Business Segments

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Business Segments

Note 13—Business Segments

        The Company has three operating segments: Retail Banking Group, Corporate Banking Group and Pacific Rim Corporate Group. The Pacific Rim Corporate Group is included in "Other." The Company has two reportable business segments: Retail Banking and Corporate Banking.

• •

  Retail Banking offers a range of banking products and services, primarily to individuals and small businesses, delivered generally through a network of branches and ATMs and telephone and internet access 24-hours-a-day. These products offered include mortgages, home equity lines of credit, consumer and commercial loans, and deposit accounts.

  •

  Corporate Banking provides credit, depository and cash management services, investment and risk management products to businesses, individuals and target specialty niches. Services include commercial and project finance loans, real estate financing, asset-based financing, trade finance and letters of credit, lease financing, customized cash management services and capital markets products, as well as trust, private banking, investment and asset management services for individuals and institutions.

        "Other" is comprised of certain subsidiaries of UnionBanCal Corporation; the transfer pricing center; the amount of the provision for credit losses over/(under) the expected loss for the period; the residual costs of support groups; goodwill, intangible assets, and the related amortization/accretion associated with the Company's privatization transaction; the elimination of the fully taxable-equivalent basis amount; and the difference between the marginal tax rate and the consolidated effective tax rate. In addition, "Other" includes the Pacific Rim Corporate Group, which offers a range of credit, deposit, and investment management products and services to companies located primarily in the U.S. that are affiliated with companies headquartered in Japan and other Asian countries, Corporate Treasury, which is responsible for Asset-Liability Management (ALM), wholesale funding, the ALM investment securities and derivatives hedging portfolios, and the FDIC covered assets.

        The information, set forth in the tables that follow, is prepared using various management accounting methodologies to measure the performance of the individual segments. Unlike financial accounting, there is no authoritative body of guidance for management accounting equivalent to U.S. GAAP. Consequently, reported results are not necessarily comparable with those presented by other companies, and they are not necessarily indicative of the results that would be reported by our business units if they were unique economic entities. The management reporting accounting methodologies, which are enhanced from time to time, measure segment profitability by assigning balance sheet and income statement items to each operating segment. Methodologies that are applied to the measurement of segment profitability include:

• •

  A funds transfer pricing system, which assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics.

  •

  An activity-based costing methodology, in which certain indirect costs, such as operations and technology expense, are allocated to the segments based on studies of billable unit costs for product or data processing. Other indirect costs, such as corporate overhead, are allocated to the segments based on internal surveys and metrics that serve as proxies for estimated usage.

  •

  An expected credit loss allocation methodology, in which credit expense is charged to an operating segment based upon expected losses arising from credit risk. As a result of the methodology used in this model, differences between the provision for credit losses and credit expense in any one period could be significant. However, over an economic cycle, the cumulative provision for credit losses and credit expense for expected losses should be substantially the same.

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

        The reportable business segment results for prior periods have been adjusted to reflect changes in the transfer pricing and overhead methodologies that have occurred.

	Retail Banking				Corporate Banking
	As of and for the Three Months Ended June 30,				As of and for the Three Months Ended June 30,
	2013		2012		2013		2012
Results of operations—Market View (Dollars in millions):
Net interest income (expense)	$	303	$	272	$	362	$	324
Noninterest income (expense)		60		58		166		151
Total revenue		363		330		528		475
Noninterest expense (income)		302		263		277		243
Credit expense (income)		7		6		39		38
Income (loss) before income taxes and including noncontrolling interests		54		61		212		194
Income tax expense (benefit)		21		24		52		50
Net income (loss) including noncontrolling interest		33		37		160		144
Deduct: Net loss from noncontrolling interests		—		—		—		—
Net income (loss) attributable to UNBC	$	33	$	37	$	160	$	144
Total assets, end of period—Market View (Dollars in millions):	$	31,081	$	26,459	$	44,736	$	36,377

