##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the quarterly period ended June 30, 2006.
 OR
 o
    
    Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the transition period from _______________ to _______________.
 Commission File Number: 000-24947
 UCBH HOLDINGS, INC.
  Delaware
    
    94-3072450(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)555 Montgomery Street, San Francisco, California
    
    94111(Address of principal executive offices)
    
    (Zip Code)
 (415) 315-2800
 þ o
  þ o o
 o þ




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##### 



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Table of Contents
 PagePART IItem 1
    
    Financial Statements
    
    
    1Item 2
    
    Managements Discussion and Analysis of  Financial Condition and Results of Operations
    
    
    19Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    47Item 4
    
    Controls and Procedures
    
    
    47PART IIItem 1
    
    Legal Proceedings
    
    
    48Item 1A
    
    Risk Factors
    
    
    48Item 2
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    48Item 3
    
    Defaults Upon Senior Securities
    
    
    48Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    48Item 5
    
    Other Information
    
    
    49Item 6
    
    Exhibits
    
    
    50SIGNATURES
    
    
    53EXHIBIT 10.8EXHIBIT 10.9EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.0




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETSNoninterest bearing cash
    
    $
    89,089
    
    
    $
    101,002Interest bearing cash
    
    
    94,598
    
    
    
    99,070Federal funds sold
    
    
    116
    
    
    
    2,993Cash and cash equivalents
    
    
    183,803
    
    
    
    203,065Investment and mortgage-backed securities available for sale, at fair value
    
    
    1,240,312
    
    
    
    1,117,724Investment and mortgage-backed securities held to maturity, at cost (fair value of
$297,664 and $313,974 at June 30, 2006, and December 31, 2005, respectively)
    
    
    299,266
    
    
    
    308,608Federal Home Loan Bank stock and other equity investments
    
    
    88,962
    
    
    
    75,445Loans held for sale
    
    
    240,162
    
    
    
    156,740Loans held in portfolio
    
    
    5,943,058
    
    
    
    5,838,660Allowance for loan losses
    
    
    (59,035
    )
    
    
    (64,542
    )Loans held in portfolio, net
    
    
    5,884,023
    
    
    
    5,774,118Accrued interest receivable
    
    
    41,305
    
    
    
    37,750Premises and equipment, net
    
    
    97,754
    
    
    
    98,289Goodwill
    
    
    107,455
    
    
    
    106,648Core deposit intangibles, net
    
    
    12,745
    
    
    
    14,981Mortgage servicing rights, net
    
    
    11,466
    
    
    
    10,642Other assets
    
    
    83,840
    
    
    
    61,627Total assets
    
    $
    8,291,093
    
    
    $
    7,965,637LIABILITIES AND STOCKHOLDERS EQUITYNoninterest bearing deposits
    
    $
    568,336
    
    
    $
    558,649Interest bearing deposits
    
    
    5,670,941
    
    
    
    5,705,520Total deposits
    
    
    6,239,277
    
    
    
    6,264,169Securities sold under agreements to repurchase
    
    
    150,000
    
    
    
    Short-term borrowings
    
    
    343,325
    
    
    
    279,425Subordinated debentures
    
    
    150,520
    
    
    
    150,520Accrued interest payable
    
    
    12,180
    
    
    
    12,582Long-term borrowings
    
    
    665,844
    
    
    
    562,033Other liabilities
    
    
    90,198
    
    
    
    93,394Total liabilities
    
    
    7,651,344
    
    
    
    7,362,123Commitments and contingencies (Note 13)Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 180,000,000 shares authorized at June 30, 2006, and
December 31, 2005; 94,479,237 and 94,037,878 shares issued and outstanding at June 30,
2006, and December 31, 2005, respectively
    
    
    945
    
    
    
    940Additional paid-in capital
    
    
    253,072
    
    
    
    247,340Retained earnings
    
    
    418,384
    
    
    
    375,220Accumulated other comprehensive loss
    
    
    (32,652
    )
    
    
    (19,986
    )Total stockholders equity
    
    
    639,749
    
    
    
    603,514Total liabilities and stockholders equity
    
    $
    8,291,093
    
    
    $
    7,965,637
  - 1 -




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Interest and dividend income:Loans
    
    $
    111,636
    
    
    $
    79,235
    
    
    $
    217,174
    
    
    $
    145,860Federal funds sold and deposits with banks
    
    
    1,223
    
    
    
    361
    
    
    
    2,238
    
    
    
    999Investment and mortgage-backed securities:Taxable
    
    
    15,463
    
    
    
    14,625
    
    
    
    29,670
    
    
    
    28,801Nontaxable
    
    
    2,684
    
    
    
    2,652
    
    
    
    5,376
    
    
    
    5,235Total interest and dividend income
    
    
    131,006
    
    
    
    96,873
    
    
    
    254,458
    
    
    
    180,895Interest expense:Deposits
    
    
    49,699
    
    
    
    26,606
    
    
    
    94,095
    
    
    
    48,667Short-term borrowings
    
    
    4,091
    
    
    
    2,653
    
    
    
    7,565
    
    
    
    2,969Subordinated debentures
    
    
    3,035
    
    
    
    2,433
    
    
    
    5,750
    
    
    
    4,747Long-term borrowings
    
    
    8,131
    
    
    
    5,535
    
    
    
    15,418
    
    
    
    9,500Total interest expense
    
    
    64,956
    
    
    
    37,227
    
    
    
    122,828
    
    
    
    65,883Net interest income
    
    
    66,050
    
    
    
    59,646
    
    
    
    131,630
    
    
    
    115,012Provision for loan losses
    
    
    1,249
    
    
    
    1,775
    
    
    
    1,556
    
    
    
    2,965Net interest income after provision for loan losses
    
    
    64,801
    
    
    
    57,871
    
    
    
    130,074
    
    
    
    112,047Noninterest income:Commercial banking fees
    
    
    3,416
    
    
    
    2,604
    
    
    
    7,511
    
    
    
    4,841Service charges on deposits
    
    
    912
    
    
    
    851
    
    
    
    1,652
    
    
    
    1,515Loss on sale of securities, net
    
    
    
    
    
    
    (614
    )
    
    
    (2
    )
    
    
    (5
    )Gain on sale of SBA loans, net
    
    
    1,021
    
    
    
    839
    
    
    
    1,602
    
    
    
    1,923Gain on sale of multifamily and commercial real estate
loans, net
    
    
    4,238
    
    
    
    2,683
    
    
    
    8,149
    
    
    
    6,435Lower of cost or market adjustment on loans held for sale
    
    
    247
    
    
    
    
    
    
    
    150
    
    
    
    Equity loss in other equity investments
    
    
    (50
    )
    
    
    (859
    )
    
    
    (508
    )
    
    
    (1,270
    )Acquisition termination fee
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    Other fees
    
    
    345
    
    
    
    164
    
    
    
    652
    
    
    
    275Total noninterest income
    
    
    10,129
    
    
    
    5,668
    
    
    
    24,206
    
    
    
    13,714Noninterest expense:Personnel
    
    
    20,738
    
    
    
    15,109
    
    
    
    46,472
    
    
    
    29,849Occupancy
    
    
    3,716
    
    
    
    3,262
    
    
    
    7,415
    
    
    
    5,908Data processing
    
    
    3,005
    
    
    
    1,762
    
    
    
    5,327
    
    
    
    3,386Furniture and equipment
    
    
    1,775
    
    
    
    1,567
    
    
    
    3,435
    
    
    
    3,096Professional fees and contracted services
    
    
    2,410
    
    
    
    2,782
    
    
    
    5,795
    
    
    
    5,291Deposit insurance
    
    
    195
    
    
    
    189
    
    
    
    406
    
    
    
    377Communication
    
    
    258
    
    
    
    238
    
    
    
    504
    
    
    
    495Core deposit intangible amortization
    
    
    467
    
    
    
    258
    
    
    
    1,022
    
    
    
    542Loss (gain) on extinguishment of subordinated debentures
and borrowings
    
    
    (365
    )
    
    
    1,196
    
    
    
    (360
    )
    
    
    1,196Other general and administrative
    
    
    4,932
    
    
    
    4,065
    
    
    
    9,863
    
    
    
    7,501Total noninterest expense
    
    
    37,131
    
    
    
    30,428
    
    
    
    79,879
    
    
    
    57,641Income before income tax expense
    
    
    37,799
    
    
    
    33,111
    
    
    
    74,401
    
    
    
    68,120Income tax expense
    
    
    12,393
    
    
    
    7,747
    
    
    
    25,576
    
    
    
    20,950Net income
    
    $
    25,406
    
    
    $
    25,364
    
    
    $
    48,825
    
    
    $
    47,170Earnings per share:Basic
    
    $
    0.27
    
    
    $
    0.28
    
    
    $
    0.52
    
    
    $
    0.52Diluted
    
    $
    0.26
    
    
    $
    0.27
    
    
    $
    0.50
    
    
    $
    0.49Dividends declared per share
    
    $
    0.030
    
    
    $
    0.025
    
    
    $
    0.060
    
    
    $
    0.050
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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income
 Additional
    
    
    
    
    
    
    Accumulated Other
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Stockholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Loss(1)
    
    
    Equity
    
    
    IncomeBalance at December
31, 2004
    
    
    91,131,824
    
    
    $
    456
    
    
    $
    203,432
    
    
    $
    286,622
    
    
    $
    (6,498
    )
    
    $
    484,012Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,170
    
    
    
    
    
    
    
    47,170
    
    
    $
    47,170Other comprehensive
income, net of tax
benefit of $55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    75
    
    
    
    75Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47,245Stock options
exercised, including
related tax benefit
    
    
    614,360
    
    
    
    5
    
    
    
    5,684
    
    
    
    
    
    
    
    
    
    
    
    5,689Cash dividend of $0.050
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,580
    )
    
    
    
    
    
    
    (4,580
    )Stock split
    
    
    
    
    
    
    457
    
    
    
    (457
    )
    
    
    
    
    
    
    
    
    
    
    Balance at June 30, 2005
    
    
    91,746,184
    
    
    $
    918
    
    
    $
    208,659
    
    
    $
    329,212
    
    
    $
    (6,423
    )
    
    $
    532,366Balance at December 31,
2005
    
    
    94,037,878
    
    
    $
    940
    
    
    $
    247,340
    
    
    $
    375,220
    
    
    $
    (19,986
    )
    
    $
    603,514Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,825
    
    
    
    
    
    
    
    48,825
    
    
    $
    48,825Other comprehensive
income, net of tax
benefit of $9,151
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,666
    )
    
    
    (12,666
    )
    
    
    (12,666
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    36,159Stock options
exercised, including
related tax benefit
    
    
    441,359
    
    
    
    5
    
    
    
    4,869
    
    
    
    
    
    
    
    
    
    
    
    4,874APB Opinion No. 25
stock compensation
charge
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12SFAS No. 123(R) stock
compensation charge
    
    
    
    
    
    
    
    
    
    
    851
    
    
    
    
    
    
    
    
    
    
    
    851Cash dividend of $0.060
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,661
    )
    
    
    
    
    
    
    (5,661
    )Balance at June 30, 2006
    
    
    94,479,237
    
    
    $
    945
    
    
    $
    253,072
    
    
    $
    418,384
    
    
    $
    (32,652
    )
    
    $
    639,749
 
 (1)
    
    Accumulated Other Comprehensive Loss arises solely from net unrealized losses on
investment and mortgage-backed securities available for sale, presented net of tax.  - 3 -




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
 Six Months Ended June 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    48,825
    
    
    $
    47,170Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    1,556
    
    
    
    2,965Amortization of net deferred loan fees
    
    
    (4,181
    )
    
    
    (2,946
    )Amortization of net securities premiums and discounts
    
    
    (32
    )
    
    
    (128
    )Federal Home Loan Bank stock dividend
    
    
    (989
    )
    
    
    (530
    )Amortization of intangibles
    
    
    2,341
    
    
    
    1,718Depreciation and amortization of premises and equipment
    
    
    4,363
    
    
    
    4,004Gain on sale of loans held in portfolio, securities, and other assets, net
    
    
    (8,784
    )
    
    
    (65
    )Lower of cost or market adjustment on loans held for sale
    
    
    (150
    )
    
    
    Equity loss in other equity investments
    
    
    368
    
    
    
    1,270Stock compensation expense, net of tax benefit related to nonqualified stock option grants
    
    
    745
    
    
    
    Loss (gain) on extinguishment of subordinated debentures and borrowings
    
    
    (360
    )
    
    
    1,196Other, net
    
    
    280
    
    
    
    110Changes in operating assets and liabilities:Decrease in loans originated for sale
    
    
    24,272
    
    
    
    50,438Increase in accrued interest receivable
    
    
    (3,555
    )
    
    
    (5,286
    )Increase in other assets
    
    
    (12,924
    )
    
    
    (859
    )Increase (decrease) in accrued interest payable
    
    
    (402
    )
    
    
    1,255Increase (decrease) in other liabilities
    
    
    (2,491
    )
    
    
    9,483Net cash provided by operating activities
    
    
    48,882
    
    
    
    109,795Cash flows from investing activities:Payment of acquisition related expenditures
    
    
    (377
    )
    
    
    Investment and mortgage-backed securities, available for sale:Principal payments and maturities
    
    
    59,436
    
    
    
    340,411Purchases
    
    
    (211,003
    )
    
    
    (418,582
    )Sales
    
    
    7,231
    
    
    
    91,380Called
    
    
    1,225
    
    
    
    12,000Investment and mortgage-backed securities, held to maturity:Principal payments and maturities
    
