,071       8.74%
   Foreign(3)......................           1,079,189           16,886         6.21        1,014,102            17,568       6.89
Securities-taxable.................           3,142,864           49,554         6.31        3,349,476            54,602       6.52
Securities-tax-exempt..............              75,489            1,880         9.96           67,962             1,643       9.68
Interest bearing deposits in banks.             207,291            2,786         5.33          174,526             2,775       6.32
Federal funds sold and securities
   purchased under resale agreements            178,509            2,345         5.21           74,158             1,263       6.77
Trading account assets.............             250,512            3,113         4.93          278,049             4,200       6.01
                                            -----------         --------                   -----------          --------
      Total earning assets.........          29,007,215          551,024         7.55       30,399,146           641,122       8.40
                                                                --------                                        --------
Allowance for credit losses........           (448,924)                                      (521,989)
Cash and due from banks............           1,944,556                                      2,109,093
Premises and equipment, net........             439,067                                        428,854
Other assets.......................           1,096,878                                      1,274,966
                                            -----------                                    -----------
      Total assets.................         $32,038,792                                    $33,690,070
                                            ===========                                    ===========

LIABILITIES
Domestic deposits:
   Interest bearing................         $ 5,782,867           36,292         2.49      $ 5,977,345            41,506       2.76
   Savings and consumer time.......           3,382,731           26,681         3.13        3,381,638            30,969       3.64
   Large time......................           4,109,821           51,372         4.96        4,602,394            71,931       6.22
Foreign deposits(3)................           1,552,769           18,233         4.66        1,764,375            25,506       5.75
                                            -----------         --------                   -----------          --------
      Total interest bearing deposits        14,828,188          132,578         3.55       15,725,752           169,912       4.30
                                            -----------         --------                   -----------          --------
Federal funds purchased and
   securities sold under repurchase
   agreements......................           1,319,426           16,493         4.96        1,644,888            26,994       6.53
Commercial paper...................           1,514,326           19,572         5.13        1,595,462            26,072       6.50
Other borrowed funds...............             774,975           10,288         5.27          243,854             3,044       4.97
Subordinated capital notes.........             298,000            4,240         5.64          226,630             4,060       7.13
UnionBanCal Corporation-obligated
   mandatorily redeemable preferred
   securities of subsidiary grantor
   trust...........................             350,000            7,093         7.92          350,000             6,414       7.32
                                            -----------         --------                   -----------          --------
      Total borrowed funds.........           4,256,727           57,686         5.38        4,060,834            66,584       6.53
                                            -----------         --------                   -----------          --------
      Total interest bearing
        liabilities................          19,084,915          190,264         3.96       19,786,586           236,496       4.76
                                                                --------                                        --------
Noninterest bearing deposits.......           9,098,284                                      9,676,284
Other liabilities..................             926,453                                      1,042,033
                                            -----------                                    -----------
      Total liabilities............          29,109,652                                     30,504,903
SHAREHOLDERS' EQUITY
Common equity......................           2,929,140                                      3,185,167
                                            -----------                                    -----------
      Total shareholders' equity...           2,929,140                                      3,185,167
                                            -----------                                    -----------
      Total liabilities and
        shareholders' equity.......         $32,038,792                                    $33,690,070
                                            ===========                                    ===========

Net interest income/margin (taxable-
   equivalent basis)......                                       360,760         4.93%                           404,626       5.30%
Less: taxable-equivalent adjustment                                  747                                             641
                                                                --------                                        --------
      Net interest income..........                             $360,013                                        $403,985
                                                                ========                                        ========
-----------
<FN>
(1)    Yields and interest income are presented on a taxable-equivalent basis
       using the federal statutory tax rate of 35 percent.

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

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

                                       26

<PAGE>

<TABLE>
<CAPTION>

                                                                        FOR THE NINE MONTHS ENDED
                                            ----------------------------------------------------------------------------------------
                                                       SEPTEMBER 30, 1999                              SEPTEMBER 30, 2000
                                            ------------------------------------------     -----------------------------------------
                                                               INTEREST       AVERAGE                          INTEREST     AVERAGE
                                              AVERAGE           INCOME/        YIELD/        AVERAGE            INCOME/      YIELD/
(DOLLARS IN THOUSANDS)                        BALANCE          EXPENSE(1)      RATE(1)       BALANCE           EXPENSE(1)    RATE(1)
-----------------------------------         -----------        ----------      -------     -----------         ----------    -------
<S>                                         <C>               <C>               <C>        <C>                <C>              <C>
ASSETS
Loans:(2)
   Domestic........................         $23,674,469       $1,365,493         7.64%     $25,248,387        $1,622,722       8.59%
   Foreign(3)......................           1,091,433           51,700         6.33        1,055,534            53,386       6.76
Securities-taxable.................           3,352,827          157,739         6.27        3,290,918           159,204       6.45
Securities-tax-exempt..............              80,216            6,086        10.11           69,078             5,134       9.91
Interest bearing deposits in banks.             209,184            9,042         5.78          193,050             7,522       5.20
Federal funds sold and securities
   purchased under resale agreements            138,396            5,237         5.06          137,987             6,364       6.16
Trading account assets.............             286,198            9,615         4.49          272,626            12,281       6.02
                                            -----------       ----------                   -----------        ----------
      Total earning assets.........          28,832,723        1,604,912         7.44       30,267,580         1,866,613       8.23
                                                              ----------                                      ----------
Allowance for credit losses........            (450,295)                                      (500,137)
Cash and due from banks............           1,972,792                                      2,111,443
Premises and equipment, net........             433,750                                        425,880
Other assets.......................           1,121,127                                      1,215,413
                                            -----------                                    -----------
      Total assets.................         $31,910,097                                    $33,520,179
                                            ===========                                    ===========

LIABILITIES
Domestic deposits:
   Interest bearing................         $ 5,645,828          106,064         2.51      $ 5,942,695           117,648       2.64
   Savings and consumer time.......           3,356,224           80,365         3.20        3,395,513            89,318       3.51
   Large time......................           3,963,288          144,798         4.46        4,581,849           203,659       5.94
Foreign deposits(3)................           1,554,221           52,046         4.48        1,869,177            76,872       5.49
                                            -----------       ----------                   -----------        ----------
      Total interest bearing deposits        14,519,561          383,273         3.53       15,789,234           487,497       4.12
                                            -----------       ----------                   -----------        ----------
Federal funds purchased and
   securities sold under repurchase
   agreements......................           1,609,826           57,368         4.76        1,573,315            72,383       6.15
Commercial paper...................           1,541,151           56,766         4.92        1,539,749            71,004       6.16
Other borrowed funds...............             740,933           28,159         5.08          366,568            14,212       5.18
Subordinated capital notes.........             298,000           12,385         5.56          274,036            13,997       6.82
UnionBanCal Corporation-obligated
   mandatorily redeemable preferred
   securities of subsidiary grantor
   trust...........................             287,179           17,476         8.03          350,000            19,788       7.53
                                            -----------       ----------                   -----------        ----------
      Total borrowed funds.........           4,477,089          172,154         5.14        4,103,668           191,384       6.23
                                            -----------       ----------                   -----------        ----------
      Total interest bearing
        liabilities................          18,996,650          555,427         3.91       19,892,902           678,881       4.56
                                                              ----------                                      ----------
Noninterest bearing deposits.......           9,009,701                                      9,530,873
Other liabilities..................             971,824                                      1,001,029
                                            -----------                                    -----------
      Total liabilities............          28,978,175                                     30,424,804
SHAREHOLDERS' EQUITY
Common equity......................           2,931,922                                      3,095,375
                                            -----------                                    -----------
      Total shareholders' equity...           2,931,922                                      3,095,375
                                            -----------                                    -----------
      Total liabilities and
        shareholders' equity.......         $31,910,097                                    $33,520,179
                                            ===========                                    ===========



Net interest income/margin (taxable-
   equivalent basis)......                                     1,049,485        4.86%                          1,187,732       5.23%
Less: taxable-equivalent adjustment                                2,488                                           1,933
                                                              ----------                                      ----------
      Net interest income..........                           $1,046,997                                      $1,185,799
                                                              ==========                                      ==========
-----------
<FN>
(1)    Yields and interest income are presented on a taxable-equivalent basis
       using the federal statutory tax rate of 35 percent.

