##### 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, 2005.
  o
    
    Transition Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the transition period from __________________ to __________________.
 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




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    1Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of  Financial Condition and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 4.
    
    Controls and Procedures
    
    
    46PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    47Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    47Item 3.
    
    Defaults Upon Senior Securities
    
    
    47Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    47Item 5.
    
    Other Information
    
    
    47Item 6.
    
    Exhibits
    
    
    48SIGNATURESEXHIBIT INDEXEXHIBIT 2.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.0EXHIBIT 2.1EXHIBIT 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 31,2005
    
    
    2004ASSETSCash and due from banks
    
    $
    110,864
    
    
    $
    73,864Federal funds sold
    
    
    12,500
    
    
    
    134,500Investment and mortgage-backed securities available for sale, at fair value
    
    
    1,144,284
    
    
    
    1,169,140Investment and mortgage-backed securities held to maturity, at cost (fair
value of $331,487 and $331,969 at June 30, 2005, and December 31, 2004,
respectively)
    
    
    321,988
    
    
    
    325,202Federal Home Loan Bank stock and other equity securities
    
    
    74,493
    
    
    
    56,867Loans held for sale
    
    
    260,501
    
    
    
    326,007Loans held in portfolio
    
    
    4,931,170
    
    
    
    4,050,741Allowance for loan losses
    
    
    (58,508
    )
    
    
    (56,472
    )Net loans held in portfolio
    
    
    4,872,662
    
    
    
    3,994,269Accrued interest receivable
    
    
    29,793
    
    
    
    24,507Premises and equipment, net
    
    
    89,993
    
    
    
    92,643Goodwill
    
    
    68,301
    
    
    
    68,301Core deposit intangibles, net
    
    
    9,287
    
    
    
    9,829Mortgage servicing rights, net
    
    
    10,190
    
    
    
    7,747Other assets
    
    
    32,318
    
    
    
    32,805Total assets
    
    $
    7,037,174
    
    
    $
    6,315,681LIABILITIES AND STOCKHOLDERS EQUITYNoninterest-bearing deposits
    
    $
    466,296
    
    
    $
    428,602Interest-bearing deposits
    
    
    4,959,030
    
    
    
    4,787,260Total deposits
    
    
    5,425,326
    
    
    
    5,215,862Short-term borrowings
    
    
    544,725
    
    
    
    72,310Subordinated debentures
    
    
    106,000
    
    
    
    136,000Accrued interest payable
    
    
    7,365
    
    
    
    6,110Long-term borrowings
    
    
    349,806
    
    
    
    334,952Other liabilities
    
    
    71,586
    
    
    
    66,435Total liabilities
    
    
    6,504,808
    
    
    
    5,831,669Commitments and contingencies (Note 14)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,
2005, and December 31, 2004; 91,746,184 and 91,131,824 shares issued and
outstanding at June 30, 2005, and December 31, 2004, respectively
    
    
    918
    
    
    
    456Additional paid-in capital
    
    
    208,659
    
    
    
    203,432Accumulated other comprehensive loss
    
    
    (6,423
    )
    
    
    (6,498
    )Retained earnings
    
    
    329,212
    
    
    
    286,622Total stockholders equity
    
    
    532,366
    
    
    
    484,012Total liabilities and stockholders equity
    
    $
    7,037,174
    
    
    $
    6,315,681
  1




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 Three Months Ended June 30,
    
    

Six
Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest and dividend income:Loans
    
    $
    79,235
    
    
    $
    52,547
    
    
    $
    145,860
    
    
    $
    105,441Funds sold and due from banks
    
    
    361
    
    
    
    94
    
    
    
    999
    
    
    
    108Investment and mortgage-backed securities:Taxable
    
    
    14,625
    
    
    
    16,713
    
    
    
    28,801
    
    
    
    31,898Non-taxable
    
    
    2,652
    
    
    
    2,280
    
    
    
    5,235
    
    
    
    4,503Total interest and dividend income
    
    
    96,873
    
    
    
    71,634
    
    
    
    180,895
    
    
    
    141,950Interest expense:Deposits
    
    
    26,606
    
    
    
    15,657
    
    
    
    48,667
    
    
    
    30,403Short-term borrowings
    
    
    2,653
    
    
    
    639
    
    
    
    2,969
    
    
    
    1,245Subordinated debentures
    
    
    2,433
    
    
    
    1,957
    
    
    
    4,747
    
    
    
    3,910Long-term borrowings
    
    
    5,535
    
    
    
    3,466
    
    
    
    9,500
    
    
    
    6,937Total interest expense
    
    
    37,227
    
    
    
    21,719
    
    
    
    65,883
    
    
    
    42,495Net interest income
    
    
    59,646
    
    
    
    49,915
    
    
    
    115,012
    
    
    
    99,455Provision for loan losses
    
    
    1,775
    
    
    
    1,009
    
    
    
    2,965
    
    
    
    3,183Net interest income after provision for loan losses
    
    
    57,871
    
    
    
    48,906
    
    
    
    112,047
    
    
    
    96,272Noninterest income:Commercial banking and other fees
    
    
    2,768
    
    
    
    2,156
    
    
    
    5,116
    
    
    
    4,025Service charges on deposits
    
    
    851
    
    
    
    715
    
    
    
    1,515
    
    
    
    1,331Gain (loss) on sale of securities, net
    
    
    (614
    )
    
    
    2,632
    
    
    
    (5
    )
    
    
    6,493Gain on sale of SBA loans, net
    
    
    839
    
    
    
    1,370
    
    
    
    1,923
    
    
    
    1,881Gain on sale of multifamily and other loans, net
    
    
    2,683
    
    
    
    
    
    
    
    6,435
    
    
    
    Equity loss in other equity investments
    
    
    (859
    )
    
    
    (1,489
    )
    
    
    (1,270
    )
    
    
    (1,489
    )Total noninterest income
    
    
    5,668
    
    
    
    5,384
    
    
    
    13,714
    
    
    
    12,241Noninterest expense:Personnel
    
    
    15,109
    
    
    
    11,696
    
    
    
    29,849
    
    
    
    24,611Occupancy
    
    
    3,262
    
    
    
    2,178
    
    
    
    5,908
    
    
    
    3,724Data processing
    
    
    1,762
    
    
    
    1,400
    
    
    
    3,386
    
    
    
    2,694Furniture and equipment
    
    
    1,567
    
    
    
    1,619
    
    
    
    3,096
    
    
    
    2,869Professional fees and contracted services
    
    
    2,782
    
    
    
    1,601
    
    
    
    5,291
    
    
    
    3,124Deposit insurance
    
    
    189
    
    
    
    197
    
    
    
    377
    
    
    
    402Communication
    
    
    238
    
    
    
    319
    
    
    
    495
    
    
    
    615Core deposit intangible amortization
    
    
    258
    
    
    
    482
    
    
    
    542
    
    
    
    715Loss on extinguishment of subordinated debentures
    
    
    1,196
    
    
    
    
    
    
    
    1,196
    
    
    
    Other general and administrative
    
    
    4,065
    
    
    
    3,460
    
    
    
    7,501
    
    
    
    7,012Total noninterest expense
    
    
    30,428
    
    
    
    22,952
    
    
    
    57,641
    
    
    
    45,766Income before income tax expenses
    
    
    33,111
    
    
    
    31,338
    
    
    
    68,120
    
    
    
    62,747Income tax expense
    
    
    7,747
    
    
    
    11,070
    
    
    
    20,950
    
    
    
    22,660Net income
    
    $
    25,364
    
    
    $
    20,268
    
    
    $
    47,170
    
    
    $
    40,087Basic earnings per share
    
    $
    0.28
    
    
    $
    0.22
    
    
    $
    0.52
    
    
    $
    0.44Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.21
    
    
    $
    0.49
    
    
    $
    0.42Dividends declared per share
    
    $
    0.03
    
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    0.04
  2




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND
COMPREHENSIVE INCOME (LOSS)
 Additional
    
    
    Accumulated Other
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Retained
    
    
    Stockholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Earnings
    
    
    Equity
    
    
    IncomeBalance at December 31, 2003
    
    
    90,076,756
    
    
    $
    450
    
    
    $
    208,990
    
    
    $
    (3,245
    )
    
    $
    208,271
    
    
    $
    414,466Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,087
    
    
    
    40,087
    
    
    $
    40,087Other comprehensive loss, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,126
    )
    
    
    
    
    
    
    (15,126
    )
    
    
    (15,126
    )Comprehensive income (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    24,961Stock options exercised, including
related tax benefit
    
    
    372,224
    
    
    
    2
    
    
    
    3,204
    
    
    
    
    
    
    
    
    
    
    
    3,206Cash dividend $0.04 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,617
    )
    
    
    (3,617
    )Balance at June 30, 2004
    
    
    90,448,980
    
    
    $
    452
    
    
    $
    212,194
    
    
    $
    (18,371
    )
    
    $
    244,741
    
    
    $
    439,016Balance at December 31, 2004
    
    
    91,131,824
    
    
    $
    456
    
    
    $
    203,432
    
    
    $
    (6,498
    )
    
    $
    286,622
    
    
    $
    484,012Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,170
    
    
    
    47,170
    
    
    $
    47,170Other comprehensive income, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    75
    
    
    
    75Comprehensive income (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47,245Stock options exercised, including
related tax benefit
    
    
    614,360
    
    
    
    5
    
    
    
    5,684
    
    
    
    
    
    
    
    
    
    
    
    5,689Cash dividend $0.05 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,580
    )
    
    
    (4,580
    )Stock split
    
    
    
    
    
    
    457
    
    
    
    (457
    )
    
    
    
    
    
    
    
    
    
    
    Balance at June 30, 2005
    
    
    91,746,184
    
    
    $
    918
    
    
    $
    208,659
    
    
    $
    (6,423
    )
    
    $
    329,212
    
    
    $
    532,366
 
 (1)
    
    Accumulated Other Comprehensive Income (Loss) arises solely from net
unrealized gains (losses) on investment and mortgage-backed securities available for sale,
presented net of tax.  3




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months Ended June 30,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    47,170
    
    
    $
    40,087Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    2,965
    
    
    
    3,183Amortization of purchase price adjustments
    
    
    15
    
    
    
    (263
    )Amortization of intangibles
    
    
    1,718
    
    
    
    715Depreciation and amortization of premises and equipment
    
    
    4,004
    
    
    
    3,050Gain on sale of loans held in portfolio, securities, and other assets, net
    
    
    (69
    )
    
    
    (6,885
    )Loss on extinguishment of subordinated debentures
    
    
    1,196
    
    
    
    Other, net
    
    
    (2,330
    )
    
    
    1,583Changes in operating assets and liabilities:Decrease in loans held for sale
    
    
    50,438
    
    
    
    Increase in accrued interest receivable
    
    
    (5,286
    )
    
    
    (2,099
    )Increase in other assets
    
    
    (764
    )
    
    
    (72,223
    )Increase (decrease) in accrued interest payable
    
    
    1,255
    
    
    
    (88
    )Increase in other liabilities
    
    
    9,483
    
    
    
    19,986Net cash provided by (used in) operating activities
    
    
    109,795
    
    
    
    (12,954
    )Cash flows from investing activities:Investments and mortgage-backed securities, available for sale:Principal payments and maturities
    
    
    340,411
    
    
    
    172,005Purchases
    
    
    (418,582
    )
    
    
    (690,068
    )Sales
    
    
    91,380
    
    
    
    490,544Called
    
    
    12,000
    
    
    
    55,036Investments and mortgage-backed securities, held to maturity:Principal payments and maturities
    
    
    13,007
    
    
    
    12,939Purchases
    
    
    (9,893
    )
    
    
    (57,768
    )Purchase of Federal Home Loan Bank stock
    
    
    (15,783
    )
    
    
    Loans held in portfolio originated and purchased, net of principal collections
    
    
    (842,347
    )
    
    
    (474,902
    )Proceeds from the sale of loans held in portfolio
    
    
    30,070
    
    
    
    71,150Purchases of premises and other equipment
    
    
    (1,691
    )
    
    
    (5,838
    )Other investing activities, net
    
    
    (8,374
    )
    
    
    (2,361
    )Net cash used in investing activities
    
    
    (809,802
    )
    
    
    (429,263
    )Cash flows from financing activities:Net increase in demand deposits, NOW, money market and savings accounts
    
    
    132,354
    
    
    
    245,104Net increase in time deposits
    
    
    77,110
    
    
    
    105,217Net increase in short-term borrowings
    
    
    437,053
    
    
    
    60,562Proceeds from long-term borrowings
    
    
    
    
    
    
    20,000Redemption of subordinated debentures
    
    
    (30,000
    )
    
    
    Proceeds from stock option exercises
    
    
    2,599
    
    
    
    1,866Payment of cash dividend on common stock
    
    
    (4,109
    )
    
    
    (3,156
    )Net cash provided by financing activities
    
    
    615,007
    
    
    
    429,593Net decrease in cash and cash equivalents
    
    
    (85,000
    )
    
    
    (12,624
    )Cash and cash equivalents at beginning of period
    
    
    208,364
    
    
    
    76,786Cash and cash equivalents at end of period
    
    $
    123,364
    
    
    $
    64,162
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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    Basis of Presentation and Summary of Significant Accounting and Reporting PoliciesOrganizationUCBH Holdings, Inc. (UCBH) is a bank holding company organized under the laws of Delaware that
conducts its business through its principal subsidiary, United Commercial Bank (the Bank), a
California state-chartered commercial bank. The Bank offers a full range of commercial and
consumer banking products through its retail branches and other banking offices in California and
New York, and internationally through its full-service branch in Hong Kong, which opened during the
second half of 2003 under a license granted by the Hong Kong Monetary Authority. The Bank also has
representative offices in Shenzhen, China and Taipei, Taiwan. During the three months ended March
31, 2004, the Banks wholly owned subsidiary, UCB Investment Services, Inc. (UCBIS), commenced
business. UCBIS is a registered broker-dealer with the Securities and Exchange Commission and a
member of the National Association of Securities Dealers (NASD) and the Securities Investor
Protection Corporation (SIPC).Basis of Presentation and Principles of ConsolidationThe accompanying unaudited consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP) for interim
financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and
include all adjustments consisting of normal and recurring nature, which UCBH and subsidiaries
(collectively referred to as the Company) considers necessary for a fair statement of the
financial condition and results of operations of such periods. Certain information and note
disclosures normally included in financial statements prepared in accordance with GAAP have been
omitted pursuant to such rules and regulations. The unaudited consolidated financial statements
include the accounts of the Company and most of its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in
consolidation. The wholly owned
subsidiaries not included in the consolidated results are certain special purpose trusts
established for the purpose of issuing Guaranteed Preferred Beneficial Interests in UCBHs junior
subordinated debentures. These trusts are excluded pursuant to Financial Accounting Standards
Board (the FASB) Interpretation No. 46R (FIN 46R), Consolidation of Variable Interest
Entities, issued by the FASB in December of 2003, as UCBH is not deemed to be the primary
beneficiary. The Bank also invests in affordable housing and small business corporations, limited
liability companies, and limited partnerships as a result of Community Reinvestment Act (CRA)
requirements. Such investments are generally accounted for under the equity or cost method
pursuant to Accounting Principles Board (the APB) Opinion No. 18, The Equity Method of
Accounting for Investments in Common Stock. Additionally, the Bank recognizes a liability and a
corresponding increase in CRA investments for delayed equity contributions that are unconditional
and legally binding relating to affordable housing investments pursuant to Emerging Issues Task
Force (EITF) Issue No. 94-1, Accounting for Tax Benefits Resulting from Investments in
Affordable Housing Projects. Other commitments are disclosed in Note 14. None of these
investments meet the requirements of FIN 46R, and therefore, are not consolidated.On January 27, 2005, UCBH declared a two-for-one stock split in the form of a stock dividend
for the shareholders of record as of March 31, 2005, and distributed the stock dividend on April
12, 2005. Accordingly, basic and diluted earnings per share on the consolidated statements of
income for the three and six months ended June 30, 2004, have been restated to reflect the impact
of the stock split. Additionally, the number of issued and
outstanding shares of UCBHs
common stock on the consolidated balance sheet at December 31, 2004, and the statement of changes
in stockholders equity and comprehensive income (loss) take into account the stock split.Please refer to the audited consolidated financial statements and related notes thereto included in
the Companys annual report on Form 10-K for the year ended December 31, 2004, for additional
details of its financial position, as well as for a description of its significant accounting
policies, which have been continued without material change. The details included in the notes
have not changed except as a result of normal transactions in the interim period and the events
mentioned in the notes below.
 5




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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, 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 years consolidated financial statements in order
to conform to the current periods presentation.Transfer and Servicing of Financial AssetsFrom time to time, the Bank sells commercial real estate, construction, multifamily real estate,
SBA and residential mortgage loans to provide funds for additional lending. The Bank retains the
servicing rights on substantially all loans sold. A sale is recognized only when consideration is
received and control is transferred to the buyer. A gain or loss is recognized at the time of sale
by comparing the net sales proceeds to the carrying value of the loans and by calculating the value
of mortgage servicing rights and retained interests, based on their relative fair values.Accounting for Stock-Based CompensationThe Company has elected to continue accounting for employee stock-based compensation using the
intrinsic value method in accordance with APB Opinion No. 25, Accounting for Stock Issued to
Employees, rather than the alternative fair value accounting allowed by Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by
SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. Under APB
Opinion No. 25, the Company records no stock-based employee compensation cost if 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.Had compensation cost for the Companys stock-based compensation arrangements for employees been
determined based on the fair value at grant date of the awards for the three and six months ended
June 30, 2005 and 2004, consistent with the provisions of SFAS No. 123, the Companys net income
and earnings per share would have been the pro forma amounts as follows (dollars in thousands,
except per share data):
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income:As reported
    
    $
    25,364
    
    
    $
    20,268
    
    
    $
    47,170
    
    
    $
    40,087Deduct: Total stock-based
employee compensation
expense determined under
fair value based method of
all awards, net of related
tax effects
    
    
    (2,251
    )
    
    
    (1,460
    )
    
    
    (4,413
    )
    
    
    (2,752
    )Pro forma net income
    
    $
    23,113
    
    
    $
    18,808
    
    
    
    42,757
    
    
    
    37,335Basic earnings per share:As reported
    
    $
    0.28
    
    
    $
    0.22
    
    
    $
    0.52
    
    
    $
    0.44Pro forma
    
    $
    0.25
    
    
    $
    0.21
    
    
    $
    0.47
    
    
    $
    0.41Diluted earnings per share:As reported
    
    $
    0.27
    
    
    $
    0.21
    
    
    $
    0.49
    
    
    $
    0.42Pro forma
    
    $
    0.24
    
    
    $
    0.20
    
    
    $
    0.45
    
    
    $
    0.39
 If the computed fair values of the stock awards had been amortized to expense over the vesting
period of the awards, pro forma amounts would have been as shown in the above table. The impact of
outstanding non-vested stock options has been excluded from the pro forma calculation.
 6




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##### Table of Contents



These calculations require the use of option pricing models, even though such models were developed
to estimate the fair value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the Companys stock option awards. These models as
required by current accounting pronouncements also require subjective assumptions, including
expected stock price volatility, dividend yield and expected time to exercise, which greatly affect
the calculated values. The following weighted average assumptions were used in the Black-Scholes
option-pricing model for options granted for the three and six months ended June 30, 2005 and 2004:
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Dividend yield
    
    
    0.60
    %
    
    
    0.42
    %
    
    
    0.58
    %
    
    
    0.42
    %Volatility
    
    
    42.65
    %
    
    
    24.05
    %
    
    
    32.36
    %
    
    
    25.04
    %Risk-free interest rate
    
    
    4.10
    %
    
    
    4.36
    %
    
    
    4.13
    %
    
    
    4.20
    %Expected lives (years)
    
    
    7.5
    
    
    
    7.5
    
    
    
    7.5
    
    
    
    7.5
 2.
    
