Union Bank of California Sells Insurance Unit to BB&T

Union Bank of California has fared much better than many larger banks in the face of a souring mortgage market, but that hasn't kept it from taking a more cautious approach. So it's selling its insurance subsidiary, Union Bank Insurance Services, to BB&T Insurance of Raleigh, N.C.

Terms of the deal weren't disclosed, but Union Bank said it would record an $11 million after-tax net gain from the transaction.

The San Francisco Business Times pointed out that Union Bank credit is actually faring relatively well.

The bank's credit quality was another bright spot. The bank charged off as uncollectable $12 million in loans. Non-performing loans stood at 0.23 percent of total loans. In the bank's $14 billion residential mortgage portfolio, only $18 million worth of mortgages were in foreclosure.

The deal was announced on Wednesday, when the bank's parent company UnionBanCal reported earnings that were down from last year. CEO Masaaki Tanaka took a guarded tone in discussing the company's outlook.

"We have faced a tougher economic environment than had been anticipated 90 days ago... In these unpredictable times, it is difficult to determine the future and we have chosen to proceed with a cautious outlook."

Chief operating officer Philip Flynn, meanwhile, suggested that even the bank's careful approach up until now didn't foresee the softness in the market.

"Deterioration in our homebuilder portfolio was more rapid than anticipated and we are beginning to see weakness in related sectors ... Given our current economic outlook we have adopted a guarded outlook for the remainder of the year."