    
    8,078
    
    
    
    13,007Purchases
    
    
    
    
    
    
    (9,893
    )Proceeds from redemption of Federal Home Loan Bank stock
    
    
    5,769
    
    
    
    Purchase of Federal Home Loan Bank stock
    
    
    (19,150
    )
    
    
    (15,783
    )Funding of other equity investments
    
    
    (903
    )
    
    
    (5,163
    )Proceeds from the sale of loans held in portfolio
    
    
    405,521
    
    
    
    30,070Loans held in portfolio originated and purchased, net of principal collections
    
    
    (616,475
    )
    
    
    (842,347
    )Purchases of premises and other equipment
    
    
    (3,859
    )
    
    
    (1,691
    )Capitalization of loan servicing rights
    
    
    (2,261
    )
    
    
    (3,619
    )Other investing activities, net
    
    
    258
    
    
    
    408Net cash used in investing activities
    
    
    (366,510
    )
    
    
    (809,802
    )Cash flows from financing activities:Net increase in demand deposits, NOW, money market and savings accounts
    
    
    45,316
    
    
    
    132,354Net increase (decrease) in time deposits
    
    
    (70,428
    )
    
    
    77,110Net increase in securities sold under agreements to repurchase
    
    
    150,000
    
    
    
    Net increase in short-term borrowings
    
    
    210,128
    
    
    
    437,053Redemption of subordinated debentures
    
    
    
    
    
    
    (30,000
    )Proceeds from long-term borrowings
    
    
    2,753
    
    
    
    Principal payments of long-term borrowings
    
    
    (37,584
    )
    
    
    Proceeds from stock option exercises
    
    
    3,359
    
    
    
    2,599Payment of cash dividend on common stock
    
    
    (5,178
    )
    
    
    (4,109
    )Net cash provided by financing activities
    
    
    298,366
    
    
    
    615,007Net decrease in cash and cash equivalents
    
    
    (19,262
    )
    
    
    (85,000
    )Cash and cash equivalents at beginning of period
    
    
    203,065
    
    
    
    208,364Cash and cash equivalents at end of period
    
    $
    183,803
    
    
    $
    123,364
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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
 1.
    
    Basis of Presentation and Summary of Significant Accounting and Reporting PoliciesBasis of Presentation and Principles of ConsolidationThe unaudited interim consolidated financial statements include the accounts of UCBH Holdings, Inc.
(UCBH), the bank holding company of United Commercial Bank (UCB), and its consolidated
subsidiaries (collectively referred to as the Company, we, us and our). The consolidated
results exclude seven special purpose trusts owned by UCBH, which were created for issuing
guaranteed preferred beneficial interests in UCBHs junior subordinated debentures. In accordance
with Financial Accounting Standards Board (the FASB) Interpretation No. (FIN) 46R,
Consolidation of Variable Interest Entities, an interpretation of ARB No. 51, these special purpose
trusts are excluded from the consolidated results as UCBH is not considered the primary beneficiary
of these trusts. All significant intercompany transactions and balances have been eliminated in
consolidation. In the opinion of management, the unaudited consolidated financial statements
contain all adjustments consisting only of a normal and recurring nature, which are considered
necessary for a fair presentation of the financial condition and results of operations for such
periods. The unaudited consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and related notes included in the Companys annual report
on Form 10-K for the year ended December 31, 2005.The unaudited consolidated financial statements of the Company have been prepared in accordance
with accounting principles generally accepted in the United States of America (GAAP) for interim
financial statements and the instructions to Form 10-Q pursuant to Rule 10-01, Interim Financial
Statements, of Regulation S-X promulgated by the SEC. Accordingly, the unaudited consolidated
financial statements do not include all of the disclosures required by GAAP for complete financial
statements. The December 31, 2005, consolidated balance sheet was derived from audited financial
statements, but does not include all disclosures required by GAAP. Results as of and for the three
and six months ended June 30, 2006, are not necessarily indicative of results that may be expected
for any other interim period or the year as a whole.The results of operations for the three and six months ended June 30, 2006, include the results of
operations of Pacifica Bancorp, Inc., which was acquired on October 31, 2005, and Asian American
Bank & Trust Company, which was acquired on November 28, 2005. On January 27, 2005, UCBH declared
a two-for-one stock split in the form of a stock dividend payable to the shareholders of record as
of March 31, 2005, and distributed the stock dividend on April 12, 2005. Accordingly, the number
of issued and outstanding shares of UCBHs common stock on the consolidated statement of changes in
stockholders equity and comprehensive income at December 31, 2004, has been adjusted to take into
account the stock split.Use of Estimates in Preparation of Financial StatementsThe preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimated results.ReclassificationCertain reclassifications have been made to prior periods consolidated financial statements to
conform to the June 30, 2006, presentation.
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##### Table of Contents



UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 Allowance for Loan LossesThe allowance for loan losses represents our estimate of the losses that are inherent in the loan
portfolio. UCB continuously monitors the quality of its loan portfolio and maintains an allowance
for loan losses sufficient to absorb losses inherent in the portfolio.UCBs methodology for assessing the adequacy of the allowance for loan losses includes the
evaluation of two distinct components: a general allowance applied to loan portfolio categories as
a whole and a specific allowance for loans deemed impaired. Loans that are determined to be
impaired are excluded from the general allowance analysis of the loan portfolio allowance and are
assessed individually.In determining the general allowance, UCB applies loss factors, differentiated by an internal
credit risk rating system, to its major loan portfolio categories (based primarily on loan type).
UCBs risk rating system is applied at the individual loan level within each of the major loan
portfolio categories. The credit quality of the loan portfolio is regularly assessed through on
going review.The loss factors are developed from actual historic losses, and reflect comparative analysis with
peer group loss rates and expected losses. Additionally, loss factors incorporate qualitative
adjustments that reflect an assessment of internal and external influences on credit quality that
have not yet been reflected in the historical loss or risk-rating data. These influences may
include elements such as portfolio credit quality trends, and changes in concentrations, growth, or
credit underwriting. UCBs qualitative adjustments also include an economic surcharge factor to
adjust loss factors in recognition of the impact various macro-economic factors have on portfolio
performance.UCB regularly assesses the loss factors that are applied to loan portfolio categories, and as part
of the assessment concluded during the three months ended June 30, 2006, UCB effected refinements
in the methodologies employed in establishing appropriate loss factors. These refinements focused
primarily on the application of the expected loss approach, which is in turn based on estimated
probabilities of default and loss given default, and on the delineation of the quantitative and
qualitative risk characteristics and macro-economic influences.The quantitative analysis resulted in a revision and lowering of the loss factors on the commercial
real estate, construction and commercial portfolios. The qualitative analysis resulted in a
lowering of the construction portfolio loss factor while resulting in an increase in the
multi-family portfolio loss factor. The quantitative analysis also resulted in establishing a
minimum loss factor for each of the major loan portfolio categories to better reflect minimum
inherent loss in all portfolios including those with limited historic loss experience.The second component of the allowance for loan losses, the specific reserve, applies to loans that
are deemed impaired. A loan is considered impaired when it is probable that UCB will not be able
to collect all amounts due, including interest payments, in accordance with the loans contractual
terms. Unless the loan is collateral-dependent, loan impairment is measured based on the present
value of expected future cash flows that have been discounted at the loans effective interest
rate. If the loan is collateral-dependent, either the observable market price or the current fair
value of the collateral, reduced by estimated disposition costs, is used in place of the discounted
cash flow analysis.UCB also estimates a reserve related to unfunded commitments and other off-balance sheet credit
exposure. In assessing the adequacy of this reserve, UCB uses a similar approach used in the
development of the allowance for loan losses. The reserve for unfunded commitments is included in
other liabilities on the statement of financial position.
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 Stock-Based CompensationEffective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 123(R), Share-Based Payment. Under SFAS No. 123(R), the total fair value of the stock options
awards is expensed ratably over the service period of the employees receiving the awards. In
adopting SFAS No. 123(R), the Company used the modified prospective method of adoption. Under this
adoption method, compensation expense recognized subsequent to adoption will include: (a)
compensation costs for all share-based payments granted prior to, but not yet vested as of January
1, 2006, based on the grant date fair value estimated in accordance with the original provisions of
SFAS No. 123, and (b) compensation costs for all share-based payments granted subsequent to January
1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No.
123(R).Prior to January 1, 2006, the Company accounted for employee stock-based compensation using the
intrinsic value method in accordance with Accounting Principles Board (the APB) Opinion No. 25,
Accounting for Stock Issued to Employees, as allowed by SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure. Under the intrinsic value method, no stock-based employee compensation cost is
recorded, provided the stock options are granted with an exercise price equal to or greater than
the market value of the underlying common stock on the date of grant. No share-based employee
compensation cost has been reflected in the Companys net income prior to the adoption of SFAS No.
123(R).In estimating the fair value of each stock option award on their respective grant dates, we use the
Black-Scholes pricing model. The Black-Scholes pricing model requires us to make assumptions with
regard to the options granted during a reporting period namely, expected life, stock price
volatility, expected dividend yield and risk-free interest rate.The expected life of the options is based on historical data of UCBHs actual experience with the
options it has granted and represents the period of time that the options granted are expected to
be outstanding. This data include employees expected exercise and post-vesting employment
termination behaviors. The expected stock price volatility is estimated using the historical
volatility of UCBHs common stock and other factors. The historical volatility covers a period
that corresponds to the expected life of the options. The expected dividend yield is based on the
estimated annual dividends that we expect UCBH to pay over the expected life of the options as a
percentage of the market value of UCBHs stock as of the grant date. The risk-free interest rate
for the expected life of the options granted is based on the U.S. Treasury yield curve in effect as
of the grant date. See note 10 for further information on share-based compensation.2.
    
    Recent Accounting PronouncementsAccounting for Uncertainty in Income TaxesIn July 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes, an interpretation
of FASB Statement No. 109. FIN 48 clarifies the accounting for income tax uncertainties that have
been recognized in an enterprises financial statements in accordance with SFAS No. 109, Accounting
for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in
a tax return. FIN 48 requires that the Company recognize in the financial statements, the impact
of a tax position, if that position is more likely than not of being sustained on audit, based on
the technical merits of the position. FIN 48 also provides additional guidance on accounting for
tax uncertainties, including derecognition, classification, interest and penalties, accounting in
interim periods, disclosure, and transition. The provisions of FIN 48 are effective for fiscal
years beginning after December 15, 2006, with the
cumulative effect of the change in accounting principle recorded as an adjustment to opening
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 retained earnings. The Company is currently evaluating the impact that adopting FIN 48 will have
on its financial statements.Accounting for Servicing of Financial AssetsIn March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an
amendment of FASB Statement No. 140. SFAS No. 156 permits entities to choose to either measure
servicing rights subsequent to initial evaluation at fair value and report changes in fair value in
earnings or amortize the servicing rights in proportion to and over the estimated net servicing
income or loss and assess the servicing rights for impairment or the need for an increased
obligation. SFAS No. 156 also clarifies when a servicer should separately recognize servicing
assets and liabilities, requires that all separately recognized assets and liabilities be initially
measured at fair value, if practicable, permits a one-time
reclassification of available for sales
securities to trading securities by an entity with recognized servicing rights and requires
additional disclosures for all separately recognized servicing assets and liabilities. SFAS No.
156 is effective as of the beginning of an entitys fiscal year that begins after September 15,
2006. The Company does not expect the adoption of SFAS No. 156 will have a material effect on its
consolidated financial position, results of operations or cash flows.Accounting for Certain Hybrid Financial InstrumentsIn February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments, an amendment of FASB Statements No. 133 and 140. SFAS No. 155 permits fair value
remeasurement for any hybrid financial instrument that contains an embedded derivative that
otherwise would require bifurcation; clarifies which interest-only strips and principal-only strips
are not subject to the requirements of SFAS No. 133; establishes a requirement to evaluate
interests in securitized financial assets to identify interests that are freestanding derivatives
or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation;
clarifies that concentrations of credit risk in the form of subordination are not embedded
derivatives; and amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a beneficial interest other
than another derivative financial instrument. The new standard is effective for all financial
instruments acquired or issued after the beginning of the Companys first fiscal year that begins
after September 15, 2006. The Company does not expect the adoption of SFAS No. 155 will have a
material effect on its consolidated financial position, results of operations or cash flows.3.
    
    Business CombinationsPacifica Bancorp, Inc. and Asian American Bank & Trust CompanyDuring the three months ended June 30, 2006, goodwill and core deposit intangibles were adjusted to
reflect the final valuations of the net assets acquired from Pacifica Bancorp, Inc. and Asian
American Bank & Trust Company.Great Eastern BankOn February 17, 2006, Great Eastern Bank (GEB) notified UCBH that it had decided to accept a
superior third party proposal, as defined in Agreement and Plan of Merger between UCBH and GEB
dated as of October 13, 2005 (the GEB Merger Agreement). UCBH notified GEB on February 21, 2006,
that it elected not to exercise the right of further negotiation as permitted under the GEB Merger
Agreement. This resulted in the termination of the GEB Merger Agreement and the payment of a
breakup fee of $5.0 million from GEB to UCBH, which was received on February 21, 2006.
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 4.
    
    Cash and Cash EquivalentsUCB is required to maintain a percentage of its deposit balances as reserves either in cash or on
deposit at the Federal Reserve Bank of San Francisco. At June 30, 2006, and December 31, 2005, the
reserve requirement was $7.0 million and $13.1 million, respectively.5.
    