    Recent Accounting PronouncementsAccounting Changes and Error CorrectionOn June 7, 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes
in Interim Financial Statements. SFAS No. 154 changes the requirements for the accounting for and
the reporting of a change in accounting principle. Previously, most voluntary changes in accounting
principles were required to be recognized by way of a cumulative effect adjustment within net
income during the period of change. SFAS No. 154 requires retrospective application to prior
periods financial statements, unless it in impracticable to determine either the period-specific
effects or the cumulative effect of the change. SFAS No. 154 is effective for accounting changes
made in fiscal years beginning after December 15, 2005; however, SFAS No. 154 does not change the
transition provisions of any existing accounting pronouncements. The Company does not believe
adoption of SFAS No. 154 will have a material effect on its consolidated financial position,
results of operations or cash flows.Accounting for Stock-Based CompensationOn December 16, 2004, the FASB issued SFAS No. 123R, Share-Based Payment. SFAS No. 123R is a
revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123R eliminates the
ability to account for share-based compensation transactions using the intrinsic value method as
prescribed under APB Opinion No. 25, Accounting for Stock Issued to Employees, and requires that
such transactions be accounted for using a fair value-based method. SFAS No. 123R covers a wide
range of share-based compensation arrangements including share options, restricted share plans,
performance-based awards, share appreciation rights and employee share purchase plans. SFAS No.
123R had been scheduled to be effective for the interim and annual periods beginning after June 15,
2005. However, in April 2005, the Securities and Exchange Commission amended Rule 4-01(a) of
Regulation S-X to amend the date for compliance with SFAS No. 123R, so that each registrant that is
not a small business issuer will be required to prepare financial statements in accordance with
SFAS No. 123R beginning with the first interim or annual reporting period of the registrants first
fiscal year beginning on or after June 15, 2005. Thus, SFAS No. 123R will not become effective for
the Company until January 1, 2006.SFAS No. 123R may be adopted using one of two methods: (1) A modified prospective method in which
compensation cost is recognized beginning with the effective date (a) based on the requirements of
SFAS No. 123R for all share-based payments granted after the effective date and (b) based on the
requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of
SFAS No. 123R that remain unvested on the effective date; (2) A modified retrospective method
which includes the requirements of the modified prospective method described above, but also
permits entities to restate based on the amounts previously recognized under SFAS No. 123 for
purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim
periods of the year of adoption. The Company has not yet concluded on the method of adoption
allowed by SFAS No. 123 and is currently evaluating the impact of this accounting guidance on its
financial position and its results of operations. However, the adoption of SFAS No. 123R may have
a material impact on the Companys financial position and results of operation.
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Accounting for Certain Loans or Debt Securities Acquired in a TransferIn December 2003, the American Institute of Certified Public Accountants (the AICPA) issued
Statement of Position 03-3 (SOP 03-3), which addresses accounting for loans or debt securities
acquired in a transfer and the resulting differences between contractual cash flows and cash flows
expected to be collected. SOP 03-3 does not apply to loans originated by the Bank. SOP 03-3
limits the yield that may be accreted to the excess of the investors estimate of undiscounted
expected principal, interest, and other cash flows over the investors initial investment in the
loan. SOP 03-3 requires that the excess of contractual cash flows over cash flows expected to be
collected not be recognized as an adjustment of yield, loss accrual or valuation allowance. SOP
03-3 also prohibits carrying over or creation of valuation allowances in the initial accounting
of all loans acquired in a transfer that are within the scope of SOP 03-3. The prohibition of the
valuation allowance carryover applies to the purchase of individual loans, pools of loans and loans
acquired in a purchase business combination.SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. For
loans acquired in fiscal years beginning on or before December 15, 2004, decreases in cash flows
expected to be collected should be applied prospectively. The adoption of SOP 03-3 did not have a
material impact on the financial condition or operating results of the Company.3.
    
    Business CombinationUCBH and Pacifica Bancorp, Inc., the holding company of
Pacifica Bank, a Washington state-chartered
bank, entered into an Agreement and Plan of Merger dated as of May 23, 2005 (the Merger
Agreement), for a total consideration of approximately $40.3 million (based on the May 23, 2005,
closing price for UCBHs common stock), composed of the issuance of approximately 1.2 million
shares of UCBHs common stock, $16.0 million in cash and approximately $3.6 million related to the
cash-out of the outstanding stock options of Pacifica Bancorp, Inc. Pacifica Bancorp, Inc. had
net loans of $132.0 million and total assets of $164.3 million at March 31, 2005, and net interest
income of $2.0 million and net income of $386,000 for the three months ended March 31, 2005. The
closing of this acquisition is anticipated to occur in the fourth quarter of 2005.In accordance with the terms of the Merger Agreement, upon consummation of UCBH and Pacifica
Bancorp, Inc. (the Merger), the outstanding shares of common stock, no par value, of Pacifica
Bancorp, Inc. will be converted into, at the election of the holder thereof, (i) shares of UCBHs
common stock, par value $0.01, in accordance with the Exchange Ratio, (ii) cash in the amount of
the Per Share Cash Consideration, or (iii) a combination of a specified number of shares of
UCBHs common stock with respect to some of such holders common stock in Pacifica Bancorp, Inc.
and cash with respect to the remainder of such holders stock in Pacifica Bancorp, Inc. Exchange
Ratio means the number of shares of UCBHs common stock into which a share of common stock of
Pacifica Bancorp, Inc. shall be converted, which number shall be equal to the quotient (to the
nearest ten-thousandth) of (i) the Per Share Amount divided by (ii) the Average Closing Price.
Per Share Cash Consideration means an amount of cash, without interest, equal to the Per Share
Amount. Per Share Amount means the quotient of (i) the sum of (A) the product of (I) 1,198,795
multiplied by (II) the Average Closing Price, plus (B) $16,024,000, divided by (ii) 3,544,597,
rounded to the nearest whole cent. Average Closing Price means the average of the daily closing
price of a share of UCBH common stock reported on The NASDAQ Stock Market during the ten (10)
consecutive trading days preceding the fifth (5) business day prior the date of consummation of the
Merger.Consummation of the Merger is subject to various closing conditions, including, among others, (i)
receipt of the approval of the Merger Agreement by Pacifica Bancorp, Inc.s stockholders; (ii)
holders of not more than seven percent of the outstanding shares of capital stock of Pacifica
Bancorp, Inc. having perfected dissenters rights pursuant to the Washington Business Corporations
Act; (iii) receipt of the requisite regulatory approvals from the Board of Governors of the Federal
Reserve System and other federal and state regulatory authorities; (iv) the net worth of Pacifica
Bancorp, Inc. be not less than the Company Closing Net Worth, excluding certain
considerations; and (v) receipt of an opinion as to the tax treatment of the Merger. Company
Closing Net Worth means, if the consummation of the Merger occurs on or before July 31, 2005,
$17,173,000; if the consummation of the Merger occurs on or after August 1, 2005, but on or before
August 31, 2005, $17,363,000; if such consummation occurs on or after September 1, 2005, but on or
before September 30, 2005, $17,566,000; if such consummation
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##### Table of Contents



occurs on or after October 1, 2005, but on or before October 31, 2005, $17,764,000; and if such
consummation occurs on or after November 1, 2005, $17,996,000.Pacifica Bancorp, Inc. and UCBH shall pay to the other a break-up fee in the event such party
terminates the Merger Agreement upon certain conditions.4.
    
    Cash and Due From BanksThe following table summarizes the interest-bearing and noninterest-bearing components of cash and
due from banks at June 30, 2005, and December 31, 2004 (dollars in thousands):
 June 30,
    
    
    December 31,2005
    
    
    2004Interest-bearing
    
    $
    22,436
    
    
    $
    16,556Noninterest-bearing
    
    
    88,428
    
    
    
    57,308Total cash and due from banks
    
    $
    110,864
    
    
    $
    73,864
 The Bank is required to maintain a percentage of its deposit balances as reserves either in cash or
on deposit at the Federal Reserve Bank. At June 30, 2005, and December 31, 2004, the reserve
requirement was $11.3 million and $6.8 million, respectively.5.
    
    Investment and Mortgage-Backed SecuritiesThe amortized cost and approximate market value of investment and mortgage-backed securities
available for sale at June 30, 2005, and December 31, 2004, are as follows (dollars in thousands):
 June 30, 2005
    
    
    December 31, 2004Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueInvestment securities:Trust Preferred Securities
    
    $
    23,442
    
    
    $
    23,149
    
    
    $
    18,441
    
    
    $
    18,219Federal Agency Notes
    
    
    147,426
    
    
    
    145,909
    
    
    
    232,594
    
    
    
    230,046Total investment securities
    
    
    170,868
    
    
    
    169,058
    
    
    
    251,035
    
    
    
    248,265Mortgage-backed securities:FNMA
    
    
    374,565
    
    
    
    371,329
    
    
    
    366,307
    
    
    
    363,097GNMA
    
    
    91,829
    
    
    
    90,936
    
    
    
    106,501
    
    
    
    105,072FHLMC
    
    
    309,121
    
    
    
    305,458
    
    
    
    288,789
    
    
    
    285,965Other
    
    
    208,983
    
    
    
    207,503
    
    
    
    167,719
    
    
    
    166,741Total mortgage-backed securities
    
    
    984,498
    
    
    
    975,226
    
    
    
    929,316
    
    
    
    920,875Total investment and mortgage-backed securities
    
    $
    1,155,366
    
    
    $
    1,144,284
    
    
    $
    1,180,351
    
    
    $
    1,169,140
 As of June 30, 2005, the carrying value and the market value of the available-for-sale securities
were $1.16 billion and $1.14 billion, respectively. The total net unrealized loss on these
securities was $11.1 million. Such unrealized losses, net of tax, are $6.4 million and are
reflected as a reduction to stockholders equity.
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##### Table of Contents



The amortized cost and approximate market value of investment and mortgage-backed securities held
to maturity at June 30, 2005, and December 31, 2004, are as follows (dollars in thousands):
 June 30, 2005
    
    
    December 31, 2004Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueInvestment securities:Municipals
    
    $
    225,530
    
    
    $
    234,750
    
    
    $
    215,594
    
    
    $
    222,297Mortgage-backed securities:FNMA
    
    
    5,524
    
    
    
    5,438
    
    
    
    5,765
    
    
    
    5,689GNMA
    
    
    90,102
    
    
    
    90,477
    
    
    
    102,439
    
    
    
    102,595FHLMC
    
    
    832
    
    
    
    822
    
    
    
    1,404
    
    
    
    1,388Total mortgage-backed securities
    
    
    96,458
    
    
    
    96,737
    
    
    
    109,608
    
    
    
    109,672Total investment and mortgage-backed securities
    
    $
    321,988
    
    
    $
    331,487
    
    
    $
    325,202
    
    
    $
    331,969
 The difference between the carrying value and market value of securities held to maturity,
aggregating a gain of $9.5 million, has not been recognized in the financial statements as of June
30, 2005.6.
    
    Loans Held for SaleLoans held for sale portfolio consists of the following at June 30, 2005, and December 31, 2004
(dollars in thousands):
 June 30,
    
    
    December 31,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    35,968
    
    
    $
    26,882Secured by real estate  multifamily
    
    
    220,176
    
    
    
    295,253Business
    
    
    2,291
    
    
    
    3,337Total commercial loans
    
    
    258,435
    
    
    
    325,472Consumer:Residential mortgage (one to four family)
    
    
    325
    
    
    
    Total consumer loans
    
    
    325
    
    
    
    Gross loans held for sale
    
    
    258,760
    
    
    
    325,472Net deferred loan costs
    
    
    1,741
    
    
    
    535Loans held for sale, at lower of cost or market value
    
    $
    260,501
    
    
    $
    326,007
 10




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##### Table of Contents



7.
    
    Loans Held in PortfolioLoans held in portfolio consists of the following at June 30, 2005, and December 31, 2004 (dollars
in thousands):
 June 30,
    
    
    December 31,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    2,332,530
    
    
    $
    1,951,020Secured by real estate  multifamily
    
    
    1,032,225
    
    
    
    865,483Construction
    
    
    361,927
    
    
    
    291,080Business
    
    
    638,619
    
    
    
    468,220Total commercial loans
    
    
    4,365,301
    
    
    
    3,575,803Consumer:Residential mortgage (one to four family)
    
    
    520,016
    
    
    
    434,323Other
    
    
    51,976
    
    
    
    47,926Total consumer loans
    
    
    571,992
    
    
    
    482,249Gross loans held in portfolio
    
    
    4,937,293
    
    
    
    4,058,052Net deferred loan fees
    
    
    (6,123
    )
    
    
    (7,311
    )Loans held in portfolio
    
    
    4,931,170
    
    
    
    4,050,741Allowance for loan losses
    
    
    (58,508
    )
    
    
    (56,472
    )Net loans held in portfolio
    
    $
    4,872,662
    
    
    $
    3,994,269
 The activity in the allowance for loan losses and allowance for losses related to unfunded
commitments consists of the following for the three and six months ended June 30, 2005 and 2004
(dollars in thousands):
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Balance at beginning of period:Allowance for loan losses
    
    $
    57,547
    
    
    $
    59,488
    
    
    $
    56,472
    
    
    $
    58,126Allowance for losses  unfunded commitments
    
    
    3,948
    
    
    
    2,816
    
    
    
    3,940
    
    
    
    2,737Total allowance for losses at beginning of period
    
    
    61,495
    
    
    
    62,304
    
    
    
    60,412
    
    
    
    60,863Provision for losses
    
    
    1,775
    
    
    
    1,009
    
    
    
    2,965
    
    
    
    3,183Loans charged off
    
    
    (3
    )
    
    
    (763
    )
    
    
    (137
    )
    
    
    (1,511
    )Recoveries of loans previously charged off
    
    
    48
    
    
    
    62
    
    
    
    75
    
    
    
    77Total allowance for losses at end of period
    
    $
    63,315
    
    
    $
    62,612
    
    
    $
    63,315
    
    
    $
    62,612Allowance for loan losses
    
    $
    58,508
    
    
    $
    59,469
    
    
    $
    58,508
    
    
    $
    59,469Allowance for losses  unfunded commitments
    
    
    4,807
    
    
    
    3,143
    
    
    
    4,807
    
    
    
    3,143Total allowance for losses at end of period
    
    $
    63,315
    
    
    $
    62,612
    
    
    $
    63,315
    
    
    $
    62,612
 8.
    
    GoodwillThe gross carrying amount for goodwill as of June 30, 2005, and December 31, 2004, are as follows
(dollars in thousands):
 June 30,
    
    
    December 31,2005
    
    
    2004Goodwill
    
    $
    68,301
    
    
    $
    68,301
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For the three and six months ended June 30, 2005, goodwill was reviewed for impairment, and it was
determined there was no impairment. The activity in goodwill consists of the following for the
three and six months ended June 30, 2005 and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    68,301
    
    
    $
    87,437
    
    
    $
    68,301
    
    
    $
    87,437Addition/Capitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase price adjustment
    
    
    
    
    
    
    (2,344
    )
    
    
    
    
    
    
    (2,344
    )Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Write-downs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at end of period
    
    $
    68,301
    
    
    $
    85,093
    
    
    $
    68,301
    
    
    $
    85,093
 9.
    
    Core Deposit IntangiblesThe gross carrying amount and the associated accumulated amortization for core deposit intangibles
as of June 30, 2005, and December 31, 2004, are as follows (dollars in thousands):
 June 30,
    
    
    December 31,2005
    
    
    2004Core deposit intangibles, gross
    
    $
    13,100
    
    
    $
    13,100Accumulated amortization
    
    
    (3,813
    )
    
    
    (3,271
    )Core deposit intangibles, net
    
    $
    9,287
    
    
    $
    9,829
 For the three and six months ended June 30, 2005, core deposit intangibles was reviewed for
impairment, and it was determined there was no impairment. The activity in core deposit
intangibles, net consists of the following for the three and six months ended June 30, 2005 and
2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    9,545
    
    
    $
    10,878
    
    
    $
    9,829
    
    
    $
    11,111Addition/Capitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization
    
    
    (258
    )
    
    
    (482
    )
    
    
    (542
    )
    
    
    (715
    )Write-downs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at end of period
    
    $
    9,287
    
    
    $
    10,396
    
    
    $
    9,287
    
    
    $
    10,396
 10.
    
    Mortgage Servicing RightsThe gross carrying amount and the associated accumulated amortization for mortgage servicing
rights, which are included in other intangibles on the consolidated balance sheets, as of June 30,
2005, and December 31, 2004, are as follows (dollars in thousands):
 June 30,
    
    
    December 31,2005
    
    
    2004Mortgage servicing rights, gross
    
    $
    12,540
    
    
    $
    9,149Accumulated amortization
    
    
    (2,350
    )
    
    
    (1,402
    )Mortgage servicing rights, net
    
    $
    10,190
    
    
    $
    7,747
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Amortization expense on mortgage servicing rights is recorded as a reduction in loan servicing fee
income and reported as part of commercial banking and other fees. For the three and six months
ended June 30, 2005, mortgage servicing rights were reviewed for impairment and it was determined
there was no impairment. The activity in mortgage servicing rights, net consists of the following
for the three and six months ended June 30, 2005 and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Balance at beginning of period
    
    $
    9,039
    
    
    $
    4,040
    
    
    $
    7,747
    
    
    $
    4,006Addition/Capitalization
    
    
    1,785
    
    
    
    2,495
    
    
    
    3,619
    
    
    
    2,683Purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization
    
    
    (634
    )
    
    
    (463
    )
    
    
    (1,176
    )
    
    
    (617
    )Write-downs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at end of period
    
    $
    10,190
    
    
    $
    6,072
    
    
    $
    10,190
    
    
    $
    6,072
 The estimated fair value of mortgage servicing rights is regularly reviewed and changed depending
on market conditions. The Bank stratifies the loans serviced for others by year of origination,
term to maturity and loan type. If the estimated fair value of a loan strata is less than its book
value, the Bank establishes a valuation allowance for the estimated temporary impairment through a
charge to noninterest income.The Bank services real estate loans for others of $1.41 billion and $1.11 billion at June 30, 2005,
and December 31, 2004, respectively. These loans are not included in the consolidated balance
sheets. In connection therewith, the Bank held trust funds of approximately $7.0 million and $14.1
million at June 30, 2005, and December 31, 2004, respectively, all of which were segregated in
separate accounts and not included in the respective balance sheets. Some agreements with
investors to whom the Bank have sold loans have provisions that could require repurchase of loans
under certain circumstances. Management does not believe that any such repurchases will be
significant, and therefore no provision for repurchase has been included.11.
    
    BorrowingsThe Bank has recorded certain loan sale transactions as secured borrowings as of June 30, 2005, as
a result of these transactions not qualifying for sales treatment under SFAS No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. The short-term
and long-term secured borrowings amounted to $5.4 million and $45.1 million, respectively, at June
30, 2005.12.
    
    Subordinated DebenturesPursuant to the Indenture dated as of April 17, 1998, (the Indenture), between UCBH and
Wilmington Trust Company (Wilmington), as Trustee, UCBH redeemed on June 27, 2005, all
$30,928,000 aggregate principal amount of the 9.375% junior subordinated debentures due May 1, 2028
(the Debentures), issued by UCBH under the Indenture. The redemption price consisted of the
$30,928,000 aggregate principal amount plus aggregate unpaid interest of $451,000. The redemption
of the Debentures resulted in a loss of $1.2 million from the write-off of the unamortized
Debentures issuance costs and other legal costs for the three and six months ended June 30, 2005.
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13.
    
