UNION BANK CD TIED TO GOLD

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Looking to take advantage of the recent plunge in the price of GOLD? How about an FDIC Insured CD tied to the price of GOLD with a mimimum return of 2.50%? We are offering one this month with UNION BANK.

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UNION BANK CD TIED TO GOLD

  1. 1. Subject to Completion PRELIMINARY DISCLOSURE SUPPLEMENT Dated March 29, 2013 To the Disclosure Statement dated January 30, 2013 Union Bank, N.A. Market-Linked Certificates of Deposit, due April 30, 2018 (MLCD No. 272) Quarterly Capped Return Linked to GoldSet forth below are the terms and conditions of the above specified Union Bank, N.A. (the “Bank”) Quarterly Capped Return Market-LinkedCertificates of Deposit (the “MLCDs”). You should carefully review this Disclosure Supplement (the “Supplement”), as well as the attachedDisclosure Statement, before deciding if an investment in an MLCD is appropriate for you. In the event of any inconsistency between theDisclosure Statement and this Supplement, the terms of the Supplement will control. In general, the MLCDs are designed for investors whoseek return of principal along with participation in the potential quarterly appreciation of the Investment Benchmark, subject to a cap asdescribed below, and who are prepared to hold the MLCD until the Maturity Date. All capitalized terms used but not defined herein have themeanings set forth in the Disclosure Statement.MLCD DescriptionEach MLCD is a certificate of deposit that offers a potential return based on the performance of the Gold Spot Price (the “Investment Benchmark”),subject to a cap as described below. This return is therefore not a fixed coupon and no Periodic Interest Payments will be made on the MLCDs• Return Potential: The interest payment to the depositor is equal to the greater of (i) the sum of the Quarterly Percentage Changes (as defined below) of the Investment Benchmark over the term of the MLCDs, subject to a cap each quarter, multiplied by the outstanding Deposit Amount on the Maturity Date or (ii) the Minimum Indexed Interest Amount (as defined below). The return potential of the MLCDs is subject to a cap on each Quarterly Percentage Change and, as a result, on the aggregate return on the MLCDs (as described below). Investors should be willing to forgo the return potential above the Maximum Indexed Interest Amount in exchange for return of principal and FDIC insurance as described below.• Return of Principal: At maturity, you will receive repayment of your Deposit Amount and an amount no less than the Minimum Indexed Interest Amount, regardless of the performance of the Investment Benchmark. Investors who redeem all or a portion of their MLCD early may lose a portion of their Deposit Amount.• FDIC Insurance: The MLCDs are deposit obligations of the Bank and are therefore eligible for FDIC coverage up to applicable limits set by federal law and regulation. The FDIC insures all deposits maintained by a depositor in the same ownership capacity (i.e., individual or joint) at the same insured depository institution up to an aggregate amount of $250,000. Further, with respect to the MLCDs, the FDIC insurance covers only the Deposit Amount and does not include any Indexed Interest Amount, Minimum Indexed Interest Amount or secondary market premium. You are responsible for determining and monitoring the FDIC insurance coverage limit available to you in purchasing any MLCD. The Bank has no obligation to monitor the FDIC insurance coverage that is available to you.• IRA Eligible: MLCDs are eligible investments for individual retirement accounts (“IRAs”).Risks and ConsiderationsPurchasing an MLCD involves a number of risks, including risks not typically associated with fixed-rate or floating-rate certificates of deposit or debtinstruments. The Bank recommends that prospective investors carefully consider, together with their financial, legal, accounting, tax and otheradvisors, those risks in determining the suitability of an MLCD in light of their financial circumstances. Please refer to the accompanying DisclosureStatement for a more detailed discussion of these risks which include, but are not limited to:• You are not guaranteed the return of the Deposit Amount if your MLCD is not held to maturity. In addition, if you choose to exercise the Early Redemption feature, you are not guaranteed the return of the Deposit Amount.• If you hold more in deposits with the Bank than applicable FDIC insurance limits (including the MLCDs you purchase), you will not receive the benefit of FDIC insurance for any balance in excess of that amount. In this instance, the return of principal is subject to the credit risk of the Bank.• Neither the Bank nor any Offering Broker is required to, nor does the Bank or any of its affiliates intend to, make a secondary market in the MLCDs. There is no assurance that a secondary market will develop. Funds needed prior to maturity should not be invested in MLCDs.• The MLCDs may yield a return that is less than that of a traditional certificate of deposit or debt instrument of a comparable maturity.• Interest on the MLCDs will be subject to annual income taxes based upon a comparable yield for the issuance, even though no payments will be made on the MLCDs until the Maturity Date, absent early redemption. You may incur a tax liability without any offsetting income from the MLCDs. See “United States Federal Income Tax Considerations” herein and in the Disclosure Statement.• The Indexed Interest Amount (as defined below) may not reflect the full upside performance of the Investment Benchmark, and the performance of the Investment Benchmark may result in the investor receiving only the Minimum Indexed Interest Amount at maturity.• Although the return on the MLCD is linked to the performance of the Investment Benchmark, you will not have any rights in or to the shares, currencies or commodities, as the case may be, comprising or referenced in the Investment Benchmark, including, where applicable, beneficial ownership rights such as dividends, distributions or voting.• Negative Quarterly Percentage Changes (as described below) may eliminate any positive capped Quarterly Percentage Changes, reducing the return to the investor to the Minimum Indexed Interest Amount at maturity even if the value of the Gold Spot Price increases from the Pricing Date (as defined below) to the maturity of the MLCD. Please see “Additional Risk Factors” in the accompanying Disclosure Statement for a more detailed discussion of the risks involved in purchasing the MLCDs.The MLCDs are made available through UnionBanc Investment Services, LLC (“UBIS”), a subsidiary of the Bank, and/or other Offering Brokers. TheMLCDs are time deposit obligations of the Bank, a national banking association, and are not obligations of UnionBanCal Corporation, the OfferingBrokers, or any other company affiliated with the Bank. None of UnionBanCal Corporation, UBIS or any other affiliate of the Bank guarantees thefinancial condition of the Bank. 1
  2. 2. Key Terms Issuer ............................................................... Union Bank, N.A. Investment Benchmark .................................... The Gold Spot Price, P.M. Fixing (Bloomberg Ticker: “GOLDLNPM Cmdty “) Gold Value ....................................................... On any Scheduled Trading Day (as defined below), that day’s afternoon gold fixing price per troy ounce of gold for delivery in London through a member of the London Bullion Market Association (the “LBMA”) authorized to effect such delivery, stated in U.S. dollars, as calculated by the London Bullion Market Association and displayed on Bloomberg Screen page “GOLDLNPM Cmdty” (the “Price Source”) that displays prices effective for that day. Currency .......................................................... USD. Minimum Deposit Amount ................................ $1,000 principal amount (except that each Offering Broker may, in its discretion, impose a higher minimum deposit amount with respect to MLCD sales to its customers) and multiples of $1,000 principal amount thereafter. Offering Period ................................................. March 29, 2013 to April 25, 2013 at 11:00 am PST. Pricing Date ..................................................... The date on which the MLCDs are priced. The Bank expects to price the MLCDs on April 26, 2013. If the Bank prices the MLCDs on a day other than on the Pricing Date, you will be notified of the changes in the final Supplement. Issue Date (Settlement Date) ........................... April 30, 2013. Maturity Date .................................................... April 30, 2018. Payment at Maturity ......................................... The amount payable on each MLCD on the Maturity Date will be the Deposit Amount plus the greater of (i) the Indexed Interest Amount or (ii) the Minimum Indexed Interest Amount. Indexed Interest Amount .................................. The sum of the 20 Quarterly Percentage Changes (as defined below), multiplied by the outstanding Deposit Amount on the Maturity Date. There is no limit, or floor, on the extent of any negative Quarterly Percentage Change used to calculate the Indexed Interest Amount. However, positive Quarterly Percentage Changes will be subject to the quarterly cap as defined below. As a result, one, or a limited number of, negative Quarterly Percentage Changes could eliminate all positive Quarterly Percentage