##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

|(Mark One) |  |                                                                                        
|---------- |  | ---------------------------------------------------------------------------------------
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

OR

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

|                                 
|---------------------------------
|For the transition period from to
|                                 
|Commission file number 0-24947   

UCBH Holdings, Inc.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 94-3072450                          
|                                                               |  |                                     
|(State or other jurisdiction of incorporation
or organization) |  | (I.R.S. Employer
Identification No.)

|                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------
|711 Van Ness Avenue, San Francisco, California  94102
(Address of principal executive offices)                 (Zip Code)

|                                                                   
|-------------------------------------------------------------------
|(415) 928-0700
(Registrants telephone number, including area code)



(Former name, former address and former fiscal year, if changed since
last report)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes
[X]   No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Yes [X]   No [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the
latest practicable date.

As of
November 13, 2003, the Registrant had 45,032,024 shares
of common stock outstanding.





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TABLE OF CONTENTS



|                               |                                                                                               |                                            |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                               |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                               | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II - OTHER INFORMATION   
|                               | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                               | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                            
|                               | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                               | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                               | ITEM 5. OTHER INFORMATION                                                                    
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                    
|EXHIBIT INDEX                 
|Exhibit 31.1                  
|Exhibit 31.2                  
|Exhibit 32                    



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##### Table of Contents



UCBH HOLDINGS, INC.
TABLE OF CONTENTS

|                               |                                                                         |                                            |    |     |       | 
|------------------------------ | ----------------------------------------------------------------------- | ------------------------------------------ | -- | --- | ----- | 
|PART I - FINANCIAL INFORMATION |                                                                         |                                            |    |    
|                               | Item 1. Financial Statements                                            |                                            |    | 1-3 |      
|                               |                                                                         | Notes to Consolidated Financial Statements |    |     | 4-11  | 
|                               | Item 2. Managements Discussion and Analysis of
Financial Condition and |                                            |    |     |      
|                               |                                                                         | Results of Operations                      |    |     | 11-27 | 
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk      |                                            |    | 28  |      
|                               | Item 4. Controls and Procedures                                         |                                            |    | 28  |      
|PART II - OTHER INFORMATION    |                                                                         |                                            |    |    
|                               | Item 1. Legal Proceedings                                               |                                            |    | 28  |      
|                               | Item 2. Changes in Securities and Use of Proceeds                       |                                            |    | 28  |      
|                               | Item 3. Defaults Upon Senior Securities                                 |                                            |    | 28  |      
|                               | Item 4. Submission of Matters to a Vote of Security Holders             |                                            |    | 28  |      
|                               | Item 5. Other Information                                               |                                            |    | 28  |      
|                               | Item 6. Exhibits and Reports on Form 8-K                                |                                            |    | 29  |      
|SIGNATURES                     |                                                                         |                                            | 30 |    
|EXHIBIT 31.1                   |                                                                         |                                            |    |    
|EXHIBIT 31.2                   |                                                                         |                                            |    |    
|EXHIBIT 32                     |                                                                         |                                            |    |    





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##### Table of Contents






PART I - FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

UCBH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)