    Earnings Per ShareOn January 27, 2005, UCBH declared a two-for-one stock split in the form of a stock dividend
to shareholders of record as of March 31, 2005, and distributed the stock dividend on April 12,
2005. Accordingly, basic and diluted earnings per share on the consolidated statements of income
for the three and six months ended June 30, 2004, have been restated to reflect the impact of the
stock split. Additionally, the number of issued and outstanding
shares of UCBHs common
stock on the consolidated balance sheet at December 31, 2004, takes into account the stock split.
The following is a reconciliation of the numerators and denominators of the basic and diluted
earnings per share for the three and six months ended June 30, 2005 and 2004 (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, 2005
    
    
    Three Months Ended June 30, 2004Net income  basic
    
    $
    25,364
    
    
    
    91,624,156
    
    
    $
    0.28
    
    
    $
    20,268
    
    
    
    90,354,498
    
    
    $
    0.22Effect of stock options
    
    
    
    
    
    
    3,597,036
    
    
    
    
    
    
    
    
    
    
    
    4,599,728Net income  diluted
    
    $
    25,364
    
    
    
    95,221,192
    
    
    $
    0.27
    
    
    $
    20,268
    
    
    
    94,954,226
    
    
    $
    0.21Six Months Ended June 30, 2005
    
    
    Six Months Ended June 30, 2004Net income  basic
    
    $
    47,170
    
    
    
    91,427,204
    
    
    $
    0.52
    
    
    $
    40,087
    
    
    
    90,275,750
    
    
    $
    0.44Effect of stock options
    
    
    
    
    
    
    4,062,664
    
    
    
    
    
    
    
    
    
    
    
    4,683,390Net income  diluted
    
    $
    47,170
    
    
    
    95,489,868
    
    
    $
    0.49
    
    
    $
    40,087
    
    
    
    94,959,140
    
    
    $
    0.42
 14.
    
    Derivative Financial Instruments and Financial Instruments with Off-Balance-Sheet RiskThe Bank is a party to derivative financial instruments and financial instruments with
off-balance-sheet risk in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuations in interest rates. The Bank does not hold
nor issue financial instruments for trading purposes. Financial instruments in the normal course
of business include commitments to extend and purchase credit, forward commitments to sell loans,
letters of credit, foreign exchange contracts and interest-rate caps. Those instruments involve,
to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in
the statement of financial position. The contract or notional amounts of those instruments reflect
the extent of involvement the Bank has in particular classes of financial instruments.The Banks exposure to credit loss in the event of nonperformance by the other party to the
financial instrument for commitments to extend credit is represented by the contractual or notional
amount of those instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. For interest-rate swap and
cap transactions and forward commitments to sell loans, the contract or notional amounts do not
represent exposure to credit loss. The Bank controls the credit risk of its interest-rate swap and
cap agreements, foreign exchange contracts, and forward commitments to sell loans through credit
approvals, limits and monitoring procedures. The Bank does not require collateral or other
security to support interest-rate swap transactions with credit risk.
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The contractual or notional amounts of derivative financial instruments and financial instruments
with off-balance-sheet risk as of June 30, 2005, and December 31, 2004, are as follows (dollars in
millions):
 June 30,
    
    
    December 31,2005
    
    
    2004Financial instruments whose contract amounts represent credit risk:Commitments to extend credit:Consumer (including residential mortgage)
    
    $
    80.0
    
    
    $
    75.6Commercial (excluding construction)
    
    
    518.0
    
    
    
    451.9Construction
    
    
    363.4
    
    
    
    260.4Letters of credit
    
    
    86.0
    
    
    
    44.8Unfunded loans held for sale commitments
    
    
    33.3
    
    
    
    Foreign exchange contracts receivable
    
    
    (285.1
    )
    
    
    (176.6
    )Foreign exchange contracts payable
    
    
    285.2
    
    
    
    176.0Put options to buy
    
    
    13.2
    
    
    
    18.7Put options to sell
    
    
    (13.2
    )
    
    
    (18.7
    )Unfunded CRA investment commitments
    
    
    5.9
    
    
    
    8.3
 CommitmentsCommitments to extend credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed expiration dates or
other termination clauses. The Bank evaluates each customers credit worthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of
credit, is based on managements credit evaluation of the counter party. Collateral held generally
includes residential or commercial real estate, accounts receivable, or other assets.Letters of credit are conditional commitments issued by the Bank to guarantee the performance of a
customer to a third party. The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loan facilities to customers. These letters of credit are
usually secured by the customers inventories or by deposits held at the Bank.Foreign exchange contracts are contracts to purchase or sell currencies in the over-the-counter
market. Such contracts can be either for immediate or forward delivery. Entering into foreign
exchange contract agreements involves the risk of dealing with counter parties and their ability to
meet the terms of the contracts. The Bank purchases or sells foreign exchange contracts in order
to hedge a balance sheet or off-balance-sheet foreign exchange position. Additionally, the Bank
purchases and sells foreign exchange contracts for customers, as long as the foreign exchange risk
is fully hedged with an offsetting position.Interest-rate caps are interest rate protection instruments that involve the payment from the
seller to the buyer of an interest differential. This differential represents the difference
between current interest rates and agreed-upon rate applied to a notional principal amount.
Entering into interest-rate cap agreements involves the risk of dealing with counter parties and
their ability to meet the terms of the contracts. Notional principal amounts often are used to
express the volume of these transactions, but the amounts potentially subject to credit risk are
much smaller. The Bank may be a purchaser of interest-rate caps and swaps. At June 30, 2005, and
December 31, 2004, no interest-rate caps or swaps were outstanding. For the three and six months
ended June 30, 2005 and 2004, the impact of interest-rate caps and swaps to interest income was
nil.Put options to buy are part of currency-linked deposits with other financial institutions. At the
option of these third parties, the Bank is required to buy a currency at a predefined exchange rate
with another currency. Put options to sell are part of currency-linked deposits that customers
have placed with the Bank. At the option of the Bank, the customer is obligated to buy a currency
at a predefined exchange rate with another currency. The put options to buy and put options to
sell, along with the related currency-linked deposits, offset each other.As disclosed in Note 1, the Bank has CRA investments of which a portion has been funded or remains
unfunded at June 30, 2005, and December 31, 2004. Fundings are made upon request by the underlying
investee companies based on original commitment amounts.
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15.
    
    Supplemental Cash Flow InformationThe supplemental cash flow information is as follows (dollars in thousands):
 Six Months Ended June 30,2005
    
    
    2004Cash paid during the period for:Interest
    
    $
    64,627
    
    
    $
    55,831Income taxes
    
    
    17,159
    
    
    
    12,044Non-cash investing and financing activities:Loans securitized
    
    $
    
    
    
    $
    147,134Income tax benefit from stock options exercised
    
    
    3,090
    
    
    
    1,340
 16.
    
    Segment InformationIn accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, the Company designates the internal organization that is used by management for
making operating decisions and assessing performance as the source of the Companys 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 three reportable
segments, which include Domestic Commercial Banking, the Hong Kong operations and UCBIS. The
Other column consists of the Hong Kong operations and UCBIS. The Intersegment column
identifies the intersegment activities between the Domestic Commercial Banking and Other.
Intersegment activities consist of funds sold and related interest by the Hong Kong operations to
Domestic Commercial Banking, Hong Kong operations short-term borrowings and related transfer
pricing interest with Domestic Commercial Banking, and a UCBIS deposit account with Domestic
Commercial Banking. Transfer pricing interest income is based on the Companys internal funds
transfer pricing system, which assigns a cost of funds or a credit for funds to assets or
liabilities based on their type, maturity or repricing characteristics. The Hong Kong operations
commenced operations in the last half of 2003 and UCBIS commenced operations during the first
quarter of 2004. The following is segment information for the three and six months ended June 30,
2005 and 2004 (dollars in thousands):
 DomesticCommercialBanking
    
    
    Other
    
    
    Intersegment
    
    
    TotalThree months ended June 30, 2005:Total interest income
    
    $
    95,287
    
    
    $
    5,139
    
    
    $
    (3,553
    )
    
    $
    96,873Net interest income
    
    
    61,247
    
    
    
    927
    
    
    
    (2,528
    )
    
    
    59,646Net income (loss)
    
    
    27,986
    
    
    
    (81
    )
    
    
    (2,541
    )
    
    
    25,364Three months ended June 30, 2004:Total interest income
    
    
    70,842
    
    
    
    1,093
    
    
    
    (301
    )
    
    
    71,634Net interest income
    
    
    49,921
    
    
    
    396
    
    
    
    (402
    )
    
    
    49,915Net income (loss)
    
    
    21,200
    
    
    
    (547
    )
    
    
    (385
    )
    
    
    20,268Six months ended June 30, 2005:Total interest income
    
    
    178,177
    
    
    
    8,881
    
    
    
    (6,163
    )
    
    
    180,895Net interest income
    
    
    117,808
    
    
    
    1,652
    
    
    
    (4,448
    )
    
    
    115,012Net income (loss)
    
    
    52,278
    
    
    
    (614
    )
    
    
    (4,494
    )
    
    
    47,170Six months ended June 30, 2004:Total interest income
    
    
    140,937
    
    
    
    1,622
    
    
    
    (609
    )
    
    
    141,950Net interest income
    
    
    99,461
    
    
    
    603
    
    
    
    (609
    )
    
    
    99,455Net income (loss)
    
    
    42,605
    
    
    
    (1,936
    )
    
    
    (582
    )
    
    
    40,087
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17.
    
    Federal and State Taxes on IncomeOn October 22, 2004, the President of the United States signed into law the American Jobs Creation
Act of 2004 (AJCA). The AJCA allows the Company to repatriate foreign earnings, as defined by
new Section 965 of the Internal Revenue Code of 1986 (the Code), at an effective tax rate of
5.25% upon satisfaction of certain conditions. Such repatriations must occur in either an
enterprises last year that began before the enactment date, or the first tax year that begins
during the one-year period beginning on the date of enactment.During the three months ended June 30, 2005, the Company elected to repatriate approximately $26 million
in previously unremitted foreign earnings. Therefore, the Company has recorded a current taxes
payable on such previously unremitted foreign earnings of approximately $703,000 in the second
quarter of 2005. In addition, the Company has recorded a tax benefit of approximately $3.9 million
as a result of the reversal of the deferred tax liability related to unremitted earnings of its
foreign subsidiary.FASB Staff Position 109-2 (FSP 109-2), Accounting and Disclosure Guidance for the Foreign
Earnings Repatriation Provision within the AJCA, indicates that the lack of clarification of
certain provisions within the AJCA and the timing of the enactment necessitate a practical
exception to the SFAS No. 109, Accounting for Income Taxes, requirement to reflect in the period
of enactment the effect of the new tax law. Accordingly, an enterprise is allowed time beyond the
financial reporting period of enactment to evaluate the effect of the AJCA on its plan for
reinvestment or repatriation of foreign earnings. FSP 109-2 requires that the provisions of SFAS
No. 109 be applied as an enterprise decides on its plan for reinvestment or repatriation of its
unremitted foreign earnings.18.
    
    Subsequent EventsOn July 21, 2005, UCBH's Board of Directors declared a quarterly cash dividend of $0.025 per
share of common stock. The dividend will be paid on October 11, 2005, to stockholders of record as
of September 30, 2005.On August 3, 2005, UCBH announced that it has signed a definitive agreement to acquire Asian
American Bank & Trust Company (AABT). Under the terms of the agreement, the value of the
transaction is approximately $34.3 million (based on the August 2, 2005, closing price for UCBHs
common stock), which is comprised of the issuance of UCBH common stock valued at approximately
$16.1 million and approximately $18.2 million in cash, subject to certain adjustments detailed in
the definitive agreement. The proposed transaction is subject to review if, during the pricing
period prior to the closing date, the price of UCBH common shares falls below $14.75 or exceeds
$22.12. The transaction, which is subject to approval by AABTs shareholders and regulatory
approval, is anticipated to close in the first quarter of 2006. AABT had assets of $127.1 million
and deposits of $106.2 million as of June 30, 2005.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThis quarterly report onForm 10-Qmay include forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon
specific assumptions that may or may not prove correct. Forward-looking statements are also
subject to known and unknown risks, uncertainties and other factors relating to UCBH Holdings, Inc.
and subsidiaries (the Company) operations and business environment, all of which are difficult to
predict, and many of which are beyond the control of the Company. The factors include, among
others:
 
    
    Economic and business conditions in the areas and markets in which the Company operate, particularly those affecting
loans secured by real estate;
    
    Deterioration or improvement in the ability of borrowers to pay their debt;
    
    Market fluctuations such as those affecting interest and foreign exchange rates and the value of securities in which
United Commercial Bank (the Bank) invests;
    
    Competition from other financial institutions, whether banks, investment banks, insurance companies or others;
    
    The ability of the Company to assimilate acquisitions, and enter new markets and lines of business, and the Bank to
open new branches, successfully;
    
    Changes in business strategies;
    
    Changes in tax law and governmental regulation of financial institutions;
    
    Demographic changes; and
    
    Other risks and uncertainties, including those discussed in the documents the Company files with the Securities and
Exchange Commission (the SEC).
 The foregoing may cause the actual results and performance of the Company to be materially
different from the results and performance indicated or suggested by the forward-looking
statements. Further description of the risks and uncertainties are included in detail in the
Companys most recent Annual Report onForm 10-Kfor the year ended December 31, 2004, as filed
with the SEC.The following discussion and analysis is intended to provide details of the results of operations
of the Company for the three and six months ended June 30, 2005 and 2004, and financial position at
June 30, 2005, and December 31, 2004. The following discussion should be read in conjunction with
the information set forth in the Companys consolidated financial statements and notes thereto and
other financial data included in this report.SUMMARY RESULTSUCBH Holdings, Inc. (UCBH ), the holding company of United Commercial Bank (the Bank and
collectively with UCBH referred to as the Company), had net income of $25.4 million for the three
months ended June 30, 2005, up 25.1%, compared with net income of $20.3 million for the three
months ended June 30, 2004. Diluted earnings per share was $0.27 for the three months ended June
30, 2005, compared with $0.21 for the three months ended June 30, 2004, adjusted for the April 12,
2005, two-for-one stock split. The Company had net income of $47.2 million for the six months
ended June 30, 2005, up 17.7%, compared with net income of $40.1 million for the six months ended
June 30, 2004. Diluted earnings per share was $0.49 for the six months ended June 30, 2005,
compared with $0.42 for the six months ended June 30, 2004, adjusted for the April 12, 2005,
two-for-one stock split.Revenues for the three months ended June 30, 2005, consist of approximately 91.3% net interest
income, which represents the difference between interest income and interest expense, and 8.7%
noninterest income. For the six months ended June 30, 2005, revenues consist of approximately
89.3% net interest income and 10.7% noninterest income. Interest income is primarily generated
from loans, and investment and mortgage-backed securities. Interest expense results from interest
paid to customers on their deposits and to debt holders on the Companys borrowings. Noninterest
income results primarily from commercial banking and other fees, service charges on deposit
accounts, and gains on sales of multifamily loans, U.S. Small Business Administration (SBA) loans
and securities.Return on average assets (ROA) was 1.50% and 1.44% for the three and six months ended June 30,
2005, respectively, compared with 1.39% and 1.40% for the three and six months ended June 30, 2004,
respectively.
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Return on average equity (ROE) was 19.74% and 18.75% for the three and six months ended June 30,
2005, respectively, compared to 18.54% and 18.56% for the three and
six months ended June 30, 2004, respectively.
The higher ROA and ROE in 2005 is reflective of the inclusion of a one-time tax benefit of $3.9
million related to the repatriation of foreign subsidiary earnings for the three and six months
ended June 30, 2005.The efficiency ratio, which represents the ratio of total noninterest expense to the sum of net
interest income and noninterest income, was comparable at 46.59% and 41.50% for the three months
ended June 30, 2005 and 2004, respectively. The efficiency ratio for the six months ended June 30,
2005 and 2004, was 44.78% and 40.97%, respectively. The efficiency ratio increase primarily
reflects the higher personnel costs, occupancy costs, and professional fees and contracted services
for the three and six months ended June 30, 2005.Compared to the three months ended June 30, 2004, interest income increased by $25.2 million, or
35.2%, to $96.9 million for the three months ended June 30, 2005, as a result of an $897.6 million
increase in average interest-earning assets primarily due to loan production. Average loans
outstanding were $4.92 billion for the three months ended June 30, 2005, compared with $3.94
billion for the three months ended June 30, 2004. Interest income increased by $38.9 million, or
27.4%, to $180.9 million for the six months ended June 30, 2005, compared to $142.0 million for the
six months ended June 30, 2004, as a result of an $819.2 million increase in average
interest-earning assets primarily due to loan production. Average loans outstanding were $4.72
billion for the six months ended June 30, 2005, compared with $3.89 billion for the six months
ended June 30, 2004.As a financial institution, the Company is sensitive to fluctuations in market interest rates. As
a result of the increases in market interest rates for the three and six months ended June 30,
2005, the yields on loans and cost of deposits have been increasing. The net interest margin,
calculated on a tax equivalent basis, increased to 3.74% and 3.73% for the three and six months
ended June 30, 2005, respectively, from 3.66% and 3.72% for the three and six months ended June 30,
2004, respectively. The increased net interest margin reflects the favorable impact of originating
higher yielding commercial loans and noninterest-bearing deposits, partially offset by the
increased cost of money market accounts and certificates of deposits resulting from higher market
interest rates. In light of the current competitive deposit market environment and the relatively
flat yield curve projected for the remainder of the year, the Company projects a net interest
margin in the range of 3.60% to 3.70% for the year ending December 31, 2005, despite the strong
commercial pipeline.The ratio of allowance for loan losses was 1.19% at June 30, 2005, compared with 1.39% at December
31, 2004. The allowance for loan losses was $58.5 million at June 30, 2005, compared with $56.5
million at December 31, 2004. The increase in the allowance for loan losses reflects the growth in
the loan portfolio, specifically commercial loans, for the six months ended June 30, 2005. For the
six months ended June 30, 2005, the Bank continued its ongoing process of reviewing its loan
portfolio by evaluating the loss factors and current economic conditions in light of its own
historical loss experience, loan delinquency and classification in determining the adequate level
of allowance for loan losses. Accordingly, the Company provided $1.8 million and $3.0 million for
loan losses for the three and six months ended June 30, 2005, respectively, compared with $1.0
million and $3.2 million for the three and six months ended June 30, 2004, respectively. In
addition, the Bank experienced significantly lower net loan charge-offs for the three and six
months ended June 30, 2005, when compared with the net loan charge-offs for the three and six
months ended June 30, 2004.Noninterest income increased by 5.3% to $5.7 million and 12.0% to $13.7 million for the three and
six months ended June 30, 2005, respectively, compared with noninterest income of $5.4 million and
$12.2 million for the three and six months ended June 30, 2004, respectively. This increase
resulted from: a) $2.7 million and $6.4 million of gains on sales of multifamily and other loans
for the three and six months ended June 30, 2005, respectively, compared with no gains on sales of
multifamily loan sales for the three and six months ended June 30, 2004; and b) an increase of
$612,000, or 28.4%, and $1.1 million, or 27.1% in commercial banking and other fees due to
increased trade finance activity for the three and six months ended June 30, 2005, respectively,
compared to the three and six months ended June 30, 2004. The Bank plans to continue its business
strategy to originate and sell a portion of SBA and multifamily loans. These gains were offset by:
a) a decrease of $531,000, or 38.8%, in gain on sale of SBA loans for the three months ended June
30, 2005, compared with the three months ended June 30, 2004; and b) a decrease in the gain on sale
of securities from $2.6 million and $6.5 million for the three and six months ended June 30, 2004,
respectively, compared with a loss on sale of available for sale securities of $614,000 and $5,000
for the three and six months ended June 30, 2005, respectively. The loss on sale of available for
sale
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securities was primarily the result of the sale of $65.7 million and $91.4 million in securities
for the three and six months ended June 30, 2005, respectively. Included in the sale of securities
was $29.7 million for the three and six months ended June 30, 2005, to provide funding for
executing the Companys plan required by American Jobs Creation Act of 2004 (AJCA). Noninterest expenses increased 32.58% to $30.4 million and 25.95% to $57.6 million for the three
and six months ended June 30, 2005, respectively, compared with $23.0 million and $45.8 million for
the three and six months ended June 30, 2004, respectively. The increase resulted primarily from
an increase in personnel expenses, occupancy expenses, professional fees and contracted services,
and the loss on extinguishment of subordinated debentures. For the three and six months ended June
30, 2005, personnel expenses increased to $15.1 million and $29.8 million, respectively, from $11.7
million and $24.6 million for the three and six months ended June 30, 2004, respectively, as a
result of additional staffing required to support the growth of the Banks commercial banking
business, the expansion of the Hong Kong branch, the opening of new branches in California and New
York, and the expansion of the Banks infrastructure to support a larger and growing organization.
Occupancy expenses increased to $3.3 million and $5.9 million for the three and six months ended
June 30, 2005, respectively, from $2.2 million and $3.7 million for the three and six months ended
June 30, 2004, respectively, as a result of the write-off of leasehold improvements, the opening of
the branches in California, New York, and representative offices in Shenzhen, China and Taipei,
Taiwan, the relocation of the San Francisco headquarters and the expansion of the Hong Kong branch.
Also, for the three and six months ended June 30, 2005, occupancy expenses reflect a full period
of occupancy expenses of the new branches and representative offices opened in the latter part of
2004. Professional fees and contracted services increased by 73.77% to $2.8 million and 69.37% to
$5.3 million for the three and six months ended June 30, 2005, respectively, from $1.6 million and
$3.1 million for the three and six months ended June 30, 2004, respectively, as a result of a
commitment to resources, primarily accounting fees, to document and enhance controls to accomplish
compliance with the Sarbanes-Oxley Act. The Company incurred a loss on extinguishment of the
9.375% junior subordinated debentures due May 1, 2028, of $1.2 million from the write-off of the
unamortized subordinated debentures issuance costs and other legal costs for the three and six
months ended June 30, 2005.CORPORATE DEVELOPMENTSOpening Representative Offices. In
April 2005, UCBH announced that the Bank opened two
representative offices in Shenzhen, China and Taipei, Taiwan, to further strengthen its ability to
offer trade finance banking services to its customers. Working in conjunction with the Hong Kong
branch, the new offices will enhance the Banks ability to provide a superior level of personalized
service to customers with business interests in the Pacific Rim.Merger Agreement with Pacifica Bancorp, Inc. UCBH and Pacifica Bancorp, Inc., the holding
company of Pacifica Bank, a Washington state-chartered bank, entered into an Agreement and Plan of
Merger dated as of May 23, 2005 (the Merger Agreement), for a total consideration of
approximately $40.3 million (based on the May 23, 2005, closing price for the UCBHs common stock),
composed of the issuance of approximately 1.2 million shares of the UCBHs common stock, $16.0
million in cash and approximately $3.6 million related to the cash-out of the outstanding stock
options of Pacifica Bancorp, Inc. This acquisition strengthens the Companys capabilities to
facilitate trade flows across the Pacific Rim and will allow it to further grow its commercial
banking business both in the domestic U.S. markets and in the Greater China Region. Pacifica
Bancorp, Inc. had net loans of $132.0 million and total assets of $164.3 million at March 31,
2005, and net interest income of $2.0 million and net income of $386,000 for the three months ended
March 31, 2005. The closing of this acquisition is anticipated to occur in the fourth quarter of
2005.Merger Agreement with Asian American Bank & Trust
Company. On August 3, 2005, UCBH announced that it has signed a definitive agreement to acquire Asian American Bank & Trust Company
(AABT). Under the terms of the agreement, the value of the transaction is approximately $34.3
million (based on the August 2, 2005, closing price for UCBHs common stock), which is comprised of
the issuance of UCBH common stock valued at approximately $16.1 million and approximately $18.2
million in cash, subject to certain adjustments detailed in the definitive agreement. The proposed
transaction is subject to review if, during the pricing period prior to the closing date, the price
of UCBH common shares falls below $14.75 or exceeds $22.12. The transaction, which is subject to
approval by AABTs shareholders and regulatory approval, is anticipated to close in the first
quarter of 2006. AABT had assets of $127.1 million and deposits of $106.2 million as of June 30,
2005.
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##### Table of Contents