    Investment and Mortgage-Backed SecuritiesThe amortized cost and approximate market value of investment and mortgage-backed securities
classified as available for sale and held to maturity at June 30, 2006, and December 31, 2005, were
as follows (dollars in thousands):
 June 30, 2006
    
    
    December 31, 2005Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueInvestment securities available for sale:Trust preferred securities
    
    $
    33,444
    
    
    $
    32,940
    
    
    $
    33,443
    
    
    $
    32,946U.S. Government sponsored enterprises
    
    
    242,819
    
    
    
    235,066
    
    
    
    159,655
    
    
    
    155,185Other
    
    
    10,503
    
    
    
    10,402
    
    
    
    11,012
    
    
    
    10,911Total investment securities available for sale
    
    
    286,766
    
    
    
    278,408
    
    
    
    204,110
    
    
    
    199,042Mortgage-backed securities available for sale:FNMA
    
    
    381,104
    
    
    
    362,975
    
    
    
    355,135
    
    
    
    344,190GNMA
    
    
    85,048
    
    
    
    79,520
    
    
    
    88,184
    
    
    
    85,033FHLMC
    
    
    344,200
    
    
    
    327,857
    
    
    
    302,540
    
    
    
    292,316Other
    
    
    199,521
    
    
    
    191,552
    
    
    
    202,264
    
    
    
    197,143Total mortgage-backed securities available for sale
    
    
    1,009,873
    
    
    
    961,904
    
    
    
    948,123
    
    
    
    918,682Total investment and mortgage-backed securities
available for sale
    
    
    1,296,639
    
    
    
    1,240,312
    
    
    
    1,152,233
    
    
    
    1,117,724Investment securities held to maturity:Municipals
    
    
    224,389
    
    
    
    226,970
    
    
    
    225,573
    
    
    
    232,279Mortgage-backed securities held to maturity:FNMA
    
    
    4,565
    
    
    
    4,277
    
    
    
    5,112
    
    
    
    4,923GNMA
    
    
    69,656
    
    
    
    65,802
    
    
    
    77,261
    
    
    
    76,133FHLMC
    
    
    656
    
    
    
    615
    
    
    
    662
    
    
    
    639Total mortgage-backed securities held to maturity
    
    
    74,877
    
    
    
    70,694
    
    
    
    83,035
    
    
    
    81,695Total investment and mortgage-backed securities
held to maturity
    
    
    299,266
    
    
    
    297,664
    
    
    
    308,608
    
    
    
    313,974Total investment and mortgage-backed securities
    
    $
    1,595,905
    
    
    $
    1,537,976
    
    
    $
    1,460,841
    
    
    $
    1,431,698
 As of June 30, 2006, the net unrealized loss on
securities was $57.9 million. The net
unrealized loss on securities that are available for sale was $56.3 million. Net of tax benefit of
$23.6 million, the unrealized $32.7 million loss is included in other comprehensive loss as a
reduction to stockholders equity. The $1.6 million net loss between the carrying value and market
value of securities that are held to maturity has not been recognized in the consolidated financial
statements for the three and six months ended June 30, 2006. Additionally, certain securities that
UCB holds have unrealized losses that extend for periods in excess of twelve months. However,
since the unrealized losses are
attributable to movement in market interest rates and UCB has the intent and ability to hold these
securities until recovery of such unrealized loss, UCB has concluded that the impairment on these
securities is temporary.
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##### Table of Contents



UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 As of December 31, 2005, the net unrealized loss on securities was $29.1 million. The net
unrealized loss on securities that are available for sale was $34.5 million. Net of tax benefit of
$14.5 million, the unrealized $20.0 million loss is included in other comprehensive income as a
reduction to stockholders equity. The $5.4 million net gain between the carrying value and market
value of securities that are held to maturity has not been recognized in the financial statements
for the year ended December 31, 2005.6.
    
    Loans Held for SaleThe components of loans held for sale as of June 30, 2006, and December 31, 2005, were as follows
(dollars in thousands):
 June 30,
    
    
    December 31,2006
    
    
    2005Commercial:Secured by real estate  nonresidential
    
    $
    237,397
    
    
    $
    154,087Business
    
    
    1,874
    
    
    
    2,653Total commercial loans
    
    
    239,271
    
    
    
    156,740Consumer:Residential mortgage (one-to-four family)
    
    
    891
    
    
    
    Loans held for sale (1)
    
    $
    240,162
    
    
    $
    156,740
 
 (1)
    
    Amounts include net unamortized deferred loan fees of $438,000
and $372,000 at June 30, 2006, and December 31, 2005, respectively. During the six months ended June 30, 2006, UCB transferred $379.7 million of loans from held
in portfolio to held for sale and $62.1 million of loans from held for sale to held in portfolio.
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 7.
    
    Loans Held in Portfolio and Allowance for Loan LossesThe components of loans held in portfolio as of June 30, 2006, and December 31, 2005, were as
follows (dollars in thousands):
 June 30,
    
    
    December 31,2006
    
    
    2005Commercial:Secured by real estate  nonresidential
    
    $
    1,963,087
    
    
    $
    2,307,381Secured by real estate  multifamily
    
    
    1,475,440
    
    
    
    1,506,848Construction
    
    
    709,222
    
    
    
    494,841Business
    
    
    1,126,926
    
    
    
    863,935Total commercial loans
    
    
    5,274,675
    
    
    
    5,173,005Consumer:Residential mortgage (one-to-four family)
    
    
    614,180
    
    
    
    613,988Other
    
    
    54,203
    
    
    
    51,667Total consumer loans
    
    
    668,383
    
    
    
    665,655Loans held in portfolio (1)
    
    
    5,943,058
    
    
    
    5,838,660Allowance for loan losses
    
    
    (59,035
    )
    
    
    (64,542
    )Loans held in portfolio, net
    
    $
    5,884,023
    
    
    $
    5,774,118
 
 (1)
    
    Amounts include net unamortized deferred loan fees of $7.7
million and $7.4 million at June 30, 2006, and December 31, 2005,
respectively. The components of loans held in portfolio by interest rate type as of June 30, 2006, and
December 31, 2005, were as follows (dollars in thousands):
 June 30,
    
    
    December 31,2006
    
    
    2005Adjustable-rate loans
    
    $
    2,963,528
    
    
    $
    2,951,945Intermediate fixed-rated loans
    
    
    1,615,804
    
    
    
    1,711,915Fixed-rate loans
    
    
    1,371,387
    
    
    
    1,182,198Loans held in portfolio (1)
    
    $
    5,950,719
    
    
    $
    5,846,058
 
 (1)
    
    Amounts exclude net unamortized deferred loan fees of $7.7
million and $7.4 million at June 30, 2006, and December 31, 2005,
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 The activity in the allowance for loan losses and allowance for losses related to unfunded
commitments for the three and six months ended June 30, 2006 and 2005, was as follows (dollars in
thousands):
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Balance at beginning of period :Allowance for loan losses
    
    $
    61,806
    
    
    $
    57,547
    
    
    $
    64,542
    
    
    $
    56,472Allowance for losses  unfunded commitments
    
    
    3,713
    
    
    
    3,948
    
    
    
    3,402
    
    
    
    3,940Total allowance for losses at beginning of period
    
    
    65,519
    
    
    
    61,495
    
    
    
    67,944
    
    
    
    60,412Provision for losses
    
    
    1,249
    
    
    
    1,775
    
    
    
    1,556
    
    
    
    2,965Loans charged off
    
    
    (2,630
    )
    
    
    (3
    )
    
    
    (5,483
    )
    
    
    (137
    )Recoveries of loans previously charged off
    
    
    121
    
    
    
    48
    
    
    
    242
    
    
    
    75Total allowance for losses at end of period
    
    $
    64,259
    
    
    $
    63,315
    
    
    $
    64,259
    
    
    $
    63,315Allowance for loan losses
    
    $
    59,035
    
    
    $
    58,508
    
    
    $
    59,035
    
    
    $
    58,508Allowance for losses  unfunded commitments
    
    
    5,224
    
    
    
    4,807
    
    
    
    5,224
    
    
    
    4,807Total allowance for losses at end of period
    
    $
    64,259
    
    
    $
    63,315
    
    
    $
    64,259
    
    
    $
    63,315
 8.
    
    BorrowingsSecurities Sold Under Agreements to RepurchaseInformation regarding outstanding securities sold under agreements to repurchase (the Repurchase
Agreements) as of and for the six months ended June 30, 2006, was as follows (dollars in
thousands):
 Average balance outstanding
    
    $
    44,751Maximum amount outstanding at any month end period
    
    
    150,000Balance outstanding at end of period
    
    
    150,000Weighted average interest rate during the period
    
    
    4.12
    %Weighted average interest rate at end of period
    
    
    4.14
    %Weighted average remaining term to maturity at end of
period (in years)
    
    
    7.1
 UCB entered into three Repurchase Agreements totaling $150.0 million, which mature between May 11,
2011, and March 27, 2016. Under the terms of the Repurchase Agreement, payments are due quarterly.
The interest rates for the respective first years of the Repurchase Agreements ranged from a
3-month London Interbank Offered Rate (LIBOR) less 82 basis points to a 3-month LIBOR less 132
basis points, which adjust quarterly. Thereafter the interest rates are fixed for the remainder of
the term with interest rates ranging from 4.75% to 5.00%. The initial interest rates ranged from
3.99% to 4.14%. The current interest rates at June 30, 2006, ranged from 3.99% to 4.40%.
Additionally, the lender has the right to terminate the applicable Repurchase Agreement either at
the first anniversary date of the Repurchase Agreement or at the first anniversary date and
quarterly thereafter. The underlying collateral pledged for the repurchase agreements consists of
Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC)
mortgage-backed securities and Federal Home Loan Bank investment securities with a fair value of
$169.1 million as of June 30, 2006. The collateral is held by a custodian and maintained under
UCBs control. At June 30, 2006, the securities sold under agreement to repurchase mature between
2010 to 2035.
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 Long-Term and Short-Term BorrowingsUCB has certain loan sale transactions recorded as secured borrowings as of June 30, 2006, and
December 31, 2005, since these transactions did not qualify for sales treatment under SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. The
secured borrowings amounted to $2.8 million at June 30, 2006, and $19.1 million at December 31,
2005.9.
    
    Earnings Per ShareThe reconciliation of the numerators and denominators of basic and diluted earnings per share for
the three and six months ended June 30, 2006 and 2005, is as follows (dollars in thousands, except
shares and per share amounts):
 Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    AmountThree Months Ended June 30, 2006
    
    
    Three Months Ended June 30, 2005Net income  basic
    
    $
    25,406
    
    
    
    94,429,086
    
    
    $
    0.27
    
    
    $
    25,364
    
    
    
    91,624,156
    
    
    $
    0.28Effect of stock options
    
    
    
    
    
    
    3,619,680
    
    
    
    
    
    
    
    
    
    
    
    3,597,036Net income  diluted
    
    $
    25,406
    
    
    
    98,048,766
    
    
    $
    0.26
    
    
    $
    25,364
    
    
    
    95,221,192
    
    
    $
    0.27Six Months Ended June 30, 2006
    
    Six Months Ended June 30, 2005Net income  basic
    
    $
    48,825
    
    
    
    94,272,826
    
    
    $
    0.52
    
    
    $
    47,170
    
    
    
    91,427,204
    
    
    $
    0.52Effect of stock options
    
    
    
    
    
    
    3,699,307
    
    
    
    
    
    
    
    
    
    
    
    4,062,664Net income  diluted
    
    $
    48,825
    
    
    
    97,972,133
    
    
    $
    0.50
    
    
    $
    47,170
    
    
    
    95,489,868
    
    
    $
    0.49
 The antidilutive outstanding stock options of UCBH common stock that were excluded from the
computation of diluted earnings per share for the three months ended June 30, 2006 and 2005, were
6,618,712 shares and 5,952,507 shares, respectively, and for the six months ended June 30, 2006 and
2005, were 6,618,712 shares and 2,784,800 shares, respectively. The stock options of UCBH common
stock are considered antidilutive if assumed proceeds per share exceed the average market price of
UCBHs common stock during the relevant periods. Assumed proceeds include proceeds from the
exercise of stock options of UCBH common stock, as well as unearned compensation and certain
deferred tax benefits related to stock options.10.
    
