SAN FRANCISCO - Unionbancal Corp. had promised to clean house on credit quality issues in the fourth quarter, but on Tuesday officials at the banking company warned Wall Street and investors that it is not quite out of the woods yet.

Exposure to two troubled California utilities and the prospect of an economic downturn linked to the state's ongoing energy crisis could dog the San Francisco company, executives said on a conference call. Last month the company, which is mostly owned by Bank of Tokyo-Mitsubishi Ltd., told analysts to expect a $250 million provision for credit losses that would wipe out nearly all fourth-quarter profits. On Monday night it made good on its projections by posting a 94% drop in profits from a year earlier, to $8.4 million. The drop was mostly caused by the increased provisioning, the company said.

Unionbancal's per-share earnings of 4 cents still beat analyst estimates, and its own target, by a penny.

But analysts see bad omens.

"The worst of syndicated problems may be over, but the California problem may just be beginning," said Rosalind Looby, an analyst at Credit Suisse First Boston, who lowered her 2001 earnings estimate for the company by 20 cents on Tuesday, to $3.10. "Ultimately, the fate of Unionbancal is tied up with Northern California."

Two of California's biggest electric utilities, Pacific Gas and Electric Corp. and Southern California Edison Co., say they are in danger of going bankrupt because their inability to raise the price they charge consumers to keep up with the cost of wholesale energy has put them billions of dollars in bank and bond debt.

Philip Flynn, Unionbancal's chief credit officer, told listeners during Tuesday's conference call that it has "a long-standing relationship" with the two utilities. While the company has already increased its loan-loss reserves to cover credit exposure to the utilities, it has not moved the credits into the nonperforming loan category, he said.

Unionbancal has seen no evidence that the utilities are in serious trouble, Mr. Flynn said. "At the moment we are unable to quantify the effect" of the energy problems "on our California-based credit portfolio."

Richard Hartnack, vice chairman, said, "We have conducted more than 1,000 interviews with small-business customers." Few told the company they are worried that the energy crisis is affecting their business, he said.

Exposure to the utilities is not the only trouble the company and its flagship Union Bank of California will try to head off in the next few quarters.

Campbell Chaney, an analyst at Sutro & Co., said his biggest concern about Unionbancal is its $2.3 billion portfolio of nonrelationship syndicated credits. This business line expanded during the economic boom of the late 1990s but has stumbled heavily over the last year and pummeled the company's earnings, he said.

Problems in the portfolio prompted the larger-than-average credit provision and helped push nonperforming assets up 36% from the third quarter, to $408 million.

Despite management's efforts to reduce this portfolio and put in new risk management policies and personnel, credit concerns have overshadowed what many analysts called good margin and revenue performance.

Fourth-quarter net interest income fell 1.3% from the third quarter, but rose 8% from a year earlier, to $399.3 million, because of an increase in average earning assets and a 22-basis-point improvement in the net interest margin.

But "the problem with Union Bank is still their syndicated portfolio," Mr. Chaney said. On the other hand, he said, it was promising that nonperforming assets came in at the low end of the $400 million to $450 million range the company had told investors last month to expect.

Another open question is how long the company will be saddled with writedowns from Unionbancal's auto leasing business, which has been afflicted by lower new-car sales and depressed used-car prices.

Largely because of auto lease residual writedowns, the company's fee income fell 0.7% from a year earlier.

"If our average loss and the industry's average loss on off-lease cars continue to expand, we would have to make adjustments" in future quarters, Mr. Hartnack said. But "it's hard to believe that it would continue to deteriorate" at the rate it has, he said.

Unionbancal's shares shed 18.75 cents, or 0.66%, to close at $28.0625.

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