Appointment of Chief Financial Officer and Appointment
of Director of Corporate Development. On June 9, 2005, the
Company appointed Dennis Wu as Executive Vice President and Chief Financial Officer. Mr. Wu
succeeds Jonathan H. Downing, who served as Chief Financial Officer since 1989. Mr. Downing has
been appointed as Executive Vice President and Director of Corporate Development and Investor
Relations, and will be focusing on acquisition opportunities and managing Investor Relations
activities as the Company continues to expand its franchise.Mr. Wu joins the Company after a 37-year career at Deloitte & Touche L.L.P., where he served as
National Managing Partner for the firms Chinese Services Group since June 2000. The Chinese
Services Group advises U.S. companies doing business in China, as well as Chinese businesses
seeking to penetrate the U.S. market. Mr. Wu served as a partner at Deloitte & Touche L.L.P. from
1979 to 2004, including the partner-in-charge of the firms Enterprise Group of Northern
California, which includes its banking, savings and loans, securities brokerage, insurance, real
estate, healthcare, and not-for-profit clients.Appointment of Director. On July 21, 2005,
the Boards of Directors of UCBH and the Bank
appointed James Kwok as a director to the respective Board of UCBH and the Bank. Since 1986, Mr. Kwok has
been the Executive Director of International Sources, Inc., with primary responsibilities in marketing,
sourcing and financing activities. Prior to International Sources, Mr. Kwok was the Vice President
of Crocker National Bank, managing a commercial banking portfolio of its Hong Kong and Taiwan
corporate clients.Appointment of Chief Operating Officer. On
July 21, 2005, UCBH and the Bank appointed
Ebrahim Shabudin as Executive Vice President and Chief Operating Officer to be effective August 1,
2005. Prior to this appointment, Mr. Shabudin served as Executive Vice President and Chief Credit
Officer of UCBH and the Bank since January 1, 2004. Previously, Mr. Shabudin was the
Managing Director of Credit Risk Management with Deloitte & Touche L.L.P. Mr. Shabudin also worked
for Bank of America in various management positions for 25 years with the most recent experience as
Senior Vice President and Credit Policy Executive.CRITICAL ACCOUNTING POLICIESThe Companys consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP) and follow general industry
practices. The most significant accounting policies followed by the Company are presented in its
most recent Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC.
These policies, along with the disclosures presented in the other financial statement notes and in
this discussion and analysis, provide information on how significant assets and liabilities are
valued in the financial statements and how those values are determined. The critical accounting
policies include estimation techniques and judgments that are based on the relevant variables and
the Companys assumptions.A number of critical accounting policies are used in the preparation of the Consolidated Financial
Statements, which this discussion accompanies.Use of Estimates.The preparation of the Consolidated Financial Statements in accordance with GAAP
requires management to make certain estimates and assumptions, which affect the amounts of reported
assets and liabilities, as well as contingent assets and liabilities as of the date of these
financial statements. These estimates and assumptions also affect the reported amounts of revenues
and expenses during the reporting period(s). The Company has established detailed policies and
control procedures that are intended to ensure that valuation methods are well controlled and
applied consistently from period to period, unless actual results indicate a change in estimate is
required.Allowance for Loan Losses.The allowance for loan losses represents managements estimate of
credit losses inherent in the Banks commercial and consumer loan portfolios at the balance sheet
date. The estimation of the allowance is based on a variety of factors that address known and
estimated risks in the portfolio, and which takes into account the Banks loan portfolio mix,
credit quality, loan growth, trends relating to the delinquent and classified loans, general
economic conditions and other factors relating to the collectibility of loans in the portfolio.
The Banks methodology for assessing the adequacy of the allowance for loan losses includes the
evaluation of two distinct components: the general allowance applied to the portfolio per Statement
of Financial Accounting Standards
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##### Table of Contents



(SFAS) No. 5, Accounting for Contingencies, and the specific allowance for loans deemed to be
impaired under SFAS No. 114, Accounting by Creditors for Impairment of a Loan.To assess the adequacy of the allowance, the Bank utilizes the application of the internal risk
rating system, and the evaluation of external factors. The loan portfolio is segmented into major
segments and loss factors are applied to the portfolio segments according to risk. Loss factors
are supported by historic charge-off experience, reviews of regional trends in collateral values,
portfolio segment delinquency and classification trends, portfolio concentrations, macro-economic
conditions, as well as other qualitative factors.A specific allowance may be assigned to individually criticized loans in the event that they are
determined to be impaired. Loans that are determined to be impaired under SFAS No. 114 are
excluded from the general allowance analysis, and assessed individually.Loans are considered to be impaired when it is probable that the Bank will not be able to collect
all amounts due, including interest payments in accordance with contractual terms. Loan impairment
is measured based on the present value of expected future cash flows discounted at the loans
effective interest rate, unless the loan is collateral dependent. In such cases, 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.The Bank continues to refine its allowance for loan loss methodology as additional relevant data
becomes available. As a result of the Bank completing the review of individual loan risk ratings
for loans with balances greater than $1.0 million, the Bank changed the general allowance factors
applied to the Construction and Commercial Loan portfolios. In doing so, the Bank determined that
the inherent risk in the portfolio was decreased due to stronger identification, administration and
action plan implementation on credits in these portfolios. In addition, the Bank segregated its
cash secured loans within its Commercial Real Estate and Commercial Loan portfolios and reduced the
general allowance loss factors associated with the cash secured loans segment.At June 30, 2005, the formula allowance increased to $57.2 million, compared to $53.0 million at
December 31, 2004, reflecting the growth in the overall loan portfolio, partially offset by the
refinements resulting from managements continuing re-evaluation processes. At June 30, 2005, the
specific allowance amounted to $1.3 million, compared to $3.5 million at December 31, 2004. The
decrease is primarily attributable to lower levels of impaired loans.Included in other liabilities are approximately $4.8 million and $3.9 million related to loan loss
allowance for unfunded loan commitments at June 30, 2005, and December 31, 2004, respectively.
Excluding unfunded commitments, the Companys allowance for loan losses was $58.5 million, or 1.19%
of loans held in portfolio, at June 30, 2005, compared to $56.5 million, or 1.39% of loans held in
portfolio, at December 31, 2004. In managements judgment, the estimate for allowance for loan
losses is adequate.Fair Value of Certain Assets.Certain assets of the Bank are recorded at fair value. In some
cases, the fair value used is an estimate. Included among these assets are securities that are
classified as available for sale, goodwill and other intangible assets, other real estate owned and
impaired loans. These estimates may change from period to period, as they are affected by changes
in interest rates and other market conditions. Losses not anticipated or greater than anticipated
could result if the Bank sold one of these assets, subsequently discovering that its estimate of
fair value had been too high. Gains not anticipated or greater than anticipated could result if
the Bank were to sell one of these assets, subsequently discovering that its estimate of fair value
had been too low. The Bank arrives at estimates of fair value as follows:
 Available-for-Sale Securities.The fair values of most securities classified as available for
sale are based on quoted market prices. If quoted market prices are not available, fair values
are extrapolated from the quoted prices of similar instruments. Declines in fair value deemed
other-than-temporary that would result in a write-down of a security, if any, are reported in
noninterest expense.Goodwill and Other Intangible Assets.The Bank establishes goodwill and other intangible assets,
including core deposit intangibles and capitalized servicing rights, by estimating the fair value
of assets and liabilities acquired using various valuation approaches, such as market value,
replacement costs and estimated cash flows for future
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##### Table of Contents



periods. Additionally, the Bank must assess goodwill each year and other intangible assets each
quarter for impairment. This assessment involves reviewing or revising estimated cash flows for
future periods. If the future cash flows are materially less than the estimates, the Bank would
be required to take a charge against earnings to write-down the asset to the lower fair value.While the Banks mortgage servicing rights model estimates a value, the specific value used is
based on a variety of factors, such as observable data and anticipated changes in market
conditions. The assumptions are based on standards used by market participants in valuing
mortgage servicing rights. The reasonableness of these assumptions is confirmed through quarterly
independent broker surveys. Independent appraisals of the fair value of the Banks servicing
portfolio are obtained periodically, but not less frequently than annually, and are used by
management to evaluate the reasonableness of the fair value estimates.Mortgage servicing rights result from the sale of multifamily loans and SBA loans with the
servicing rights retained, and the securitization and retention of residential mortgage (one to
four family) and multifamily loans with the servicing rights retained. The market value for
servicing is based upon the coupon rates, maturity, and prepayment rates experienced for the
mortgages being serviced. The value of mortgage servicing rights is based on various assumptions
including prepayment speeds and discount rates.
 Income Taxes.The provision for income taxes is based on income reported for financial statement
purposes and differs from the amount of taxes currently payable, since certain income and expense
items are reported for financial statement purposes in different periods than those for tax
reporting purposes.The Company accounts for income taxes using the asset and liability approach, the objective of
which is to establish deferred tax assets and liabilities for the temporary differences between the
financial reporting basis and the tax basis of the Companys assets and liabilities at enacted tax
rates expected to be in effect when such amounts are realized or settled. A valuation allowance is
established for deferred tax assets if, based on the weight of available evidence, it is more
likely than not that some portion or all of the deferred tax assets will not be realized. A
valuation allowance is established, when necessary, to reduce the deferred tax assets to the amount
that is more likely than not to be realized.Alternative Methods of Accounting.The accounting and reporting policies of the Company are in
accordance with GAAP and conform to practices within the banking industry.When the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation, in 1996 it elected to continue to use the method of accounting for
stock options which did not recognize compensation expense at the time options were granted. As
required by SFAS No. 123, pro forma amounts of compensation expense and the pro forma effect on net
income and earnings per share are disclosed each period, as if the Company had instead elected to
use the accounting method that recognizes compensation expense. The Company adopted SFAS No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure, during 2003. The pro forma
amounts of compensation expense and the pro forma effect on net income and earnings per share are
disclosed in Note 1 to the Consolidated Financial Statements using the Black-Scholes model for
pricing options. Had the Company elected to adopt the SFAS No. 123 fair value based method of
accounting instead of pro forma disclosure, additional compensation expense, as disclosed in Note 1
to the Consolidated Financial Statements, would have been recognized.Recent Accounting PronouncementsNote 2 to the Consolidated Financial Statements discusses new accounting policies adopted by the
Company during the financial periods presented and the expected impact of accounting policies
issued or proposed, but not yet required to be adopted. To the extent the adoption of new
accounting standards materially affects the Companys financial statements, the impacts are
discussed in the applicable sections of this financial review and Notes to the Consolidated
Financial Statements.
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##### Table of Contents



RESULTS OF OPERATIONSGeneral.The Companys main source of income is net interest income, which is the difference
between its interest income (generally interest earned from borrowers and investments) and its
interest expense (generally the interest owed to depositors as well as interest owed on borrowings,
such as loans from the Federal Home Loan Bank). Changes in the average amount of interest-earning
assets (generally loans and investments) as well as in interest-bearing liabilities (generally
deposits and other borrowings) during a period affect the amount of net interest income the Company
earns. Changes in the interest rates earned on loans and securities, and paid on deposits and
other borrowings also affect net interest income.The Company also earns noninterest income, which is generally made up of commercial banking fees
and other fees paid by its customers, and gains on sales of loans and securities. In addition to
interest expense, the Companys income is affected by noninterest expenses (primarily personnel,
occupancy and professional fees), and provision for loan losses. Other factors beyond the
Companys control, such as economic and business conditions, competition from other financial
institutions, market fluctuations, changes in tax law and government regulation of financial
institutions may also significantly affect the Companys results of operations.The Bank offers commercial deposit facilities and commercial loans. Included in the loans offered
are nonresidential real estate loans, commercial business loans, multifamily real estate loans,
construction loans and small business loans. Through the consumer business division, the Bank
offers consumer deposit products including savings accounts, checking accounts and time deposits.
The consumer division also originates residential mortgage (one to four family) loans and home
equity lines of credit.The Bank originates commercial real estate loans for primary users, as well as for investors. The
Bank also originates multifamily mortgages, which are typically secured by five- to 50-unit
residential buildings, within its primary market areas. Loans secured by residential buildings in
excess of 50 units are underwritten pursuant to the Banks underwriting standards for commercial
nonresidential real estate loans. Both types of commercial real estate loans are generally
adjustable-rate or fixed-rate for an initial period of time and then become adjustable-rate loans.
Multifamily mortgages are generally amortized over 30 years and have balloon payments between 15 to
25 years. Commercial nonresidential real estate loans are generally amortized over 25 years and
have balloon payments between seven to ten years.Construction loans are originated primarily for the construction of entry-level and first-time
move-up housing within California or mixed-use properties. The Bank focuses on mid-tier builders.
Construction loans are generally prime based, are generally written for a one-year term and may
have up to a one-year renewal option.The Bank provides commercial business loans to customers for working capital purposes for accounts
receivable and inventory, as well as loans to finance equipment. In addition, the Bank offers
small business loans, for which 75% of the principal balance is generally guaranteed by the U.S.
Small Business Administration.The Bank originates fixed-rate and adjustable-rate residential mortgage (one to four family) loans
within its primary market area. These loans are originated through its retail branches. Such
mortgage loans are originated primarily for owner-occupants. In addition to these residential
mortgage loans, the Bank offers home equity loans.The Bank originates home equity lines of credit secured by residential real estate. These lines
generally consist of floating rate loans tied to the prime rate.
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##### Table of Contents



Operating Data and RatiosThree Months Ended June 30, 2005, Compared to Three Months Ended June 30, 2004Following is a table of selected operating metrics for the three months ended June 30, 2005 and
2004 (dollars in thousands, except per share data):
 Three Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Net income
    
    $
    25,364
    
    
    $
    20,268
    
    
    $
    5,096
    
    
    
    25.14
    %Diluted earnings per share
    
    $
    0.27
    
    
    $
    0.21
    
    
    $
    0.06
    
    
    
    28.57Return on average assets
    
    
    1.50
    %
    
    
    1.39
    %
    
    
    11
    bp
    
    
    7.91Return on average equity
    
    
    19.74
    %
    
    
    18.54
    %
    
    
    120
    bp
    
    
    6.47Efficiency ratio
    
    
    46.59
    %
    
    
    41.50
    %
    
    
    509
    bp
    
    
    12.27Average equity to average assets
    
    
    7.62
    %
    
    
    7.49
    %
    
    
    13
    bp
    
    
    1.74
 The consolidated net income of the Company for the three months ended June 30, 2005, increased by
$5.1 million, or 25.1%, to $25.4 million, compared to $20.3 million for the three months ended June
30, 2004. The annualized ROE and ROA ratios for the three months ended June 30, 2005, were 19.74%
and 1.50%, respectively. These amounts compare with annualized ROE and ROA ratios of 18.54% and
1.39%, respectively, for the three months ended June 30, 2004. These higher ratios are reflective
of the inclusion of a one-time tax benefit of $3.9 million related to the repatriation of foreign
subsidiary earnings for the three months ended June 30, 2005. The efficiency ratio was 46.59% for
the three months ended June 30, 2005, compared with 41.50% for the three months ended June 30,
2004. The efficiency ratio increase reflects higher personnel costs, occupancy costs, professional
fees and contracted services, and the loss on extinguishment of subordinated debentures for the
three months ended June 30, 2005, compared with the three months ended June 30, 2004. Diluted
earnings per common share on a post-split basis were $0.27 for the three months ended June 30,
2005, compared with $0.21 for the three months ended June 30, 2004.Net Interest Income and Net Interest Margin. Following is a table of selected ratios that
reflect the changes in net interest income for the Company for the three months ended June 30, 2005
and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Net interest income before provision for loan losses
    
    $
    59,646
    
    
    $
    49,915
    
    
    $
    9,731
    
    
    
    19.50
    %Net interest margin (1)
    
    
    3.74
    %
    
    
    3.66
    %
    
    
    8
    bp
    
    
    2.19Average yield on loans (2)
    
    
    6.44
    %
    
    
    5.34
    %
    
    
    110
    bp
    
    
    20.60Average yield on taxable securities
    
    
    4.42
    %
    
    
    4.58
    %
    
    
    (16)
    bp
    
    
    (3.49
    )Average yield on non-taxable securities
    
    
    4.78
    %
    
    
    4.76
    %
    
    
    2
    bp
    
    
    0.42Average cost of deposits
    
    
    1.99
    %
    
    
    1.32
    %
    
    
    67
    bp
    
    
    50.76Average cost of borrowings
    
    
    4.90
    %
    
    
    3.55
    %
    
    
    135
    bp
    
    
    38.03
 
 (1)
    
    Net interest margin is calculated on a tax equivalent basis.(2)
    