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

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

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


                                       27


<PAGE>



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

         Net interest income, on a taxable-equivalent  basis, was $360.8 million
in the third quarter of 1999,  compared with $404.6 million in the third quarter
of 2000.  This  increase  of $43.8  million,  or 12  percent,  was  attributable
primarily to a $1.4 billion,  or 5 percent,  increase in average earning assets,
partially  funded  by a  $578.0  million,  or 6  percent,  increase  in  average
noninterest bearing deposits. In addition, the net interest margin was favorably
impacted by the interest rate  environment  that contributed to higher yields on
loans and other interest  bearing  assets,  partially  offset by higher rates on
deposits and other  average  interest  bearing  liabilities,  as well as a lower
effective  cost  of  funding  the  increased  assets.  The net  interest  margin
increased 37 basis points to 5.30 percent.

         Average earning assets were $29.0 billion in the third quarter of 1999,
compared  with $30.4  billion  in the third  quarter  of 2000.  This  growth was
attributable  to a $1.3 billion,  or 5 percent,  increase in average loans.  The
growth in average  loans was mostly due to the  increase in average  commercial,
financial and industrial loans of $782.5 million, real estate construction loans
of $303.6  million,  real estate  residential  mortgage loans of $206.6 million,
real estate commercial mortgage loans of $188.1 million, and partially offset by
lower average consumer loans of $179.5 million.

         The higher  interest  rate  environment  resulted  in higher  yields on
average earning assets of 85 basis points, partially offset by higher rates paid
on average  interest  bearing  liabilities  of 80 basis points.  The decision to
maintain an asset sensitive balance sheet contributed to the higher yields.  The
$0.7 billion,  or 4 percent,  increase in average interest  bearing  liabilities
over the  third  quarter  of 1999 was due to an  increase  in  average  interest
bearing deposits of $0.9 billion, primarily large time deposits.

         Average  noninterest  bearing deposits  increased $578.0 million,  or 6
percent,  over the third  quarter  of 1999.  This  large  base of  interest-free
funding continues to benefit our lower cost of funds.

         NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 2000

         Net interest income, on a taxable-equivalent  basis, was $1,049 million
in the first nine months of 1999, compared with $1,188 million in the first nine
months of 2000. This increase of $138.2 million, or 13 percent, was attributable
primarily to a $1.4 billion,  or 5 percent,  increase in average earning assets,
partially  funded  by a  $521.2  million,  or 6  percent,  increase  in  average
noninterest bearing deposits. In addition, the net interest margin was favorably
impacted by the interest rate  environment  that contributed to higher yields on
loans and other interest  bearing  assets,  partially  offset by higher rates on
deposits and other  average  interest  bearing  liabilities,  as well as a lower
effective  cost  of  funding  the  increased  assets.  The net  interest  margin
increased 37 basis points to 5.23 percent.

         Average  earning  assets were $28.8 billion in the first nine months of
1999,  compared with $30.3 billion in the first nine months of 2000. This growth
was  attributable  to a $1.5 billion,  or 6 percent,  increase in average loans,
partially offset by $73.0 million,  or 2 percent decrease in average securities.
The  growth  in  average  loans  was  mostly  due to  the  increase  in  average
commercial,  financial  and  industrial  loans of $908.8  million,  real  estate
commercial  mortgage loans of $375.1 million,  real estate construction loans of
$268.7 million,  and real estate  residential  mortgage loans of $104.5 million,
partially offset by lower average consumer loans of $164.8 million. The decrease
in average  securities,  which  comprised  primarily of fixed rate available for
sale securities, reflected liquidity and interest rate risk management actions.

         The higher  interest  rate  environment  resulted  in higher  yields on
average earning assets of 79 basis points, partially offset by higher rates paid
on average  interest  bearing  liabilities  of 65 basis points.  The decision to
maintain an asset sensitive balance sheet contributed to the higher yields.  The
$896.3 million,  or 5 percent,  increase in average interest bearing liabilities
over the first nine months of 1999 was due to an  increase  in average  interest
bearing deposits of $1.3 billion, or 9 percent, primarily large time deposits.

         Average  noninterest  bearing deposits  increased $521.2 million,  or 6
percent,  over the first nine months of 1999.  This large base of  interest-free
funding continues to benefit our lower cost of funds.

                                       28

<PAGE>


NONINTEREST INCOME

<TABLE>
<CAPTION>


                                     FOR THE THREE MONTHS ENDED                      FOR THE NINE MONTHS ENDED
                              --------------------------------------          -------------------------------------
                              SEPTEMBER 30,  SEPTEMBER 30,   PERCENT          SEPTEMBER 30,  SEPTEMBER 30,  PERCENT
(DOLLARS IN THOUSANDS)            1999           2000        CHANGE               1999          2000        CHANGE
-----------------------------   --------       --------      ------             --------      --------      ------
<S>                             <C>            <C>            <C>               <C>           <C>           <C>
Service charges on
   deposit accounts.....        $ 45,401       $ 53,779       18.45%            $127,981      $153,987       20.32%
Trust and investment
   management fees......          36,353         39,975        9.96              102,607       116,163       13.21
Merchant transaction
   processing fees......          18,598         19,354        4.06               51,256        54,887        7.08
International commissions
   and fees.............          17,475         18,012        3.07               53,186        53,463        0.52
Merchant banking fees...          10,946         15,353       40.26               27,561        40,681       47.60
Brokerage commissions and
   fees.................           7,148          8,616       20.54               18,825        27,309       45.07
Foreign exchange trading
   gains, net...........           5,267          6,143       16.63               14,873        21,054       41.56
Securities gains, net...           2,004          3,104       54.89                3,899         8,804      125.80
Other...................           5,157          4,592      (10.96)              32,267        17,660      (45.27)
                                --------       --------      ------             --------      --------      ------
   Total noninterest
      income............        $148,349       $168,928       13.87%            $432,455      $494,008       14.23%
                                ========       ========      ======             ========      ========      ======
-----------
</TABLE>


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

         In the third quarter of 2000, noninterest income was $168.9 million, an
increase of $20.6  million,  or 14 percent,  over the same period in 1999.  This
increase was attributed to growth in deposit-  related income,  merchant banking
fees, trust and investment fees, brokerage revenues and securities gains, net.

         Service  charges on deposit  accounts  revenue  was $53.8  million,  an
increase  of $8.4  million or 18  percent  over the third  quarter of 1999.  The
increase was primarily attributable to a 6 percent increase in average deposits,
higher  overdraft  fees due to a change in fee  structure,  and the expansion of
several products and services.

         Merchant  banking fees were $15.4 million,  an increase of $4.4 million
or 40 percent over the third quarter of 1999. The increase was primarily related
to increased syndication fees.