Changes, in which case, you would receive only the return of your Deposit Amount and the Minimum Indexed Interest Amount at maturity. As a result of the quarterly cap, the Indexed Interest Amount will never be more than the Maximum Indexed Interest Amount (as defined below). Quarterly Percentage Change ......................... The Quarterly Percentage Change for each quarter will equal the lesser of: (i) the (Final Quarterly Value – Initial Quarterly Value) Initial Quarterly Index Value, and (ii) the 4.00% to 5.00% quarterly cap*. *The quarterly cap will be determined on the Pricing Date subject to the range herein, and will be between 4.00% and 5.00%, inclusive. Initial Quarterly Value ....................................... For the first quarter, the Closing Value (defined below) of the Investment Benchmark on the Pricing Date and for each quarter thereafter, the Final Quarterly Value for the immediately preceding quarter. Final Quarterly Value ....................................... For each quarter, the Closing Value (defined below) of the Investment Benchmark on the 25th of each January, April, July, and October beginning July 2013 through and including January 2018 and April 25, 2018 (the “Final Observation Date” and each such date, an “Observation Date.”) Changes in the value of the Investment Benchmark from the Final Observation Date to the Maturity Date will not affect the Indexed Interest Amount or the return on the MLCD. Closing Value ................................................... The value of the Investment Benchmark as of the close of trading on the Relevant Exchange on the related Scheduled Trading Day. If any Observation Date is not a Scheduled Trading Day, the Closing Value will be determined on the immediately succeeding Scheduled Trading Day. 2
  3. 3. Annual Percentage Yield (“APY”) ..................... 0.49% (if the Investment Benchmark remains the same throughout the term, so that only the Deposit Amount and the Minimum Indexed Interest Amount are payable on the MLCDs). The Bank uses the “daily balance method” to calculate interest on the MLCD. The method applies a daily periodic rate to the Deposit Amount each day. APYs assume that the MLCDs were purchased in the original offering and are calculated on the basis of a 365-day year.Minimum Indexed Interest Amount .................. The Minimum Indexed Interest Amount at maturity will be 2.50% multiplied by the outstanding Deposit Amount on the Maturity Date. This equates to a 0.49% APY.Maximum Indexed Interest Amount ................. The Maximum Indexed Interest Amount at maturity will be 80.00% - 100.00% (the sum of the 20 Quarterly Percentage Changes each of which are subject to the quarterly cap of 4.00% - 5.00%) multiplied by the outstanding Deposit Amount on the Maturity Date. This equates to a 12.47% - 14.86% APY. The Maximum Indexed Interest Amount will be determined on the Pricing Date subject to the ranges herein.Periodic Interest Payments…………………….. None.Call Feature ..................................................... None.Early Redemption Dates .................................. The 15th of each March, June, September, and December, beginning March 15, 2014. The amount you receive upon an early redemption (the “Early Redemption Amount”) is described in the section of the Disclosure Statement entitled “General Description of the MLCDs - Early Redemption and Early Redemption Penalty." Upon an Early Redemption, the amount that you may receive for your MLCD may be less than if held to maturity and will be impacted by the factors described under "Risk Factors – The Price at Which You May Sell the MLCDs Prior to Maturity May Be Substantially Less Than Your Deposit Amount” and “Fees and Hedging” in the Disclosure Statement.Survivor’s Option .............................................. Upon the death or adjudication of incompetence of the beneficial owner of the MLCD, the estate will be entitled to the return of the full Deposit Amount. The estate will not be entitled to additional payments associated with the performance of the Investment Benchmark or any secondary market premiums that may have been paid. thSurvivor’s Option Payment Dates .................... The 10 of each month, beginning June 10, 2013.Calculation Agent ............................................. Union Bank, N.A.Scheduled Trading Day.................................... Any day on which all of the Relevant Exchanges and Related Exchanges are scheduled to be open for trading for each security then included in the Investment Benchmark.CUSIP .............................................................. 90521AMP0Placement Fee ................................................. The MLCDs will be distributed through Participating Brokers. Participating Brokers will receive a Placement Fee from the Bank of up to 2.75% of the aggregate Deposit Amount of the MLCDs sold. 3
  4. 4. Illustrative ExamplesThe following examples are provided for illustration purposes only and are hypothetical. They are not representative ofevery possible scenario concerning the Quarterly Percentage Changes of the Investment Benchmark. The Bank cannotpredict the Closing Value of the Investment Benchmark on any Scheduled Trading Day. The assumptions the Bank hasmade in connection with the illustrations set forth below may not reflect actual events, and the hypothetical quarterlyindex values of the Investment Benchmark for each Observation Date used in the illustrations below may not be theactual quarterly index values of the Investment Benchmark for each such Observation Date. The examples assume aquarterly cap of 4.00%* on the Quarterly Percentage Changes in the Investment Benchmark. You should not take theseexamples as an indication or assurance of the expected performance of the Investment Benchmark or rate of return onthe MLCD.The following examples indicate how and whether the Indexed Interest Amount would be calculated and paid withrespect to a hypothetical $1,000 Deposit Amount in the MLCDs. These examples assume that there is no earlyredemption, that the MLCDs are held to maturity, and the following: Quarterly Percentage The lesser of: Change: (i) the (Final Quarterly Value – Initial Quarterly Value) Initial Quarterly Value, and (ii) the 4.00% quarterly cap*. Indexed Interest Amount: The sum of the 20 Quarterly Percentage Changes of the Investment Benchmark multiplied by the outstanding Deposit Amount on the Maturity Date. Maximum Indexed Interest 80.00%** multiplied by the outstanding Deposit Amount on the Amount: Maturity Date. This equates to a 12.47% APY. Minimum Indexed Interest 2.50% multiplied by the outstanding Deposit Amount on the Maturity Amount Date. This equates to a 0.49% APY. Payment at Maturity: The Deposit Amount plus the greater of (i) the Indexed Interest Amount or (ii) the Minimum Indexed Interest Amount.*The actual quarterly cap on the Quarterly Percentage Changes will be determined on the Pricing Date, subject to the4.00% - 5.00% range herein, and will not be less than 4.00%.**The actual Maximum Indexed Interest Amount will be determined on the Pricing Date, subject to the 80.00% - 100.00%range herein, and will not be less than 80.00%. 4
  5. 5. Example 1: Investment Benchmark Increases by 30% in two different Scenarios, but Payment at Maturity Varies Scenario A Scenario B Initial Final Initial Final Observation Quarterly % Quarterly % Quarterly Quarterly Quarterly Quarterly Dates Changes * Changes * Value Value Value Value 25-Jul-13 1600.00 1570.56 -1.84% 1600.00 1462.88 -8.57% 25-Oct-13 1570.56 1553.60 -1.08% 1462.88 1319.23 -9.82% 27-Jan-14 1553.60 1586.69 2.13% 1319.23 1191.52 -9.68% 25-Apr-14 1586.69 1650.16 4.00% * 1191.52 1063.91 -10.71% 25-Jul-14 1650.16 1650.16 0.00% 1063.91 1036.25 -2.60% 27-Oct-14 1650.16 1693.39 2.62% 1036.25 996.77 -3.81% 26-Jan-15 1693.39 1695.42 0.12% 996.77 934.47 -6.25% 27-Apr-15 1695.42 1677.62 -1.05% 934.47 924.94 -1.02% 27-Jul-15 1677.62 1695.91 1.09% 924.94 924.94 0.00% 26-Oct-15 1695.91 1739.15 2.55% 924.94 936.50 1.25% 25-Jan-16 1739.15 1781.59 2.44% 936.50 936.50 0.00% 25-Apr-16 1781.59 1820.25 2.17% 936.50 997.37 4.00% * 25-Jul-16 1820.25 1855.20 1.92% 997.37 997.37 0.00% 25-Oct-16 1855.20 1890.26 1.89% 997.37 1070.18 4.00% * 25-Jan-17 1890.26 1927.12 1.95% 1070.18 977.08 -8.70% 25-Apr-17 1927.12 2004.21 4.00% * 977.08 1113.87 4.00% * 25-Jul-17 2004.21 2046.10 2.09% 1113.87 1325.50 4.00% * 25-Oct-17 2046.10 2093.36 2.31% 1325.50 1577.35 4.00% * 25-Jan-18 2093.36 2144.65 2.45% 1577.35 1877.04 4.00% * 25-Apr-18 2144.65 2080.00 -3.01% 1877.04 2080.00 4.00% * Sum of the Quarterly Percentage Changes 26.75% -31.91% Quarterly Cap * 4.00% 4.00% Indexed Interest Amount $267.46 ($319.10) Minimum Indexed Interest Amount $25.00 $25.00 Maximum Indexed Interest Amount $800.00 $800.00 Payment at Maturity $1,267.46 $1,025.00 APY 4.85% 0.49% *Quarterly Percentage Changes for these Observation Dates have been reduced to reflect the hypothetical quarterly cap of 4.00% (the actual cap will be determined on the Pricing Date subject to the 4.00% - 5.00% range herein). Although the Quarterly Percentage Change is capped at 4.00%, the Final Quarterly Value for that quarter is the Initial Quarterly Value for the immediately succeeding quarter regardless of the application of the quarterly cap. In Example 1, we assume that the Investment Benchmark increases by 30% from the Closing Value on the Pricing Date to the Final Observation Date for each hypothetical scenario. However, the Payment at Maturity in Scenario A of $1,267.46. exceeds the Payment at Maturity in Scenario B of $1,025.00. Example 1 illustrates that even though the appreciation of the Investment Benchmark from the Pricing Date to the Final Observation Date is the same in both scenarios, the Payments at Maturity differ because (a) the Indexed Interest Amount and Payment at Maturity depends on the Quarterly Percentage Changes and the Values of the Investment Benchmark on certain Observation Dates during the term of the MLCD, rather than on the appreciation of the Investment Benchmark from the Pricing Date to the Final Observation Date; (b) the Quarterly Percentage Changes are subject to a 4.00% quarterly cap; and (c) negative Quarterly Percentage Changes are used in determing the Indexed Interest Amount. 5