|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |           | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ---------------- | --------- | --------------- | - | --------- | --------- | 
|                                                                                                                                                                                                                                              |                                            |   | At September 30, |           | At December 31,
|                                                                                                                                                                                                                                              |                                            |   | 2003             |           | 2002           
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                
|                                                                                                                                                                                                                                              |                                            |   | (unaudited)      |           |                 |   |          
|Assets                                                                                                                                                                                                                                        |                                            |   |                  |           |                 |   |           |          
|Cash and due from banks                                                                                                                                                                                                                       |                                            | $ | 67,705           |           |                 | $ | 58,954    |          
|Federal funds sold                                                                                                                                                                                                                            |                                            |   | 2,200            |           |                 |   |          |          
|Investment and mortgage-backed securities available for sale, at fair value                                                                                                                                                                   |                                            |   | 1,245,344        |           |                 |   | 1,469,387 |          
|Investment and mortgage-backed securities, held to maturity (fair value $285,628
at September 30, 2003, and $114,582 at December 31, 2002)                                                                                                    |                                            |   | 284,753          |           |                 |   | 111,994   |          
|Federal Home Loan Bank Stock and other equity securities                                                                                                                                                                                      |                                            |   | 36,709           |           |                 |   | 40,162    |          
|Loans                                                                                                                                                                                                                                         |                                            |   | 3,619,569        |           |                 |   | 3,027,810 |          
|Allowance for loan losses                                                                                                                                                                                                                     |                                            |   | (58,111          | )         |                 |   | (48,865   | )        
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|Net loans                                                                                                                                                                                                                                     |                                            |   | 3,561,458        |           |                 |   | 2,978,945 |          
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|Accrued interest receivable                                                                                                                                                                                                                   |                                            |   | 22,558           |           |                 |   | 22,641    |          
|Premises and equipment, net                                                                                                                                                                                                                   |                                            |   | 83,488           |           |                 |   | 81,697    |          
|Goodwill                                                                                                                                                                                                                                      |                                            |   | 87,779           |           |                 |   | 46,052    |          
|Core deposit intangibles                                                                                                                                                                                                                      |                                            |   | 11,560           |           |                 |   | 10,734    |          
|Other assets                                                                                                                                                                                                                                  |                                            |   | 24,120           |           |                 |   | 33,070    |          
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|                                                                                                                                                                                                                                              | Total assets                               |   | $                | 5,427,674 |                 |   | $         | 4,853,636 | 
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|Liabilities                                                                                                                                                                                                                                   |                                            |   |                  |           |                 |   |           |          
|Deposits                                                                                                                                                                                                                                      |                                            | $ | 4,531,831        |           |                 | $ | 4,006,813 |          
|Borrowings                                                                                                                                                                                                                                    |                                            |   | 319,648          |           |                 |   | 353,374   |          
|Guaranteed preferred beneficial interests in junior subordinated debentures                                                                                                                                                                   |                                            |   | 136,000          |           |                 |   | 136,000   |          
|Accrued interest payable                                                                                                                                                                                                                      |                                            |   | 10,663           |           |                 |   | 11,659    |          
|Other liabilities                                                                                                                                                                                                                             |                                            |   | 31,884           |           |                 |   | 63,423    |          
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|                                                                                                                                                                                                                                              | Total liabilities                          |   |                  | 5,030,026 |                 |   |           | 4,571,269 | 
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|Commitments and contingencies                                                                                                                                                                                                                 |                                            |   |                 |           |                 |   |          |          
|Stockholders Equity                                                                                                                                                                                                                          |                                            |   |                  |           |                 |   |           |          
|Preferred stock, $.01 par value, authorized 10,000,000 shares, none issued and outstanding                                                                                                                                                    |                                            |   |                 |           |                 |   |          |          
|Common stock, $.01 par value, authorized 180,000,000 and 90,000,000 shares at
September 30, 2003, and at December 31, 2002, respectively, shares issued and
outstanding 44,995,490 at September 30, 2003, and 42,018,728 at December 31, 2002 |                                            |   | 450              |           |                 |   | 210       |          
|Additional paid-in capital                                                                                                                                                                                                                    |                                            |   | 206,459          |           |                 |   | 124,440   |          
|Accumulated other comprehensive (loss) income                                                                                                                                                                                                 |                                            |   | (368             | )         |                 |   | 9,053     |          
|Retained earnings-substantially restricted                                                                                                                                                                                                    |                                            |   | 191,107          |           |                 |   | 148,664   |          
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|                                                                                                                                                                                                                                              | Total stockholders equity                 |   |                  | 397,648   |                 |   |           | 282,367   | 
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          
|                                                                                                                                                                                                                                              | Total liabilities and stockholders equity |   | $                | 5,427,674 |                 |   | $         | 4,853,636 | 
|                                                                                                                                                                                                                                              |                                            |   |                  |           |                 |   |           |          

The accompanying notes are an integral part of these financial statements.

Page 1



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##### Table of Contents



UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: Dollars in Thousands, Except for Per Share Data)

