• Require that investment suitability be determined individually for each investor as the financial instruments described herein may not be suitable for all investors.
• Are CDs of Union Bank, N.A., and are held in the name of Union Bank, as Custodian.
• Are FDIC insured within permissible limits. It is the customer’s responsibility to make sure that all funds held with Union Bank are considered when reviewing for FDIC coverage.
• Are NOT insured, backed, or guaranteed by SIPC or Broker.
• Involve significant risks, including risks not typically associated with fixed-rate or floating-rate CDs or debt instruments such as liquidity and market risks. The payment at maturity may yield a return that is less than that of a traditional certificate of deposit or debt instrument of a comparable maturity.
• Union Bank may offer more than one MLCD at any given time. Other MLCDs may be available with other indices, including but not limited to the S&P 500®, Dow Jones Industrial Average, DJUBS, foreign currency baskets, or various commodity indices.
• May be subject to a cap on returns. Returns may be subject to a cap either on a quarterly basis and/or on the overall return potential at maturity.
• May have provisions that allow Union Bank to call the MLCD prior to maturity, which could result in a lower return on the MLCD.
• Could result in a significant loss of principal if sold or redeemed prior to maturity. Any losses incurred due to the sale or redemption prior to maturity are not FDIC insured. Due to the extremely limited resale market for this product, investors may be unable to sell their MLCD prior to maturity and, should they do so, they may receive more or less than their original investment.
• In taxable accounts, interest is declared annually and taxed as ordinary income, which is based on an estimated yield for the MLCD even though no interest may be paid until maturity. The ordinary income tax rate may be a higher rate than the lower capital gains rate normally paid by investors on longer-term investments. This annual declared interest raises the investor’s cost basis, reducing tax consequences at maturity. Consult your tax advisor for information relating to your individual tax situation.

Prior to purchase, please read the Preliminary Disclosure Supplement and Disclosure Statement carefully as this provides additional important information about Union Bank’s Market-Linked CDs.

©2012Union

Possible Gotchas
1. Early withdrawal penalties: It’s a CD folks. If you take the money before maturity, you may have a penalty. That’s a disadvantage for any CD. Again, do not compare to a stock, mutual, fund, money market account, etc. It’s a CD. You may be interested to know that if you terminate the MLCD prematurely, it’s basically a sale and you may end up making money instead of losing it depending on the value of the underlying stocks or indexes upon which the CD is based. So there’s no disadvantage here really. Anyone knows going in if you terminate a CD prematurely, you may have a penalty. Simple.

2. Bad Tax Rates: It’s a CD folks. I know I keep reminding you. CDs aren’t securities. Obviously there are no long term capital gains. Why is this even a consideration. CDs aren’t retirement vehicles. If you want long term capital gains rates, why even talk about a CD.

3. Ugly Tax Treatment: It says above a quirky thing about this CD is you have to report interest each year as income. It’s a CD folks! That’s the way CDs work. What’s quirky about that. The advantage a MLCD has over a traditional CD is that you get to receive that interest each year without penalty. It’s available now to spend or reinvest. A traditional CD will penalize you for taking that gain out unless you set it up to pay you the interest. And you still have to claim the interest as income. So again, no disadvantage here when you understand it’s a CD folks. That’s how they work. It’s not a security.

4. Possible Upper Limit: How’s is that a disadvantage. It’s a CD! If I have a CD that can return up to 9 percent in any given year (if that’s the cap), why would that be a disadvantage when the best long term traditional CDs are paying 1.25%. Hey, a safe investment with no risk that’s FDIC insured, issued by a bank, that can pay me five times more than a regular CD….why is that a disadvantage. This is safe, guaranteed money. I didn’t put it in the CD to make the big bucks. I didn’t put it in there as a rainy day fund to pay for car repairs if my transmission goes out. That’s what savings and money market accounts are for. It’s money I probably don’t need over the next five or six years, but I don’t want to risk it…and I’d like to make some decent interest on it. It’s simple folks.

5. Dividend Reinvestment: This one really is kind of silly. I don’t mean to be mean here. If you want dividend reinvestment, buy stocks or mutual funds that invest heavily in dividend paying investments. Why would a CD even come to your mind. Let’s see, I’m thinking about investing in something that will pay me dividends because I like those dividends. I want to take them in cash or let them automatically buy more stock for me. Let’s look at CDs and some other things. NO. You wouldn’t even think about CDs would you.

Look folks…if you want to talk about securities, talk about securities and the advantages and disadvantages of different kinds of securities. If you want to talk about CDs you talk about bank instruments like checking accounts, savings accounts, money market accounts, and CDs. You compare CDs to bank instruments. People who looks at MLCDs are CD shoppers. Not securities shoppers. If someone has decided to purchase a CD because they want a CD as part of their overall short term strategy, then MLCDs are an excellent alternative. You then can compare different MLCDs available, and then compare them to other traditional CDs. You don’t compare them to securities. Only people who are extremely adverse to the market or any risk should look at MLCDs as a long term retirement vehicle. Then they can open an IRA and fund them with MLCDs.

Bottom line….CDs are CDs and Securities and Securities. Compare apples to apples.