  6. 6. Example 2: Investment Benchmark Increases in Value but Minimum Indexed Interest Amount Still Applies Scenario C In Example 2, the Payment at Maturity is equal to $1,025.00 or Initial Final the Deposit Amount of $1,000 plus the Minimum Indexed Interest Observation Quarterly % Quarterly Quarterly Amount of $25.00. The Minimum Indexed Interest Amount is Dates Changes * Value Value payable even though the Investment Benchmark appreciated by 25-Jul-13 1600.00 992.00 -38.00% more than 2.50% from the Pricing Date to the Final Observation 25-Oct-13 992.00 944.58 -4.78% Date. Example 2 illustrates that the Indexed Interest Amount 27-Jan-14 944.58 937.88 -0.71% may be negative or less than the Minimum Indexed Interest Amount even if the Investment Benchmark appreciates from the 25-Apr-14 937.88 926.62 -1.20% Pricing Date to the Final Observation Date because (a) the 25-Jul-14 926.62 1158.28 4.00% * Indexed Interest Amount and Payment at Maturity depends on 27-Oct-14 1158.28 1111.37 -4.05% the Quarterly Percentage Changes and the Values of the Investment Benchmark on certain Observation Dates during the 26-Jan-15 1111.37 1070.02 -3.72% term of the MLCD, rather than on the appreciation of the 27-Apr-15 1070.02 1337.53 4.00% * Investment Benchmark from the Pricing Date to the Final 27-Jul-15 1337.53 1292.99 -3.33% Observation Date; (b) the Quarterly Percentage Changes are 26-Oct-15 1292.99 1200.93 -7.12% subject to a 4.00% quarterly cap; and (c) negative Quarterly Percentage Changes are used in determining the Indexed 25-Jan-16 1200.93 1200.21 -0.06% Interest Amount. 25-Apr-16 1200.21 1223.49 1.94% 25-Jul-16 1223.49 1249.06 2.09% The likelihood that on the Maturity Date you will receive only the 25-Oct-16 1249.06 1299.23 4.00% * return of your Deposit Amount and the Minimum Indexed Interest 25-Jan-17 1299.23 1377.18 4.00% * Amount increases as the number of negative Quarterly Percentage Changes increases. You may receive only your 25-Apr-17 1377.18 1514.90 4.00% * Deposit Amount and the Minimum Indexed Interest Amount even 25-Jul-17 1514.90 1613.37 4.00% * if the Value of the Gold Spot Price increases, resulting in a 25-Oct-17 1613.37 1936.04 4.00% * Closing Value on the Final Observation Date that exceeds the 25-Jan-18 1936.04 2071.56 4.00% * Closing Value on the Pricing Date. In fact, if the Gold Spot Price declines in any single quarter resulting in a negative Quarterly 25-Apr-18 2071.56 2000.00 -3.45% Percentage Change that equals or exceeds -73.50% in theseSum of the Quarterly Percentage Changes -30.39% hypothetical examples, you would receive only the MinimumQuarterly Cap * 4.00% Indexed Interest Amount on the Maturity Date, regardless of theIndexed Interest Amount ($303.94) amount of the increases in the Gold Spot Price on subsequent Observation Dates. In that case, at maturity, you would receiveMinimum Indexed Interest Amount $25.00 only the Deposit Amount of the MLCDs plus the Minimum IndexedMaximum Indexed Interest Amount $800.00 Interest Amount at maturity, or $1,025.00 in this example.Payment at Maturity $1,025.00APY 0.49%*Quarterly Percentage Changes for these Observation Dates have been reduced to reflect the hypothetical quarterly cap of 4.00%(the actual cap will be determined on the Pricing Date subject to the 4.00% - 5.00% range herein). Although the Quarterly PercentageChange is capped at 4.00%, the Final Quarterly Value for that quarter is the Initial Quarterly Value for the immediately succeedingquarter regardless of the application of the quarterly cap. 6
  7. 7. Investment Benchmark OverviewThe value of gold to which the return on the MLCD is linked is the spot price of gold in U.S. dollars as determined at3:00 p.m. London time by a committee of market making members of the London Bullion Market Association (“LBMA”).The five members of the committee are Barclays Capital, Scotia Mocatta, Deutsche Bank, Societe Generale, and HSBCInvestment Banking Group. The fix is carried out twice a day, at 10:30 am and 3:00 pm London local time via telephoneby the five members.Information as of market close on March 29, 2013 Bloomberg Ticker Symbol: GOLDLNPM Cmdty Current Price (03/29/2013): $1,598.25Source: BloombergThe London Bullion MarketLondon is the focus of the international Over-the-Counter (OTC) market for gold, with a client base that includes themajority of the central banks that hold gold, plus producers, refiners, fabricators and other traders throughout the world.Members of the London bullion market typically trade with each other and with their clients on a principal-to-principalbasis, which means that all risks, including those of credit, are between the two counterparts to a transaction. This isknown as an ‘Over the Counter’ (OTC) market, as opposed to an exchange traded environment.The London bullion market is a wholesale market, where minimum traded amounts for clients are generally 1,000ounces of gold.Unlike a futures exchange – where trading is based around standard contract units, settlement dates and deliveryspecifications – the OTC market allows flexibility. It also provides confidentiality, as transactions are conducted betweenthe two principals involved. 7
  8. 8. Historical Closing Values of GoldSince its inception, the Investment Benchmark has experienced significant fluctuations. Any historical upward ordownward trend in the Gold Spot Price during any period shown below is not an indication that the Gold Spot Price ismore or less likely to increase or decrease at any time during the term of the MLCDs. The historical values do not givean indication of the future performance of the Gold Spot Price. The Bank cannot assure you that the future performanceof the Gold Spot Price will result in holders of the MLCDs receiving an amount greater than the outstanding depositamount of the MLCDs and the Minimum Indexed Interest Amount on the maturity date. 10 Year Historical Price Graph (Daily) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 8
  9. 9. The table below sets forth the quarterly high and low closing values, as well as end-of-quarter closing values, of theInvestment Benchmark for each of the quarters from December 2002 to present. The Bank obtained the data in the tablefrom Bloomberg, LP. Historical price values of Investment Benchmark should not be used as an indication of futureperformance. Quarter Ending Quarterly High Quarterly Low Quarterly Close Dec-02 349.30 310.75 347.20 Mar-03 382.10 329.45 334.85 Jun-03 371.40 319.90 346.00 Sep-03 390.70 342.50 388.00 Dec-03 416.25 370.25 416.25 Mar-04 425.50 390.50 423.70 Jun-04 427.25 375.00 395.80 Sep-04 415.65 387.30 415.65 Dec-04 454.20 411.25 435.60 Mar-05 443.70 411.10 427.50 Jun-05 440.55 414.45 437.10 Sep-05 473.25 418.35 473.25 Dec-05 536.50 456.50 513.00 Mar-06 584.00 524.75 582.00 Jun-06 725.00 567.00 613.50 Sep-06 663.25 573.60 599.25 Dec-06 648.75 560.75 632.00 Mar-07 685.75 608.40 661.75 Jun-07 691.40 642.10 650.50 Sep-07 743.00 648.75 743.00 Dec-07 841.10 725.50 833.75 Mar-08 1011.25 846.75 933.50 Jun-08 946.00 853.00 930.25 Sep-08 986.00 740.75 884.50 Dec-08 903.50 712.50 869.75 Mar-09 989.00 810.00 916.50 Jun-09 981.75 870.25 934.50 Sep-09 1018.50 908.50 995.75 Dec-09 1212.50 1003.50 1087.50 Mar-10 1153.00 1058.00 1115.50 Jun-10 1261.00 1123.50 1244.00 Sep-10 1307.50 1157.00 1307.00 Dec-10 1421.00 1313.50 1405.50 Mar-11 1447.00 1319.00 1439.00 Jun-11 1552.50 1418.00 1505.50 Sep-11 1895.00 1483.00 1620.00 Dec-11 1795.00 1531.00 1531.00 Mar-12 1781.00 1598.00 1662.50 Jun-12 1677.50 1540.00 1598.50 Sep-12 1784.50 1556.25 1776.00 Dec-12 1791.75 1650.50 1657.50 Dec-02 through Dec-12 1895.00 310.75 1657.50 9