    Includes loans held for sale. Net interest income before provision for loan losses of $59.6 million for the three months ended
June 30, 2005, represented a $9.7 million, or 19.50%, increase over net interest income of $49.9
million for the three months ended June 30, 2004. The increase in net interest income was
primarily due to an $897.6 million increase in the average
balance of interest-earning assets,
which resulted primarily from organic loan growth. The average cost of deposits increased 67 basis
points from 1.32% for the three months ended June 30, 2004, to 1.99% for the three months ended
June 30, 2005, as a result of the increase in market interest rates during the past twelve months.
This was offset by a 110 basis point increase in average loan yields from 5.34% for the three
months ended June 30, 2004, to 6.44% for the three months ended June 30, 2005. Loan yield reflects
repricing of adjustable-rate loans resulting from increases in market interest rate indices. The
taxable securities yield decreased from 4.58% for the three months ended June 30, 2004, to 4.42%
for the three months ended June 30, 2005. The non-taxable securities yield increased from 4.76%
for the three months ended June 30, 2004, to 4.78% for the three months ended June 30, 2005.
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##### Table of Contents



The decrease in the taxable securities yield reflects lower-yielding securities.The net interest margin, calculated on a tax equivalent basis, was 3.74% for the three months ended
June 30, 2005, as compared to 3.66% for the three months ended June 30, 2004. Certain
interest-earning assets of the Company qualify for federal tax exemptions or credits. The net
interest margin, calculated on a tax equivalent basis, considers the tax benefit derived from these
assets. The increase in net interest margin reflects the favorable impact of growing higher
yielding commercial loans and noninterest bearing deposits, partially offset by the increased cost
of money market accounts and certificates of deposit resulting from higher market interest rates.The following is a table reflecting selected average balances of the Companys assets and
liabilities for the three months ended June 30, 2005 and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average interest-earning assets
    
    $
    6,497,337
    
    
    $
    5,599,727
    
    
    $
    897,610
    
    
    
    16.03
    %Average interest-bearing liabilities
    
    
    5,721,308
    
    
    
    4,968,551
    
    
    
    752,757
    
    
    
    15.15Average loans, including loans held for sale
    
    
    4,918,500
    
    
    
    3,937,324
    
    
    
    981,176
    
    
    
    24.92Average taxable securities
    
    
    1,323,832
    
    
    
    1,460,605
    
    
    
    (136,773
    )
    
    
    (9.36
    )Average non-taxable securities
    
    
    221,942
    
    
    
    191,715
    
    
    
    30,227
    
    
    
    15.77Average deposits
    
    
    5,344,015
    
    
    
    4,736,061
    
    
    
    607,954
    
    
    
    12.84Average borrowings
    
    
    668,773
    
    
    
    462,066
    
    
    
    206,707
    
    
    
    44.74
 The following table presents the composition of the Banks average loan portfolio, including loans
held for sale, for the three months ended June 30, 2005 and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average commercial loans
    
    $
    4,400,344
    
    
    $
    3,560,988
    
    
    $
    839,356
    
    
    
    23.57
    %Average consumer loans
    
    
    518,156
    
    
    
    376,336
    
    
    
    141,820
    
    
    
    37.68Average loans, including loans held for sale
    
    $
    4,918,500
    
    
    $
    3,937,324
    
    
    $
    981,176
    
    
    
    24.92
    %
 The following table presents components of the Banks average deposits for the three months ended
June 30, 2005 and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average noninterest-bearing deposits
    
    $
    427,181
    
    
    $
    365,576
    
    
    $
    61,605
    
    
    
    16.85
    %Average interest-bearing deposits
    
    
    4,916,834
    
    
    
    4,370,485
    
    
    
    546,349
    
    
    
    12.50Total average deposits
    
    $
    5,344,015
    
    
    $
    4,736,061
    
    
    $
    607,954
    
    
    
    12.84
    %
 The increase of $897.6 million on average interest-earning assets for the three months ended June
30, 2005, resulted primarily from organic commercial loan growth. Average outstanding loans
increased by $981.2 million for the three months ended June 30, 2005, from the same period last
year as a result of the Banks continued focus on commercial lending activities. Average
commercial loan balances increased $839.4 million for the three months ended June 30, 2005, as
compared to the corresponding period of 2004. This increase is primarily due to the Banks
continued emphasis on commercial real estate and commercial business loans, and expansion of its
Hong Kong branch. Average consumer loans for the three months ended June 30, 2005, increased
$141.8 million from the same period in 2004. New loan commitments of $1.19 billion for the three
months ended June 30, 2005, were composed of $1.13 billion in commercial and $55.5 million in
consumer commitments.Average securities of $1.55 billion for the three months ended June 30, 2005, were down from $1.65
billion for the three months ended June 30, 2004, a decrease of $106.5 million, or 6.45%.
Securities prepayments and maturities were partially replaced with new securities purchases. The
long-term goal is to reduce the securities portfolio to a range of 15% to 20% of the balance sheet.
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##### Table of Contents



Average total deposits increased $608.0 million to $5.34 billion for the three months ended June
30, 2005, up from $4.74 billion for the three months ended June 30, 2004, a result of the Banks
ongoing focus on the generation of commercial and consumer demand deposits. Average
interest-bearing deposits increased to $4.92 billion for the three months ended June 30, 2005, up
from $4.37 billion for the three months ended June 30, 2004, and average noninterest-bearing
deposits increased to $427.2 million for the three months ended June 30, 2005, up from $365.6
million for the three months ended June 30, 2004.The following table presents the distribution of average assets and liabilities, and stockholders
equity, as well as the total dollar amounts of interest income from average interest-earning assets
and the resultant yields, and dollar amounts of interest expense of average interest-bearing
liabilities, expressed both in dollars and rates for the three months ended June 30, 2005 and 2004
(dollars in thousands):
 Three Months Ended June 30,2005
    
    
    2004Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Yield/Cost
    
    
    Balance
    
    
    Expense
    
    
    Yield/CostInterest-earning assetsLoans (1)(5)
    
    $
    4,918,500
    
    
    $
    79,235
    
    
    
    6.44
    %
    
    $
    3,937,324
    
    
    $
    52,547
    
    
    
    5.34
    %Taxable securities (6)
    
    
    1,323,832
    
    
    
    14,625
    
    
    
    4.42
    
    
    
    1,460,605
    
    
    
    16,713
    
    
    
    4.58Non-taxable securities (6)
    
    
    221,942
    
    
    
    2,652
    
    
    
    4.78
    
    
    
    191,715
    
    
    
    2,280
    
    
    
    4.76Other
    
    
    33,063
    
    
    
    361
    
    
    
    4.37
    
    
    
    10,083
    
    
    
    94
    
    
    
    3.73Total interest-earning assets
    
    
    6,497,337
    
    
    
    96,873
    
    
    
    5.96
    
    
    
    5,599,727
    
    
    
    71,634
    
    
    
    5.12Noninterest-earning assets
    
    
    246,733
    
    
    
    
    
    
    
    
    
    
    
    235,044
    
    
    
    Total assets
    
    $
    6,744,070
    
    
    $
    96,873
    
    
    
    5.75
    %
    
    $
    5,834,771
    
    
    $
    71,634
    
    
    
    4.91
    %Interest-bearing liabilities:Deposits:NOW, checking and money market
accounts
    
    $
    1,042,570
    
    
    $
    4,401
    
    
    
    1.69
    %
    
    $
    776,133
    
    
    $
    1,941
    
    
    
    1.00
    %Savings accounts
    
    
    837,437
    
    
    
    2,258
    
    
    
    1.08
    
    
    
    893,359
    
    
    
    1,902
    
    
    
    0.85Time deposits
    
    
    3,036,827
    
    
    
    19,947
    
    
    
    2.63
    
    
    
    2,700,993
    
    
    
    11,814
    
    
    
    1.75Total interest-bearing deposits
    
    
    4,916,834
    
    
    
    26,606
    
    
    
    2.16
    
    
    
    4,370,485
    
    
    
    15,657
    
    
    
    1.43Borrowings
    
    
    668,773
    
    
    
    8,188
    
    
    
    4.90
    
    
    
    462,066
    
    
    
    4,105
    
    
    
    3.55Subordinated debentures
    
    
    135,701
    
    
    
    2,433
    
    
    
    7.17
    
    
    
    136,000
    
    
    
    1,957
    
    
    
    5.76Total interest-bearing liabilities
    
    
    5,721,308
    
    
    
    37,227
    
    
    
    2.60
    
    
    
    4,968,551
    
    
    
    21,719
    
    
    
    1.75Noninterest-bearing deposits
    
    
    427,181
    
    
    
    
    
    
    
    
    
    
    
    365,576
    
    
    
    Other noninterest-bearing liabilities
    
    
    81,535
    
    
    
    
    
    
    
    
    
    
    
    63,356
    
    
    
    Stockholders equity
    
    
    514,046
    
    
    
    
    
    
    
    
    
    
    
    437,288
    
    
    
    Total liabilities and stockholders equity
    
    $
    6,744,070
    
    
    $
    37,227
    
    
    
    2.21
    %
    
    $
    5,834,771
    
    
    $
    21,719
    
    
    
    1.49
    %Net interest income/net interest rate
spread (2)(4)
    
    
    
    
    
    $
    59,646
    
    
    
    3.36
    %
    
    
    
    
    
    $
    49,915
    
    
    
    3.37
    %Net interest-earning assets/net interest
margin (3)(4)
    
    $
    776,029
    
    
    
    
    
    
    
    3.67
    %
    
    $
    631,176
    
    
    
    
    
    
    
    3.57
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    1.14x
    
    
    
    
    
    
    
    
    
    
    
    1.13x
 
 (1)
    
    Nonaccrual loans are included in the table for computation purposes, but interest
for such loans is included on a cash basis.(2)
    
    Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(3)
    
    Net interest margin represents net interest income divided by average
interest-earning assets.(4)
    
    Net interest rate spread and net interest margin is calculated on a non-tax
equivalent basis.(5)
    
    Average loans balance includes loans held for sale.(6)
    
    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. 27




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##### Table of Contents



Allowance and Provision for Loan Losses. Total nonperforming assets as of June 30,
2005, were $12.2 million, or 0.17% of total assets, reflecting managements continued focus on
maintaining high credit quality assets. This compares with total nonperforming assets of $12.6
million, or 0.20%, at December 31, 2004. Net loan recoveries were $44,000 for the three months
ended June 30, 2005, compared with net loan charge-offs of $701,000 for the three months ended June
30, 2004. Annualized net loan charge-offs for the three months ended June 30, 2005, was zero
compared with 0.07% for the three months ended June 30, 2004.The ratio of allowance for loan losses was 1.19% at June 30, 2005, compared with 1.39% at December
31, 2004. The allowance for loan losses was $58.5 million at June 30, 2005, compared with $56.5
million at December 31, 2004. The increase in the allowance for loan losses reflects the growth in
the loan portfolio and the increase in commercial loans for the six months ended June 30, 2005.
For the three months ended June 30, 2005, the Bank continued its ongoing process of reviewing its
loan portfolio by evaluating the loss factors and current economic conditions in light of its own
historical loss experience, loan delinquency and classification in determining the adequate level
of allowance for loan losses. Accordingly, the Bank provided $1.8 million for loan losses for the
three months ended June 30, 2005, compared with $1.0 million for the three months ended June 30,
2004. In addition, the Bank experienced significantly lower net loan charge-offs for the three
months ended June 30, 2005, when compared with the net loan charge-offs for the three months ended
June 30, 2004.Noninterest Income. The following table presents the composition of noninterest income for
the three months ended June 30, 2005 and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Commercial banking and other fees
    
    $
    2,768
    
    
    $
    2,156
    
    
    $
    612
    
    
    
    28.39
    %Service charges on deposits
    
    
    851
    
    
    
    715
    
    
    
    136
    
    
    
    19.02Gain (loss) on sale of securities, net
    
    
    (614
    )
    
    
    2,632
    
    
    
    (3,246
    )
    
    
    (123.33
    )Gain on sale of SBA loans, net
    
    
    839
    
    
    
    1,370
    
    
    
    (531
    )
    
    
    (38.76
    )Gain on sale of multifamily and other loans, net
    
    
    2,683
    
    
    
    
    
    
    
    2,683
    
    
    
    Equity loss in other equity investments
    
    
    (859
    )
    
    
    (1,489
    )
    
    
    630
    
    
    
    (42.31
    )Total noninterest income
    
    $
    5,668
    
    
    $
    5,384
    
    
    $
    284
    
    
    
    5.27
    %
 Noninterest income increased by 5.27% to $5.7 million for the three months ended June 30, 2005,
compared with noninterest income of $5.4 million for the three months ended June 30, 2004. This
increase resulted from: a) $2.7 million of net gains on sales of multifamily and other loans for
the three months ended June 30, 2005, compared with no gains on sales of multifamily loan sales in
the corresponding quarter of 2004; b) an increase of $612,000, or 28.39%, in commercial banking and
other fees due to increased trade finance activity; and c) a decrease in equity loss in other
equity investments of $630,000. These gains were offset by: a) a decrease of $531,000, or 38.76%,
in net gain on sale of SBA loans for the three months ended June 30, 2005, compared with the three
months ended June 30, 2004, primarily as a result of transaction volume; and b) a decrease in the
net gain on sale of securities from $2.6 million for the three months ended June 30, 2004, compared
with a net loss on sale of securities of $614,000 for the three months ended June 30, 2005, which
was primarily the result of the sale of $65.7 million in securities. Included in the sale of
securities was $29.7 million for the three months ended June 30, 2005, to provide funding for
executing the Companys plan required by AJCA.
 28




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##### Table of Contents



Noninterest Expense. The following table presents the composition of noninterest expense
for the three months ended June 30, 2005 and 2004 (dollars in thousands):
 Three Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Personnel
    
    $
    15,109
    
    
    $
    11,696
    
    
    $
    3,413
    
    
    
    29.18
    %Occupancy
    
    
    3,262
    
    
    
    2,178
    
    
    
    1,084
    
    
    
    49.77Data processing
    
    
    1,762
    
    
    
    1,400
    
    
    
    362
    
    
    
    25.86Furniture and equipment
    
    
    1,567
    
    
    
    1,619
    
    
    
    (52
    )
    
    
    (3.21
    )Professional fees and contracted services
    
    
    2,782
    
    
    
    1,601
    
    
    
    1,181
    
    
    
    73.77Deposit insurance
    
    
    189
    
    
    
    197
    
    
    
    (8
    )
    
    
    (4.06
    )Communication
    
    
    238
    
    
    
    319
    
    
    
    (81
    )
    
    
    (25.39
    )Core deposit intangible amortization
    
    
    258
    
    
    
    482
    
    
    
    (224
    )
    
    
    (46.47
    )Loss on extinguishment of subordinated debentures
    
    
    1,196
    
    
    
    
    
    
    
    1,196
    
    
    
    Other general and administrative
    
    
    4,065
    
    
    
    3,460
    
    
    
    605
    
    
    
    17.49Total noninterest expense
    
    $
    30,428
    
    
    $
    22,952
    
    
    $
    7,476
    
    
    
    32.57
    %Efficiency ratio
    
    
    46.59
    %
    
    
    41.50
    %
    
    
    509
    bp
    
    
    12.27
    %Noninterest expenses to average assets
    
    
    1.80
    %
    
    
    1.57
    %
    
    
    23
    bp
    
    
    14.65
    %
 Noninterest expenses increased 32.57% to $30.4 million for the three months ended June 30, 2005,
compared with $23.0 million for the three months ended June 30, 2004. The increase resulted
primarily from an increase in personnel expenses, occupancy expenses, professional fees and
contracted services, and the loss on extinguishment of subordinated debentures. For the three
months ended June 30, 2005, personnel expenses increased to $15.1 million from $11.7 million for
the three months ended June 30, 2004, as a result of additional staffing required to support the
growth of the Banks commercial banking business, the expansion of the Hong Kong branch, the
opening of new branches in California and New York, and the expansion of the Banks infrastructure
to support a larger and growing organization. Occupancy expenses increased to $3.3 million for the
three months ended June 30, 2005, from $2.2 million for the three months ended June 30, 2004, as a
result of the write-off of leasehold improvements, the opening of the branches in California, New
York, and representative offices in Shenzhen, China and Taipei, Taiwan and the expansion of the
Hong Kong branch. Also, for the three months ended June 30, 2005, occupancy expenses reflect a
full quarter of occupancy expenses of the new branches and representative offices opened in the
latter part of 2004 and during the three months ended March 31, 2005. Professional fees and
contracted services increased by 73.77% to $2.8 million for the three months ended June 30, 2005,
from $1.6 million for the three months ended June 30, 2004, as a result of a commitment to
resources, primarily accounting fees, to document and enhance controls to accomplish compliance
with the Sarbanes-Oxley Act. The Company incurred a loss on extinguishment of the 9.375% junior
subordinated debentures due May 1, 2028, of $1.2 million from the write-off of the unamortized
subordinated debentures issuance costs for the three months ended June 30, 2005.Provision for Income Taxes. The provision for income taxes was $7.7 million and $11.1
million on income before taxes of $33.1 million and $31.3 million for the three months ended June
30, 2005 and 2004, respectively. The effective tax rate for the three months ended June 30, 2005,
was 23.4%, compared with 35.3% for the three months ended June 30, 2004. These rates are lower
than the combined federal and state statutory rate of 42.0%, primarily due to federal and state tax
credits and incentives, tax-exempt income and the reversal of the deferred tax liability related to
unremitted earnings of its foreign subsidiary.As of June 30, 2005, the Company repatriated approximately $26 million in previously unremitted
foreign earnings for which the Company had previously provided deferred taxes. In connection with
the repatriation, the Company has recorded a current taxes payable on such previously unremitted
foreign earnings of approximately $703,000 in the second quarter of 2005. In addition, the Company
has recorded a tax benefit of approximately $3.9 million as a result of the reversal of the
deferred tax liability related to unremitted earnings of its foreign subsidiary.For the remainder of 2005, based on current tax laws, the Companys effective tax rate is expected
to be approximately 37.3% before considering the effect of any unusual or special items that may
effect the Companys tax rate in future periods.
 29




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##### Table of Contents



Six Months Ended June 30, 2005, Compared to Six Months Ended June 30, 2004Following is a table of selected operating metrics for the six months ended
June 30, 2005 and 2004 (dollars in thousands, except per share data):
 Six Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Net income
    
    $
    47,170
    
    
    $
    40,087
    
    
    $
    7,083
    
    
    
    17.67
    %Diluted earnings per share
    
    $
    0.49
    
    
    $
    0.42
    
    
    $
    0.07
    
    
    
    16.67Return on average assets
    
    
    1.44
    %
    
    
    1.40
    %
    
    4  bp
    
    
    2.86Return on average equity
    
    
    18.75
    %
    
    
    18.56
    %
    
    19  bp
    
    
    1.02Efficiency ratio
    
    
    44.78
    %
    
    
    40.97
    %
    
    381  bp
    
    
    9.30Average equity to average assets
    
    
    7.69
    %
    
    
    7.56
    %
    
    13  bp
    
    
    1.72
 The consolidated net income of the Company for the six months ended June 30, 2005, increased by
$7.1 million, or 17.67%, to $47.2 million, compared to $40.1 million for the six months ended June
30, 2004. The annualized return on ROE and ROA ratios for the six months ended June 30, 2005, were
18.75% and 1.44%, respectively. These amounts compare with annualized ROE and ROA ratios of 18.56%
and 1.40%, respectively, for the six months ended June 30, 2004. These higher ratios are
reflective of the inclusion of a one-time tax benefit of $3.9 million related to the repatriation
of foreign subsidiary earnings for the six months ended June 30, 2005. The efficiency ratio was
44.78% for the six months ended June 30, 2005, compared with 40.97% for the six months ended June
30, 2004. The efficiency ratio increase reflects higher personnel costs, occupancy costs,
professional fees and contracted services, and the loss on extinguishment of subordinated
debentures for the six months ended June 30, 2005, compared with the six months ended June 30,
2004. Diluted earnings per common share on a post-split basis were $0.49 for the six months ended
June 30, 2005, compared with $0.42 for the six months ended June 30, 2004.Net Interest Income and Net Interest Margin. Following is a table of selected ratios that
reflect the changes in net interest income for the Company for the six months ended June 30, 2005
and 2004 (dollars in thousands):
 Six Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Net interest income before provision for loan losses
    