    Employee Benefit PlansStock Option PlanOn May 18, 2006, UCBH adopted the UCBH Holdings, Inc. 2006 Equity Incentive Plan (the Plan),
which was formerly known as the UCBH Holdings, Inc. 1998 Stock Option Plan, as amended. The Plan
was approved by its shareholders and provides for the granting of stock-based compensation awards,
including options, to eligible officers, employees and directors of the Company. Stock option
awards are approved by the Board of Directors and are granted at the fair market value of the
Companys common stock on the date of the grant. The options vest over a period determined at the
time the options are granted, generally three years of continuous service, and have a maximum term
of ten years. Certain options awards provide for accelerated vesting if there is a change in
control, as defined in the Plan. As of June 30, 2006, the Company had 989,573 shares of common
stock reserved for the issuance of options under the Plan.Prior to January 1, 2006, the Company accounted for employee stock-based compensation using the
intrinsic value method in accordance with APB Opinion No. 25, Accounting for Stock Issued to
Employees, as allowed by SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS
No. 148, Accounting for Stock-Based
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 Compensation  Transition and Disclosure. Under the intrinsic
value method, no stock-based employee compensation cost is recorded, provided the stock options are
granted with an exercise price equal to or greater than the market value of the underlying common
stock on the date of grant.Effective January 1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payment.SFAS No.
123(R) eliminates the ability for companies to account for share-based compensation transactions
using the intrinsic value method and requires that companies measure and recognize compensation
expense for all share-based payments at fair value. Under SFAS No. 123(R), the total fair value of
the stock options awards is expensed ratably over the service period of the employees receiving the
awards. In adopting SFAS No. 123(R), the Company used the modified prospective method of adoption.
Under this adoption method, compensation expense recognized subsequent to adoption will include:
(a) compensation costs for all share-based payments granted prior to, but not yet vested as of
January 1, 2006, based on the grant date fair value estimated in accordance with the original
provisions of SFAS No. 123, and (b) compensation costs for all share-based payments granted
subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the
provisions of SFAS No. 123(R). No share-based employee compensation cost has been reflected in the
Companys net income prior to the adoption of SFAS No. 123(R) and results for prior periods have
not been restated.The adoption of SFAS No. 123(R) reduced income before income tax expense for the three and six
months ended June 30, 2006, by approximately $546,000 and $851,000, respectively, and reduced net
income for the same periods by approximately $466,000 and $733,000, respectively. Basic and
diluted earnings per common share for the three and six months ended June 30, 2006, were reduced by
less than $0.01 as a result of the amounts expensed. In addition, as of June 30, 2006, total
unrecognized compensation cost related to nonvested stock option awards was approximately $6.6
million and the related weighted-average period over which it is expected to be recognized is
approximately 2.64 years. Further, for the three and six months ended June 30, 2006, the total
income tax benefit recognized in the statement of operations for share-based compensation
arrangements was $80,000 and $118,000, respectively.Prior to the adoption of SFAS No. 123(R), the Company presented all tax benefits for deductions
resulting from the exercise of stock options as operating cash flows in the consolidated statements
of cash flows. SFAS No. 123(R) requires that the cash flows from the tax benefits resulting from
tax deductions in excess of the compensation cost recognized for those options (excess tax
benefits) be classified as financing cash flows. However, for the three and six months ended June
30, 2006, there were no such excess tax benefits.In estimating the fair value of each stock option award on their respective grant dates, we use the
Black-Scholes pricing model. The following are the assumptions that were incorporated in the model
for the three and six months ended June 30, 2006 and 2005:
 Three Months Ended June 30,
    
    Six Months Ended June 30,2006
    
    2005
    
    2006
    
    2005Dividend yield
    
    
    0.60
    %
    
    
    0.60
    %
    
    
    0.63
    %
    
    
    0.58
    %Volatility
    
    
    29.72
    %
    
    
    42.65
    %
    
    
    29.90
    %
    
    
    32.36
    %Risk-free interest rate
    
    
    5.03
    %
    
    
    4.10
    %
    
    
    4.70
    %
    
    
    4.13
    %Expected lives (years)
    
    
    7.71
    
    
    
    7.48
    
    
    
    7.58
    
    
    
    7.54
 The expected life of the options is based on historical data of UCBHs actual experience with the
options it has granted and represents the period of time that the options granted are expected to
be outstanding. This data include employees expected exercise and post-vesting employment
termination behaviors. The expected stock price
volatility is estimated using the historical volatility of UCBHs common stock and other factors.
The historical volatility covers a period that corresponds to the expected life of the options.
The expected dividend yield is based on the estimated annual dividends that we expect UCBH to pay
over the expected life of the options as a percentage
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UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 of the market value of UCBHs stock as of the
grant date. The risk-free interest rate for the expected life of the options granted is based on
the U.S. Treasury yield curve in effect as of the grant date.The following is a summary of the stock option activity for the three and six months ended June 30,
2006 (dollars in thousands, except weighted average exercise price):
 Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedWeighted
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    Aggregate
    
    
    
    
    
    
    Average
    
    
    Remaining
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    Intrinsic
    
    
    Number of
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    Value
    
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueThree Months Ended June 30, 2006
    
    
    Six Months Ended June 30, 2006Options
outstanding,
beginning of period
    
    
    14,821,177
    
    
    $
    12.52
    
    
    
    
    
    
    
    
    
    
    
    14,436,020
    
    
    $
    12.23Granted
    
    
    314,000
    
    
    
    18.77
    
    
    
    
    
    
    
    
    
    
    
    916,000
    
    
    
    18.11Exercised
    
    
    (241,550
    )
    
    
    7.84
    
    
    
    
    
    
    
    
    
    
    
    (441,359
    )
    
    
    7.61Forfeited
    
    
    (29,500
    )
    
    
    17.65
    
    
    
    
    
    
    
    
    
    
    
    (46,000
    )
    
    
    17.66Expired
    
    
    (5,803
    )
    
    
    18.55
    
    
    
    
    
    
    
    
    
    
    
    (6,337
    )
    
    
    18.40Options
outstanding, end of
period
    
    
    14,858,324
    
    
    $
    12.71
    
    
    
    6.31
    
    
    $
    56,860
    
    
    
    14,858,324
    
    
    $
    12.71
    
    
    
    6.31
    
    
    $
    56,860Shares exercisable
end of period
    
    
    13,836,324
    
    
    $
    12.32
    
    
    
    6.07
    
    
    $
    58,406
    
    
    
    13,836,324
    
    
    $
    12.32
    
    
    
    6.07
    
    
    $
    58,406
 The weighted-average grant date fair value of options granted was $7.86 and $8.51 during the
three months ended June 30, 2006 and 2005, respectively, and $7.37 and $7.54, during the six months
ended June 30, 2006 and 2005, respectively. The total intrinsic value of options exercised was
$2.7 million and $3.7 million during the three months ended June 30, 2006 and 2005, respectively,
and $4.8 million and $8.9 million during the six months ended June 30, 2006 and 2005, respectively.
The total fair value of options that vested was $6.9 million and $8.4 million during the three and
six months ended June 30, 2005, respectively. No options vested during the three and six months
ended June 30, 2006.The range of exercise prices for options outstanding at June 30, 2006, was as follows:
 Weighted-
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    Average
    
    
    
    
    
    
    AverageOptions
    
    
    Exercise
    
    
    Remaining
    
    
    Options
    
    
    ExerciseExercise Price
    
    Outstanding
    
    
    Price
    
    
    Life
    
    
    Exercisable
    
    
    Price$1.88-$2.25
    
    
    1,497,566
    
    
    $
    1.88
    
    
    
    2.49
    
    
    
    1,497,566
    
    
    $
    1.88$2.26-$4.51
    
    
    163,956
    
    
    
    2.93
    
    
    
    3.71
    
    
    
    163,956
    
    
    
    2.93$4.52-$6.77
    
    
    3,921,392
    
    
    
    6.15
    
    
    
    4.80
    
    
    
    3,921,392
    
    
    
    6.15$6.78-$9.03
    
    
    273,412
    
    
    
    7.21
    
    
    
    5.40
    
    
    
    273,412
    
    
    
    7.21$9.04-$11.29
    
    
    687,933
    
    
    
    10.01
    
    
    
    5.47
    
    
    
    687,933
    
    
    
    10.01$11.30-$13.55
    
    
    325,355
    
    
    
    12.38
    
    
    
    6.57
    
    
    
    325,355
    
    
    
    12.38$13.56-$15.81
    
    
    404,164
    
    
    
    14.82
    
    
    
    7.12
    
    
    
    404,164
    
    
    
    14.82$15.82-$18.07
    
    
    1,361,334
    
    
    
    17.33
    
    
    
    8.96
    
    
    
    631,334
    
    
    
    16.96$18.08-$20.33
    
    
    5,483,412
    
    
    
    18.84
    
    
    
    7.88
    
    
    
    5,191,412
    
    
    
    18.82$20.34-$22.59
    
    
    739,800
    
    
    
    21.25
    
    
    
    6.70
    
    
    
    739,800
    
    
    
    21.25Total/Average
    
    
    14,858,324
    
    
    $
    12.71
    
    
    
    6.31
    
    
    
    13,836,324
    
    
    $
    12.32
 The following table sets forth the effect on net income and net income per common share as if the
Company had applied the fair value recognition provisions of SFAS No. 123 to all outstanding stock
option awards for the three
 - 15 -




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##### Table of Contents



UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 and six months ended June 30, 2005, prior to the Companys adoption of
SFAS No. 123(R) (amounts in thousands, except per share amounts):
 Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2005
    
    
    June 30, 2005Net income, as reported
    
    $
    25,364
    
    
    $
    47,170Deduct: Total stock-based employee
compensation expense determined
under fair value based method of all
awards, net of related tax effects
    
    
    (2,251
    )
    
    
    (4,413
    )Net income, pro forma
    
    $
    23,113
    
    
    $
    42,757Basic earnings per share:As reported
    
    $
    0.28
    
    
    $
    0.52Pro forma
    
    $
    0.25
    
    
    $
    0.47Diluted earnings per share:As reported
    
    $
    0.27
    
    
    $
    0.49Pro forma
    
    $
    0.24
    
    
    $
    0.45
 During the fourth quarter of 2005, UCBHs Board of Directors approved the accelerated vesting of
all outstanding unvested stock options awarded to employees, officers and directors that had been
granted on or before October 26, 2005, under its stock option plan. The decision to accelerate the
vesting was made primarily to reduce the impact of recording noncash compensation expense upon the
adoption of SFAS No. 123(R). Stock options covering approximately 5.1 million shares of UCBHs
common stock were affected by this action, including approximately 1.9 million shares that were
held by the Companys executive officers and directors. The number of shares, exercise prices and
all of the other relevant terms and conditions applicable to the accelerated options remained
unchanged. By accelerating the vesting of the options, the Company estimated that approximately
$16.4 million of future compensation expense, net of taxes, has been eliminated.11.
    
    Related Party TransactionsSeveral members of the Board of Directors and executive officers of the Company have deposits with
UCB that are made in the ordinary course of business with the same terms and conditions, including
interest rates, as those prevailing at the same time for comparable transactions with other
customers. The total deposits for these related parties were $6.3 million and $7.2 million at June
30, 2006, and December 31, 2005, respectively. Additionally, UCB has adopted a policy that
prohibits loans or extensions of credit to Directors and affiliated persons of the Company, and
their related interests.
 - 16 -




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##### Table of Contents



UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 12.
    
    Derivative Financial Instruments and Financial Instruments with Off-Balance-Sheet RiskThe contractual or notional amounts of derivative financial instruments and financial instruments
with off-balance-sheet risk as of June 30, 2006, and December 31, 2005, were as follows (dollars in
thousands):
 June 30,
    
    December 31,2006
    
    2005Financial instruments whose contract amounts represent credit risk:Commitments to extend credit:Consumer (including residential mortgage)
    
    $
    82,062
    
    
    $
    88,407Commercial (excluding construction)
    
    
    829,868
    
    
    
    672,662Construction
    
    
    669,200
    
    
    
    539,955Letters of credit
    
    
    121,346
    
    
    
    90,595Foreign exchange contracts receivable
    
    
    (372,966
    )
    
    
    (217,827
    )Foreign exchange contracts payable
    
    
    223,662
    
    
    
    216,892Put options to buy
    
    
    9,468
    
    
    
    11,269Put options to sell
    
    
    (9,472
    )
    
    
    (11,269
    )Unfunded CRA investment commitments
    
    
    4,469
    
    
    
    4,760
 13. Contingent Liabilities
  14. Supplemental Cash Flow Information
  2006
    
    2005Cash paid during the period for:Interest
    
    $
    123,230
    
    
    $
    64,627Income taxes
    
    
    33,260
    
    
    
    17,159Noncash investing and financing activities:Stock warrants acquired with issuance of commercial loans
    
    $
    (129
    )
    
    $
    Income tax benefit from stock options exercised
    
    
    1,515
    
    
    
    3,090Transfer of loans from held for sale to held in portfolio
    
    
    (62,095
    )
    
    
    Transfer of loans to held for sale from held in portfolio
    
    
    379,748
    
    
    
    
 15.
    
    Segment InformationThe Company designates the internal organization that is used by management for making operating
decisions and assessing performance as the source of its reportable segments. The Company has
determined that its reportable segments are those that are based on the Companys method of
internal reporting. The Company has determined that it has two reportable segments, Domestic
Banking and Other. Other segment consists of the Companys Hong Kong operations and UCB
Investment Services, Inc. The UCBH Holdings, Inc. column
in the following table consists of UCBH, which reflects the holding company activities. The intersegment column consists
of the UCBH and UCB elimination units and reflects the elimination of intersegment transactions.
 - 17 -




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##### Table of Contents



UCBH
HOLDINGS, INC. AND SUBSIDIARIES
 Notes to Consolidated Financial
Statements - Continued
 (unaudited)
 The following is segment information for the three and six months ended June 30, 2006 and 2005
(dollars in thousands):
 UCBHDomestic
    
    
    
    
    
    Total
    
    Holdings,Banking
    
    Other
    
    Segments
    
    Inc.
    