  10. 10. Market Disruption Events“Market Disruption Event” means a Price Source Disruption, Trading Disruption, Disappearance of CommodityReference Price, Material Change in Formula or Tax Disruption. • “Price Source Disruption” means (i) the failure of the Price Source to announce or publish the Gold Value (or the information necessary for determining the Gold Value) or (ii) the temporary or permanent discontinuance or unavailability of the Price Source. • “Trading Disruption” means the material suspension of, or material limitation imposed on, trading in gold or a related futures contract, options contract or commodity on the London bullion market or the relevant exchange, as applicable. • “Disappearance of Commodity Reference Price” means (i) the permanent discontinuation of trading in a Gold- related futures contract, options contract or commodity on the London bullion market or the relevant exchange, as applicable, or (ii) the disappearance or permanent discontinuance or unavailability of the Gold Value, notwithstanding the availability of the Price Source or the status of trading in Gold or in a related futures contract, options contract or commodity. • “Material Change in Formula” means the occurrence since the pricing date of a material change in the formula for or the method of calculating the Gold Spot Price. • “Tax Disruption” means the imposition of, change in or removal of an excise, severance, sales, use, value- added, transfer, stamp, documentary, recording or similar tax on, or measured by reference to, Gold (other than a tax on, or measured by reference to overall gross or net income) by any government or taxation authority after the pricing date, if the direct effect of the applicable imposition, change or removal is to raise or lower the Gold Value on the day that would otherwise be a Measurement Date from what it would have been without that imposition, change or removal.If a Market Disruption occurs or exists on the valuation date set forth above for the MLCDs, the Calculation Agent maydetermine the Gold Value (or the method for determining the Gold Value), taking into consideration the latest availablequotation for the Gold Value and any other information that in good faith it deems relevant. The Calculation Agent maymake this determination in such manner as it deems appropriate, and its determination will be binding. 10
  11. 11. Additional Risk FactorsInvesting in the MLCDs involves significant risks, including those listed below. You should carefully review the more detailed explanationof risks relating to the MLCDs in the “Risk Factors” section of the attached Disclosure Statement. The Bank also encourages you toconsult your investment, legal, tax, accounting, and other advisors before investing in the MLCDs.• The Indexed Interest Amount is based solely on the change in the Investment Benchmark from the Initial Closing Value to the Final Closing Value . No interim changes in the Investment Benchmark, including increases, will be considered in determining the Indexed Interest Amount.• Although the return on the MLCDs is linked to the performance of the Investment Benchmark, you will not have any rights with respect to gold or any related futures contracts.• The MLCDs will not be regulated by the U.S. Commodity Futures Trading Commission.• The Indexed Interest Amount will be subject to market volatility and risks relating to gold. Gold prices are subject to volatile price movements over short periods of time and are affected by numerous factors. These include economic factors, including the structure of and confidence in the global monetary system, expectations of the future rate of inflation, the relative strength of, and confidence in, the U.S. dollar (the currency in which the price of gold is generally quoted), interest rates and gold borrowing and lending rates, and global or regional economic, financial, political, regulatory, judicial, or other events. Gold prices may also be affected by industry factors such as industrial and jewelry demand, lending, sales and purchases of gold by the official sector, including central banks and other governmental agencies and multilateral institutions which hold gold, levels of gold production and production costs, and short- term changes in supply and demand because of trading activities in the gold market. It is not possible to predict the aggregate effect of all or any combination of these factors.• The Gold Spot Price is determined by the LBMA. The LBMA is a self regulatory association of bullion market participants. If the LBMA should cease operations, or if bullion trading should become subject to a value added tax or other tax or any other form of regulation currently not in place, the role of the LBMA price fixings as a global benchmark for the value of gold may be adversely affected. The LBMA is a principals’ market which operates in a manner more closely analogous to over-the-counter physical commodity markets than regulated futures markets, and certain features of U.S. futures contracts are not present in the context of LBMA trading. The LBMA Gold Value will not necessarily be consistent with other valuations of gold, such as those determined by reference to futures contracts on gold.• The price of gold could be adversely affected by the promulgation of new laws or regulations or by the reinterpretation of existing laws or regulations (including, without limitation, those relating to taxes and duties on commodities or commodity components) by one or more governments, governmental agencies or instrumentalities, courts, or other official bodies. Any event of this kind could adversely affect the Gold Spot Price and, as a result, could adversely affect the value of the MLCDs. . 11
  12. 12. UNITED STATES FEDERAL INCOME TAX CONSIDERATIONSTo ensure compliance with Treasury Department Circular 230, you are hereby notified that (a) anydiscussion of United States federal tax issues in this Disclosure Supplement is not intended or writtento be relied upon, and cannot be relied upon by you for the purpose of avoiding penalties that may beimposed on you under the Internal Revenue Code of 1986, as amended (the “Code”), (b) thisdiscussion is included herein by the Bank in connection with the promotion or marketing (within themeaning of Circular 230) by the Bank, UBIS and the Offering Brokers of the transactions or mattersaddressed in this Disclosure Supplement, and (c) you should seek advice based on your particularcircumstances from an independent tax advisor.The following discussion supplements (and, to the extent inconsistent with, supersedes) and should be read inconjunction with the discussion in the attached Disclosure Statement under “United States Federal Income TaxConsiderations.” For purposes of that discussion, the MLCDs are “long-term MLCDs.”The table below sets forth the following information with respect to each $1,000 principal amount of the MLCDsfor each of the indicated accrual periods through the maturity dates of the MLCDs: • the adjusted issue price at the beginning of the accrual period; • the amount of interest deemed to have accrued during the accrual period; and • the total amount of interest deemed to have accrued from the original issue date through the end of the accrual period.The table is based upon a hypothetical projected payment schedule (including both a hypothetical IndexedInterest Amount and a hypothetical comparable yield equal to 1.99% per annum (compounded annually), whichis the Bank’s current estimate of the comparable yield, based upon market conditions as of the date of thisSupplement) as determined by the Bank for purposes of illustrating the application of the Code and theTreasury regulations to the MLCDs. The comparable yield will not be less than the “applicable federal rate”based on the overall maturity of the MLCD. This tax accrual table is based upon a hypothetical projectedpayment schedule per $1,000 principal amount of the MLCDs, which would consist of a single payment of$1,103.57 at maturity. This payment consists of the principal amount and a projection for tax purposes of theestimated Indexed Interest Amount. The actual “projected payment schedule” will be completed on the PricingDate of the MLCDs, and included in the final Supplement. This information is provided solely for tax purposes,and the Bank makes no representations or predictions as to what the actual Indexed Interest Amount will be.The following table is for illustrative purposes only. The Bank will determine the actual projected paymentschedule and the actual comparable yield on the Pricing Date. The tax accrual table will be revised accordinglyand will be set forth in the final Supplement. The tax accrual table will depend upon actual market interestrates (and accordingly, the Bank’s borrowing costs for debt instruments with comparable maturities) asdetermined on the Pricing Date. Total Interest Deemed Interest Deemed to to Have Accrued from Adjusted Issue Price Accrue on the MLCDs Original Issue Date as at Beginning of During the Accrual of End of Accrual Accrual Period Accrual Period Period (1) Period April 30, 2013 to December 31, 2013 1,000.00 13.27 13.27 January 1, 2014 to December 31, 2014 1,013.27 20.16 33.43 January 1, 2015 to December 31, 2015 1,033.43 20.57 54.00 January 1, 2016 to December 31, 2016 1,054.00 20.97 74.97 January 1, 2017 to December 31, 2017 1,074.97 21.39 96.36 January 1, 2018 to April 30, 2018 1,096.36 7.21 103.57 (1) Represents the adjusted issue price at the beginning of the accrual period multiplied by the hypothetical comparable yield for the accrual period.Final Adjusted Issue Price = $1,103.57 per $1,000 principal amount of MLCDs.Upon payment at maturity, you will be required to adjust the income accrued pursuant to the projected paymentschedule, upward or downward, to reflect the difference, if any, between the actual and projected amount of thematurity payment. You generally will treat any such gain as ordinary income and any such loss as ordinaryloss to the extent of previous income inclusions. All prospective investors in the MLCDs should consult theirown tax advisors concerning the taxation of the MLCDs. 12
