UnionBanCal profit falls 15%

UnionBanCal Corp. said Monday that its second-quarter profit fell 15% as a higher number of loans went unpaid and the regional bank set aside more money to cover unpaid debt.

For the period that ended June 30, the parent of Union Bank of California reported net income of $141.3 million, or $1.02 a share, down from $165.4 million, or $1.19, a year earlier.

The results included a gain of $11.5 million, or 8 cents a share, from the sale of the bank’s insurance brokerage business, and a gain of $4.4 million, or 3 cents, from selling shares of MasterCard Inc.

UnionBanCal shares rose $3.31, or 7.3%, to $48.81 after the bank said its earnings from continuing operations were 97 cents a share, beating analysts’ estimates. Analysts polled by Thomson Financial, on average, were expecting profit of 92 cents a share.

Net charge-offs, or loans written off as not being repaid, rose to $31 million from $2 million in the second quarter of 2007. The 2008 period included $13 million in charge-offs for the bank’s home builder portfolio. Nonperforming assets were $225 million, compared with $30 million a year earlier.

UnionBanCal pumped up its provision for credit losses, or money set aside to cover bad loans, to $95 million from $5 million in the second quarter of 2007.

“While charge-offs have been relatively modest in recent quarters, our provision levels continue to reflect our cautious view regarding the economy and the global financial markets,” said Masaaki Tanaka, UnionBanCal’s president and chief executive.

Net interest income, or the difference between how much it costs a bank to borrow money and how much it receives from lending money to customers, rose 19% to $512.9 million, from $431 million in the second quarter last year.