    Intersegment
    
    ConsolidatedThree months ended June 30, 2006:Total interest and dividend income
    
    $
    127,084
    
    
    $
    6,244
    
    
    $
    133,328
    
    
    $
    
    
    
    $
    (2,322
    )
    
    $
    131,006Net interest income (expense)
    
    
    67,341
    
    
    
    1,769
    
    
    
    69,110
    
    
    
    (3,060
    )
    
    
    
    
    
    
    66,050Net income (loss)
    
    
    28,975
    
    
    
    (407
    )
    
    
    28,568
    
    
    
    25,409
    
    
    
    (28,571
    )
    
    
    25,406Three months ended June 30, 2005:Total interest and dividend income
    
    $
    96,124
    
    
    $
    1,246
    
    
    $
    97,370
    
    
    $
    
    
    
    $
    (497
    )
    
    $
    96,873Net interest income (expense)
    
    
    60,893
    
    
    
    1,192
    
    
    
    62,085
    
    
    
    (2,439
    )
    
    
    
    
    
    
    59,646Net income (loss)
    
    
    29,661
    
    
    
    (611
    )
    
    
    29,050
    
    
    
    25,364
    
    
    
    (29,050
    )
    
    
    25,364Six months ended June 30, 2006:Total interest and dividend income
    
    $
    247,582
    
    
    $
    10,694
    
    
    $
    258,276
    
    
    $
    
    
    
    $
    (3,818
    )
    
    $
    254,458Net interest income (expense)
    
    
    134,371
    
    
    
    3,051
    
    
    
    137,422
    
    
    
    (5,792
    )
    
    
    
    
    
    
    131,630Net income (loss)
    
    
    55,106
    
    
    
    (1,893
    )
    
    
    53,213
    
    
    
    48,825
    
    
    
    (53,213
    )
    
    
    48,825Six months ended June 30, 2005:Total interest and dividend income
    
    $
    179,394
    
    
    $
    2,431
    
    
    $
    181,825
    
    
    $
    
    
    
    $
    (930
    )
    
    $
    180,895Net interest income (expense)
    
    
    117,538
    
    
    
    2,232
    
    
    
    119,770
    
    
    
    (4,758
    )
    
    
    
    
    
    
    115,012Net income (loss)
    
    
    55,262
    
    
    
    (1,084
    )
    
    
    54,178
    
    
    
    47,170
    
    
    
    (54,178
    )
    
    
    47,170
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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 FORWARD LOOKING STATEMENTS
 This document, including information included or incorporated by reference in this document,
contains certain forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future
events and include, among others:
 
    
    statements with respect to UCBH Holdings, Inc. and its
consolidated subsidiaries (collectively the Company) beliefs,
plans, objectives, goals, guidelines, expectations, anticipations,
and future financial condition, results of operations and
performance;
    
    statements preceded or identified by words, such as expects,
anticipates, intends, plans, believes, seeks,
estimates, will, should, could, projects, may, or
words of similar import.
 These forward-looking statements are based upon managements current beliefs and expectations and
are not guarantees of future performance, nor should they be relied upon as representing
managements views as of any subsequent date. These forward-looking statements are also inherently
subject to significant business, economic and competitive uncertainties, risks and contingencies,
many of which are difficult to predict and generally beyond managements control. In addition,
these forward-looking statements are subject to assumptions with respect to future business
strategies and decisions that are subject to change and actual results, performance or achievements
may be materially different from the anticipated results, performance or achievements discussed,
expressed or implied by these forward-looking statements. Factors that might cause such
differences include, but are not limited to the following:
 
    
    the Companys ability to successfully execute its business plans and achieve its objectives;
    
    changes in political and economic conditions, including the economic effects of terrorist attacks against the United
States and related events;
    
    changes in financial market conditions, either nationally or locally in areas in which the Company conducts its
operations;
    
    fluctuations in the equity and fixed-income markets;
    
    changes in interest rates;
    
    acquisitions and integration of acquired businesses;
    
    increases in the levels of losses, customer bankruptcies, claims and assessments;
    
    changes in fiscal, monetary, regulatory, trade and tax policies and laws;
    
    continuing consolidation in the financial services industry;
    
    new litigation or changes in existing litigation;
    
    success in gaining regulatory approvals, when required;
    
    changes in consumer spending and savings habits;
    
    increased competitive challenges and expanding product and pricing pressures among financial institutions, whether
banks, investment banks, insurance companies or others, in the Companys markets;
    
    technological changes;
    
    demographic changes;
    
    legislation or regulatory changes which adversely affect the Companys operations and businesses;
    
    the Companys ability to comply with applicable laws and regulations; and
    
    changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or
regulatory agencies.
 You are cautioned not to place undue reliance on these forward-looking statements, which speak only
as of the date of this document or the date of any document incorporated by reference in this
document. All subsequent written and oral forward-looking statements concerning matters addressed
in this document and attributable to the Company or any person acting on the Companys behalf are
expressly qualified in their entirety by the cautionary statements contained or referred to in this
section. Except to the extent required by applicable law or regulation, the Company undertakes no
obligation to update these forward-looking statements to reflect events, developments or
circumstances after the date of this document or to reflect the occurrence of future events.
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##### Table of Contents



MANAGEMENT OVERVIEW
     CORPORATE DEVELOPMENTS
 Election of New Director
 CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
  Allowance for Loan Losses
  - 20 -




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Stock-Based Compensation
 Share-Based Payment
 Accounting for Stock Issued to Employees Accounting for Stock-Based
Compensation Accounting for Stock-Based Compensation  Transition and
Disclosure
  Three Months Ended June 30,
    
    Six Months Ended June 30,2006
    
    2005
    
    2006
    
    2005Dividend yield
    
    
    0.60
    %
    
    
    0.60
    %
    
    
    0.63
    %
    
    
    0.58
    %Volatility
    
    
    29.72
    %
    
    
    42.65
    %
    
    
    29.90
    %
    
    
    32.36
    %Risk-free interest rate
    
    
    5.03
    %
    
    
    4.10
    %
    
    
    4.70
    %
    
    
    4.13
    %Expected lives (years)
    
    
    7.71
    
    
    
    7.48
    
    
    
    7.58
    
    
    
    7.54
   - 22 -




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##### Table of Contents



Income Taxes
   Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes
 Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No.
109 Accounting for Income Taxe
 Accounting for Servicing of Financial Assets
 Accounting for Servicing of Financial Assets, an
amendment of FASB Statement No. 140
 - 23 -




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Accounting for Certain Hybrid Financial Instruments
 Accounting for Certain Hybrid Financial
Instruments, an amendment of FASB Statements No. 133 and 140
 - 24 -




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##### Table of Contents



RESULTS OF OPERATIONS
 Financial Highlights
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,Increase (Decrease)
    
    
    
    
    
    
    
    
    
    
    Increase (Decrease)2006
    
    
    2005
    
    
    Amount
    
    
    %
    
    
    2006
    
    
    2005
    
    
    Amount
    
    
    %Operating Data:Total interest and dividend income
    
    $
    131,006
    
    
    $
    96,873
    
    
    $
    34,133
    
    
    
    35.23
    
    
    $
    254,458
    
    
    $
    180,895
    
    
    $
    73,563
    
    
    
    40.67Total interest expense
    
    
    64,956
    
    
    
    37,227
    
    
    
    27,729
    
    
    
    74.49
    
    
    
    122,828
    
    
    
    65,883
    
    
    
    56,945
    
    
    
    88.43Net interest income
    
    
    66,050
    
    
    
    59,646
    
    
    
    6,404
    
    
    
    10.74
    
    
    
    131,630
    
    
    
    115,012
    
    
    
    16,618
    
    
    
    14.45Provision for loan losses
    
    
    1,249
    
    
    
    1,775
    
    
    
    (526
    )
    
    
    (29.63
    )
    
    
    1,556
    
    
    
    2,965
    
    
    
    (1,409
    )
    
    
    (47.52
    )Net interest income after recovery
of (provision for) loan losses
    
    
    64,801
    
    
    
    57,871
    
    
    
    6,930
    
    
    
    11.97
    
    
    
    130,074
    
    
    
    112,047
    
    
    
    18,027
    
    
    
    16.09Total noninterest income
    
    
    10,129
    
    
    
    5,668
    
    
    
    4,461
    
    
    
    78.71
    
    
    
    24,206
    
    
    
    13,714
    
    
    
    10,492
    
    
    
    76.51Total noninterest expense
    
    
    37,131
    
    
    
    30,428
    
    
    
    6,703
    
    
    
    22.03
    
    
    
    79,879
    
    
    
    57,641
    
    
    
    22,238
    
    
    
    38.58Income before income tax expense
    
    
    37,799
    
    
    
    33,111
    
    
    
    4,688
    
    
    
    14.16
    
    
    
    74,401
    
    
    
    68,120
    
    
    
    6,281
    
    
    
    9.22Income tax expense
    
    
    12,393
    
    
    
    7,747
    
    
    
    4,646
    
    
    
    55.97
    
    
    
    25,576
    
    
    
    20,950
    
    
    
    4,626
    
    
    
    22.08Net income
    
    $
    25,406
    
    
    $
    25,364
    
    
    $
    42
    
    
    
    0.17
    
    
    $
    48,825
    
    
    $
    47,170
    
    
    $
    1,655
    
    
    
    3.51Per Share Data:Basic earnings per share
    
    $
    0.27
    
    
    $
    0.28
    
    
    $
    (0.01
    )
    
    
    (3.57
    )
    
    $
    0.52
    
    
    $
    0.52
    
    
    $
    
    
    
    
    Diluted earnings per share
    
    
    0.26
    
    
    
    0.27
    
    
    
    (0.01
    )
    
    
    3.70
    
    
    
    0.50
    
    
    
    0.49
    
    
    
    0.01
    
    
    
    2.04Dividends declared per share
    
    
    0.030
    
    
    
    0.025
    
    
    
    0.005
    
    
    
    20.00
    
    
    
    0.060
    
    
    
    0.050
    
    
    
    0.010
    
    
    
    20.00Select Operating Ratios:Return on average assets
    
    
    1.25
    %
    
    
    1.50
    %
    
    (25
    ) bp*
    
    
    (16.67
    )
    
    
    1.22
    %
    
    
    1.44
    %
    

    (22
    ) bp*
    
    
    (15.28
    )Return on average equity
    
    
    16.20
    
    
    
    19.74
    
    
    
    (354
    )
    
    
    (17.93
    )
    
    
    15.79
    
    
    
    18.75
    
    
    
    (296
    )
    
    
    (15.79
    )Efficiency ratio (1)
    
    
    48.74
    
    
    
    46.59
    
    
    
    215
    
    
    
    4.61
    
    
    
    51.26
    
    
    
    44.78
    
    
    
    648
    
    
    
    14.47Noninterest expense to average assets
    
    
    1.83
    
    
    
    1.80
    
    
    
    3
    
    
    
    1.67
    
    
    
    1.99
    
    
    
    1.76
    
    
    
    23
    
    
    
    13.07Average equity to average assets
    
    
    7.74
    
    
    
    7.62
    
    
    
    12
    
    
    
    1.57
    
    
    
    7.71
    
    
    
    7.69
    
    
    
    2
    
    
    
    0.26Dividend payout ratio (2)
    
    
    11.54
    
    
    
    9.26
    
    
    
    228
    
    
    
    24.62
    
    
    
    12.00
    
    
    
    10.20
    
    
    
    180
    
    
    
    17.65Net loan charge-offs to average loans
    
    
    0.16
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    0.17
    
    
    
    
    
    
    
    17
    
    
    
    
 June 30,
    
    December 31,
    
    Increase (Decrease)2006
    
    2005
    
    Amount
    
    %Financial Condition and Other Data:Investments and mortgage-backed securities
available for sale
    
    $
    1,240,312
    
    
    $
    1,117,724
    
    
    $
    122,588
    
    
    
    10.97Investments and mortgage-backed securities
held to maturity
    
    
    299,266
    
    
    
    308,608
    
    
    
    (9,342
    )
    
    
    (3.03
    )Loans held for sale
    
    
    240,162
    
    
    
    156,740
    
    
    
    83,422
    
    
    
    53.22Loans held in portfolio, net
    
    
    5,884,023
    
    
    
    5,774,118
    
    
    
    109,905
    
    
    
    1.90Total assets
    
    
    8,291,093
    
    
    
    7,965,637
    
    
    
    325,456
    
    
    
    4.09Deposits
    
    
    6,239,277
    
    
    
    6,264,169
    
    
    
    (24,892
    )
    
    
    (0.40
    )Securities sold under agreements to repurchase
    
    
    150,000
    
    
    
    
    
    
    
    150,000
    
    
    
    Short-term borrowings
    
    
    343,325
    
    
    
    279,425
    
    
    
    63,900
    
    
    
    22.87Long-term borrowings
    
    
    665,844
    
    
    
    562,033
    
    
    
    103,811
    
    
    
    18.47Subordinated debentures
    
    
    150,520
    
    
    
    150,520
    
    
    
    
    
    
    
    Stockholders equity
    
    
    639,749
    
    
    
    603,514
    
    
    
    36,235
    
    
    
    6.00Nonperforming assets
    
    
    16,104
    
    
    
    19,133
    
    
    
    (3,029
    )
    
    
    (15.83
    )Selected Ratios:Loan delinquency ratio
    
    
    0.24
    %
    
    
    0.48
    %
    
    (24)
    bp*
    
    
    (50.00
    )Nonperforming assets to total assets
    
    
    0.19
    
    
    
    0.24
    
    
    
    (5
    )
    
    
    (20.83
    )Nonperforming loans to total loans
    
    
    0.26
    
    
    
    0.32
    
    
    
    (6
    )
    
    
    (18.75
    )Allowance for loan losses to nonperforming
loans
    
    
    366.58
    
    
    
    337.33
    
    
    
    2,925
    
    
    
    8.67Allowance for loan losses to loans held in
portfolio
    
    
    0.99
    
    
    
    1.11
    
    
    
    (12
    )
    
    
    (10.81
    )Total loan to deposit ratio
    
    
    99.10
    
    
    
    95.71
    
    
    
    339
    
    
    
    3.54Stockholders equity to total assets
    
    
    7.72
    
    
    