  13. 13. DISCLOSURE STATEMENT dated January 30, 2013 UNION BANK, N.A. Market-Linked Certificates of DepositUnion Bank, N.A. (the “Bank”) may from time to time offer market-linked certificates of deposit (“MLCDs”) with maturities of at least seven calendar days.The returns on the MLCDs will be linked to one or more Investment Benchmarks, as described below. This Disclosure Statement contains the generalterms and conditions that will apply to the MLCDs. The specific terms and conditions applicable to a particular MLCD offering will be described in greaterdetail in the applicable Disclosure Supplement (“Supplement”). In the event of any inconsistency between the Disclosure Statement and the Supplement,the terms of the Supplement will control.Payments on the MLCDsUnless otherwise specified in the Supplement and unlike traditional certificates of deposit and other debt instruments, the Bank will make a payment onthe maturity date of the MLCDs (the “Indexed Interest Amount”) that is related to changes in (i) the value or values of one or more indices based on theprices of securities, (ii) the exchange rates of one or more specified currencies or currency indices, (iii) the value or values of one or more commodities orcommodity indices, (iv) the price or prices of the shares of one or more exchange traded funds (“ETFs”) based on any of the forgoing or on any othertypes of assets or (v) any other measure of economic or financial performance. With respect to each MLCD, the applicable assets or market measuresare referred to as the “Investment Benchmark.” (For example, in the case of an MLCD linked to the price of shares of an ETF, the Investment Benchmarkwill be the relevant ETF.) The Supplement for the MLCDs will specify the applicable Investment Benchmark and how the Indexed Interest Amount will becalculated. The Indexed Interest Amount may be calculated based upon values observed on one or more dates that are close to the maturity date of theMLCDs, or periodically over the term of the MLCD, and may be subject to a cap. As a result, the payments received on the MLCD may besubstantially less than any change in the value of the Investment Benchmark, and these features may generally negatively affect yourinvestment return. In addition, if the Supplement does not provide for a Minimum Indexed Interest Amount, as defined below, you may receiveno interest payment or return of any kind on your MLCDs, other than the repayment of the Deposit Amount (as defined below). If the MLCD isheld to maturity, the Bank will pay no less than the full Deposit Amount.LiquidityAlthough the Bank or its affiliates may purchase the MLCDs from you in the secondary market, they are not obligated to do so. The Bank and its affiliatesare not obligated to, and do not intend to, make a market for the MLCDs. There is no assurance that a secondary market for the MLCDs will develop or, ifit develops, that it will continue. Consequently, you may not be able to sell your MLCDs readily or at prices that will enable you to realize your desiredyield. Only MLCDs held to maturity or MLCDs that are subject to a permitted early withdrawal in the event of the death or adjudicated incompetence of abeneficial owner of the MLCD will be entitled to the return of the full Deposit Amount. If you sell your MLCDs prior to maturity, you may receive less thanthe full amount of your Deposit Amount. The MLCDs are designed to be held to maturity, and funds that you need prior to maturity should not beinvested in MLCDs.Deposit InsuranceThe MLCDs are deposit obligations of the Bank, the deposits and accounts of which are insured by the Federal Deposit Insurance Corporation (the“FDIC”) up to certain statutory limits and in accordance with certain limitations and restrictions. The “Deposit Insurance” section below contains a generaldescription of the federal deposit insurance limitations and restrictions as applied to the MLCDs. The amount of deposit insurance available to you forMLCDs you purchase will depend on a number of factors, including the capacity in which you hold the MLCDs and whether you hold any other deposits atthe Bank in the same capacity. A depositor purchasing a principal amount of MLCDs that is in excess of the described limits or which, together with otherdeposits that it maintains at the Bank in the same ownership capacity, is in excess of such limits should not rely on the availability of deposit insurancewith respect to such excess. To the extent you maintain deposits with the Bank in excess of the FDIC limits, you are relying solely on the Bank’sability to pay the principal amount of the MLCD. You are responsible for monitoring the total amount of deposits that you hold at the Bank inthe same ownership capacity in order to determine the extent of FDIC insurance coverage available to you on the MLCDs. In addition, the FDIChas taken the position that any Indexed Interest Amount and Minimum Indexed Interest Amount (until such amounts are contractually accruedon the books and records of the Bank) and any secondary market premium paid by a depositor above the principal amount of the MLCDs arenot insured by the FDIC. Therefore, you are relying solely on the Bank’s ability to pay the Indexed Interest Amount and Minimum IndexedInterest Amount, if any, until such time as such amounts are contractually accrued on the books and records of the Bank. See “DepositInsurance” herein.Survivor’s OptionIf so specified in the Supplement, withdrawals will be permitted prior to the maturity date in the event of the death or adjudicated incompetence of thebeneficial owner of the MLCD. This right is called a “Survivor’s Option” and upon the valid election of this right, the Bank will repay 100% of the principalamount of the MLCD; however, the Bank will not pay any Indexed Interest Amount or Minimum Indexed Interest Amount. See “Survivor’s Option” herein.Tax TreatmentMost United States holders of the MLCDs, other than those purchasing the MLCDs through a tax advantaged retirement account (such as an IRA), aresubject to tax rules requiring them to include in their taxable income during each tax year in which the MLCDs are outstanding imputed interestincome on the MLCDs even though interest, if any, may not be paid on the MLCDs until maturity. See “United States Federal Income TaxConsiderations” herein.Risk FactorsIn making an investment decision, investors must rely on their own examination of the Bank and the terms of the offering, including the merits and risksinvolved. You should reach an investment decision only after carefully considering, together with your financial, legal and tax advisors, thesuitability of an investment in an MLCD in light of your financial circumstances. You will be subject to risks, including risks not associatedwith conventional fixed-rate or floating-rate certificates of deposit or debt instruments. See “Risk Factors” herein and “Risks andConsiderations” in the applicable Supplement for more information on the risks associated with the MLCDs.MLCDs Are Obligations of the BankThe MLCDs are obligations solely of the Bank, and are not obligations of and are not guaranteed by UnionBanCal Corporation, UnionBanc InvestmentServices, LLC (“UBIS”) or any other affiliate or subsidiary of the bank. The MLCDs are not, and will not be, registered under the Securities Act of 1933, asamended, and are not required to be so registered. The MLCDs have not been recommended by any federal or state securities commission or regulatoryauthority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Disclosure Statement or anySupplement. Any representation to the contrary is a criminal offense.Offering BrokersThe MLCDs will be made available through UBIS and may be made available through certain other brokers (together, the “Offering Brokers”). UBIS is aregistered broker-dealer, investment advisor, member FINRA/SIPC, and a subsidiary of the Bank.Union Bank, N.A. — Market Linked Certificates of Deposit — Disclosure Statement 1
  14. 14. TABLE OF CONTENTS PageSummary .......................................................................................................................................................................................... 3Risk Factors ..................................................................................................................................................................................... 4General Description of the MLCDs.................................................................................................................................................. 10 Union Bank, N.A.................................................................................................................................................................... 10 Payments on the MLCDs ...................................................................................................................................................... 10 Additions and Withdrawals .................................................................................................................................................... 10 Early Redemption and Early Redemption Penalty ................................................................................................................. 10 Survivor’s Option ................................................................................................................................................................... 11 Information with Respect to the Investment Benchmark ........................................................................................................ 12 Market Disruption Events ...................................................................................................................................................... 12 Discontinuance or Modification of an Investment Benchmark Other than an ETF .................................................................. 13 Anti-dilution Adjustments and Liquidation Events Relating to an ETF; Alternate Calculation .................................................. 