	Other						Reconciling Items
	As of and for the Three Months Ended June 30,						As of and for the Three Months Ended June 30,
	2013			2012			2013			2012
Results of operations—Market View (Dollars in millions):
Net interest income (expense)	$	20		$	71		$	(19	)	$	(21	)
Noninterest income (expense)		(4	)		(6	)		(17	)		(15	)
Total revenue		16			65			(36	)		(36	)
Noninterest expense (income)		137			104			(14	)		(11	)
Credit expense (income)		(49	)		(58	)		—			—
Income (loss) before income taxes and including noncontrolling interests		(72	)		19			(22	)		(25	)
Income tax expense (benefit)		(31	)		2			(8	)		(9	)
Net income (loss) including noncontrolling interest		(41	)		17			(14	)		(16	)
Deduct: Net loss from noncontrolling interests		3			5			—			—
Net income (loss) attributable to UNBC	$	(38	)	$	22		$	(14	)	$	(16	)
Total assets, end of period—Market View (Dollars in millions):	$	28,681		$	27,346		$	(2,237	)	$	(2,243	)

	UnionBanCal Corporation
	As of and for the Three Months Ended June 30,
	2013			2012
Results of operations—Market View (Dollars in millions):
Net interest income (expense)	$	666		$	646
Noninterest income (expense)		205			188
Total revenue		871			834
Noninterest expense (income)		702			599
Credit expense (income)		(3	)		(14	)
Income (loss) before income taxes and including noncontrolling interests		172			249
Income tax expense (benefit)		34			67
Net income (loss) including noncontrolling interest		138			182
Deduct: Net loss from noncontrolling interests		3			5
Net income (loss) attributable to UNBC	$	141		$	187
Total assets, end of period—Market View (Dollars in millions):	$	102,261		$	87,939

	Retail Banking				Corporate Banking
	As of and for the Six Months Ended June 30,				As of and for the Six Months Ended June 30,
	2013		2012		2013		2012
Results of operations—Market View (Dollars in millions):
Net interest income (expense)	$	612	$	540	$	717	$	647
Noninterest income (expense)		120		114		323		300
Total revenue		732		654		1,040		947
Noninterest expense (income)		602		527		550		483
Credit expense (income)		13		12		77		77
Income (loss) before income taxes and including noncontrolling interests		117		115		413		387
Income tax expense (benefit)		46		45		101		102
Net income (loss) including noncontrolling interest		71		70		312		285
Deduct: Net loss from noncontrolling interests		—		—		—		—
Net income (loss) attributable to UNBC	$	71	$	70	$	312	$	285
Total assets, end of period—Market View (Dollars in millions):	$	31,081	$	26,459	$	44,736	$	36,377

	Other						Reconciling Items
	As of and for the Six Months Ended June 30,						As of and for the Six Months Ended June 30,
	2013			2012			2013			2012
Results of operations—Market View (Dollars in millions):
Net interest income (expense)	$	23		$	141		$	(38	)	$	(41	)
Noninterest income (expense)		49			18			(32	)		(30	)
Total revenue		72			159			(70	)		(71	)
Noninterest expense (income)		290			226			(27	)		(23	)
Credit expense (income)		(96	)		(104	)		—			—
Income (loss) before income taxes and including noncontrolling interests		(122	)		37			(43	)		(48	)
Income tax expense (benefit)		(46	)		(11	)		(17	)		(18	)
Net income (loss) including noncontrolling interest		(76	)		48			(26	)		(30	)
Deduct: Net loss from noncontrolling interests		7			9			—			—
Net income (loss) attributable to UNBC	$	(69	)	$	57		$	(26	)	$	(30	)
Total assets, end of period—Market View (Dollars in millions):	$	28,681		$	27,346		$	(2,237	)	$	(2,243	)

	UnionBanCal Corporation
	As of and for the Six Months Ended June 30,
	2013			2012
Results of operations—Market View (Dollars in millions):
Net interest income (expense)	$	1,314		$	1,287
Noninterest income (expense)		460			402
Total revenue		1,774			1,689
Noninterest expense (income)		1,415			1,213
Credit expense (income)		(6	)		(15	)
Income (loss) before income taxes and including noncontrolling interests		365			491
Income tax expense (benefit)		84			118
Net income (loss) including noncontrolling interest		281			373
Deduct: Net loss from noncontrolling interests		7			9
Net income (loss) attributable to UNBC	$	288		$	382
Total assets, end of period—Market View (Dollars in millions):	$	102,261		$	87,939