    7.58
    
    
    
    14
    
    
    
    1.85Bank Regulatory Capital Ratios:United Commercial Bank:Total risk-based capital
    
    
    11.12
    %
    
    
    10.98
    %
    
    14
    bp*
    
    
    1.28Tier 1 risk-based capital
    
    
    10.15
    
    
    
    9.91
    
    
    
    24
    
    
    
    2.42Tier 1 leverage ratio (3)
    
    
    8.48
    
    
    
    8.26
    
    
    
    22
    
    
    
    2.66UCBH Holdings, Inc. and subsidiaries:Total risk-based capital
    
    
    11.40
    %
    
    
    11.33
    %
    
    7
    bp*
    
    
    0.62Tier 1 risk-based capital
    
    
    10.44
    
    
    
    10.26
    
    
    
    18
    
    
    
    1.75Tier 1 leverage ratio (3)
    
    
    8.72
    
    
    
    8.56
    
    
    
    16
    
    
    
    1.87
 
 (1)
    
    Represents noninterest expense divided by the total of our net interest income
before provision for loan losses and our noninterest income.(2)
    
    Represents dividends declared per share as a percentage of diluted earnings per
share.(3)
    
    Represents Tier 1 capital to total average assets.*
    
    Basis point. - 25 -




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##### Table of Contents



Three Months Ended June 30, 2006, Compared to Three Months Ended June 30, 2005
  Net Interest Income and Net Interest Margin
 - 26 -




---



##### Table of Contents



2006
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    AverageInterest
    
    
    Yields
    
    
    
    
    
    
    Interest
    
    
    YieldsAverage
    
    
    Income/
    
    
    Earned/
    
    
    Average
    
    
    Income/
    
    
    Earned/Balance
    
    
    Expense
    
    
    Rates Paid
    
    
    Balance
    
    
    Expense
    
    
    Rates PaidNontaxable equivalent basis:Interest-earning assetsLoans (1)(2)
    
    $
    6,111,151
    
    
    $
    111,636
    
    
    
    7.31
    %
    
    $
    4,918,500
    
    
    $
    79,235
    
    
    
    6.44
    %Taxable securities (3)
    
    
    1,284,824
    
    
    
    15,463
    
    
    
    4.81
    
    
    
    1,323,832
    
    
    
    14,625
    
    
    
    4.42Nontaxable securities (3)
    
    
    224,973
    
    
    
    2,684
    
    
    
    4.77
    
    
    
    221,942
    
    
    
    2,652
    
    
    
    4.78Other
    
    
    100,149
    
    
    
    1,223
    
    
    
    4.88
    
    
    
    33,063
    
    
    
    361
    
    
    
    4.37Total interest-earning assets
    
    
    7,721,097
    
    
    
    131,006
    
    
    
    6.79
    
    
    
    6,497,337
    
    
    
    96,873
    
    
    
    5.96Noninterest-earning assets
    
    
    378,590
    
    
    
    
    
    
    
    
    
    
    
    246,733
    
    
    
    Total assets
    
    $
    8,099,687
    
    
    $
    131,006
    
    
    
    
    
    
    $
    6,744,070
    
    
    $
    96,873Interest-bearing liabilities:Deposits:NOW, checking and money market accounts
    
    $
    1,301,889
    
    
    $
    9,919
    
    
    
    3.05
    
    
    $
    1,042,570
    
    
    $
    4,401
    
    
    
    1.69Savings accounts
    
    
    696,545
    
    
    
    2,113
    
    
    
    1.21
    
    
    
    837,437
    
    
    
    2,258
    
    
    
    1.08Time deposits
    
    
    3,651,787
    
    
    
    37,667
    
    
    
    4.13
    
    
    
    3,036,827
    
    
    
    19,947
    
    
    
    2.63Total interest-bearing deposits
    
    
    5,650,221
    
    
    
    49,699
    
    
    
    3.52
    
    
    
    4,916,834
    
    
    
    26,606
    
    
    
    2.16Short-term borrowings
    
    
    343,341
    
    
    
    4,091
    
    
    
    4.77
    
    
    
    293,420
    
    
    
    2,653
    
    
    
    3.62Long- term borrowings
    
    
    685,733
    
    
    
    8,131
    
    
    
    4.74
    
    
    
    375,353
    
    
    
    5,535
    
    
    
    5.90Subordinated debentures
    
    
    150,520
    
    
    
    3,035
    
    
    
    8.07
    
    
    
    135,701
    
    
    
    2,433
    
    
    
    7.17Total interest-bearing liabilities
    
    
    6,829,815
    
    
    
    64,956
    
    
    
    3.80
    
    
    
    5,721,308
    
    
    
    37,227
    
    
    
    2.60Noninterest-bearing deposits
    
    
    530,621
    
    
    
    
    
    
    
    
    
    
    
    427,181
    
    
    
    Other noninterest-bearing liabilities
    
    
    111,959
    
    
    
    
    
    
    
    
    
    
    
    81,535
    
    
    
    Stockholders equity
    
    
    627,292
    
    
    
    
    
    
    
    
    
    
    
    514,046
    
    
    
    Total liabilities and stockholders equity
    
    $
    8,099,687
    
    
    $
    64,956
    
    
    
    
    
    
    $
    6,744,070
    
    
    $
    37,227Net interest-earning assets/net interest
income/net interest rate spread
(4)
    
    $
    891,282
    
    
    $
    66,050
    
    
    
    2.99
    %
    
    $
    776,029
    
    
    $
    59,646
    
    
    
    3.36
    %Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.42
    %
    
    
    
    
    
    
    
    
    
    
    3.67
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    1.13
    x
    
    
    
    
    
    
    
    
    
    
    1.14
    xTax equivalent basis:Total interest-earning assets (6)
    
    $
    7,721,097
    
    
    $
    132,451
    
    
    
    6.86
    %
    
    $
    6,497,337
    
    
    $
    98,013
    
    
    
    6.03
    %Total interest-bearing liabilities
    
    
    6,829,815
    
    
    
    64,956
    
    
    
    3.80
    
    
    
    5,721,308
    
    
    
    37,227
    
    
    
    2.60Net interest-earning assets/net interest
income/net interest rate spread
(4)
    
    $
    891,282
    
    
    $
    67,495
    
    
    
    3.06
    %
    
    $
    776,029
    
    
    $
    60,786
    
    
    
    3.43
    %Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.50
    %
    
    
    
    
    
    
    
    
    
    
    3.74
    %Average cost of deposits:Total interest-bearing deposits
    
    $
    5,650,221
    
    
    $
    49,699
    
    
    
    3.52
    %
    
    $
    4,916,834
    
    
    $
    26,606
    
    
    
    2.16
    %Noninterest-bearing deposits
    
    
    530,621
    
    
    
    
    
    
    
    
    
    
    
    427,181
    
    
    
    Total deposits
    
    $
    6,180,842
    
    
    $
    49,699
    
    
    
    3.22
    %
    
    $
    5,344,015
    
    
    $
    26,606
    
    
    
    1.99
    %
 
 (1)
    
    Nonaccrual loans are included in the table for computation purposes; however,
interest for such loans is recognized on a cash basis.(2)
    
    Average loans include loans held for sale.(3)
    
    Average yield on investment securities is computed using historical cost balances;
the yield information does not give effect to
changes in fair value that are reflected as a component of stockholders equity.(4)
    
    Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by average
interest-earning assets.(6)
    
    Interest income from nontaxable securities has been adjusted to a tax equivalent
basis using a statutory federal income tax rate of 35.0%. Interest income from nontaxable
investment securities calculated on a tax equivalent basis was $1.4 million and $1.1 million
for the three months ended June 30, 2006 and 2005, respectively. - 27 -




---



##### Table of Contents



Provision for Loan Losses
 Noninterest Income
 Noninterest Expense
 Income Tax Expense
 - 28 -




---



##### Table of Contents



Six Months Ended June 30, 2006, Compared to Six Months Ended June 30, 2005
  Net Interest Income and Net Interest Margin
 - 29 -




---



##### Table of Contents



2006
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    AverageInterest
    
    
    Yields
    
    
    
    
    
    
    Interest
    
    
    YieldsAverage
    
    
    Income/
    
    
    Earned/
    
    
    Average
    
    
    Income/
    
    
    Earned/Balance
    
    
    Expense
    
    
    Rates Paid
    
    
    Balance
    
    
    Expense
    
    
    Rates PaidNontaxable equivalent basis:Interest-earning assetsLoans (1)(2)
    
    $
    6,074,549
    
    
    $
    217,174
    
    
    
    7.15
    %
    
    $
    4,717,214
    
    
    $
    145,860
    
    
    
    6.18
    %Taxable securities (3)
    
    
    1,254,399
    
    
    
    29,670
    
    
    
    4.73
    
    
    
    1,309,936
    
    
    
    28,801
    
    
    
    4.40Nontaxable securities (3)
    
    
    225,275
    
    
    
    5,376
    
    
    
    4.77
    
    
    
    218,789
    
    
    
    5,235
    
    
    
    4.79Other
    
    
    98,493
    
    
    
    2,238
    
    
    
    4.54
    
    
    
    60,411
    
    
    
    999
    
    
    
    3.31Total interest-earning assets
    
    
    7,652,716
    
    
    
    254,458
    
    
    
    6.65
    
    
    
    6,306,350
    
    
    
    180,895
    
    
    
    5.74Noninterest-earning assets
    
    
    368,557
    
    
    
    
    
    
    
    
    
    
    
    239,533
    
    
    
    Total assets
    
    $
    8,021,273
    
    
    $
    254,458
    
    
    
    
    
    
    $
    6,545,883
    
    
    $
    180,895Interest-bearing liabilities:Deposits:NOW, checking and money market accounts
    
    $
    1,257,330
    
    
    $
    17,693
    
    
    
    2.81
    
    
    $
    1,011,073
    
    
    $
    7,847
    
    
    
    1.55Savings accounts
    
    
    737,635
    
    
    
    4,391
    
    
    
    1.19
    
    
    
    893,533
    
    
    
    4,723
    
    
    
    1.06Time deposits
    
    
    3,636,978
    
    
    
    72,011
    
    
    
    3.96
    
    
    
    2,954,066
    
    
    
    36,097
    
    
    
    2.44Total interest-bearing deposits
    
    
    5,631,943
    
    
    
    94,095
    
    
    
    3.34
    
    
    
    4,858,672
    
    
    
    48,667
    
    
    
    2.00Short-term borrowings
    
    
    353,183
    
    
    
    7,565
    
    
    
    4.28
    
    
    
    189,481
    
    
    
    2,969
    
    
    
    3.13Long- term borrowings
    
    
    633,205
    
    
    
    15,418
    
    
    
    4.87
    
    
    
    355,244
    
    
    
    9,500
    
    
    
    5.35Subordinated debentures
    
    
    148,298
    
    
    
    5,750
    
    
    
    7.75
    
    
    
    135,850
    
    
    
    4,747
    
    
    
    6.99Total interest-bearing liabilities
    
    
    6,766,629
    
    
    
    122,828
    
    
    
    3.63
    
    
    
    5,539,247
    
    
    
    65,883
    
    
    
    2.38Noninterest-bearing deposits
    
    
    521,086
    
    
    
    
    
    
    
    
    
    
    
    422,911
    
    
    
    Other noninterest-bearing liabilities
    
    
    114,992
    
    
    
    
    
    
    
    
    
    
    
    80,546
    
    
    
    Stockholders equity
    
    
    618,566
    
    
    
    
    
    
    
    
    
    
    
    503,179
    
    
    
    Total liabilities and stockholders equity
    
    $
    8,021,273
    
    
    $
    122,828
    
    
    
    
    
    
    $
    6,545,883
    
    
    $
    65,883Net interest-earning assets/net interest
income/net interest rate spread
(4)
    
    $
    886,087
    
    
    $
    131,630
    
    
    
    3.02
    %
    
    $
    767,103
    
    
    $
    115,012
    
    
    
    3.36
    %Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.44
    %
    
    
    
    
    
    
    
    
    
    
    3.65
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    1.13
    x
    
    
    
    
    
    
    
    
    
    
    1.14
    xTax equivalent basis:Total interest-earning assets (6)
    
    $
    7,652,716
    
    
    $
    257,353
    
    
    
    6.73
    %
    
    $
    6,306,350
    
    
    $
    183,477
    
    
    
    5.82
    %Total interest-bearing liabilities
    
    
    6,766,629
    
    
    
    122,828
    
    
    
    3.63
    
    
    
    5,539,247
    
    
    
    65,883
    
    
    
    2.38Net interest-earning assets/net interest
income/net interest rate spread
(4)
    
    $
    886,087
    
    
    $
    134,525
    
    
    
    3.10
    %
    
    $
    767,103
    
    
    $
    117,594
    
    
    
    3.44
    %Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    3.52
    %
    
    
    
    
    
    
    
    
    
    
    3.73
    %Average cost of deposits:Total interest-bearing deposits
    
    $
    5,631,943
    
    
    $
    94,095
    
    
    
    3.34
    %
    
    $
    4,858,672
    
    
    $
    48,667
    
    
    
    2.00
    %Noninterest-bearing deposits
    
    
    521,086
    
    
    
    
    
    
    
    
    
    
    
    422,911
    
    
    
    Total deposits
    
    $
    6,153,029
    
    
    $
    94,095
    
    
    
    3.06
    %
    
    $
    5,281,583
    
    
    $
    48,667
    
    
    
    1.84
    %
 
 (1)
    