13 Minimum Denominations ....................................................................................................................................................... 13 The Calculation Agent ........................................................................................................................................................... 13Fees and Hedging .......................................................................................................................................................................... 14Purchasing an MLCD...................................................................................................................................................................... 14Evidence of the Deposits ................................................................................................................................................................ 14Deposit Insurance ........................................................................................................................................................................... 15 General ................................................................................................................................................................................. 15 Payments Under Adverse Circumstances ............................................................................................................................. 16United States Federal Income Tax Considerations ......................................................................................................................... 18 General ................................................................................................................................................................................. 18 U.S. Holders.......................................................................................................................................................................... 19 MLCDs with Stated Maturities of One Year or Less (“short-term MLCDs”)............................................................................. 19 MLCDs with Stated Maturities of More Than One Year (“long-term MLCDs”) ........................................................................ 19 Additional Medicare Tax ........................................................................................................................................................ 20 Comparison with Conventional Certificates of Deposit........................................................................................................... 20 Non-U.S. Holders .................................................................................................................................................................. 20 Backup Withholding and Reporting ....................................................................................................................................... 21 New U.S. Withholding Legislation.......................................................................................................................................... 21Union Bank, N.A. — Market Linked Certificates of Deposit — Disclosure Statement 2
  15. 15. Summary This Disclosure Statement, along with the applicable Supplement, describes the terms of the MLCDs offered. These documents contain information you should consider when making your investment decision and you should rely solely on the information contained in this Disclosure Statement and the applicable Supplement. To the extent that any of the information in the Supplement is inconsistent with the information contained in this Disclosure Statement, the applicable Supplement will control. Neither the Bank nor UBIS has authorized anyone to provide you with any additional information. If any such information is provided to you, you should not rely on it. The information contained in this Disclosure Statement and any Supplement may not be modified by any oral representation made before or after purchase of an MLCD. You should consider carefully the information contained in “Risk Factors” beginning on the next page. This Disclosure Statement and the applicable Supplement do not constitute an offer or solicitation by anyone in any state or jurisdiction in which such offer or solicitation is not authorized or in which the person making the offer or solicitation is not qualified to do so, or to any person for whom it is unlawful to make such an offer or solicitation. The information contained in this Disclosure Statement and the applicable Supplement may only be accurate as of the dates of such documents. You should not interpret the delivery of this Disclosure Statement or the applicable Supplement or the sale of the MLCDs as an indication that there has been no change in the information set forth herein or therein since those dates. Issuer Union Bank, N.A. (the “Bank”) Calculation Agent Union Bank, N.A. MLCDs Market-linked certificates of deposit, issued by the Bank from time to time and as described herein and in the applicable Supplement. See “General Description of the MLCDs.” The MLCDs will be in the form of a master certificate held through the Depository Trust Company (“DTC”). See “Evidence of the Deposits.” Payments MLCDs are deposit obligations of the Bank. Upon maturity, the bank will return to you the full deposit amount of your MLCDs (the “Deposit Amount”). Unlike traditional certificates of deposit and other debt instruments, the Bank will make a payment on the maturity date of the MLCDs (and such other dates as may be set forth in the applicable Supplement) based on changes in an Investment Benchmark (the “Indexed Interest Amount”). If so specified in the applicable Supplement, the MLCDs may also accrue and provide for periodic payments of interest at a specified rate (the “Periodic Interest Payments”). See “General Description of the MLCDs – Payments on the MLCDs.” Additions and Withdrawals; Generally, additions and withdrawals are not permitted. If so specified in the applicable Early Redemption Supplement, a series of MLCDs may have an early redemption feature, in which case the amount of the payment on the MLCDs will be determined prior to maturity and an early redemption penalty (the “Early Redemption Penalty”) may apply (the “Early Redemption Amount”), and/or a Survivor’s Option, as described below. See “General Description of the MLCDs – Additions and Withdrawals,” “– Early Redemption and Early Redemption Penalty” and “– Survivor’s Option.” Survivor’s Option If so specified in the applicable Supplement, withdrawals will be permitted prior to the maturity date in the event of the death or adjudicated incompetence of the beneficial owner of an MLCD. See “General Description of the MLCDs – Survivor’s Option.” Investment Benchmark The Investment Benchmark and the method for calculating the Indexed Interest Amount will be set forth in the applicable Supplement. See “General Description of the MLCDs – Information with Respect to the Investment Benchmark.” Minimum Denomination Unless otherwise specified in the applicable Supplement, denominations of $1,000 and integral multiples of $1,000 in excess thereof. See “General Description of the MLCDs – Minimum Denominations.” Transfers If you choose to terminate your Offering Broker as nominee, authorized representative, agent or custodian with regard to an MLCD, you may (i) transfer your MLCDs to another broker- dealer or other institution which is a direct or indirect DTC participant (the “Transferee Broker,” which together with the Offering Broker, is collectively referred to herein as “Broker”) or (ii) request that your ownership of the MLCD be evidenced directly on the books of the Bank, subject to applicable law and the Bank’s terms and conditions, including those related to the manner of evidencing MLCD ownership. In the event that your ownership of the MLCD is evidenced directly on the books of the Bank, the term “Broker” as used herein shall include the Bank to the extent applicable.Union Bank, N.A. — Market Linked Certificates of Deposit — Disclosure Statement 3