         Trust  and  investment  management  fees  were  $40.0  million  for the
quarter, an increase of $3.6 million or 10 percent over the same period in 1999.
The increase was mainly  attributed  to asset growth under  management.  Managed
assets have grown by 12 percent  over the prior year,  rising to $21.9  billion,
while total assets have increased 8 percent to $132.5 billion.

         Brokerage  commissions and fees were $8.6 million,  an increase of $1.5
million or 21 percent over the third quarter of 1999. The increase was primarily
related to  brokerage  commissions  on sales of  non-proprietary  mutual  funds,
annuities, and insurance products and growth in corporate sweep products.

         Securities  gains,  net were $3.1 million,  an increase of $1.1 million
over the third quarter of 1999. This increase was primarily  related to the sale
of venture capital securities investments during the period.

         Other noninterest  income was $4.6 million,  a decrease of $0.6 million
or 11  percent  from the  same  period  in  1999.  The  decrease  was  primarily
attributed to a $4.5 million loss on distressed  loans held for sale,  partially
offset  by higher  rate  swap fee  income  of $3.1  million.  Included  in other
noninterest income are auto lease residual  write-downs of $5.0 million in third
quarter 2000 and $6.3 million in the same quarter 1999.

         NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 2000

         In the  first  nine  months  of 2000,  noninterest  income  was  $494.0
million,  an increase of $61.6 million,  or 14 percent,  over the same period in
1999.  This  increase  was  primarily  attributed  to growth in  deposit-related
income,  trust and investment fees,  merchant banking fees,  brokerage revenues,
foreign exchange  trading gains, net gains from securities  sales, and partially
offset by other income.


                                       29

<PAGE>


         Service  charges on deposit  accounts  revenue was $154.0  million,  an
increase of $26.0 million or 20 percent over the first nine months of 1999.  The
increase was primarily attributable to a 8 percent increase in average deposits,
higher  overdraft  fees due to a change in fee  structure,  and the expansion of
several products and services.

         Trust and investment  management fees were $116.2 million,  an increase
of $13.6  million  or 13  percent  over  the  first  nine  months  of 1999.  The
acquisition of Imperial Trust Company  accounted for just over 25 percent of the
increase with the rest  attributable to growth in institutional  trust business,
institutional  asset  management  accounts,  and a 10 percent increase in retail
HighMark Fund balances.

         Merchant banking fees were $40.7 million,  an increase of $13.1 million
or 48 percent over the first nine months of 1999.  The  increase  was  primarily
related to higher syndication fees.

         Brokerage  commissions and fees were $27.3 million, an increase of $8.5
million  or 45 percent  over the first nine  months of 1999.  The  increase  was
primarily related to brokerage  commissions on sales of  non-proprietary  mutual
funds, annuities, and insurance products and growth in corporate sweep products.

         Foreign exchange trading gains, net were $21.1 million,  an increase of
$6.2 million or 42 percent over the first nine months of 1999.  The increase was
attributed to an increase in exporters'  cross border  transactions,  reflecting
the gradual recovery of the Asian and European  economies and a strong US$ which
resulted  in an  increase  in overseas  direct  investments  and capital  market
securities' investments.

         Securities gains, net were $8.8 million, an increase of $4.9 million or
126 percent  over the first nine months of 1999.  This  increase  was  primarily
related to the sale of venture capital securities investments,  partially offset
by the sale of certain lower  yielding  securities  in our  portfolio  where the
proceeds were used to purchase higher yielding securities.

         Other noninterest income was $17.7 million, a decrease of $14.6 million
or 45  percent  over the first  nine  months of 1999.  The  decrease  was mainly
attributed to higher  losses on the  valuation of auto lease  residuals of $11.2
million,  a $4.5 million loss on the sale of distressed loans held for sale, and
the write down of venture capital equity investments of $1.8 million,  partially
offset by a $4.1 million gain on the sale of a property.


                                       30

<PAGE>


NONINTEREST EXPENSE

<TABLE>
<CAPTION>

                                 FOR THE THREE MONTHS ENDED                         FOR THE NINE MONTHS ENDED
                           --------------------------------------           --------------------------------------
                           SEPTEMBER 30, SEPTEMBER 30,    PERCENT           SEPTEMBER 30,  SEPTEMBER 30,   PERCENT
(DOLLARS IN THOUSANDS)          1999         2000         CHANGE                1999           2000        CHANGE
-------------------------    --------      --------       ------             --------        --------      ------
<S>                          <C>           <C>             <C>               <C>             <C>            <C>
Salaries and other           $135,697      $130,085        (4.14)%           $401,973        $387,411       (3.62)%
   compensation.......
Employee benefits.....         29,761        22,142       (25.60)              98,167          57,072      (41.86)
                             --------      --------       ------             --------        --------      ------
   Personnel-related
      expense.........        165,458       152,227        (8.00)             500,140         444,483      (11.13)
Net occupancy.........         22,895        24,664         7.73               67,273          69,358        3.10
Equipment.............         19,389        15,702       (19.02)              49,405          47,706       (3.44)
Merchant transaction
   processing.........         12,905        12,784        (0.94)              37,773          37,144       (1.67)
Communications........         10,666        11,736        10.03               31,217          33,048        5.87
Professional services.          8,440        10,760        27.49               29,426          29,278       (0.50)
Data processing.......          7,797         8,577        10.00               23,459          26,199       11.68
Advertising and public
   relations..........          7,845         8,042         2.51               23,341          20,546      (11.97)
Software..............          6,113         5,850        (4.30)              18,790          16,831      (10.43)
Printing and office
   supplies...........          5,103         5,055        (0.94)              17,800          14,945      (16.04)
Travel................          4,335         3,900       (10.03)              14,236          12,020      (15.57)
Intangible asset
   amortization.......          3,509         3,338        (4.87)              10,527          10,014       (4.87)
Armored car...........          3,180         3,153        (0.85)               9,648           9,437       (2.19)
Foreclosed asset
   expense (income)...           (703)          (14)      (98.01)              (1,256)              7          nm
Restructuring charge
   (credit)...........         85,000             -           nm               85,000         (19,000)         nm
Other.................         22,366        25,604        14.48               73,911          77,719        5.15
                             --------      --------                          --------        --------
    Total noninterest
      expense.........       $384,298      $291,378       (24.18)            $990,690        $829,735      (16.25)
                             ========      ========                          ========        ========
-----------
<FN>
nm = not meaninful
</FN>
</TABLE>


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

         In the third quarter of 2000, noninterest expense was $291.4 million, a
decrease of $7.9 million, or 3 percent,  over the same period in 1999, excluding
the $85.0 million  restructuring  reserve recorded in the third quarter of 1999.
This decrease was mainly  attributed to lower direct expenses  realized  through
our Mission Excel  expense  reduction  efforts and higher  expenses in the prior
year  related  to  the  Year  2000   conversion,   partially  offset  by  higher
professional service fees resulting from increased projects in the current year.

         o    Personnel-related  expense was $152.2 million, a decrease of $13.2
              million or 8 percent over the third quarter of 1999. This decrease
              was attributed to lower staff expense due to personnel  reductions
              achieved  through  Mission  Excel and changes to our pension  plan
              assumptions.

         o    Equipment expense was $15.7 million, a decrease $3.7 million or 19
              percent  over  the  third  quarter  of  1999.  This  decrease  was
              primarily  related to the  write-off of unused  personal  computer
              equipment replaced in a corporate upgrade in the prior year.

         o    Professional  services  expense was $10.8 million,  an increase of
              $2.3  million or 27 percent over the third  quarter of 1999.  This
              increase  was  attributed  to a  higher  level of  projects  being
              conducted in the current year.

         NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 2000

         In the first nine months of 2000,  noninterest  expense,  excluding the
restructuring reserve of $85.0 million recorded in the third quarter of 1999 and
the  restructuring  credits of $19.0  million  recorded  in the first and second
quarters of 2000, was $848.7 million, a decrease of $57.0 million, or 6 percent,
over the same


                                       31

<PAGE>

period in 1999. This decrease was attributed to lower direct  expenses  realized
through our Mission  Excel expense  reduction  efforts,  higher  expenses in the
prior year related to the Year 2000 conversion, and a one-time credit related to
an accounting change.

         o    Personnel-related  expense was $444.5 million, a decrease of $55.7
              million or 11 percent  over the first  nine  months of 1999.  This
              decrease was  attributed  to a one-time  credit for an  accounting
              methodology  change  in  recognizing   pension  expense  of  $16.0
              million,  personnel reductions achieved through Mission Excel, and
              changes to our pension plan assumptions.

INCOME TAX EXPENSE

         The effective tax rate for each of the third  quarters of 1999 and 2000
were 30 percent and 35 percent, respectively.  During the third quarter of 1999,
we  recognized  a net tax benefit of $4.4  million as the result of a California
Franchise Tax Board audit settlement for the years 1989 through 1993.  Excluding
this tax  benefit,  our  effective  tax rate would  have been 35 percent  and 35
percent for the three months ended  September  30, 1999 and  September 30, 2000,
respectively.

         The  effective tax rate for the first nine months of 1999 and 2000 were
32 percent and 35 percent,  respectively.  During the first nine months of 1999,
we  recognized  tax benefits as the result of an IRS  settlement of $6.3 million
for refund  claims we filed for the years  1992  through  1994 and a  California
Franchise Tax Board audit  settlement of $4.4 million for the years 1989 through
1993.  Excluding  these tax benefits,  our effective tax rate would have been 34
percent and 35 percent for the first nine months  ended  September  30, 1999 and
September 30, 2000, respectively.

LOANS

         The following table shows loans outstanding by loan type.

<TABLE>
<CAPTION>

                                                                                                     PERCENT CHANGE TO
                                                                                                  SEPTEMBER 30, 2000 FROM:
                                                                                              --------------------------------
                                     SEPTEMBER 30,       DECEMBER 31,        SEPTEMBER 30,    SEPTEMBER 30,       DECEMBER 31,
(DOLLARS IN THOUSANDS)                    1999              1999                 2000             1999               1999
-------------------------------       -----------        -----------          -----------        ------             ------
<S>                                   <C>                <C>                  <C>                <C>                <C>
Domestic:
   Commercial, financial and
      industrial...............       $13,774,886        $14,176,630          $14,207,319          3.14 %             0.22 %
   Construction................           644,980            648,478              944,263         46.40              45.61
   Mortgage:
      Residential..............         2,579,526          2,581,141            2,984,627         15.70              15.63
      Commercial...............         3,242,516          3,572,347            3,373,801          4.05              (5.56)
                                      -----------        -----------          -----------
        Total mortgage.........         5,822,042          6,153,488            6,358,428          9.21               3.33
   Consumer:
      Installment..............         1,969,518          1,922,158            1,752,292        (11.03)             (8.84)
      Home equity..............           714,189            727,776              736,835          3.17               1.24
                                      -----------        -----------          -----------
        Total consumer.........         2,683,707          2,649,934            2,489,127         (7.25)             (6.07)
   Lease financing.............         1,155,415          1,148,542            1,148,314         (0.61)             (0.02)
                                      -----------        -----------          -----------
        Total loans in domestic
           offices.............        24,081,030         24,777,072           25,147,451          4.43               1.49
Loans originated in foreign
   branches....................         1,104,652          1,135,886            1,010,488         (8.52)            (11.04)
                                      -----------        -----------          -----------
        Total loans............       $25,185,682        $25,912,958          $26,157,939          3.86 %             0.95 %
                                      ===========        ===========          ===========

</TABLE>

                                       32


<PAGE>

         Our lending  activities  are  predominantly  domestic,  with such loans
comprising 96 percent of the total loan  portfolio at September 30, 2000.  Total
loans at September 30, 2000 were $26.2 billion,  an increase of $1.0 billion, or
4 percent,  over September 30, 1999. The increase was  attributable to growth in
the commercial,  financial and industrial loan portfolio, which increased $432.4
million,  the  residential  mortgage  loan  portfolio,  which  increased  $405.1
million,  the construction loan portfolio,  which increased $299.3 million,  the
commercial  mortgage loan portfolio,  which increased $131.3 million,  partially
offset by, the consumer loan portfolio, which decreased $194.6 million.

         Commercial,  financial  and  industrial  loans  represent  the  largest
category  in the  loan  portfolio.  These  loans  are  extended  principally  to
corporations,  middle market businesses, and small businesses,  with no industry
concentration exceeding 10 percent of total commercial, financial and industrial
loans. At September 30, 1999 and 2000, the commercial,  financial and industrial
loan  portfolio  was $13.8  billion,  or 55  percent of total  loans,  and $14.2
billion,  or 54 percent of total  loans,  respectively.  The  increase of $432.4
million,  or 3 percent,  from September 30, 1999 was primarily  attributable  to
loans extended to businesses with revenues exceeding $20 million.

         The construction loan portfolio totaled $645.0 million, or 3 percent of
total loans, at September 30, 1999,  compared with $944.3 million,  or 4 percent
of total loans,  at September  30, 2000.  This growth of $299.3  million,  or 46
percent,  from September 30, 1999 was primarily  attributable  to the continuing
favorable  California  real  estate  market  coupled  with a strong  West  Coast
economy.

         Mortgage  loans were $5.8  billion,  or 23 percent of total  loans,  at
September 30, 1999, compared with $6.4 billion, or 24 percent of total loans, at
September 30, 2000. The mortgage loan portfolio  consists of loans on commercial
and industrial  projects and residential  loans,  secured by one-to-four  family
residential  properties,  primarily in  California.  The increase in  commercial
mortgage loans of $131.3 million, or 4 percent and in residential mortgage loans
of $405.1 million,  or 16 percent,  from September 30, 1999,  reflected both the
favorable  California  real estate  market and a strong West Coast  economy.  In
addition,  higher  residential  mortgage  loan  balances  were  impacted  by the
purchase of $109.0 million in adjustable rate mortgages primarily  originated in
California, Oregon and Washington.

         Consumer loans totaled $2.7 billion,  or 11 percent of total loans,  at
September 30, 1999, compared with $2.5 billion, or 10 percent of total loans, at
September 30, 2000. The decrease of $194.6 million, or 7 percent,  was primarily
attributable  to  automobile  dealer  loans.  Origination's  were  lower  due to
increased  competition  in the  business  and the  maturing of loans  originated
during peak  years.  In a press  release  dated  September  14,  2000,  the bank
announced it is exiting the indirect automobile lending business.