    $
    115,012
    
    
    $
    99,455
    
    
    $
    15,557
    
    
    
    15.64
    %Net interest margin (1)
    
    
    3.73
    %
    
    
    3.72
    %
    
    1  bp
    
    
    0.27Average yield on loans (2)
    
    
    6.18
    %
    
    
    5.42
    %
    
    76  bp
    
    
    14.02Average yield on taxable securities
    
    
    4.40
    %
    
    
    4.55
    %
    
    (15) bp
    
    
    (3.30
    )Average yield on non-taxable securities
    
    
    4.79
    %
    
    
    4.78
    %
    
    1  bp
    
    
    0.21Average cost of deposits
    
    
    1.84
    %
    
    
    1.31
    %
    
    53  bp
    
    
    40.46Average cost of borrowings
    
    
    4.58
    %
    
    
    3.56
    %
    
    102  bp
    
    
    28.65
 
 (1)
    
    Net interest margin is calculated on a tax equivalent basis.(2)
    
    Includes loans held for sale. Net interest income before provision for loan losses of $115.0 million for the six months ended
June 30, 2005, represented a $15.6 million, or 15.64%, increase over net interest income of
$99.5 million for the six months ended June 30, 2004. The increase in net interest income was primarily
due to an $819.2 million increase in the average balance of
interest-earning assets, which resulted
primarily from organic loan growth. The average cost of deposits increased 53 basis points from
1.31% for the six months ended June 30, 2004, to 1.84% for the six months ended June 30, 2005, as a
result of the increase in market interest rates during the past twelve months. This was offset by
a 76 basis point increase in average loan yields from 5.42% for the six months ended June 30, 2004,
to 6.18% for the six months ended June 30, 2005. Loan yield reflects repricing of adjustable-rate
loans resulting from increases in market interest rate indices. The taxable securities yield
decreased from 4.55% for the six months ended June 30, 2004, to 4.40% for the six months ended
June 30, 2005. The non-taxable securities yield increased from 4.78% for the six months ended June 30,
2004, to 4.79% for the six months ended June 30, 2005. The decrease in the taxable securities
yield reflects lower-yielding securities.
 30




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##### Table of Contents



The net interest margin, calculated on a tax equivalent basis, was 3.73% for the six months ended
June 30, 2005, as compared to 3.72% for the six months ended June 30, 2004. Certain
interest-earning assets of the Company qualify for federal tax exemptions or credits. The net
interest margin, calculated on a tax equivalent basis, considers the tax benefit derived from these
assets. The increase in net interest margin reflects the favorable impact of growing higher
yielding commercial loans and noninterest-bearing deposits, partially offset by the increased cost
of money market accounts and certificates of deposit resulting from higher market interest rates.The following is a table reflecting selected average balances of the Companys assets and
liabilities for the six months ended June 30, 2005 and 2004 (dollars in thousands):
 Six Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average interest-earning assets
    
    $
    6,306,350
    
    
    $
    5,487,116
    
    
    $
    819,234
    
    
    
    14.93
    %Average interest-bearing liabilities
    
    
    5,539,247
    
    
    
    4,881,170
    
    
    
    658,077
    
    
    
    13.48Average loans, including loans held for sale
    
    
    4,717,214
    
    
    
    3,889,384
    
    
    
    827,830
    
    
    
    21.28Average taxable securities
    
    
    1,309,936
    
    
    
    1,402,472
    
    
    
    (92,536
    )
    
    
    (6.60
    )Average non-taxable securities
    
    
    218,789
    
    
    
    188,530
    
    
    
    30,259
    
    
    
    16.05Average deposits
    
    
    5,281,583
    
    
    
    4,636,573
    
    
    
    645,010
    
    
    
    13.91Average borrowings
    
    
    544,725
    
    
    
    459,955
    
    
    
    84,770
    
    
    
    18.43
 The following table presents the composition of the Banks average loan portfolio, including loans
held for sale, for the six months ended June 30, 2005 and 2004 (dollars in thousands):
 Six Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average commercial loans
    
    $
    4,207,432
    
    
    $
    3,537,100
    
    
    $
    670,332
    
    
    
    18.95
    %Average consumer loans
    
    
    509,782
    
    
    
    352,284
    
    
    
    157,498
    
    
    
    44.71Average loans, including loans held for sale
    
    $
    4,717,214
    
    
    $
    3,889,384
    
    
    $
    827,830
    
    
    
    21.28
    %
 The following table presents components of the Banks average deposits for the six months ended
June 30, 2005 and 2004 (dollars in thousands):
 Six Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average noninterest-bearing deposits
    
    $
    422,911
    
    
    $
    351,358
    
    
    $
    71,553
    
    
    
    20.36
    %Average interest-bearing deposits
    
    
    4,858,672
    
    
    
    4,285,215
    
    
    
    573,457
    
    
    
    13.38Total average deposits
    
    $
    5,281,583
    
    
    $
    4,636,573
    
    
    $
    645,010
    
    
    
    13.91
    %
 The increase of $819.2 million on average interest-earning assets for the six months ended June 30,
2005, resulted primarily from organic commercial loan growth. Average outstanding loans increased
by $827.8 million for the six months ended June 30, 2005, from the same period last year as a
result of the Banks continued focus on commercial lending activities. Average commercial loan
balances increased $670.3 million for the six months ended June 30, 2005, as compared to the
corresponding period of 2004. This increase is primarily due to the Banks continued emphasis on
commercial real estate and commercial business loans, and expansion of its Hong Kong branch.
Average consumer loans for the six months ended June 30, 2005, increased $157.5 million from the
same period in 2004. New loan commitments of $1.99 billion for the six months ended June 30, 2005,
were composed of $1.88 billion in commercial commitments and $108.7 million in consumer commitments.Average securities of $1.53 billion for the six months ended June 30, 2005, were down from $1.59
billion for the six months ended June 30, 2004, a decrease of $62.3 million, or 3.91%. Securities
prepayments and maturities were partially replaced with new securities purchases. The long-term
goal is to reduce the securities portfolio to a range of 15% to 20% of the balance sheet.
 31




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##### Table of Contents



Average total deposits increased $645.0 million to $5.28 billion for the six months ended June 30,
2005, up from $4.64 billion for the six months ended June 30, 2004, a result of the Banks ongoing
focus on the generation of commercial and consumer demand deposits. Average interest-bearing
deposits increased to $4.86 billion for the six months ended June 30, 2005, up from $4.29 billion
for the six months ended June 30, 2004, and average noninterest-bearing deposits increased to
$422.9 million for the six months ended June 30, 2005, up from $351.4 million for the six months
ended June 30, 2004.The following table presents the distribution of average assets and liabilities, and stockholders
equity, as well as the total dollar amounts of interest income from average interest-earning
assets, and the resultant yields and dollar amounts of interest expense of average interest-bearing
liabilities, expressed both in dollars and rates for the six months ended June 30, 2005 and 2004
(dollars in thousands):
 Six Months Ended June 30,2005
    
    
    2004Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Yield/Cost
    
    
    Balance
    
    
    Expense
    
    
    Yield/CostInterest-earning assetsLoans
(1)(5)
    
    $
    4,717,214
    
    
    $
    145,860
    
    
    
    6.18
    %
    
    $
    3,889,384
    
    
    $
    105,441
    
    
    
    5.42
    %Taxable securities (6)
    
    
    1,309,936
    
    
    
    28,801
    
    
    
    4.40
    
    
    
    1,402,472
    
    
    
    31,898
    
    
    
    4.55Non-taxable securities (6)
    
    
    218,789
    
    
    
    5,235
    
    
    
    4.79
    
    
    
    188,530
    
    
    
    4,503
    
    
    
    4.78Other
    
    
    60,411
    
    
    
    999
    
    
    
    3.31
    
    
    
    6,730
    
    
    
    108
    
    
    
    3.21Total interest-earning assets
    
    
    6,306,350
    
    
    
    180,895
    
    
    
    5.74
    
    
    
    5,487,116
    
    
    
    141,950
    
    
    
    5.17Noninterest-earning assets
    
    
    239,533
    
    
    
    
    
    
    
    
    
    
    
    229,913
    
    
    
    Total assets
    
    $
    6,545,883
    
    
    $
    180,895
    
    
    
    5.53
    %
    
    $
    5,717,029
    
    
    $
    141,950
    
    
    
    4.97
    %Interest-bearing liabilities:Deposits:NOW, checking and money market
accounts
    
    $
    1,011,073
    
    
    $
    7,847
    
    
    
    1.55
    %
    
    $
    757,995
    
    
    $
    3,707
    
    
    
    0.98
    %Savings accounts
    
    
    893,533
    
    
    
    4,723
    
    
    
    1.06
    
    
    
    883,849
    
    
    
    3,574
    
    
    
    0.81Time deposits
    
    
    2,954,066
    
    
    
    36,097
    
    
    
    2.44
    
    
    
    2,643,371
    
    
    
    23,122
    
    
    
    1.75Total interest-bearing deposits
    
    
    4,858,672
    
    
    
    48,667
    
    
    
    2.00
    
    
    
    4,285,215
    
    
    
    30,403
    
    
    
    1.42Borrowings
    
    
    544,725
    
    
    
    12,469
    
    
    
    4.58
    
    
    
    459,955
    
    
    
    8,182
    
    
    
    3.56Subordinated debentures
    
    
    135,850
    
    
    
    4,747
    
    
    
    6.99
    
    
    
    136,000
    
    
    
    3,910
    
    
    
    5.75Total interest-bearing liabilities
    
    
    5,539,247
    
    
    
    65,883
    
    
    
    2.38
    
    
    
    4,881,170
    
    
    
    42,495
    
    
    
    1.74Noninterest-bearing deposits
    
    
    422,911
    
    
    
    
    
    
    
    
    
    
    
    351,358
    
    
    
    Other noninterest-bearing liabilities
    
    
    80,546
    
    
    
    
    
    
    
    
    
    
    
    52,506
    
    
    
    Stockholders equity
    
    
    503,179
    
    
    
    
    
    
    
    
    
    
    
    431,995
    
    
    
    Total liabilities and stockholders equity
    
    $
    6,545,883
    
    
    $
    65,883
    
    
    
    2.01
    %
    
    $
    5,717,029
    
    
    $
    42,495
    
    
    
    1.49
    %Net interest income/net interest rate
spread (2)(4)
    
    
    
    
    
    $
    115,012
    
    
    
    3.36
    %
    
    
    
    
    
    $
    99,455
    
    
    
    3.43
    %Net interest-earning assets/net interest
margin (3)(4)
    
    $
    767,103
    
    
    
    
    
    
    
    3.65
    %
    
    $
    605,946
    
    
    
    
    
    
    
    3.63
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    1.14x
    
    
    
    
    
    
    
    
    
    
    
    1.12x
 
 (1)
    
    Nonaccrual loans are included in the table for computation purposes, but interest
for such loans is included on a cash basis.(2)
    
    Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(3)
    
    Net interest margin represents net interest income divided by average
interest-earning assets.(4)
    
    Net interest rate spread and net interest margin is calculated on a non-tax
equivalent basis.(5)
    
    Average loans balance includes loans held for sale.(6)
    
    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. 32




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##### Table of Contents



Allowance and Provision for Loan Losses. Total nonperforming assets as of June 30,
2005 were $12.2 million, or 0.17%, reflecting managements continued focus on maintaining high
credit quality assets. This compares with total nonperforming assets of $12.6 million, or 0.20%,
at December 31, 2004. Net loan charge-offs were $62,000 for the six months ended June 30, 2005,
compared with net loan charge-offs of $1.4 million for the six months ended June 30, 2004.
Annualized net loan charge-offs for the six months ended June 30, 2005, was zero compared with
0.07% for the six months ended June 30, 2004.The ratio of allowance for loan losses was 1.19% at June 30, 2005, compared with 1.39% at December
31, 2004. The allowance for loan losses was $58.5 million at June 30, 2005, compared with $56.5
million at December 31, 2004. The increase in the allowance for loan losses reflects the growth in
the loan portfolio and the increase in commercial loans for the six months ended June 30, 2005.
For the six months ended June 30, 2005, the Bank continued its ongoing process of reviewing its
loan portfolio by evaluating the loss factors and current economic conditions in light of its own
historical loss experience, loan delinquency and classification in determining the adequate level
of allowance for loan losses. In addition, the Bank experienced significantly lower net loan
charge-offs for the six months ended June 30, 2005, when compared with the net loan charge-offs for
the six months ended June 30, 2004. Accordingly, the Company provided $3.0 million for loan losses
for the six months ended June 30, 2005, compared with $3.2 million for the six months ended June
30, 2004.Noninterest Income. The following table presents the composition of noninterest income for
the six months ended June 30, 2005 and 2004 (dollars in thousands):
 Six Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Commercial banking and other fees
    
    $
    5,116
    
    
    $
    4,025
    
    
    $
    1,091
    
    
    
    27.11
    %Service charges on deposits
    
    
    1,515
    
    
    
    1,331
    
    
    
    184
    
    
    
    13.82Gain (loss) on sale of securities, net
    
    
    (5
    )
    
    
    6,493
    
    
    
    (6,498
    )
    
    
    (100.08
    )Gain on sale of multifamily and other loans, net
    
    
    6,435
    
    
    
    
    
    
    
    6,435
    
    
    
    Gain on sale of SBA loans, net
    
    
    1,923
    
    
    
    1,881
    
    
    
    42
    
    
    
    2.23Equity loss in other equity investments
    
    
    (1,270
    )
    
    
    (1,489
    )
    
    
    219
    
    
    
    (14.71
    )Total noninterest income
    
    $
    13,714
    
    
    $
    12,241
    
    
    $
    1,473
    
    
    
    12.03
    %
 Noninterest income increased by 12.03% to $13.7 million for the six months ended June 30, 2005,
compared with noninterest income of $12.2 million for the six months ended June 30, 2004. This
increase resulted from: a) $6.4 million of gains on sales of multifamily loans for the six months
ended June 30, 2005, compared with no gains on sales of multifamily loan sales in the corresponding
quarter of 2004; b) an increase of $1.1 million, or 27.11%, in commercial banking fees due to
increased trade finance activity; and c) an increase of $42,000, or 2.23%, in gain on sale of SBA
loans for the six months ended June 30, 2005, compared with the six months ended June 30, 2004.
These gains were partially offset by a decrease in the gain on sale of securities from $6.5 million
for the six months ended June 30, 2004, compared with a net loss on sale of securities of $5,000
for the six months ended June 30, 2005, which was primarily the result of the sale of $91.4 million
in securities. Included in the sale of securities was $29.7 million for the six months ended June
30, 2005, to provide funding for executing the Companys plan required by AJCA.
 33




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##### Table of Contents



Noninterest Expense. The following table presents the composition of noninterest expense
for the six months ended June 30, 2005 and 2004 (dollars in thousands):
 Six Months Ended June 30,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Personnel
    
    $
    29,849
    
    
    $
    24,611
    
    
    $
    5,238
    
    
    
    21.28
    %Occupancy
    
    
    5,908
    
    
    
    3,724
    
    
    
    2,184
    
    
    
    58.65Data processing
    
    
    3,386
    
    
    
    2,694
    
    
    
    692
    
    
    
    25.69Furniture and equipment
    
    
    3,096
    
    
    
    2,869
    
    
    
    227
    
    
    
    7.91Professional fees and contracted services
    
    
    5,291
    
    
    
    3,124
    
    
    
    2,167
    
    
    
    69.37Deposit insurance
    
    
    377
    
    
    
    402
    
    
    
    (25
    )
    
    
    (6.22
    )Communication
    
    
    495
    
    
    
    615
    
    
    
    (120
    )
    
    
    (19.51
    )Core deposit intangible amortization
    
    
    542
    
    
    
    715
    
    
    
    (173
    )
    
    
    (24.20
    )Loss on extinguishment of subordinated debentures
    
    
    1,196
    
    
    
    
    
    
    
    1,196
    
    
    
    Other general and administrative
    
    
    7,501
    
    
    
    7,012
    
    
    
    489
    
    
    
    6.97Total noninterest expense
    
    $
    57,641
    
    
    $
    45,766
    
    
    $
    11,875
    
    
    
    25.95
    %Efficiency ratio
    
    
    44.78
    %
    
    
    40.97
    %
    
    
    381
    bp
    
    
    9.30
    %Noninterest expenses to average assets
    
    
    1.76
    %
    
    
    1.60
    %
    
    
    16
    bp
    
    
    10.00
    %
 Noninterest expenses increased 25.95% to $57.6 million for the six months ended June 30, 2005,
compared with $45.8 million for the six months ended June 30, 2004. The increase resulted
primarily from an increase in personnel expenses, occupancy expenses, professional fees and
contracted services, and the loss on extinguishment of subordinated debentures. For the six months
ended June 30, 2005, personnel expenses increased to $29.8 million from $24.6 million for the six
months ended June 30, 2004, as a result of additional staffing required to support the growth of
the Banks commercial banking business, the expansion of the Hong Kong branch, the opening of new
branches in California and New York, and the expansion of the Banks infrastructure to support a
larger and growing organization. Occupancy expenses increased to $5.9 million for the six months
ended June 30, 2005, from $3.7 million for the six months ended June 30, 2004, as a result of the
write-off of leasehold improvements, the opening of the branches in California, New York, and
representative offices in Shenzhen, China and Taipei, Taiwan, the relocation of the San Francisco
headquarters and the expansion of the Hong Kong branch. Also, for the six months ended June 30,
2005, occupancy expenses reflect a full six months of occupancy expenses of the new branches and
representative offices opened in the latter part of 2004. Professional fees and contracted
services increased by 69.37% to $5.3 million for the six months ended June 30, 2005, from $3.1
million for the six months ended June 30, 2004, as a result of a commitment to resources, primarily
accounting fees, to document and enhance controls to accomplish compliance with the Sarbanes-Oxley
Act. The Company incurred a loss on extinguishment of the 9.375% junior subordinated debentures
due May 1, 2028, of $1.2 million from the write-off of the unamortized subordinated debenture
issuance costs for the six months ended June 30, 2005.Provision for Income Taxes. The provision for income taxes was $21.0 million and $22.7
million on income before taxes of $68.1 million and $62.7 million for the six months ended June 30,
2005 and 2004, respectively. The effective tax rate for the six months ended June 30, 2005, was
30.8%, compared with 36.1% for the six months ended June 30, 2004. These rates are lower than the
combined federal and state statutory rate of 42.0%, primarily due to federal and state tax credits
and incentives, tax-exempt income and the reversal of the deferred tax liability related to
unremitted earnings of its foreign subsidiary.As of June 30, 2005, the Company repatriated approximately $26 million in previously unremitted
foreign earnings for which the Company had previously provided deferred taxes. In connection with
the repatriation, the Company has recorded a current taxes payable on such previously unremitted
foreign earnings of approximately $703,000 in the second quarter of 2005. In addition, the Company
has recorded a tax benefit of approximately $3.9 million as a result of the reversal of the
deferred tax liability related to unremitted earnings of its foreign subsidiary.For the remainder of 2005, based on current tax laws, the Companys effective tax rate is expected
to be approximately 37.3% before considering the effect of any unusual or special items that may
effect the Companys tax rate in future periods.
 34




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##### Table of Contents



FINANCIAL POSITIONThe following table outlines the Companys loans, securities and total assets at June 30, 2005, and
December 31, 2004 (dollars in thousands):
 June 30,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Total loans held in portfolio
    
    $
    4,931,170
    
    
    $
    4,050,741
    
    
    $
    880,429
    
    
    
    21.74
    %Securities
    
    
    1,466,272
    
    
    
    1,494,342
    
    
    
    (28,070
    )
    
    
    (1.88
    )Total assets
    
    
    7,037,174
    
    
    
    6,315,681
    
    
    $
    721,493
    
    
    