    Nonaccrual loans are included in the table for computation purposes; however,
interest for such loans is recognized on a cash basis.(2)
    
    Average loans include loans held for sale.(3)
    
    Average yield on investment securities is computed using historical cost balances;
the yield information does not give effect to
changes in fair value that are reflected as a component of stockholders equity.(4)
    
    Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by average
interest-earning assets.(6)
    
    Interest income from nontaxable securities has been adjusted to a tax equivalent
basis using a statutory federal income tax rate of 35.0%. Interest income from nontaxable
investment securities calculated on a tax equivalent basis was $2.9 million and $2.6 million
for the six months ended June 30, 2006 and 2005, respectively. - 30 -




---



##### Table of Contents



Provision for Loan Losses
 Noninterest Income
  Noninterest Expense
  Income Tax Expense
 - 31 -




---



##### Table of Contents



BALANCE SHEET ANALYSIS
 Investment Securities
  June 30, 2006
    
    
    December 31, 2005Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueInvestment securities available for sale:Trust preferred securities
    
    $
    33,444
    
    
    $
    32,940
    
    
    $
    33,443
    
    
    $
    32,946U.S. Government sponsored enterprises
    
    
    242,819
    
    
    
    235,066
    
    
    
    159,655
    
    
    
    155,185Other
    
    
    10,503
    
    
    
    10,402
    
    
    
    11,012
    
    
    
    10,911Total investment securities available for sale
    
    
    286,766
    
    
    
    278,408
    
    
    
    204,110
    
    
    
    199,042Mortgage-backed securities available for sale:FNMA
    
    
    381,104
    
    
    
    362,975
    
    
    
    355,135
    
    
    
    344,190GNMA
    
    
    85,048
    
    
    
    79,520
    
    
    
    88,184
    
    
    
    85,033FHLMC
    
    
    344,200
    
    
    
    327,857
    
    
    
    302,540
    
    
    
    292,316Other
    
    
    199,521
    
    
    
    191,552
    
    
    
    202,264
    
    
    
    197,143Total mortgage-backed securities available for sale
    
    
    1,009,873
    
    
    
    961,904
    
    
    
    948,123
    
    
    
    918,682Total investment and mortgage-backed securities
available for sale
    
    
    1,296,639
    
    
    
    1,240,312
    
    
    
    1,152,233
    
    
    
    1,117,724Investment securities held to maturity:Municipals
    
    
    224,389
    
    
    
    226,970
    
    
    
    225,573
    
    
    
    232,279Mortgage-backed securities held to maturity:FNMA
    
    
    4,565
    
    
    
    4,277
    
    
    
    5,112
    
    
    
    4,923GNMA
    
    
    69,656
    
    
    
    65,802
    
    
    
    77,261
    
    
    
    76,133FHLMC
    
    
    656
    
    
    
    615
    
    
    
    662
    
    
    
    639Total mortgage-backed securities held to maturity
    
    
    74,877
    
    
    
    70,694
    
    
    
    83,035
    
    
    
    81,695Total investment and mortgage-backed securities
held to maturity
    
    
    299,266
    
    
    
    297,664
    
    
    
    308,608
    
    
    
    313,974Total investment and mortgage-backed securities
    
    $
    1,595,905
    
    
    $
    1,537,976
    
    
    $
    1,460,841
    
    
    $
    1,431,698
   - 32 -




---



##### Table of Contents



Loans
  June 30,
    
    
    December 31,2006
    
    
    2005Commercial:Secured by real estate  nonresidential
    
    $
    1,963,087
    
    
    $
    2,307,381Secured by real estate  multifamily
    
    
    1,475,440
    
    
    
    1,506,848Construction
    
    
    709,222
    
    
    
    494,841Business
    
    
    1,126,926
    
    
    
    863,935Total commercial
    
    
    5,274,675
    
    
    
    5,173,005Consumer:Residential mortgage (one-to-four family)
    
    
    614,180
    
    
    
    613,988Other
    
    
    54,203
    
    
    
    51,667Total consumer
    
    
    668,383
    
    
    
    665,655Loans held in portfolio (1)
    
    
    5,943,058
    
    
    
    5,838,660Allowance for loan losses
    
    
    (59,035
    )
    
    
    (64,542
    )Loans held in portfolio, net
    
    $
    5,884,023
    
    
    $
    5,774,118
 
 (1)
    
    Amounts include net unamortized deferred loan fees of $7.7 million and $7.4
million at June 30, 2006, and December 31, 2005, respectively.   June 30,
    
    
    December 31,2006
    
    
    2005Commercial:Secured by real estate  nonresidential
    
    $
    237,397
    
    
    $
    154,087Business
    
    
    1,874
    
    
    
    2,653Total commercial
    
    
    239,271
    
    
    
    156,740Consumer:Residential mortgage (one-to-four family)
    
    
    891
    
    
    
    Loans held for sale (1)
    
    $
    240,162
    
    
    $
    156,740
 
 (1)
    
    Amounts include net unamortized deferred loan fees of $438,000 and $372,000 at
June 30, 2006, and December 31, 2005, respectively.  - 33 -




---



##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Loans held for sale:Commercial:Secured by real estate  nonresidential
    
    $
    10,600
    
    
    $
    19,269
    
    
    $
    32,925
    
    
    $
    39,103Secured by real estate  multifamily
    
    
    
    
    
    
    223,340
    
    
    
    
    
    
    
    398,979Total commercial loans
    
    
    10,600
    
    
    
    242,609
    
    
    
    32,925
    
    
    
    438,082Consumer:Residential mortgage (one-to-four family)
    
    
    1,251
    
    
    
    325
    
    
    
    1,251
    
    
    
    325Total loans held for sale commitments (1)
    
    
    11,851
    
    
    
    242,934
    
    
    
    34,176
    
    
    
    438,407Loans held in portfolio:Commercial:Secured by real estate  nonresidential
    
    
    186,971
    
    
    
    391,419
    
    
    
    372,052
    
    
    
    584,567Secured by real estate  multifamily
    
    
    49,114
    
    
    
    167,180
    
    
    
    134,236
    
    
    
    244,559Construction
    
    
    306,967
    
    
    
    166,013
    
    
    
    485,858
    
    
    
    308,945Business
    
    
    332,246
    
    
    
    166,602
    
    
    
    562,765
    
    
    
    306,026Total commercial loans
    
    
    875,298
    
    
    
    891,214
    
    
    
    1,554,911
    
    
    
    1,444,097Consumer:Residential mortgage (one-to-four family)
    
    
    27,495
    
    
    
    42,726
    
    
    
    46,360
    
    
    
    88,075Other
    
    
    9,289
    
    
    
    12,449
    
    
    
    16,545
    
    
    
    20,348Total consumer loans
    
    
    36,784
    
    
    
    55,175
    
    
    
    62,905
    
    
    
    108,423Total loans held in portfolio commitments (1)
    
    
    912,082
    
    
    
    946,389
    
    
    
    1,617,816
    
    
    
    1,552,520Total loan commitments (1)
    
    $
    923,933
    
    
    $
    1,189,323
    
    
    $
    1,651,992
    
    
    $
    1,990,927
 
 (1)
    
    Excludes commitments related to loan participations. - 34 -




---



##### Table of Contents



IntermediateAdjustable
    
    
    Fixed
    
    
    Fixed
    
    
    TotalCommercial:Secured by real estate  nonresidential
    
    $
    855,186
    
    
    $
    411,044
    
    
    $
    702,855
    
    
    $
    1,969,085Secured by real estate  multifamily
    
    
    345,330
    
    
    
    974,767
    
    
    
    151,970
    
    
    
    1,472,067Construction
    
    
    655,948
    
    
    
    
    
    
    
    58,058
    
    
    
    714,006Business
    
    
    1,012,659
    
    
    
    3,199
    
    
    
    111,437
    
    
    
    1,127,295Total commercial
    
    
    2,869,123
    
    
    
    1,389,010
    
    
    
    1,024,320
    
    
    
    5,282,453Consumer:Residential mortgage (one-to-four family)
    
    
    47,547
    
    
    
    226,794
    
    
    
    339,723
    
    
    
    614,064Other
    
    
    46,858
    
    
    
    
    
    
    
    7,344
    
    
    
    54,202Total consumer
    
    
    94,405
    
    
    
    226,794
    
    
    
    347,067
    
    
    
    668,266Gross loans held in portfolio (1)
    
    $
    2,963,528
    
    
    $
    1,615,804
    
    
    $
    1,371,387
    
    
    $
    5,950,719
 
 (1)
    
    Amounts exclude net deferred loan fees of $7.7 million at June 30, 2006. Deposits
  June 30, 2006
    
    
    December 31, 2005Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageAmount
    
    
    Rate
    
    
    Amount
    
    
    RateNOW, checking and money market accounts
    
    $
    1,847,555
    
    
    
    2.07
    %
    
    $
    1,784,065
    
    
    
    1.65
    %Savings accounts
    
    
    928,540
    
    
    
    2.02
    
    
    
    946,714
    
    
    
    1.85Time deposits:Less than $100,000
    
    
    1,184,102
    
    
    
    3.97
    
    
    
    1,203,001
    
    
    
    2.69$100,000 or greater
    
    
    2,279,080
    
    
    
    4.43
    
    
    
    2,330,389
    
    
    
    3.98Total time deposits
    
    
    3,463,182
    
    
    
    4.27
    
    
    
    3,533,390
    
    
    
    3.54Total deposits
    
    $
    6,239,277
    
    
    
    3.28
    %
    
    $
    6,264,169
    
    
    
    2.75
    %
  - 35 -




---



##### Table of Contents



Borrowings
  June 30,
    
    December 31,2006
    
    2005Securities sold under agreements to repurchase:Average balance outstanding
    
    $
    44,751
    
    
    $
    Maximum amount outstanding at any month end period
    
    
    150,000
    
    
    
    Balance outstanding at end of period
    
    
    150,000
    
    
    
    Weighted average interest rate during the period
    
    
    4.12
    %
    
    
    
    %Weighted average interest rate at end of period
    
    
    4.14
    %
    
    
    
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    7.1
    
    
    
    Short-term borrowings:FHLB of San Francisco and Seattle advances and other short-term borrowings:Average balance outstanding
    
    $
    307,210
    
    
    $
    301,400Maximum amount outstanding at any month end period
    
    
    482,317
    
    
    
    566,169Balance outstanding at end of period
    
    
    343,325
    
    
    
    279,425Weighted average interest rate during the period
    
    
    4.30
    %
    
    
    3.51
    %Weighted average interest rate at end of period
    
    
    5.27
    %
    
    
    4.09
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    
    
    
    
    Long-term borrowings:FHLB of San Francisco, Seattle and Boston advances:Average balance outstanding
    
    $
    633,205
    
    
    $
    361,677Maximum amount outstanding at any month end period
    
    
    699,980
    
    
    
    562,033Balance outstanding at end of period
    
    
    665,844
    
    
    
    562,033Weighted average interest rate during the period
    
    
    4.87
    %
    
    
    5.15
    %Weighted average interest rate at end of period
    
    
    4.73
    %
    
    
    4.76
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    5.0
    
    
    
    5.2
  Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities
 - 36 -




---



##### Table of Contents



Subordinated Debentures
  - 37 -




---



##### Table of Contents



RISK ELEMENTS
   
    
    Enterprise Risk Management Committee, which reviews credit, operational, market and liquidity risk.
 
    
    Credit Risk Management Committee, which reviews credit policies, products, and problem assets risk.
 
    
    Market Risk Management Committee, which reviews securities, loans and borrowings to assess yield, market and interest
rate risk.
 