CROSS-BORDER OUTSTANDINGS

         Our cross-border  outstandings  reflect certain additional economic and
political  risks that are not  reflected in domestic  outstandings.  These risks
include those arising from exchange rate  fluctuations  and  restrictions on the
transfer of funds. The following table sets forth our cross-border  outstandings
as of September  30, 1999,  December 31, 1999,  and  September 30, 2000 for each
country  where  such  outstandings  exceeded  1  percent  of total  assets.  The
cross-border  outstandings  were  compiled  based upon  category and domicile of
ultimate risk and are comprised of balances with banks,  trading account assets,
securities  available for sale,  securities  purchased under resale  agreements,
loans, accrued interest receivable, acceptances outstanding and investments with
foreign  entities.  The  amounts  outstanding  for each  country


                                       33

<PAGE>


exclude local currency outstandings. For those individual countries shown in the
table below, most of our local currency outstandings are hedged or are funded by
local currency borrowings.

<TABLE>
<CAPTION>

                                                                                  PUBLIC     CORPORATIONS
                                                                  FINANCIAL       SECTOR      AND OTHER          TOTAL
(DOLLARS IN MILLIONS)                                            INSTITUTIONS    ENTITIES     BORROWERS       OUTSTANDINGS
------------------------------------------------------------     ------------    --------    ------------     ------------
<S>                                                                 <C>            <C>          <C>              <C>
September 30, 1999
Japan.......................................................        $127            $-          $361             $488
Korea.......................................................         459             1            57              517
December 31, 1999
Japan.......................................................          82             -           339              421
Korea.......................................................         422             -            53              475
September 30, 2000
Korea.......................................................         332             -            34              366

</TABLE>

PROVISION FOR CREDIT LOSSES

         We  recorded a $20  million  provision  for credit  losses in the third
quarter of 1999, compared with an $80 million provision for credit losses in the
third  quarter of 2000 and a $70 million  provision in the second  quarter 2000.
The provision for credit losses for the nine months ended September 30, 2000 was
$190  million  compared to $35 million for the nine months ended  September  30,
1999.  Provisions for credit losses are charged to income to bring our allowance
for credit  losses to a level  deemed  appropriate  by  management  based on the
factors discussed under "Allowance for Credit Losses" below.

         Our provision for credit losses in the third quarter of 2000,  compared
with the second  quarter 2000  provision was affected by the following  factors:

         o    The continuing  application of strict standards to the definitions
              of potential and  well-defined  weaknesses in our loan  portfolio,
              resulting  in higher  levels of  criticized  assets  and  downward
              migration within the criticized grades,

         o    The higher  impairment  allowance on nonaccrual  loans due to both
              increased   impairment  and  higher  volume  of  loans  placed  on
              nonaccrual during the period,

         o    The  establishment  of a separate  loss factor for  foreign  loans
              based on historical  losses in our foreign loan  portfolio,  which
              reduced our provision requirement, and

         o    The refinement of our reserve  methodology,  which  eliminated the
              portion  of  the  unallocated   allowance  related  to  model  and
              estimation risk.

ALLOWANCE FOR CREDIT LOSSES

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

         The  formula  allowance  is  calculated  by  applying  loss  factors to
outstanding  loans and  certain  unused  commitments,  in each case based on the
internal  risk grade of such  loans,  pools of loans,  leases  and  commitments.
Changes in risk grades of both  performing  and  nonperforming  loans affect the
amount of the formula  allowance.  Loss factors are based on our historical loss
experience  and may be adjusted for


                                       34

<PAGE>


significant factors that, in management's judgment, affect the collectibility of
the  portfolio as of the  evaluation  date.  Loss  factors are  developed in the
following  ways:

         o    Problem  graded loan loss  factors  are  derived  from a migration
              model  that  tracks  historical  loss  experience  over a six-year
              period,  which we believe captures the appropriate  default losses
              on our loan portfolio,

         o    Pass graded loan loss factors are based on the average  annual net
              charge-off  rate over a period of 10 years,  which we  believe  is
              reflective of a full business cycle,

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

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

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

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

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

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

         o    Collateral values,

         o    Loan volumes and concentrations,

         o    Seasoning of the loan portfolio,

         o    Specific industry conditions within portfolio segments,

         o    Recent loss experience in particular segments of the portfolio,

         o    Duration of the current business cycle,

         o    Bank regulatory examination results, and

         o    Findings of our internal credit examiners.

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


                                       35

<PAGE>


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

COMPARISON OF THE TOTAL  ALLOWANCE AND RELATED  PROVISION FOR CREDIT LOSSES FROM
DECEMBER 31, 1999

         At December 31, 1999, our allowance for credit losses was $470 million,
or 1.82  percent of total  loans,  and 281  percent of total  nonaccrual  loans,
compared  with an  allowance  for credit  losses at  September  30, 2000 of $526
million,  or 2.01  percent of total loans,  and 186 percent of total  nonaccrual
loans.

         In  addition,  the  allowance  incorporates  the  results of  measuring
impaired  loans as  provided in SFAS No. 114 and SFAS No.  118,  "Accounting  by
Creditors for Impairment of a Loan-Income  Recognition and  Disclosures".  These
accounting standards prescribe the measurement  methods,  income recognition and
disclosures  related to impaired  loans.  At December 31, 1999,  total  impaired
loans were $167.4  million and the  associated  impairment  allowance  was $42.4
million,  compared  with $283.0  million  and $91.1  million,  respectively,  at
September 30, 2000.

         Historically,   our  credit  policy  prescribed  that  our  unallocated
allowance  include a component in respect of model and estimation  risk equal to
20% to 25% of the allocated allowance.  The primary reason for this component of
the  unallocated  allowance was the  dissimilarity  of the loss histories of our
predecessor  institutions,  Union  Bank and Bank of  California,  prior to their
combination  in 1996.  As part of our ongoing  effort to improve  our  allowance
methodology, we conducted a review of model imprecision for our pass and problem
graded loans,  which was completed  during the third quarter of 2000. The review
indicated  the  following:

         o    In light of the  expansion to a ten year loss history for our pass
              graded  loans  and our  analysis  of our loss  experience  for the
              10-year  period,  we have  concluded  that it is not  necessary to
              provide an amount for model risk with  respect to this  portion of
              the formula allowance.

         o    Our loss migration model,  upon which we calculate  default losses
              on our problem  graded  credits,  now  indicates  that losses have
              remained  relatively  unchanged over the past six years,  which is
              the maximum number of years that may be included in our model.  As
              a result,  we have  concluded  that it is not necessary to provide
              for  model  risk  with  respect  to this  portion  of the  formula
              allowance.

         o    In addition,  we have concluded that our impaired loans, which are
              remeasured  on a monthly  basis,  have no  significant,  evidenced
              estimation risk within our specific allowance.

         We made no other  changes in  estimation  methods or  assumptions  that
affected our methodology for assessing the  appropriateness of the allowance for
credit  losses.  Changes in  assumptions  regarding  the effects of economic and
business  conditions on borrowers and other factors,  which are described below,
have affected the  assessment of the  unallocated  allowance.  Estimation  risk,
which  continues to be present in the allowance for credit  losses,  will now be
included as part of our attributed factors within the unallocated  allowance for
credit losses.


                                       36

<PAGE>


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

         At September 30, 2000, the formula allowance was $320 million, compared
to $257  million at December  31,  1999,  an increase of $63  million.  This was
primarily due to increases in criticized  credits and downward  migration within
the  criticized  grades,  offset  by a  reduction  of  $12  million  related  to
improvement in the risk factors on foreign loans.

         At September 30, 2000, the specific allowance was $107 million compared
to $51 million at December  31,  1999,  an  increase  of $56  million.  This was
primarily  caused by both higher  impairment  allowances on our nonaccrual loans
and higher levels of nonaccrual loans.