    11.42
 The Company experienced continued asset and core deposit growth for the six months ended June 30,
2005. The increase of $721.5 million in total assets from December 31, 2004, to June 30, 2005, was
primarily related to increases in the loan portfolio.During the six months ended June 30, 2005, total loans held in portfolio increased by $880.4
million. This growth resulted primarily from an organic increase in commercial loans from the
Banks continuing focus on originating such loans. Total commercial loans grew to $4.37 billion at
June 30, 2005, up from $3.58 billion at December 31, 2004, as a result of new commercial loan
commitments of $1.88 billion for the six months ended June 30, 2005, due to continued loan
generation efforts, partially offset by principal repayments, and loan sales. Consumer loans
increased to $572.0 million at June 30, 2005, from $482.2 million at December 31, 2004, primarily
due to organic growth.As a result of favorable market conditions and continued marketing efforts, the Bank experienced a
higher level of new loan commitments; $1.99 billion for the six months ended June 30, 2005, which
was composed of $1.88 billion in commercial loan commitments and $108.7 million in consumer
commitments.The securities balance (including the available-for-sale and held-to-maturity portfolios) decreased
by $28.1 million from December 31, 2004, to June 30, 2005. This was primarily the result of sales
of $91.4 million, principal repayments and securities calls of $93.7 million, and maturities and
payoffs of $271.7 million, partially offset by purchases of $428.5 million for the six months ended
June 30, 2005.Loan Quality Data and RatiosThe following table outlines certain information regarding the Banks allowance for loan losses,
past due and nonperforming loans at June 30, 2005, and December 31, 2004:
 June 30,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Allowance for loan losses
    
    $
    58,508
    
    
    $
    56,472
    
    
    $
    2,036
    
    
    
    3.61
    %Allowance for loan losses to loans held in portfolio
    
    
    1.19
    %
    
    
    1.39
    %
    
    (20) bp
    
    
    (14.39
    )Past due loans to total loans held in portfolio
    
    
    0.43
    %
    
    
    0.90
    %
    
    (47) bp
    
    
    (52.22
    )Nonperforming loans/assets
    
    $
    12,209
    
    
    $
    12,574
    
    
    $
    (365)
    
    
    
    (2.90
    )Nonperforming assets to total assets
    
    
    0.17
    %
    
    
    0.20
    %
    
    (3) bp
    
    
    (15.00
    )%
 The allowance for loan losses increased by $2.0 million from December 31, 2004, to June 30, 2005,
due to loan portfolio growth, partially offset by the Banks continued quarterly re-evaluation
process as previously disclosed in the Allowance and Provision for Loan Losses section under
Results of Operations.
 35




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##### Table of Contents



The following table shows the composition of the Banks loan portfolio by amount and percentage of
total gross loans in each major loan category at June 30, 2005, and December 31, 2004 (dollars in
thousands):
 June 30, 2005
    
    
    December 31, 2004Amount
    
    
    %
    
    
    Amount
    
    
    %Commercial:Secured by real estate  nonresidential
    
    $
    2,332,530
    
    
    
    47.24
    %
    
    $
    1,951,020
    
    
    
    48.08
    %Secured by real estate  multifamily
    
    
    1,032,225
    
    
    
    20.91
    
    
    
    865,483
    
    
    
    21.33Construction
    
    
    361,927
    
    
    
    7.33
    
    
    
    291,080
    
    
    
    7.17Business
    
    
    638,619
    
    
    
    12.93
    
    
    
    468,220
    
    
    
    11.54Total commercial
    
    
    4,365,301
    
    
    
    88.41
    
    
    
    3,575,803
    
    
    
    88.12Consumer:Residential mortgage (one to four family)
    
    
    520,016
    
    
    
    10.53
    
    
    
    434,323
    
    
    
    10.70Other
    
    
    51,976
    
    
    
    1.05
    
    
    
    47,926
    
    
    
    1.18Total consumer
    
    
    571,992
    
    
    
    11.59
    
    
    
    482,249
    
    
    
    11.88Gross loans held in portfolio
    
    
    4,937,293
    
    
    
    100.00
    %
    
    
    4,058,052
    
    
    
    100.00
    %Net deferred loan origination (fees) costs
    
    
    (6,123
    )
    
    
    
    
    
    
    (7,311
    )Loans held in portfolio
    
    
    4,931,170
    
    
    
    
    
    
    
    4,050,741Allowance for loan losses
    
    
    (58,508
    )
    
    
    
    
    
    
    (56,472
    )Net loans held in portfolio
    
    $
    4,872,662
    
    
    
    
    
    
    $
    3,994,269
 The Bank has identified certain loans that will be sold during 2005. As a result, such loans are
classified as held for sale at June 30, 2005, and December 31, 2004. The composition of the loans
held for sale portfolio was as follows (dollars in thousands):
 June 30,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Commercial:Secured by real estate  nonresidential
    
    $
    35,968
    
    
    $
    26,882
    
    
    $
    9,086
    
    
    
    33.80
    %Secured by real estate  multifamily
    
    
    220,176
    
    
    
    295,253
    
    
    
    (75,077
    )
    
    
    (25.43
    )Business
    
    
    2,291
    
    
    
    3,337
    
    
    
    (1,046
    )
    
    
    (31.35
    )Total commercial
    
    
    258,435
    
    
    
    325,472
    
    
    
    (67,037
    )
    
    
    (20.60
    )Consumer:Residential mortgage (one to four family)
    
    
    325
    
    
    
    
    
    
    
    325
    
    
    
    Total consumer
    
    
    325
    
    
    
    
    
    
    
    325
    
    
    
    Gross loans held for sale
    
    
    258,760
    
    
    
    325,472
    
    
    
    (66,712
    )
    
    
    (20.50
    )Net deferred loan costs
    
    
    1,741
    
    
    
    535
    
    
    
    1,206
    
    
    
    225.42Loans held for sale
    
    $
    260,501
    
    
    $
    326,007
    
    
    $
    (65,506
    )
    
    
    (20.09
    )%
 The Bank continues to emphasize production of commercial real estate and commercial business loans.
The Bank also originates and funds loans that qualify for guarantees issued by the SBA.
Generally, the SBA guarantees on such loans are 75% of the loan amount. The residual portion of
the loan is not guaranteed by the U.S. government, and the Bank bears the credit risk on that
portion of such loans. The Bank generally sells the guaranteed portion of each SBA loan at the
time of loan origination. From time-to-time, the Bank may sell part of the unguaranteed portion of
the SBA loans. SBA regulations require that the Bank as the originator retain a minimum of 5% of
the total loan amount.
 36




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##### Table of Contents



As a result of changing the loan origination focus to commercial loans, the Bank is originating
more loans that reprice in shorter time periods than the traditional repricing terms of residential
mortgage (one to four family) loans. Construction loans, commercial business loans and SBA loans
generally have monthly repricing terms. Commercial real estate loans generally reprice monthly or
are intermediate fixed, meaning that the loans have interest rates that are fixed for a period,
typically five years, and then generally reprice monthly or become due and payable. Multifamily
loans are generally adjustable-rate and reprice semiannually. Residential mortgage (one to four
family) loans may be adjustable-rate and reprice semiannually or annually, have fixed rates,
meaning that the loans have interest rates that are fixed over the term of the loans, for terms of
15 or 30 years, or have interest rates that are fixed for a period, typically five years, and then
generally reprice semiannually or annually.The following table reflects the Banks gross loans held in portfolio composition by type at
June 30, 2005, and December 31, 2004 (dollars in thousands):
 June 30,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Adjustable-rate loans
    
    $
    2,847,415
    
    
    $
    2,603,889
    
    
    $
    243,526
    
    
    
    9.35
    %Intermediate fixed-rated loans
    
    
    1,225,781
    
    
    
    881,744
    
    
    
    344,037
    
    
    
    39.02Fixed-rate loans
    
    
    864,097
    
    
    
    572,419
    
    
    
    291,678
    
    
    
    50.96Gross loans held in portfolio
    
    $
    4,937,293
    
    
    $
    4,058,052
    
    
    $
    879,241
    
    
    
    21.67
    %
 Adjustable-rate loans increased $243.5 million from December 31, 2004, to June 30, 2005.
Adjustable-rate loans represented 57.7% of gross loans at June 30, 2005, compared with 64.2% of
gross loans at December 31, 2004. The increase of $344.0 million in intermediate fixed-rate loans
from December 31, 2004, to June 30, 2005, is a result of the origination of new intermediate
fixed-rate multifamily loans based on market demand. Fixed-rate loans increased $291.7 million
from December 31, 2004, to June 30, 2005.As a result of the Banks continued focus on commercial lending activities, loan growth remained
concentrated in its commercial loan portfolio, which totaled $4.37 billion at June 30, 2005, a
22.08% increase from $3.58 billion at December 31, 2004.The table below shows new loan commitments for the six months ended June 30, 2005 and 2004 (dollars
in thousands):
 Six Months Ended June 30,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    623,670
    
    
    $
    295,950Secured by real estate  multifamily
    
    
    643,538
    
    
    
    342,447Construction
    
    
    308,945
    
    
    
    175,025Business
    
    
    306,026
    
    
    
    206,706Total commercial loans
    
    
    1,882,179
    
    
    
    1,020,128Consumer:Residential mortgage (one to four family)
    
    
    88,400
    
    
    
    126,866Home equity and other
    
    
    20,348
    
    
    
    21,256Total consumer loans
    
    
    108,748
    
    
    
    148,122Total new
loan commitments
    
    $
    1,990,927
    
    
    $
    1,168,250
 37




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##### Table of Contents



Internal Loan Securitizations. The Bank manages its risk-based capital level through a
variety of means, including internal loan securitizations. In such securitizations, the Bank
exchanges either multifamily or residential mortgage (one to four family) loans for Fannie Mae
(FNMA) securities. Residential mortgage (one to four family) loans are generally included in the
50% risk weight for risk-based capital purposes, whereas multifamily loans may fall either into the
50% or 100% risk weight depending on the specific criteria of each individual loan. FNMA
securities are classified as a 20% risk weight.These internal securitizations do not have a cash impact to the Bank, since selected loans from its
loans held in portfolio are exchanged for FNMA securities. Such securities are represented by
exactly the same loans previously held in the Banks loans held in portfolio. The FNMA securities
are generally held as available-for-sale (AFS) securities in the Banks investment and
mortgage-backed securities portfolio.Through these securitization transactions, the Bank also reduces its credit risk. In these
securitizations, the Company fully transfers credit risk on the related loans to FNMA. The Banks
yield on the FNMA securities is lower than the average yield on the underlying loans. This
difference is the guarantee fee that is retained by FNMA as compensation for relieving the Bank of
the credit risk on these loans. Since the Bank retains all of the securities issued by FNMA in the
securitization, no gain or loss is recognized on the exchange transaction. The Bank continues to
service the loans included in these securitizations. In addition, these securitization
transactions improve the Banks liquidity, since FNMA securities receive more favorable treatment
as a collateral base for borrowings than do whole loans.During the six months ended June 30, 2004, the Bank internally securitized $147.1 million of
multifamily loans. There were no securitizations during the six months ended June 30, 2005.Risk Elements. The Bank generally place loans on nonaccrual status when they become 90
days past due, unless the loan is both well secured and in the process of collection. Loans may be
placed on nonaccrual status earlier if, in managements opinion, the full and timely collection of
principal or interest becomes uncertain. When a loan is placed on nonaccrual status, unpaid
accrued interest is charged against interest income. The Bank charge off loans when it determines
that collection has become unlikely. Other real estate owned (OREO), of which the Bank has none,
would consist of real estate acquired by us through foreclosure.The following is the Banks risk elements table at June 30, 2005, and December 31, 2004 (dollars in
thousands):
 June 30,
    
    
    December 31,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    11,276
    
    
    $
    8,085Construction
    
    
    
    
    
    
    4,353Business
    
    
    933
    
    
    
    136Total nonaccrual loans
    
    
    12,209
    
    
    
    12,574Total nonperforming assets
    
    $
    12,209
    
    
    $
    12,574Nonperforming assets to total assets
    
    
    0.17
    %
    
    
    0.20
    %Nonaccrual loans to total loans
    
    
    0.24
    %
    
    
    0.29
    %Nonperforming assets to total loans and OREO
    
    
    0.24
    %
    
    
    0.29
    %Total loans
    
    $
    5,191,671
    
    
    $
    4,376,748Gross income not recognized on nonaccrual loans
    
    
    507
    
    
    
    699Accruing loans contractually past due 90 days or more
    
    
    6,639
    
    
    
    3,101Loans classified as troubled debt restructurings but not included above
    
    
    10,903
    
    
    
    11,329
 38




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##### Table of Contents



Total nonperforming assets were $12.2 million at June 30, 2005, a decrease of $365,000, from $12.6
million at December 31, 2004. The decrease was primarily attributable to removal of three
construction loans from nonaccrual loans, offset by one additional commercial real estate loan and
three additional commercial business loans to nonaccrual loans. The ratio of nonperforming assets
to total assets was 0.17% at June 30, 2005, compared with 0.20% at December 31, 2004.The Banks policy is to record OREO at the lower of carrying value or fair value less estimated
disposal costs. Any write-down of OREO would be charged to earnings.The $10.9 million performing restructured amount in the table above represents one commercial real
estate loan and one commercial loan. The first performing restructured loan is represented by a
non-residential loan secured by real estate for $8.8 million. The $8.8 million non-residential
loan secured by real estate has been classified as a performing restructured loan as a result of
the Bank making interest rate concessions on a separate loan for $1.6 million to the same obligator
and is secured by the same property. The separate loan of $1.6 million is included in the
nonaccrual commercial real estate in the table above. The other performing restructured loan is
represented by a commercial business loan of $2.1 million where the Bank provided an interest rate
concession.With the exception of the loans described in the above and the classified loans, the Bank is not
aware of any other loans as of June 30, 2005, where the known credit problems of the borrower lead
us to believe that they will not comply with their repayment schedule, or that would result in the
loan being included in the nonperforming loan table at a future date.Since 1998, the Bank has engaged an independent loan review firm to examine the classification of
our commercial loan portfolio. The firm reviews new commercial loan commitments in excess of
$100,000 and also conducts annual reviews based on specified criteria. The firm is composed of
former bank regulators and former bankers.Management cannot predict the extent to which economic conditions in the Banks market area may
worsen or the full impact that such conditions may have on the Banks loan portfolio. Accordingly,
there can be no assurance that other loans will not become 90 days or more past due, be placed on
nonaccrual status, or become impaired or restructured loans or OREO in the future.The Bank has a risk rating process to which all loans in the portfolio are subjected. Criticized
loans are classified in the following categories:
 
    
    Special Mention: loans that should not yet be adversely
classified, but have credit deficiencies or potential weaknesses
that warrant the Banks attention.
    
    Substandard: loans with one or more well-defined weaknesses,
which have the distinct possibility that the Bank will sustain
some loss if the weaknesses are not corrected.
    
    Doubtful: loans with the weaknesses of a substandard loan plus
such weaknesses, which make collection or liquidation in full
questionable, based on current information, and have a high
probability of loss.
    
    Loss: loans considered uncollectible.
 39




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##### Table of Contents



The following table sets forth information concerning the allowance for loan losses and allowance
for losses related to unfunded commitments for the six months ended June 30, 2005 and 2004
(dollars in thousands):
 Six Months Ended June 30,2005
    
    
    2004Balance at beginning of year:Allowance for loan losses
    
    $
    56,472
    
    
    $
    58,126Allowance for losses  unfunded commitments
    
    
    3,940
    
    
    
    2,737Total allowance for losses at beginning of year
    
    
    60,412
    
    
    
    60,863Provision for loan losses
    
    
    2,965
    
    
    
    3,183Charge-offs:Commercial:Secured by real estate  nonresidential
    
    
    
    
    
    
    416Business
    
    
    137
    
    
    
    1,064Total commercial
    
    
    137
    
    
    
    1,480Consumer:Other
    
    
    
    
    
    
    31Total consumer
    
    
    
    
    
    
    31Total charge-offs
    
    
    137
    
    
    
    1,511Recoveries:Commercial:Business
    
    
    58
    
    
    
    64Total commercial
    
    
    58
    
    
    
    64Consumer:Other
    
    
    17
    
    
    
    13Total consumer
    
    
    17
    
    
    
    13Total recoveries
    
    
    75
    
    
    
    77Total allowance for losses at end of period
    
    $
    63,315
    
    
    $
    62,612Allowance for loan losses
    
    $
    58,508
    
    
    $
    59,469Allowance for losses  unfunded commitments
    
    
    4,807
    
    
    
    3,143Total allowance for losses at end of period
    
    $
    63,315
    
    
    $
    62,612Allowance for loan losses to ending loans (1)
    
    
    1.19
    %
    
    
    1.47
    %Annualized net charge-offs to average loans outstanding (2)
    
    
    
    %
    
    
    0.07
    %
 
 (1)
    
    Ratio of allowance for loan losses to ending loans for June 30, 2005 and 2004, are
based on loans held in portfolio, and excludes loans held for sale.(2)
    
    Average loans balance includes loans held for sale. 40




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##### Table of Contents



Securities. The Bank maintains an investment and mortgage-backed securities portfolio
(portfolio) to provide both liquidity and enhance the income of the organization. The portfolio
is composed of two segments: Available for Sale (AFS) and Held to Maturity (HTM). The Bank
does not maintain a trading portfolio. The Bank carries the AFS portfolio at fair value, with
unrealized changes in the fair value of the securities reflected as Accumulated Other Comprehensive
Income (Loss). At the end of each month, the Bank adjusts the carrying value of its AFS portfolio
to reflect the current fair value of each security. The HTM portfolio is carried at amortized
cost. At the time a security is purchased, the Bank classifies it either as AFS or HTM.
Securities are classified as HTM if the Bank has the positive intent and ability to hold such
securities to maturity.The Banks portfolio investments are governed by the Asset/Liability Policy (A/L Policy), which
is approved by the Banks Board of Directors. The A/L Policy sets forth exposure limits for
selected investments, as a function of total assets, total securities and Tier I Capital. The A/L
Policy further sets forth maximum maturity and duration limits for securities. The A/L Policy also
further limits the concentration in a particular investment as a function of the total issue. The
A/L Policy sets forth goals for each type of investment with respect to ROA, ROE and Return on
Risk-Based Capital. It also sets forth limits for interest rate sensitivity for each type of
investment.Permitted investments include U.S. Government obligations, agency securities, municipal
obligations, investment grade securities, commercial paper, corporate debt, money market mutual
funds and guaranteed preferred beneficial interests in junior subordinated debentures. The Banks
Board of Directors has directed management to invest in securities with the objective of optimizing
the yield on investments that appropriately balances the risk-based capital utilization and
interest rate sensitivity. The A/L Policy requires that all securities be of investment grade at
the time of purchase.The securities balance, which includes the AFS and HTM portfolios, decreased by $28.1 million from
December 31, 2004, to June 30, 2005. This was primarily the result of sales of $91.4 million,
principal repayments and securities calls of $93.7 million, and maturities and payoffs of $271.7
million, partially offset by purchases of $428.5 million for the six months ended June 30, 2005.
The Bank intends to continue reducing its balance sheet by accelerating the organic growth of its
loan portfolio and decreasing its securities concentration.The portfolio provides liquidity for the Banks operations. Such liquidity can either be realized
through the sale of AFS securities or through borrowing. Securities are generally pledged as
collateral for such borrowings.The Banks HTM securities portfolio declined from $325.2 million at December 31, 2004, to $322.0
million at June 30, 2005. This decrease primarily resulted from principal repayments of $13.0
million. The Bank plans from time-to-time to continue to purchase securities for its HTM
portfolio. However, for the foreseeable future, the Bank expects that the preponderance of its
securities portfolio will be classified as AFS.
 41




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##### Table of Contents



The following table presents the securities portfolio at June 30, 2005, and December 31, 2004
(dollars in thousands):
 June 30, 2005
    
    
    December 31, 2004Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueInvestment securities available for sale:Trust Preferred Securities
    
    $
    23,442
    
    
    $
    23,149
    
    
    $
    18,441
    
    
    $
    18,219Federal Agency Notes
    
    
    147,426
    
    
    
    145,909
    
    
    
    232,594
    
    
    