  16. 16. Risk FactorsYour purchase of an MLCD involves significant risks, including risks not associated with fixed-rate or floating-rate certificates of deposit ordebt instruments. You should not purchase the MLCDs unless you understand and are able to bear the risks associated with the MLCDswhich are included in this Disclosure Statement and any applicable Supplement. You should compare the features of the MLCDs to otheravailable investments before deciding to purchase an MLCD. Due to the uncertainty as to whether the MLCDs will earn an Indexed InterestAmount, the return you receive with respect to an MLCD may be higher or lower than the returns on other deposits or investments availablefrom the Offering Brokers or the Bank or through other investments. You should reach an investment decision only after carefullyconsidering, together with your financial, legal and tax advisors, the suitability of an investment in an MLCD in light of your financialcircumstances.Depositors May Not Be Entitled to Receive any Interest Even if the MLCD Is Held to MaturityUnless the Supplement specifies a Minimum Indexed Interest Amount (as defined below) or Periodic Interest Payments, you will not receiveany other return at maturity if the value of the Investment Benchmark does not change so as to produce an Indexed Interest Amount greaterthan zero. If the Indexed Interest Amount is not greater than zero, at maturity you will receive only the Deposit Amount of your MLCDs plusany Periodic Interest Payments or Minimum Indexed Interest Amount specified in the related Supplement.It is possible you will receive no Indexed Interest Amount, even though the value of the Investment Benchmark on the maturity date isgreater than the value of the Investment Benchmark on the issue date of your MLCDs. For example, if the Indexed Interest Amount iscalculated based on an average of the value of the Investment Benchmark observed at specified intervals during the term of the MLCD, oneor more low values may offset any earlier or later increases, resulting in an Indexed Interest Amount of zero. If your MLCDs are subject toany knock-out event or similar event pursuant to their terms that eliminates any Indexed Interest Amount, your Indexed Interest Amount willbe zero if the Investment Benchmark is at specified values at any time during the term of your MLCDs, even if the value of the InvestmentBenchmark is not at those specified values at other times or at maturity. You must carefully read the applicable Supplement to determinethe circumstances under which your Indexed Interest Amount will be limited, or will be zero.Your Return May Be Less Than the Return You Could Earn on Alternative Investments or on a Direct Investment inthe Investment Benchmark or Any of Its ComponentsYour return on the MLCDs, if any, may be lower than the return you could receive on a conventional certificate of deposit or debt instrumentof comparable maturity and on other alternative investments available. Your return, if any, may not reflect the full opportunity cost to youwhen you take into account factors that affect the time value of money. In part, this is because you have lost the use of the Deposit Amountfor the term of the MLCDs.Further, your return on the MLCDs, if any, may not reflect the return you would realize if you actually owned the Investment Benchmark orany of its components. For example, the payment on the maturity date of an MLCD does not include any dividends paid on any securitiesincluded in an Investment Benchmark that is a securities index or any dividends paid on an ETF that is an Investment Benchmark. Further,the Indexed Interest Amount may be calculated based upon observing the value of the Investment Benchmark over the term of the MLCDs,at one point in time or at intervals prior to maturity, may be based on participating in the performance of the Investment Benchmark at a ratethat is less than 1.00, or may be otherwise capped. If the Investment Benchmark includes any non-U.S. indices or securities, your return onthe MLCDs will not be adjusted to reflect the returns that you would have received had you made a direct investment in such InvestmentBenchmark or its components, and its value increased or decreased due to changes in the applicable currency exchange rates.The Price at Which You May Sell the MLCDs Prior to Maturity May Be Substantially Less Than Your Deposit AmountIn connection with any proposed secondary market sale or early redemption (if applicable) of your MLCDs, the price at which you may sellyour MLCDs or the Early Redemption Amount (if applicable), respectively, will likely differ from the amount that you would receive atmaturity. A variety of factors will influence the sale price or the Early Redemption Amount (if applicable). A change in one factor couldoffset the effect of a change in one of the other factors, such that there may be no determinable net effect on the sale price or the EarlyRedemption Amount (if applicable). An adverse movement in one or more of the factors could result in the sale price or the EarlyRedemption Amount (if applicable) being substantially less than your original Deposit Amount. For example, the effect from an increase inthe value of the Investment Benchmark may be offset by an increase in interest rates on the sale price or the Early Redemption Amount (ifapplicable). Additionally, an Early Redemption Penalty may factor into the Early Redemption Amount (if applicable).Investment Benchmark. Changes in the value of the Investment Benchmark from its initial value on the issue date are anticipated to have asubstantial impact on the price at which you may sell your MLCDs prior to maturity and the Early Redemption Amount (if applicable). Evenif the value of the Investment Benchmark has increased from its initial value, upon any proposed secondary market sale or earlyredemption, you may still receive substantially less than the amount that would be payable at maturity based upon that same value due tothe expectation that the value of the Investment Benchmark will continue to fluctuate until the maturity date.Volatility of the Investment Benchmark. Volatility is the term used to describe the size and frequency of fluctuations in the value of theInvestment Benchmark. If the volatility of the Investment Benchmark increases or decreases, the price at which you may sell your MLCDsprior to maturity and the Early Redemption Amount (if applicable) may be adversely affected.Interest Rates. Changes in interest rates will affect the price at which you may sell your MLCDs prior to maturity and the Early RedemptionAmount (if applicable). Generally, if interest rates increase, the sale price and the Early Redemption Amount (if applicable) may decrease,and if interest rates decrease, the sale price for your MLCDs prior to maturity and the Early Redemption Amount (if applicable) mayincrease. Interest rates may also directly or indirectly impact the value of the Investment Benchmark, which would affect the sale price andthe Early Redemption Amount (if applicable).Union Bank, N.A. — Market Linked Certificates of Deposit — Disclosure Statement 4
  17. 17. Dividend Yield. If the Investment Benchmark is a securities index or an ETF, the price at which you may sell MLCDs prior to maturity andthe and the Early Redemption Amount (if applicable) may also be affected by the dividend yields, if any, on the components of theInvestment Benchmark (such as the securities included in an index or the securities held by an ETF). Because a depositor in the MLCD isnot entitled to the value of dividend payments, an increase in dividend yields may reduce the sale price and the Early Redemption Amount(if applicable), while a decrease in dividend yields may increase the sale price and the Early Redemption Amount (if applicable).Time Remaining to the Applicable Maturity Date. As the time remaining to maturity of MLCDs decreases, the “time premium” associatedwith them will decrease. Before maturity, the price at which you may sell your MLCDs may be above that which would be expected basedon the levels of market interest rates and the value of the applicable Investment Benchmark. This difference will reflect a “time premium”due to expectations concerning the value of the Investment Benchmark during the period before the applicable maturity date. In general, asthe time remaining to maturity decreases, we expect that this “time premium” may decrease, lowering the sale price for your MLCDs and theEarly Redemption Amount (if applicable).Events Affecting or Involving the Investment Benchmark. Economic, financial, regulatory, judicial, political and other developments thataffect the value of the Investment Benchmark or its components, and real or anticipated changes in those factors, also may affect the priceat which you may sell your MLCDs prior to maturity and the Early Redemption Amount (if applicable).Neither You Nor the Bank Has Rights in the Investment Benchmarks or Any of Its ComponentsYour interest in an MLCD does not entitle you to the rights of a holder of the Investment Benchmark or any of its components. As a result: if your Investment Benchmark is linked to a securities index or an ETF, you will not have any rights in the components of the index or the applicable ETF or the securities that it holds, including voting rights, the right to receive interest, dividends or other distributions or any other rights in any of those securities; and if your Investment Benchmark is linked to a commodity, commodity index, currency or futures contract, or commodity ETF, purchasing the MLCDs will not make you a holder of any commodity, currency or futures contract relating to the Investment Benchmark or its underlying components or assets. The MLCDs will be paid in U.S. dollars, and you will have no right to receive delivery of any commodity, currency or futures contract relating to an Investment Benchmark.Limited Liquidity Prior to MaturityWhen you purchase an MLCD, you agree with the Bank to keep your funds on deposit for the term of the MLCD. Unless otherwisespecified in the Supplement, you will not have the right to withdraw any portion of the Deposit Amount prior to the maturity date.Neither the Offering Brokers nor the Bank can assure you that you will be able to sell your MLCDs in the secondary market prior to itsmaturity date. Therefore, you should not rely on any such ability to sell your MLCDs prior to its maturity date for any benefits, includingachieving trading profits, limiting trading or other losses, realizing income or having access to the proceeds. Even if a secondary marketdoes develop, it may not provide significant liquidity, and it is unlikely that the secondary market value of the MLCDs will correlate closelywith the value of the Investment Benchmark. If you sell your MLCDs prior to maturity, you may not receive the full