         At  September  30,  2000,  the  unallocated  allowance  was $99 million
compared to $162 million at December  31,  1999,  a decrease of $63 million.  As
discussed  previously,  during the quarter we refined our reserve methodology to
eliminate the prescribed  component of the  unallocated  allowance in respect of
model  and  estimation  risk.  In light  of the  elimination  of this  mandatory
component of the unallocated  reserve, we have increased the remaining component
of the  unallocated  allowance to reflect the  estimation  risk that  management
believes exists in the formula and specific allowances,  primarily in respect of
the  anticipated  downward  regradings  of  loans  in  certain  sectors  of  our
portfolio.  Management  believes that other  inherent  losses related to certain
conditions  considered in its evaluation of the unallocated  allowance have been
recognized in the formula  allowance  during the nine months ended September 30,
2000.

         At September  30, 2000, we had a $99 million  unallocated  allowance in
our  allowance  for credit  losses.  In evaluating  the  appropriateness  of the
unallocated  allowance,  we  considered  the  following  factors as well as more
general factors such as the interest rate environment and the impact of economic
downturn on those  borrowers who have a more leveraged  financial  profile:

         o    the need to provide for model and  estimation  risk, as previously
              required by our credit policy was eliminated,

         o    the need to provide for probable  losses  related to certain Asian
              countries on borrowers was eliminated, as we reduced our exposures
              and completed the regradings of those exposures,

         o    the  adverse  effects  of  rising  fuel  prices  and  governmental
              regulation on borrowers in the utilities industry,  which could be
              in the range of $22 million to $35 million,

         o    the adverse  effects of changes in the economic,  regulatory,  and
              technology  environments on borrowers in the  communications/media
              industry,  which  could  be in the  range  of $21  million  to $31
              million,

         o    the adverse  effects of the recent  slowing  trends in  same-store
              sales  and  softening  consumer  confidence  on  borrowers  in the
              retailing  industry,  which could be in the range of $8 million to
              $14 million,

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

         o    the adverse  effects on borrowers in the healthcare  industry from
              reduced reimbursements from government medical insurance programs,
              which have been reduced  either  through loan sales or as a result
              of their incorporation into our formula allowance,  which could be
              in the range of $3 million to $6 million.


                                       37

<PAGE>


         There  can be no  assurance  that the  adverse  impact  of any of these
conditions  on us will not be in  excess of the  ranges  set  forth  above.  See
forward-looking statements on page 41.


<TABLE>
<CAPTION>

                                                                             FOR THE THREE MONTHS       FOR THE NINE MONTHS
                                                                                    ENDED                      ENDED
                                                                                SEPTEMBER 30,               SEPTEMBER 30,
                                                                           --------------------------------------------------
(DOLLARS IN THOUSANDS)                                                       1999         2000          1999          2000
-----------------------------------------------------------------------    ---------     ---------     ---------    ---------
<S>                                                                        <C>           <C>           <C>          <C>
Balance, beginning of period...........................................    $450,403      $500,731      $459,328     $470,378
Loans charged off:
   Commercial, financial and industrial................................      15,080        55,855        27,570      140,629
   Mortgage............................................................          84            18           724          133
   Consumer............................................................       2,978         2,867        10,790        8,861
   Lease financing.....................................................         785           827         2,559        2,158
   Foreign]............................................................           -             -        14,127            -
                                                                           ---------     ---------     ---------    ---------
      Total loans charged off..........................................      18,927        59,567        55,770      151,781
Recoveries of loans previously charged off:
   Commercial, financial and industrial................................       3,909         3,123        11,479       11,766
   Mortgage............................................................          49            30           452          156
   Consumer............................................................       1,605         1,534         6,242        5,047
   Lease financing.....................................................         238           128           581          455
                                                                           ---------     ---------     ---------    ---------
      Total recoveries of loans previously charged off.................       5,801         4,815        18,754       17,424
                                                                           ---------     ---------     ---------    ---------
        Net loans charged off..........................................      13,126        54,752        37,016      134,357
Provision for credit losses............................................      20,000        80,000        35,000      190,000
Foreign translation adjustment and other net additions (deductions)....         152           (83)          117         (125)
                                                                           ---------     ---------     ---------    ---------
Balance, end of period.................................................    $457,429      $525,896      $457,429     $525,896
                                                                           =========     =========     =========    =========
Allowance for credit losses to total loans.............................        1.82%         2.01%         1.82%        2.01%
Provision for credit losses to net loans charged off...................      152.37        146.11         94.55       141.41
Net loans charged off to average loans outstanding for the period(2)...        0.21          0.82          0.20         0.68
-----------
<FN>
(1) Foreign loans are those loans originated in foreign branches.
(2) Annualized.
</FN>
</TABLE>

         Total loans charged off in the third quarter of 2000 increased by $40.6
million  from the third  quarter of 1999,  of which $9.5  million was related to
distressed  loan sales.  Charge-offs  reflect the  realization  of losses in the
portfolio that were recognized previously through provisions for credit losses.

         The  third  quarter's   recoveries  of  loans  previously  charged  off
decreased by $1.0 million from the same period in 1999.  The  percentage  of net
loans charged off to average loans increased by 61 percent, from the same period
in 1999. At September 30, 2000, the allowance for credit losses exceeded the net
loans  charged  off during the third  quarter of 2000,  reflecting  management's
belief,  based on the  foregoing  analysis,  that  there are  additional  losses
inherent in the portfolio.

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


                                       38

<PAGE>


NONPERFORMING ASSETS
<TABLE>
<CAPTION>


                                                                          SEPTEMBER 30,      DECEMBER 31,        SEPTEMBER 30,
(DOLLARS IN THOUSANDS)                                                        1999               1999                2000
-----------------------------------------------------------------------   -------------      ------------        -------------
<S>                                                                         <C>                <C>                 <C>
Commercial, financial and industrial...................................     $146,521           $159,479            $262,169
Construction...........................................................        4,334              4,286               3,967
Commercial mortgage....................................................        4,045              3,629              11,509
Foreign................................................................            -                  -               5,354
                                                                            ---------          ---------           ---------
      Total nonaccrual loans...........................................      154,900            167,394             282,999
Foreclosed assets......................................................        3,357              2,386               2,014
Distressed loans held for sale.........................................            -                  -              14,782
                                                                            ---------          ---------           ---------
      Total nonperforming assets.......................................     $158,257           $169,780            $299,795
                                                                            =========          =========           =========
Allowance for credit losses............................................     $457,429           $470,378            $525,896
                                                                            =========          =========           =========
Nonaccrual loans to total loans........................................         0.62%              0.65%               1.08%
Allowance for credit losses to nonaccrual loans........................       295.31             281.00              185.83
Nonperforming assets to total loans, foreclosed assets and distressed
   loans held for sale.................................................         0.63               0.66                1.15
Nonperforming assets to total assets...................................         0.49               0.50                0.89
</TABLE>


         At September 30, 2000,  nonperforming assets totaled $299.8 million, an
increase of $141.5 million, or 89 percent, from a year earlier. The increase was
mainly in commercial and industrial loans to medium-to-large corporate borrowers
in  different  industry  sectors.  Included  in  nonperforming  assets are $14.8
million in  distressed  loans that are being held for  accelerated  disposition.
During the third  quarter of 2000,  we sold $56.0  million of  distressed  loans
under this accelerated disposition program.