    
    Operational Risk Management Committee, which reviews those risks not covered by the Credit Risk Management and the
Market Risk Management Committees.
  Credit Risk Management
    - 38 -




---



##### Table of Contents



June 30, 2006
    
    
    December 31, 2005Amount
    
    
    %
    
    
    Amount
    
    
    %Commercial:Secured by real estate  nonresidential
    
    $
    1,963,087
    
    
    
    33.03
    
    
    $
    2,307,381
    
    
    
    39.52Secured by real estate  multifamily
    
    
    1,475,440
    
    
    
    24.83
    
    
    
    1,506,848
    
    
    
    25.81Construction
    
    
    709,222
    
    
    
    11.93
    
    
    
    494,841
    
    
    
    8.47Business
    
    
    1,126,926
    
    
    
    18.96
    
    
    
    863,935
    
    
    
    14.80Total commercial
    
    
    5,274,675
    
    
    
    88.75
    
    
    
    5,173,005
    
    
    
    88.60Consumer:Residential mortgage (one-to-four family)
    
    
    614,180
    
    
    
    10.33
    
    
    
    613,988
    
    
    
    10.52Other
    
    
    54,203
    
    
    
    0.92
    
    
    
    51,667
    
    
    
    0.88Total consumer
    
    
    666,383
    
    
    
    11.25
    
    
    
    665,655
    
    
    
    11.40Loans held in portfolio (1)
    
    $
    5,943,058
    
    
    
    100.00
    
    
    $
    5,838,660
    
    
    
    100.00
 
 (1)
    
    Amounts include net unamortized deferred loan fees of $7.7 million and $7.4
million at June 30, 2006, and December 31, 2005, respectively.   Nonperforming Assets
  - 39 -




---



##### Table of Contents



June 30,
    
    
    December 31,2006
    
    
    2005Commercial loans:Secured by real estate  nonresidential
    
    $
    9,104
    
    
    $
    12,792Business
    
    
    6,622
    
    
    
    5,903Total commercial loans
    
    
    15,726
    
    
    
    18,695Consumer loans:Residential mortgage (one-to-four family)
    
    
    378
    
    
    
    388Other
    
    
    
    
    
    
    50Total consumer loans
    
    
    378
    
    
    
    438Total nonaccrual loans
    
    
    16,104
    
    
    
    19,133Other real estate owned (OREO)
    
    
    
    
    
    
    Total nonperforming assets
    
    $
    16,104
    
    
    $
    19,133Nonperforming assets to total assets
    
    
    0.19
    %
    
    
    0.24
    %Nonaccrual loans to total loans
    
    
    0.26
    
    
    
    0.32Nonperforming assets to total loans and OREO
    
    
    0.26
    
    
    
    0.32Total loans
    
    $
    6,183,635
    
    
    $
    5,995,400Gross income not recognized on nonaccrual loans
    
    
    1,279
    
    
    
    790Accruing loans contractually past due 90 days or more
    
    
    4,374
    
    
    
    5,374Loans classified as troubled debt restructurings and not included above
    
    
    8,494
    
    
    
    10,827
      - 40 -




---



##### Table of Contents



Allowances for Credit Losses
 Allowance for Loan Losses
       - 41 -




---



##### Table of Contents



Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Balance at beginning of period:Allowance for loan losses
    
    $
    61,806
    
    
    $
    57,547
    
    
    $
    64,542
    
    
    $
    56,472Allowance for losses  unfunded commitments
    
    
    3,713
    
    
    
    3,948
    
    
    
    3,402
    
    
    
    3,940Total allowance for losses at beginning of year
    
    
    65,519
    
    
    
    61,495
    
    
    
    67,944
    
    
    
    60,412Acquired allowance for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    1,249
    
    
    
    1,775
    
    
    
    1,556
    
    
    
    2,965Charge-offs:Commercial:Secured by real estate  nonresidential
    
    
    
    
    
    
    
    
    
    
    (452
    )
    
    
    Business
    
    
    (2,630
    )
    
    
    (3
    )
    
    
    (4,981
    )
    
    
    (137
    )Total commercial
    
    
    (2,630
    )
    
    
    (3
    )
    
    
    (5,433
    )
    
    
    (137
    )Consumer:Other
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    Total charge-offs
    
    
    (2,630
    )
    
    
    (3
    )
    
    
    (5,483
    )
    
    
    (137
    )Recoveries:Commercial:Secured by real estate  nonresidential
    
    
    47
    
    
    
    
    
    
    
    128
    
    
    
    Business
    
    
    70
    
    
    
    39
    
    
    
    100
    
    
    
    58Total commercial
    
    
    117
    
    
    
    39
    
    
    
    228
    
    
    
    58Consumer:Residential mortgage (one-to-four family)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    4
    
    
    
    9
    
    
    
    14
    
    
    
    17Total consumer
    
    
    4
    
    
    
    9
    
    
    
    14
    
    
    
    17Total recoveries
    
    
    121
    
    
    
    48
    
    
    
    242
    
    
    
    75Net recoveries (charge-offs)
    
    
    (2,509
    )
    
    
    45
    
    
    
    (5,241
    )
    
    
    (62
    )Total allowance for losses at end of period
    
    
    64,259
    
    
    
    63,315
    
    
    
    64,259
    
    
    
    63,315Allowance for loan losses
    
    
    59,035
    
    
    
    58,508
    
    
    
    59,035
    
    
    
    58,508Allowance for losses  unfunded commitments
    
    
    5,224
    
    
    
    4,807
    
    
    
    5,224
    
    
    
    4,807Total allowance for losses at end of period
    
    $
    64,259
    
    
    $
    63,315
    
    
    $
    64,259
    
    
    $
    63,315Allowance for loan losses to loans held in portfolio
    
    
    0.99
    %
    
    
    1.19
    %
    
    
    0.99
    %
    
    
    1.19
    %Net charge-offs to average loans outstanding (1)
    
    
    0.16
    
    
    
    
    
    
    
    0.17
    
    
    
    
 
 (1)
    
    Average loans balance includes loans held for sale.  - 42 -




---



##### Table of Contents



Allowance for Unfunded Commitments
 Operational Risk Management
    Interest Rate and Market Risk Management
    - 43 -




---



##### Table of Contents



Liquidity Risk Management
 Liquidity Management
   - 44 -




---



##### Table of Contents



- 45 -




---



##### Table of Contents



CAPITAL MANAGEMENT
   June 30,
    
    December 31,2006
    
    2005United Commercial Bank:Tier 1 leverage
    
    
    8.48
    %
    
    
    8.26
    %Tier 1 risk-based capital
    
    
    10.15
    
    
    
    9.91Total risk-based capital
    
    
    11.12
    
    
    
    10.98UCBH Holdings, Inc. and subsidiaries:Tier 1 leverage
    
    
    8.72
    %
    
    
    8.56
    %Tier 1 risk-based capital
    
    
    10.44
    
    
    
    10.26Total risk-based capital
    
    
    11.40
    
    
    
    11.33
  - 46 -




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  - 47 -




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  Votes
    
    Votes
    
    Votes
    
    Votes
    
    BrokersDescription of Proposal
    
    For
    
    Against
    
    Withheld
    
    Abstained
    
    Non-Votes1.
    
    To elect three Class II directors to serveuntil the 2009 Annual Meeting of Stockholders:Joseph J. Jou
    
    
    79,174,956
    
    
    
    
    
    
    
    4,656,602
    
    
    
    
    
    
    
    James Kwok
    
    
    83,394,445
    
    
    
    
    
    
    
    437,113
    
    
    
    
    
    
    
    David S. Ng
    
    
    83,392,644
    
    
    
    
    
    
    
    438,914
    
    
    
    
    
    
    
    2.
    
    To approve UCBH senior executive annualincentive plan
    
    
    72,060,992
    
    
    
    1,770,924
    
    
    
    
    
    
    
    107,161
    
    
    
    9,892,4813.
    
    To approve the amended and restated UCBH 2006equity incentive plan
    
    
    61,798,965
    
    
    
    12,036,710
    
    
    
    
    
    
    
    103,399
    
    
    
    9,892,4844.
    
    To ratify the Audit Committees selection ofPricewaterhouseCoopers LLP as UCBHsindependent auditors
    
    
    83,651,711
    
    
    
    98,033
    
    
    
    
    
    
    
    81,814
    
    
    
    
 - 48 -




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##### Table of Contents



Term Ending in 2007 (Class III)
    
    Term Ending in 2008 (Class I)Anthony Y. Chan
    
    Li-Lin KoDr. Godwin Wong
    
    Richard Li-Chung WangThomas S. Wu
    
    Dennis Wu
 
 Item 5. Other Information
 None.
 - 49 -




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##### Table of Contents



Item 6. Exhibits
 Index to Exhibits
 Exhibit
    
    
    
Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Agreement and Plan of Merger by and
among UCBH Holdings, Inc. (Buyer),
UCBH Merger Sub, Inc., a wholly owned
subsidiary of Buyer, and Pacifica
Bancorp, Inc. dated May 23, 2005
    
    10-Q
    
    000-24947
    
    
    2.1
    
    
    August 9, 20052.2
    
    Agreement and Plan of Merger by and
among UCBH Holdings, Inc. (Buyer),
United Commercial Bank, a wholly
owned subsidiary of Buyer, and Asian
American Bank & Trust Company dated
August 2, 2005
    
    10-Q
    
    000-24947
    
    
    2.2
    
    
    November 9, 20052.3
    
    Agreement and Plan of Merger by and
among UCBH Holdings, Inc. (Buyer),
United Commercial Bank, a wholly
owned subsidiary of Buyer, and Great
Eastern Bank dated October 13, 2005
    
    S-4
    
    000-24947
    
    
    2.1
    
    
    December 12, 20053.1
    
    Second Amended and Restated
Certificate of Incorporation of UCBH
Holdings, Inc.
    
    10-Q
    
    000-24947
    
    
    3.1
    
    
    May 10, 20043.2
    
    Amended and Restated Bylaws of UCBH
Holdings, Inc., as amended and
restated
    
    10-Q
    
    000-24947
    
    
    3.2
    
    
    May 10, 20043.3
    
    Certificate of Designation,
Preferences and Rights of Series A
Participating Preferred Stock (filed
as Exhibit A to Exhibit 4.7 hereto)
    
    8-K
    
    000-24947
    
    
    1
    
    
    January 29, 20034.0
    
    Form of Stock Certificate of UCBH
Holdings, Inc.
    
    S-1
    
    333-58325
    
    
    4.0
    
    
    July 1, 19984.1
    
    Indenture of UCBH Holdings, Inc.,
dated April 17, 1998, between UCBH
Holdings, Inc. and Wilmington Trust
Company, as trustee
    
    S-4
    
    333-58335
    
    
    4.1
    
    
    July 1, 19984.2
    
    Form of Certificate of Series B
Junior Subordinated Debenture
    
    S-4
    
    333-58335
    
    
    4.2
    
    
    July 1, 19984.3
    
    Certificate of Trust of UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.3
    
    
    July 1, 19984.4
    
    Amended and Restated Declaration of
Trust of UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.4
    
    
    July 1, 19984.5
    
    Form of Series B Capital Security
Certificate for UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.5
    
    
    July 1, 19984.6
    
    Form of Series B Guarantee of the
Company relating to the Series B
Capital Securities
    
    S-4
    
    333-58335
    
    
    4.6
    
    
    July 1, 19984.7
    
    Rights Agreement dated as of January
28, 2003
    
    8-K
    
    000-24947
    
    
    1
    
    
    January 29, 2003
 - 50 -




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##### Table of Contents



Index to Exhibits
 Exhibit
    
    
    
Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith4.8
    
    Indenture of UCBH Holdings, Inc.,
dated September 22, 2005, between
UCBH Holdings, Inc. and Wilmington
Trust Company, as trustee
    
    10-Q
    
    000-24947
    
    
    2.2
    
    
    November 9, 200510.1
    
    Employment Agreement between UCBH
Holdings, Inc., United Commercial
Bank and Thomas S. Wu
    
    10-Q
    
    000-24947
    
    
    10.1
    
    
    November 9, 200410.2
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Jonathan H.
Downing
    
    8-K
    
    000-24947
    
    
    10.2
    
    
    June 13, 200510.3
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Sylvia Loh as
well as certain other Executive Vice
Presidents of UCBH Holdings, Inc. or
United Commercial Bank
    
    10-Q
    
    000-24947
    
    
    10.3
    
    
    November 9, 200410.4
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Ka Wah (Tony)
Tsui as well as certain other Senior
Vice Presidents of UCBH Holdings,
Inc. or United Commercial Bank
    
    10-Q
    
    000-24947
    
    
    10.4
    
    
    November 9, 200410.5
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Daniel Gautsch
    
    8-K
    
    000-24947
    
    
    10.1
    
    
    June 8, 200510.6
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Dennis Wu
    
    8-K
    
    000-24947
    
    
    10.1
    
    
    June 13, 200510.7
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and certain Senior
Vice Presidents of UCBH Holdings,
Inc. or United Commercial Bank
    
    10-Q
    
    000-24947
    
    
    10.1
    
    
    April 27, 200610.8
    
    UCBH Holdings, Inc. 2006 Equity
Incentive Plan, (formerly known as
UCBH Holdings, Inc. 1998 Stock Option
Plan)
    
    
    
    
    
    
    
    
    
    
    
    P10.9
    
    UCBH Holdings, Inc. Senior Executive
Annual Incentive Plan
    
    
    
    
    
    
    
    
    
    
    
    P10.10
    
    Executive Deferred Compensation Plan,
as amended
    
    8-K
    
    000-24947
    
    
    10.1
    
    
    December 20, 200510.11
    
    Director Deferred Compensation Plan
    
    10-K
    
    000-24947
    
    
    10.7
    
    
    March 17, 200510.12
    
    Form of Indemnification Agreement of
UCBH Holdings, Inc.
    
    8-K
    
    000-24947
    
    
    10.1
    
    
    May 18, 2006
 - 51 -




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##### Table of Contents



Index to Exhibits
 Exhibit
    
    
    
Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.13
    
    Form of Indemnification Agreement of
United Commercial Bank.
    
    8-K
    
    000-24947
    
    
    10.2
    
    
    May 18,200614.1
    
    Code of Conduct, as amended on August
14, 2004.
    
    8-K
    
    000-24947
    
    
    14.1
    
    
    September 1, 200421.0
    
    Subsidiaries of UCBH Holdings, Inc.
    
    10-K
    
    000-24947
    
    
    21.0
    
    
    March 16, 200631.1
    
    Certificate pursuant to Rule
13a-14(a) of the Securities Exchange
Act, as amended, signed and dated by
Thomas S. Wu.
    
    
    
    
    
    
    
    
    
    
    
    P31.2
    
    Certificate pursuant to Rule
13a-14(a) of the Securities Exchange
Act, as amended, signed and dated by
Dennis Wu.
    
    
    
    
    
    
    
    
    
    
    
    P32.0
    
    Certificate pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002, signed and dated by Thomas
S. Wu and Dennis Wu.
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
 
 (1)
    
    Furnished herewith - 52 -




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##### Table of Contents



SIGNATURES
  UCBH HOLDINGS, INC.Date: August 9, 2006
    
    /s/ Thomas S. WuThomas S. WuChairman, President andChief Executive Officer(Principal Executive Officer)Date: August 9, 2006
    
    /s/ Dennis WuDennis WuDirector, Executive Vice President andChief Financial Officer(Principal Financial and Accounting Officer)
 - 53 -