amount of your DepositAmount.The MLCDs will not be listed on any national exchange or quoted on any U.S. automated inter-dealer quotation system or traded in theover-the-counter market.Secondary Market Prices May Be Affected by Fees and Hedging CostsAssuming no change in market conditions or any other relevant factors, the price, if any, at which a party will be willing to purchase MLCDsin secondary market transactions and the Early Redemption Amount (if applicable) likely will be lower, perhaps significantly lower, than theoriginal issue price. This is in part because the original issue price includes, and secondary market prices (if available) and the EarlyRedemption Amount (if applicable) are likely to exclude, the effect of placement fees paid to a Participating Broker, Issuer Program Costs(as defined below) paid to or recognized by the Bank and the anticipated profit to hedge providers included in hedging the Bank’sobligations under the MLCDs. The anticipated cost of hedging the Bank’s obligations will be determined by the Bank or its affiliates with theintent to realize a profit. However, because hedging the Bank’s obligations entails exposure to market forces beyond the Bank’s control orits affiliates’ control, these hedging activities may result in a profit that is more or less than initially anticipated, or may result in a loss.Therefore, assuming no change in market conditions or any other relevant factors, the price, if any, at which the Offering Broker will bewilling to purchase MLCDs from you and the Early Redemption Amount (if applicable) will likely be lower than the original issue price. Inaddition, any such prices may differ from values determined by others’ pricing models as a result of such compensation or other transactioncosts.Insolvency of the Bank May Result in Early Payment of Your MLCDsIf the FDIC is appointed as conservator or receiver for the Bank, the FDIC is authorized to disaffirm or repudiate certain contracts to whichthe Bank is a party, the performance of which is determined to be burdensome, and the disaffirmation or repudiation of which is determinedto promote the orderly administration of the Bank’s affairs. It appears very likely that for this purpose deposit obligations, such as theMLCDs, are “contracts” within the meaning of the foregoing and that the MLCDs could be repudiated by the FDIC in its capacity asconservator or receiver of the Bank. As a result of any such repudiation, a holder of the MLCDs could be required to make a claim againstthe FDIC for the Deposit Amount of the MLCDs and follow the FDIC’s claims procedures, which may result in a delay in receiving payment,or the FDIC as conservator or receiver could also transfer the MLCDs to another insured depository institution, without approval or consentof the holder of the MLCDs. A transferee depository institution would likely be permitted to offer holders of the MLCDs the choice of (i)repayment of the Deposit Amount of the MLCDs or (ii) continuation of the MLCD for the remainder of the term, possibly on less favorableUnion Bank, N.A. — Market Linked Certificates of Deposit — Disclosure Statement 5
  18. 18. terms (including the periodic interest rate, if applicable). If an MLCD is paid off prior to maturity, either by a transferee depository institutionor the FDIC, you may be unable to reinvest the funds at the same anticipated rate of return on the original MLCD. In any case, no claimwould likely be available for any secondary market premium paid by you above the Deposit Amount, any Indexed Interest Amount or otherdamages such as lost profit or opportunity cost.An Investment Linked to the Shares of an ETF Is Different from an Investment Linked to the Related UnderlyingIndex or Other AssetsThe performance of the shares of an ETF may not exactly replicate the performance of the related underlying index or other assets heldby the ETF because, for example, the ETF may not invest in all of the securities or other assets included in the related underlying indexand because the ETF will reflect transaction costs and fees that are not included in the calculation of the value of the related underlyingindex or other assets. An ETF may also hold securities or other assets that are not included in the underlying index or other underlyingasset, or may also use one or more derivative transactions in an effort to track the performance of the underlying index or otherunderlying asset, which in each case may impact its performance. It is also possible that an ETF may not fully replicate theperformance of the related underlying index or underlying assets due to the temporary unavailability of certain securities or assets in thesecondary market or due to other extraordinary circumstances. In addition, because the shares of an ETF are traded on a securitiesexchange and are subject to market supply and investor demand, the price of a share of an ETF may differ from the net asset value pershare of such ETF. For the foregoing reasons, the performance of an ETF may not correlate perfectly with the performance of therelated underlying index or underlying assets, and the return on the MLCDs based on the performance of an ETF and may be worsethan the return on MLCDs or other investments directly linked to the performance of the related underlying index or underlying assets.Investment Benchmark Sponsors Have No Relationship with the MLCDsThe Bank will not be affiliated with any Investment Benchmark Sponsor, including the sponsor of any applicable index and any sponsor orinvestment advisor of an ETF or its underlying index. Similarly, no such party will be involved in any respect with the offering or sale of theMLCDs (except for any licensing arrangements disclosed in the applicable Supplement). The Bank has no ability to control or influence theactions of any such party, including with respect to publicly available information regarding the Investment Benchmark (including anyunderlying index), any changes to an Investment Benchmark, or any decision by an Investment Benchmark Sponsor or any other such partyto discontinue or alter an Investment Benchmark. You will have no rights as a holder of the MLCDs against any such party, even thoughyour MLCDs are linked to the Investment Benchmark.Limited information may be available in the applicable Supplement with respect to the Investment Benchmark and its historical performancebased on publicly available information. Neither the Bank nor the Offering Brokers will independently verify publicly available informationand they will not make any representation that publicly available information about the Investment Benchmark, the Investment BenchmarkSponsor or any other party is accurate or complete. Neither the Bank nor the Offering Brokers will provide to you updated information orprovide information regarding material future events regarding the Investment Benchmark. You should undertake an independent review ofthe Investment Benchmark before making a decision to purchase an MLCD.We Cannot Control Actions by Any ETF or Any of the Companies Whose Securities Are Included in an InvestmentBenchmarkActions by any company whose securities are included in an Investment Benchmark, including any ETF or its investment advisor, mayhave an adverse effect on the value of the applicable securities or the Investment Benchmark, and the amount payable on the MLCDs.Unless otherwise disclosed in the applicable Supplement, although the Bank or its affiliates may from time to time invest in suchcompanies, the Bank will not be affiliated with any company whose security is represented by an Investment Benchmark. Thesecompanies will not be involved in the offering of the MLCDs and will have no obligations with respect to the MLCDs, including anyobligation to take our or your interests into consideration for any reason. These companies will not receive any of the proceeds of theoffering of the MLCDs and will not be responsible for, and will not have participated in, the determination of the timing of, prices for, orquantities of, the MLCDs to be issued. These companies will not be involved with the administration, marketing or trading of theMLCDs and will have no obligations with respect to the amounts to be paid to you under the MLCDs.Changes to the Investment Benchmark May Impact the Amount You Receive Prior to and at MaturityThe Investment Benchmark Sponsor, including the sponsor of any applicable index and any sponsor or investment advisor of an ETF or itsunderlying index or assets, will have the ability to make changes that could adversely affect the value of the Investment Benchmark, theprice at which you may sell your MLCDs prior to maturity, the Early Redemption Amount (if applicable) and the amount of any IndexedInterest Amount. For an Inventment Benchmark that is an index or ETF, such changes could include: additions, deletions or substitutions of the assets comprising any applicable index or ETF; making methodological changes to the calculation of the value of any applicable index or ETF; or suspending or discontinuing calculation or publication of the trading levels or values of any applicable index or ETF.The Historical Performance of the Investment Benchmark Is Not an Indication of the Future Performanceof the Investment BenchmarkThe historical performance of the Investment Benchmark, which is included in the applicable Supplement, should not be taken as anUnion Bank, N.A. — Market Linked Certificates of Deposit — Disclosure Statement 6

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