         Nonaccrual  loans as a  percentage  of total loans were 1.08 percent at
September  30,  2000,   compared  with  0.62  percent  at  September  30,  1999.
Nonperforming  assets as a percentage  of total loans,  foreclosed  assets,  and
distressed  loans held for sale  increased to 1.15 percent at September 30, 2000
from 0.63 percent at September 30, 1999.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
<TABLE>
<CAPTION>

                                                                          SEPTEMBER 30,      DECEMBER 31,       SEPTEMBER 30,
(DOLLARS IN THOUSANDS)                                                        1999               1999                2000
-----------------------------------------------------------------------   -------------      ------------       -------------
<S>                                                                         <C>                <C>                 <C>
Commercial, financial and industrial...................................     $ 1,211            $ 2,729             $ 5,758
Construction...........................................................           -                  -                 638
Mortgage:
   Residential.........................................................       4,728              5,830               2,835
   Commercial..........................................................         386                442                   -
                                                                            -------            -------             -------
      Total mortgage...................................................       5,114              6,272               2,835
Consumer and other.....................................................       4,397              2,932               3,405
                                                                            -------            -------             -------
   Total loans 90 days or more past due and still accruing.............     $10,722            $11,933             $12,636
                                                                            =======            =======             =======
</TABLE>


ASSET QUALITY TRENDS

         During the past year, we have experienced  deteriorating  asset quality
with  increasing  levels of  nonperforming  assets,  charge-offs,  and provision
expense.  Based on this trend, we expect that nonperforming assets,  charge-offs
and  provision  expense may continue to rise as our borrowers  become  adversely
impacted by the slowing economy and other factors.


                                       39

<PAGE>


LIQUIDITY

         Liquidity  risk  represents  the  potential  for  loss as a  result  of
limitations  on our ability to adjust our future cash flows to meet the needs of
depositors and borrowers and to fund  operations on a timely and  cost-effective
basis.  The ALM Policy approved by the Board requires  quarterly  reviews of our
liquidity  by the  ALCO,  which  is  composed  of bank  senior  executives.  Our
liquidity  management  draws  upon the  strengths  of our  extensive  retail and
commercial market business  franchise,  coupled with the ability to obtain funds
for various  terms in a variety of domestic  and  international  money  markets.
Liquidity is managed through the funding and investment  functions of the Global
Markets Group.

         Core deposits provide us with a sizable source of relatively stable and
low-cost funds. Our average core deposits,  which include demand deposits, money
market demand  accounts,  and savings and consumer time deposits,  combined with
average common shareholders'  equity,  funded 66 percent of average total assets
of $33.7  billion for the third quarter  ended  September 30, 2000.  Most of the
remaining  funding  was  provided  by  short-term  borrowings  in  the  form  of
negotiable  certificates of deposit,  foreign deposits,  federal funds purchased
and securities  sold under  repurchase  agreements,  commercial  paper and other
borrowings.

         Liquidity may also be provided by the sale or maturity of assets.  Such
assets  include  interest-bearing  deposits  in banks,  federal  funds  sold and
securities  purchased under resale agreements,  and trading account  securities.
The aggregate of these assets  averaged $0.5 billion during the third quarter of
2000.  Additional  liquidity may be provided by investment  securities available
for sale that  amounted  to $3.6  billion at  September  30,  2000,  and by loan
maturities.

REGULATORY CAPITAL

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

<TABLE>
<CAPTION>

UNIONBANCAL CORPORATION
                                                                                                MINIMUM           "WELL-CAPITALIZED"
                          SEPTEMBER 30,         DECEMBER 31,      SEPTEMBER 30,                REGULATORY             REGULATORY
(DOLLARS IN THOUSANDS)        1999                 1999                2000                    REQUIREMENT            REQUIREMENT
------------------------   -----------         -----------         -----------             -------------------    ------------------
CAPITAL COMPONENTS
<S>                        <C>                 <C>                 <C>
Tier 1 capital             $ 3,216,976         $ 3,308,912         $ 3,520,717
Tier 2 capital                 605,381             616,772             613,777
                           -----------         -----------         -----------
Total risk-based capital   $ 3,822,357         $ 3,925,684         $ 4,134,494
                           ===========         ===========         ===========
Risk-weighted assets...    $32,378,472         $33,288,167         $33,476,055
                           ===========         ===========         ===========
Quarterly average assets   $31,969,687         $32,765,347         $33,637,908
                           ===========         ===========         ===========
<CAPTION>

                             AMOUNT     RATIO     AMOUNT    RATIO     AMOUNT    RATIO        AMOUNT     RATIO
CAPITAL RATIOS             -----------  ------ -----------  ------ -----------  -----      -----------  -----
<S>                        <C>          <C>    <C>          <C>    <C>          <C>        <C>           <C>           <C>
Total capital (to
   risk-weighted assets)   $ 3,822,357  11.81% $ 3,925,684  11.79% $ 4,134,494  12.35%  >  $ 2,678,084   8.0%           na
                                                                                        -
Tier 1 capital (to
   risk-weighted assets)     3,216,976   9.94    3,308,912   9.94    3,520,717  10.52   >    1,339,042   4.0            na
                                                                                        -
Leverage ratio(1)            3,216,976  10.06    3,308,912  10.10    3,520,717  10.47   >    1,345,516   4.0            na
                                                                                        -
-----------
<FN>
(1)      Tier 1 capital divided by quarterly average assets (excluding certain intangible assets).
</FN>
</TABLE>

<TABLE>
<CAPTION>
UNION BANK OF CALIFORNIA, N.A.

                                                                                                MINIMUM           "WELL-CAPITALIZED"
                          SEPTEMBER 30,         DECEMBER 31,      SEPTEMBER 30,                REGULATORY             REGULATORY
(DOLLARS IN THOUSANDS)        1999                 1999                2000                    REQUIREMENT            REQUIREMENT
------------------------   -----------         -----------         -----------             -------------------    ------------------
<S>                        <C>                 <C>                 <C>
CAPITAL COMPONENTS
Tier 1 capital             $ 3,103,665         $ 3,103,324         $ 3,295,828
Tier 2 capital                 500,178             511,327             506,616
                           -----------         -----------         -----------
Total risk-based capital   $ 3,603,843         $ 3,614,651         $ 3,802,444
                           ===========         ===========         ===========
Risk-weighted assets       $31,960,695         $32,850,575         $32,900,514
                           ===========         ===========         ===========
Quarterly average assets   $31,696,685         $32,507,079         $33,942,940
                           ===========         ===========         ===========
<CAPTION>

                             AMOUNT     RATIO     AMOUNT    RATIO     AMOUNT    RATIO         AMOUNT    RATIO        AMOUNT    RATIO
CAPITAL RATIOS             -----------  -----  -----------  -----  -----------  -----      -----------  -----     -----------  -----
<S>                        <C>          <C>    <C>          <C>    <C>          <C>        <C>           <C>      <C>           <C>
Total capital (to
   risk-weighted assets)   $ 3,603,843  11.28% $ 3,614,651  11.00% $ 3,802,444  11.56%  >   $ 2,632,041   8.0%  > $ 3,290,051   10.0
                                                                                        -                       -
Tier 1 capital (to
   risk-weighted assets)     3,103,665   9.71    3,103,324   9.45    3,295,828  10.02   >    1,316,021   4.0    >   1,974,031    6.0
                                                                                        -                       -

Leverage ratio(1)            3,103,665   9.79    3,103,324   9.55    3,295,828   9.71   >    1,357,718   4.0    >   1,697,147    5.0
                                                                                        -                       -
-----------
<FN>
(1) Tier 1 capital divided by quarterly average assets (excluding certain
    intangible assets).
</FN>
</TABLE>

                                       40

<PAGE>

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

         Compared with December 31, 1999, our Tier 1 risk-based capital ratio at
September  30,  2000  increased  58 basis  points  to 10.52  percent,  our total
risk-based  capital ratio  increased 54 basis points to 12.35  percent,  and our
leverage ratio increased 41 basis points to 10.47 percent.  The increases in the
capital  ratios were  primarily  attributable  to a higher growth rate in Tier 1
capital attributed to higher growth in net income.