    230,046Total investment securities available for sale
    
    
    170,868
    
    
    
    169,058
    
    
    
    251,035
    
    
    
    248,265Mortgage-backed securities available for sale:FNMA
    
    
    374,565
    
    
    
    371,329
    
    
    
    366,307
    
    
    
    363,097GNMA
    
    
    91,829
    
    
    
    90,936
    
    
    
    106,501
    
    
    
    105,072FHLMC
    
    
    309,121
    
    
    
    305,458
    
    
    
    288,789
    
    
    
    285,965Other
    
    
    208,983
    
    
    
    207,503
    
    
    
    167,719
    
    
    
    166,741Total mortgage-backed securities available for sale
    
    
    984,498
    
    
    
    975,226
    
    
    
    929,316
    
    
    
    920,875Total investment and mortgage-backed securities
available for sale
    
    $
    1,155,366
    
    
    $
    1,144,284
    
    
    $
    1,180,351
    
    
    $
    1,169,140Investment securities held to maturity:Municipals
    
    $
    225,530
    
    
    $
    234,750
    
    
    $
    215,594
    
    
    $
    222,297Mortgage-backed securities held to maturity:FNMA
    
    
    5,524
    
    
    
    5,438
    
    
    
    5,765
    
    
    
    5,689GNMA
    
    
    90,102
    
    
    
    90,477
    
    
    
    102,439
    
    
    
    102,595FHLMC
    
    
    832
    
    
    
    822
    
    
    
    1,404
    
    
    
    1,388Total mortgage-backed securities held to maturity
    
    
    96,458
    
    
    
    96,737
    
    
    
    109,608
    
    
    
    109,672Total investment and mortgage-backed securities
held to maturity
    
    $
    321,988
    
    
    $
    331,487
    
    
    $
    325,202
    
    
    $
    331,969Total investment and mortgage-backed securities
    
    $
    1,477,354
    
    
    $
    1,475,771
    
    
    $
    1,505,553
    
    
    $
    1,501,109
 As of June 30, 2005, the carrying value and the market value of the available-for-sale securities
were $1.16 billion and $1.14 billion, respectively. The total net unrealized loss on these
securities was $11.1 million. Such unrealized losses are $6.4 million net of tax and are reflected
as a reduction to stockholders equity. The difference between the carrying value and market value
of securities that are held to maturity, aggregating a gain of $9.5 million, has not been
recognized in the financial statements as of June 30, 2005. The unrealized net gains are the
result of movements in market interest rates.Deposits. Deposits have traditionally been the Banks primary source of funds to use in
lending and investment activities. At June 30, 2005, 52.8% of the Banks deposits were time
deposits, 29.5% were negotiable order of withdrawal (NOW) accounts, demand deposits and money
market accounts, and 17.7% were savings accounts. By comparison, at December 31, 2004, 53.4% of
the Banks deposits were time deposits, 27.4% were NOW accounts, demand deposits and money market
accounts, and 19.2% were savings accounts.The Bank obtains its deposits primarily from the communities that it serves. With the exception of
state and federal government entities (Public Fund Sector) contributing 7.20% of total deposits,
no other material portion of the Banks deposits were from or were dependent upon any one customer
or industry. The Bank accepts deposits over $100,000 from customers. Included in the figure for
time deposits at June 30, 2005, is $1.94 billion of deposits of $100,000 or greater, compared to
$1.87 billion at December 31, 2004. Such deposits made up 35.8% of total deposits at June 30,
2005, compared to 35.8% at December 31, 2004.
 42




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##### Table of Contents



The following table presents the balances and rates paid for categories of deposits at June 30,
2005, and December 31, 2004 (dollars in thousands):
 June 30, 2005
    
    
    December 31, 2004Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageAmount
    
    
    Rate
    
    
    Amount
    
    
    RateNOW, checking and money market accounts
    
    $
    1,602,365
    
    
    
    1.27
    %
    
    $
    1,427,366
    
    
    
    0.96
    %Savings accounts
    
    
    957,844
    
    
    
    1.21
    
    
    
    1,000,489
    
    
    
    1.03Time deposits:Less than $100,000
    
    
    924,506
    
    
    
    2.43
    
    
    
    918,650
    
    
    
    1.79$100,000 or greater
    
    
    1,940,611
    
    
    
    2.96
    
    
    
    1,869,357
    
    
    
    2.26Total time deposits
    
    
    2,865,117
    
    
    
    2.79
    
    
    
    2,788,007
    
    
    
    2.11Total deposits
    
    $
    5,425,326
    
    
    
    2.06
    %
    
    $
    5,215,862
    
    
    
    1.59
    %
 Other Borrowings. The Bank maintains borrowing lines with numerous correspondent banks and
brokers and with the Federal Home Loan Bank (the FHLB) of San Francisco to supplement the Banks
supply of lendable funds and to manage liquidity. Such borrowings are generally secured with
mortgage loans and/or securities with a market value at least equal to outstanding balances. In
addition to loans and securities, advances from the FHLB of San Francisco are typically secured by
a pledge of the Banks stock in the FHLB of San Francisco. At June 30, 2005, the Bank had $835.7
million of FHLB advances outstanding and $407.3 million outstanding at December 31, 2004. At June
30, 2005, the Bank had $738.4 million of additional FHLB borrowings available for future borrowing
capacity.Included in the $835.7 million of FHLB advances as of June 30, 2005, were $531.0 million of
short-term, fixed-rate advances that mature within one year. All of the $304.7 million in
long-term advances mature between 2006 and 2008. As of June 30, 2005, $231.0 million of these
advances may be terminated at the option of the FHLB of San Francisco. The FHLB may terminate the
advances at quarterly intervals at specified periods ranging from three to five years beyond the
original advance dates. To date, the FHLB has not exercised its option to terminate any advances
to the Bank. In the event the FHLB decided to exercise this option, the Bank would need to pay the
advances back.The following table sets forth certain information regarding short and long-term borrowings of the
Bank at or for the six months ended June 30, 2005 and 2004 (dollars in thousands):
 At or for theSix Months Ended June 30,2005
    
    
    2004Short-term borrowings:FHLB of San Francisco advances and other short-term borrowings:Average balance outstanding
    
    $
    174,403
    
    
    $
    174,747Maximum amount outstanding at any month end period
    
    
    539,364
    
    
    
    300,695Balance outstanding at end of period
    
    
    539,364
    
    
    
    300,695Weighted average interest rate during the period
    
    
    2.88
    %
    
    
    1.42
    %Weighted average interest rate at end of period
    
    
    3.40
    %
    
    
    1.32
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    
    
    
    
    Long-term borrowings:FHLB of San Francisco advances:Average balance outstanding
    
    $
    332,932
    
    
    $
    268,259Maximum amount outstanding at any month end period
    
    
    334,913
    
    
    
    285,180Balance outstanding at end of period
    
    
    304,723
    
    
    
    285,180Weighted average interest rate during the period
    
    
    4.74
    %
    
    
    5.17
    %Weighted average interest rate at end of period
    
    
    5.02
    %
    
    
    5.17
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    3
    
    
    
    4
 43




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The Bank has recorded certain loan sale transactions as secured borrowings as of June 30, 2005, as
a result of these transactions not qualifying for sales treatment under SFAS No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities. The short-term
and long-term secured borrowings amounted to $5.4 million and $45.1 million, respectively, at
June 30, 2005, and are not reflected in the above short-term and long-term borrowings table.Subordinated Debentures of the Company (TPS). UCBH established special purpose trusts in
1998, 2001, and 2002 for the purpose of issuing Guaranteed Preferred Beneficial Interests in its
Subordinated Debentures (Capital Securities). The trusts exist for the sole purpose of issuing
the Capital Securities and investing the proceeds thereof in Subordinated Debentures issued by
UCBH. Payment of distributions out of the monies held by the trusts and payments on liquidation of
the trusts, or the redemption of the Capital Securities, are guaranteed by UCBH to the extent the
trusts have funds available thereof. The obligations of UCBH under the guarantees and the
Subordinated Debentures are subordinate and junior in right of payment to all indebtedness of UCBH
and will be structurally subordinated to all liabilities and obligations of UCBHs subsidiaries.
UCBH had $106.0 million of TPS outstanding at June 30, 2005, and $136.0 million at December 31,
2004.Pursuant to the Indenture dated as of April 17, 1998, (the Indenture), between UCBH and
Wilmington Trust Company (Wilmington), as Trustee, UCBH redeemed on June 27, 2005, all
$30,928,000 aggregate principal amount of the 9.375% junior subordinated debentures due May 1, 2028
(the Debentures), issued by UCBH under the Indenture. The redemption price consisted of the
$30,928,000 aggregate principal amount plus aggregate unpaid interest of $451,000. The redemption
of the Debentures resulted in a loss of $1.2 million related to the write-off of the unamortized
Debentures issuance costs for the three and six months ended June 30, 2005. UCBH did not replace
the redeemed subordinated debentures during the second quarter of 2005. The financial impact of
replacing the subordinated debentures with other funding sources will result in a $1.5 million
decrease in interest expense per annum.Regulatory Capital. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital guidelines as calculated under
regulatory accounting practices. As of June 30, 2005, the Bank met the Well Capitalized
requirements under these guidelines. The total risk-based capital ratio of the Bank at June 30,
2005, was 11.29%, as compared with 12.67% at December 31, 2004. The ratio of Tier I Capital (as
defined in the regulations) to average assets (as defined in the regulations) of the Bank at June
30, 2005, was 8.18% as compared with 8.49% at December 31, 2004. The decrease to the risk-based
capital ratios from December 31, 2004, to June 30, 2005, is attributable to the increase in loans.The Company is categorized as Well Capitalized. The Companys total risk-based capital ratio is
higher than the Banks due to the inclusion of the Capital Securities as capital in the
risk-based capital calculation. Capital Securities are includable as capital up to 25% of Tier I
Capital. As discussed in Note 1 to the Consolidated Financial Statements, the trusts were
deconsolidated for reporting purposes pursuant to the FIN 46R interpretation. In March 2005, the
Federal Reserve Bank issued final guidance allowing the inclusion of capital securities in Tier I
Capital subject to tightened quantitative limits and a broader range of restricted core capital
elements, as defined. The Banks Tier I Capital is unaffected, since all trust preferred
securities have been issued at the UCBH level.Stockholders Equity. Total common shares outstanding at June 30, 2005, were 91.7 million,
compared with 91.1 million outstanding at December 31, 2004; prior periods have been restated for
the April 12, 2005, two-for-one stock split. On January 27, 2005, UCBH declared a
two-for-one stock split in the form of a stock dividend to shareholders of record as of March 31,
2005, and distributed on April 12, 2005.Liquidity. As a financial institution, the Company must maintain sufficient levels of
liquid assets at all times to meet our cash flow needs. These liquid assets ensure that the
Company has the cash available to pay out deposit withdrawals, meet the credit needs of its
customers and be able to take advantage of investment opportunities as they arise. In addition to
liquid assets, certain liabilities can provide liquidity as well. Liquid assets can include cash
and deposits that the Company has with other banks, federal funds sold and other short-term
investments, maturing loans and investments, payments by borrowers of principal and interest on
loans, payments of principal and interest on investments and loans sales. Additional sources of
liquidity can include increased deposits, lines of credit and other borrowings.
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##### Table of Contents



Net cash provided by operating activities for the six months ended June 30, 2005, was $109.8
million. Of this amount, net cash provided by operating activities was due to $47.2 million from
net income, $3.0 million from provision for loan losses, $1.7 million from amortization of intangibles,
$4.0 million from depreciation and amortization of premises and equipment, $1.2 million from loss
on extinguishment of subordinated debentures, $50.4 million from net change in loans held for sale
and $10.7 million net increase in operating liabilities. This was offset by $2.3 million from
other, net and $6.1 million from net increase in other operating
assets.Net cash used in investing activities for the six months ended June 30, 2005, was $809.8 million.
Of this amount, $842.3 million was used in loans originated and purchased, net of principal
collections, offset by $30.1 million in proceeds from sale of loans held in portfolio and $12.5
million from net activities related to the investment and
mortgage-backed securities activities.Net cash provided by financing activities for the six months ended June 30, 2005, was $615.0
million primarily due to $209.5 million from net activities related to deposits and $437.1 million
primarily from net borrowings from the FHLB of San Francisco, offset by $30.0 million redemption of
the subordinated debentures.The Company considers the impairment of value to certain investment and mortgage-backed securities
is attributable to the movement of market interest rates and believes the fair value will improve
over time due to the high credit ratings of the securities. There are no credit concerns with any
of these investment and mortgage-backed securities, and the Company has the intent and ability to
hold these securities to maturity.At June 30, 2005, the Bank has $2.7 billion of certificates of deposit scheduled to mature within
one year. The Company believes that its liquidity resources will provide it with sufficient amounts
of cash necessary to meet these commitments.The Companys liquidity may be adversely affected by unexpected withdrawals of deposits, excessive
interest rates paid by competitors and other factors. The Company reviews its liquidity position
regularly in light of its expected growth in loans and deposits. The Company believes that it
maintains adequate sources of liquidity to meet its needs.Capital Resources.UCBH has continuously declared quarterly dividends on common
stock since 2000. UCBH paid aggregate dividends of $2.3 million for the three months ended
June 30, 2005. The payment of such dividends did not have a significant impact on the liquidity of
the Company. As a result of the dividends declared, the total capital of the Company was reduced
by $2.3 million for the three months ended June 30, 2005. Dividends declared for the three months
ended June 30, 2005, had the effect of reducing the Tier I leverage capital ratio by six basis
points and risk-based capital ratio by seven basis points.
 45




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market RiskThere has been no material change in UCBH Holdings, Inc. and subsidiaries (the Company) exposure
to market risk since the information was disclosed in the Companys Annual Report dated
December 31, 2004, on file with the Securities and Exchange Commission (SEC File No. 000-24947).

Item 4. Controls and ProceduresAt the end of the period covered by this report, the UCBH Holdings, Inc. and subsidiaries (the
Company) carried out an evaluation, under the supervision and with the participation of the
Companys management, including the Chief Executive Officer, the Chief Financial Officer, and the
Executive Vice President and Director of Corporate Development and Investor Relations (formerly the
Chief Financial Officer), of the effectiveness of the design and operation of the Companys
disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934, as amended.As discussed in Managements Report on Internal Control over Financial Reporting in Item 9A of the
Companys Form 10-K filed with the SEC on March 17, 2005, as of December 31, 2004, there was a
material weakness in the Companys internal control over financial reporting due to a shortage of
qualified financial personnel with sufficient depth, skills and experience to apply accounting
principles generally accepted in the United States of America (GAAP) to the Companys
transactions and to prepare financial statements that comply with GAAP. As a result of that
material weakness, the Chief Executive Officer and the then Chief Financial Officer concluded that
the Companys disclosure controls and procedures were not effective as of December 31, 2004.The Company has authorized the addition of sufficient staff members to the finance department to
ensure that it has the depth, skills and experience within the department to prepare its financial
statements and disclosures in accordance with GAAP. During the three months ended June 30, 2005,
the Company hired two additional senior finance executives, including a Chief Financial Officer and
a Corporate Controller, responsible for further strengthening the finance departments resources,
to ensure that the Companys finance department has the requisite depth, skills and technical
expertise to prepare its financial statements and disclosures in accordance with GAAP and
consolidated the senior vice president position responsible for managing a team focused on
improving the Companys financial accounting processes. The Company remains actively involved in
recruiting additional finance professionals to further strengthen the finance department. The
Company has not completed the implementation of the changes it believes are required to remediate
the previously reported material weakness in internal control over financial reporting. Because
the material weakness was in the process of being remediated as of June 30, 2005, the Chief
Executive Officer and the Chief Financial Officer have concluded that the Companys disclosure
controls and procedures were not effective as of June 30, 2005.Changes in Internal Control Over Financial ReportingOther than as described above, there have been no changes that have materially affected, or are
reasonably likely to materially affect, the Companys internal control over financial reporting.The Company believes it is addressing the deficiencies that affected its internal control over
financial reporting as of June 30, 2005. However, the effectiveness of any system of internal
controls is subject to inherent limitations and there can be no assurance that the Companys
internal control over financial reporting will prevent or detect all errors. The Company intends
to continue to evaluate and further strengthen its internal controls over the financial reporting
system. In addition, management has discussed with and received approval from the Audit Committee
to engage finance and accounting consultants when necessary, in order to provide the necessary
expertise until sufficient expertise can be developed and maintained internally.
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##### Table of Contents



PART II  OTHER INFORMATION

Item 1. Legal ProceedingsUCBH Holdings, Inc.s wholly owned subsidiary, United Commercial Bank, has been a party to
litigation incidental to various aspects of its operations, in the ordinary course of business.
Management is not currently aware of any litigation that will have a material adverse impact on
UCBH Holdings, Inc. and subsidiaries consolidated financial condition, or the results of
operations.

Item 2. Unregistered Sales of Equity Securities and Use of ProceedsNone.

Item 3. Defaults Upon Senior SecuritiesNot applicable.

Item 4. Submission of Matters to a Vote of Security HoldersThe following proposals and the related votes thereon were made at UCBH Holdings, Inc.s (UCBH)
annual stockholders meeting held on May 19, 2005:
 Votes
    
    Votes
    
    Votes
    
    Votes
    
    BrokersDescription of Proposal
    
    For
    
    Against
    
    Withheld
    
    Abstained
    
    Non-Votes1.
    
    To elect three Class I
directors to serve until
the 2008 Annual Meeting of
Stockholders:Li-Lin Ko
    
    
    41,023,132
    
    
    
    
    
    
    
    1,387,033
    
    
    
    
    
    
    Richard Li-Chung Wang
    
    
    41,175,564
    
    
    
    
    
    
    
    1,234,601
    
    
    
    
    
    
    Dennis Wu
    
    
    41,175,064
    
    
    
    
    
    
    
    1,235,101
    
    
    
    
    
    
    2.
    
    To ratify the Audit
Committees selection of
PricewaterhouseCoopers LLP
as UCBHs independent
auditors
    
    
    38,921,962
    
    
    
    2,356,624
    
    
    
    
    
    
    
    1,131,579
    
    
    
 
 Item 5. Other InformationNone.
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##### Table of Contents



Item 6. ExhibitsIndex to Exhibits
 Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Agreement and Plan of Merger by and
among UCBH Holdings, Inc., a Delaware
corporation, and Pacifica Bancorp,
Inc., a Washington corporation, dated
May 23, 2005
    
    
    
    
    
    
    
    
    
    
    
    P3.1
    
    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, relating to
Series B Junior Subordinated
Debentures
    
    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, 20034.8
    
    Indenture of UCBH Holdings, Inc.,
dated April 17, 1998, between UCBH Holdings, Inc. and Wilmington Trust Company,
as trustee
    
    8-K
    
    000-24947
    
    
    4.1
    
    
    May 27, 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, 2005
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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.3
    
    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
    
    Amended UCBH Holdings, Inc. 1998
Stock Option Plan
    
    8-K
    
    000-24947
    
    
    10.1
    
    
    May 25, 200510.8
    
    Executive Deferred Compensation Plan
    
    10-K
    
    000-24947
    
    
    10.6
    
    
    March 17, 200510.9
    
    Director Deferred Compensation Plan
    
    10-K
    
    000-24947
    
    
    10.7
    
    
    March 17, 200510.10
    
    Form of Indemnification Agreement of
UCBH Holdings, Inc.
    
    8-K
    
    000-24947
    
    
    10.3
    
    
    June 13, 200510.11
    
    Form of Indemnification Agreement of
United Commercial Bank.
    
    8-K
    
    000-24947
    
    
    10.4
    
    
    June 13, 200514.1
    
    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 17, 200531.1
    
    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.
    
    
    
    
    
    
    
    
    
    
    
    P
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##### Table of Contents



SIGNATURES
 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
 UCBH HOLDINGS, INC.Date:
August 9, 2005
    
    /s/ Thomas S. WuThomas S. Wu
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)Date:
August 9, 2005
    
    /s/ Dennis WuDennis Wu
Director, Executive Vice President
andChief Financial Officer
(Principal Financial Officer)
 50