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

FORWARD-LOOKING STATEMENTS

         Our  management   frequently   makes   forward-looking   statements  in
Securities and Exchange  Commission  filings,  such as this one, press releases,
news  articles,  conference  calls  with Wall  Street  analysts  and when we are
speaking on behalf of UnionBanCal Corporation. Forward-looking statements can be
identified by looking at the fact that they do not relate strictly to historical
or  current  facts.   Often,   they  include  the  words  "believe,"   "expect,"
"anticipate,"  "intend,"  "plan,"  "estimate,"  "project,"  or words of  similar
meaning,  or future or  conditional  verbs  such as "will,"  "would,"  "should,"
"could,"  or "may."  The  forward-looking  statements  we make are  intended  to
provide  investors with  additional  information  with which they may assess our
future  potential.  All  of  these  forward-looking   statements  are  based  on
assumptions about an uncertain future. There are numerous factors that could and
will cause actual results to differ from those discussed in our  forward-looking
statements.  Many of these  factors are beyond our ability to control or predict
and could have a material adverse effect on our stock price, financial position,
or results of  operations.  Some,  but not all, of these  factors are  discussed
below.  All  forward-looking  statements  included in this document are based on
information  available as of its date, and we assume no obligation to update any
forward-looking statement.

         ADVERSE CALIFORNIA ECONOMIC CONDITIONS COULD ADVERSELY AFFECT OUR
           BUSINESS

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

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

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

                                       41

<PAGE>


         FLUCTUATIONS IN INTEREST RATES COULD ADVERSELY AFFECT OUR BUSINESS

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

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

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

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

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

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

         As part of The Bank of Tokyo-Mitsubishi,  Ltd.'s normal risk management
processes,  The Bank of  Tokyo-Mitsubishi,  Ltd. manages global credit exposures
and  concentrations on an aggregate basis,  including us. Therefore,  at certain
levels,  our ability to approve  certain  credits and categories of customers is
subject to  concurrence  by The Bank of  Tokyo-Mitsubishi,  Ltd.. We may wish to
extend  credit to the same customer as The Bank of Tokyo-  Mitsubishi,  Ltd. Our
ability to do so may be  limited  for  various  reasons,  including  The Bank of
Tokyo-Mitsubishi,  Ltd's  aggregate  credit  exposure  and  marketing  policies.
Certain

                                       42

<PAGE>


directors' and officers'  ownership  interests in The Bank of  Tokyo-Mitsubishi,
Ltd.'s  common  stock or service as a director  or officer or other  employee of
both us and The Bank of Tokyo-Mitsubishi,  Ltd. could create or appear to create
potential  conflicts  of  interest,  especially  since both of us compete in the
United States banking industry.

         SUBSTANTIAL COMPETITION IN THE CALIFORNIA BANKING MARKET COULD
           ADVERSELY AFFECT US

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

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

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

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

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

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

         Although The Bank of Tokyo-Mitsubishi, Ltd. has announced its intention
to maintain its majority  ownership in us, The Bank of Tokyo-  Mitsubishi,  Ltd.
may sell shares of our common stock in  compliance  with the federal  securities
laws. By virtue of The Bank of  Tokyo-Mitsubishi,  Ltd.'s current control of us,
The Bank of  Tokyo-Mitsubishi,  Ltd.  could sell large  amounts of shares of our
common  stock by causing us to file a  registration  statement  that would allow
them to sell shares more easily. In addition, The Bank of

                                       43

<PAGE>


Tokyo-Mitsubishi,   Ltd.   could  sell  shares  of  our  common  stock   without
registration pursuant to Rule 144 under the Securities Act. Although we can make
no prediction as to the effect, if any, that such sales would have on the market
price of our common stock, sales of substantial  amounts of our common stock, or
the perception that such sales could occur,  could  adversely  affect our market
price. If The Bank of  Tokyo-Mitsubishi,  Ltd. sells or transfers  shares of our
common stock as a block,  another person or entity could become our  controlling
shareholder.

         STRATEGIES

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

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

         o  deterioration of our asset quality,

         o  our inability to reduce noninterest expenses,

         o  our inability to increase noninterest income,

         o  our inability to decrease reliance on asset revenues,

         o  our ability to sustain loan growth,

         o  regulatory and other impediments associated with making
            acquisitions,

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

         o  decreases in net interest margins,

         o  increases in competition,

         o  adverse regulatory or legislative developments,

         o  unexpected increases in costs related to potential
            acquisitions, and

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

         RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR DIVESTITURES OR
           RESTRUCTURING

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

                                       44

<PAGE>


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

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

ITEM 3.  MARKET RISK.

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

                                       45

<PAGE>


                           PART II. OTHER INFORMATION



ITEM 4.  OTHER INFORMATION

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

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



(a) Exhibits:

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

  3.1  Restated Articles of Incorporation of the Registrant, as amended(1)
  3.2  By-laws of the Registrant, as amended January 27, 1999(2)
 10.1  Management Stock Plan. (As restated effective June 1, 1997)*(3)
 10.2  Union Bank of California Deferred Compensation Plan. (January 1, 1997,
       Restatement, as amended November 21, 1996)*(4)
 10.3  Union Bank of California Senior Management Bonus Plan. (Effective January
       1, 2000)*(5)
 10.4  Richard C. Hartnack Employment Agreement. (Effective January 1, 1998)*(6)
 10.5  Robert M. Walker Employment Agreement. (Effective January 1, 1998)*(6)
 10.6  Union Bank of California Supplemental Executive Retirement Plan. (Effec-
       tive January 1, 1988) (Amended and restated as of January 1, 1997)*(3)
 10.7  Union Bank Financial Services Reimbursement Program. (As restated effec-
       tive January 1, 2000)*(7)
 10.8  Performance Share Plan. (Effective January 1, 1997)*(3)
 10.9  Service Agreement Between Union Bank of California and The Bank of Tokyo-
       Mitsubishi Ltd. (Effective October 1, 1997)*(3)
10.10  Management Stock Plan. (As restated effective January 1, 2000)*(8)
10.11  Union Bank of California, N.A. Supplemental Retirement Plan for Policy
       Making Officers (effective November 1, 1999)*(5)
 27.1  Financial Data Schedule(9)


-----------

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

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

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

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

(5) Incorporated by reference to Form 10-Q for the quarter ended June 30, 2000.

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

(7) Incorporated by reference to Form 8-K dated April 1, 1996 (filed as exhibit
    10.14).

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

(9) Filed herewith.

    * Management contract or compensatory plan, contract or arrangement.

(b) Reports on Form 8-K:

    None



                                     46
<PAGE>


                                   SIGNATURES

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

                            UNIONBANCAL CORPORATION
                                   (Registrant)

                            By /s/ DAVID I. MATSON
                               ----------------------------------------
                                   David I. Matson
                                   EXECUTIVE VICE PRESIDENT AND
                                   CHIEF FINANCIAL OFFICER



                            By /s/ DAVID A. ANDERSON
                               ----------------------------------------
                                   David A. Anderson
                                   SENIOR VICE PRESIDENT AND CONTROLLER



                            Dated: November 13, 2000


                                       47