|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |         |        | 
|---------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------- | ------------------------- | ------ | -------------------------- | ------ | ------------------------- | ------ | ------ | ------ | ------ | ------- | ------- | ------ | ------ | ------- | ------- | ------ | 
|                             |                                                                             |                                                     |                           |        | For the Three Months Ended |        | For the Nine months Ended
|                             |                                                                             |                                                     |                           |        | September 30,              |        | September 30,            
|                             |                                                                             |                                                     |                           |        |                            |        |                          
|                             |                                                                             |                                                     |                           |        | 2003                       |        | 2002                      |        | 2003   |        | 2002  
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |       
|Interest income:             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |        
|                             | Loans                                                                       |                                                     | $                         | 49,854 |                            |        | $                         | 38,669 |        |        | $      | 139,833 |         |        | $      | 114,942 |        
|                             | Funds sold and securities purchased under agreements to resell              |                                                     |                           | 43     |                            |        |                           | 25     |        |        |        | 62      |         |        |        | 87      |        
|                             | Investment and mortgage-backed securities                                   |                                                     |                           | 16,402 |                            |        |                           | 11,236 |        |        |        | 51,947  |         |        |        | 30,724  |        
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|                             |                                                                             | Total interest income                               |                           |        | 66,299                     |        |                           |        | 49,930 |        |        |         | 191,842 |        |        |         | 145,753 |       
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|Interest expense:            |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |        
|                             | Deposits                                                                    |                                                     |                           | 17,677 |                            |        |                           | 13,919 |        |        |        | 52,936  |         |        |        | 43,491  |        
|                             | Short-term borrowings                                                       |                                                     |                           | 112    |                            |        |                           | 136    |        |        |        | 587     |         |        |        | 338     |        
|                             | Guaranteed preferred beneficial interests in junior
subordinated debentures |                                                     |                           | 1,959  |                            |        |                           | 949    |        |        |        | 5,958   |         |        |        | 2,688   |        
|                             | Long-term borrowings                                                        |                                                     |                           | 3,479  |                            |        |                           | 3,405  |        |        |        | 10,359  |         |        |        | 10,083  |        
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|                             |                                                                             | Total interest expense                              |                           |        | 23,227                     |        |                           |        | 18,409 |        |        |         | 69,840  |        |        |         | 56,600  |       
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|                             |                                                                             | Net interest income                                 |                           |        | 43,072                     |        |                           |        | 31,521 |        |        |         | 122,002 |        |        |         | 89,153  |       
|Provision for loan losses    |                                                                             |                                                     | 2,820                     |        |                            |        | 2,742                     |        |        |        | 6,644  |         |         |        | 6,516  |        
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|                             |                                                                             | Net interest income after provision for loan losses |                           |        | 40,252                     |        |                           |        | 28,779 |        |        |         | 115,358 |        |        |         | 82,637  |       
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|Noninterest income:          |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |        
|                             | Commercial banking fees                                                     |                                                     |                           | 1,645  |                            |        |                           | 1,262  |        |        |        | 4,736   |         |        |        | 3,403   |        
|                             | Service charges on deposits                                                 |                                                     |                           | 515    |                            |        |                           | 404    |        |        |        | 1,657   |         |        |        | 1,230   |        
|                             | Gain on sale of securities                                                  |                                                     |                           | 3,050  |                            |        |                           | 395    |        |        |        | 7,866   |         |        |        | 2,439   |        
|                             | Gain on sale of loans                                                       |                                                     |                           | 1,229  |                            |        |                           | 408    |        |        |        | 1,746   |         |        |        | 1,182   |        
|                             | Miscellaneous income                                                        |                                                     |                           | 92     |                            |        |                           | 125    |        |        |        | 318     |         |        |        | 294     |        
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|                             |                                                                             | Total noninterest income                            |                           |        | 6,531                      |        |                           |        | 2,594  |        |        |         | 16,323  |        |        |         | 8,548   |       
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|Noninterest expense:         |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |        
|                             | Personnel                                                                   |                                                     |                           | 10,133 |                            |        |                           | 6,627  |        |        |        | 30,506  |         |        |        | 21,075  |        
|                             | Occupancy                                                                   |                                                     |                           | 1,747  |                            |        |                           | 1,488  |        |        |        | 4,273   |         |        |        | 4,206   |        
|                             | Data processing                                                             |                                                     |                           | 1,453  |                            |        |                           | 813    |        |        |        | 3,659   |         |        |        | 2,433   |        
|                             | Furniture and equipment                                                     |                                                     |                           | 1,012  |                            |        |                           | 527    |        |        |        | 2,548   |         |        |        | 1,766   |        
|                             | Professional fees and contracted services                                   |                                                     |                           | 1,198  |                            |        |                           | 1,077  |        |        |        | 4,305   |         |        |        | 4,684   |        
|                             | Deposit insurance                                                           |                                                     |                           | 185    |                            |        |                           | 109    |        |        |        | 511     |         |        |        | 323     |        
|                             | Communication                                                               |                                                     |                           | 285    |                            |        |                           | 176    |        |        |        | 757     |         |        |        | 495     |        
|                             | Core deposit intangible amortization                                        |                                                     |                           | 185    |                            |        |                           |       |        |        |        | 1,318   |         |        |        |        |        
|                             | One-time litigation settlement                                              |                                                     |                           |       |                            |        |                           | 6,750  |        |        |        |        |         |        |        | 6,750   |        
|                             | Miscellaneous expense                                                       |                                                     |                           | 3,585  |                            |        |                           | 2,235  |        |        |        | 9,618   |         |        |        | 6,335   |        
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|                             |                                                                             |                                                     | Total noninterest expense |        |                            | 19,783 |                           |        |        | 19,802 |        |         |         | 57,495 |        |         |         | 48,067 | 
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|Income before taxes          |                                                                             |                                                     | 27,000                    |        |                            |        | 11,571                    |        |        |        | 74,186 |         |         |        | 43,118 |        
|Income tax expense           |                                                                             |                                                     | 10,232                    |        |                            |        | 4,243                     |        |        |        | 28,062 |         |         |        | 16,895 |        
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|                             |                                                                             | Net income                                          |                           | $      | 16,768                     |        |                           | $      | 7,328  |        |        | $       | 46,124  |        |        | $       | 26,223  |       
|                             |                                                                             |                                                     |                           |        |                            |        |                           |        |        |        |        |         |         |        |        |         |        
|Basic earnings per share     |                                                                             | $                                                   | 0.37                      |        |                            | $      | 0.19                      |        |        | $      | 1.07   |         |         | $      | 0.67   |        
|Diluted earnings per share   |                                                                             | $                                                   | 0.36                      |        |                            | $      | 0.18                      |        |        | $      | 1.02   |         |         | $      | 0.64   |        
|Dividends declared per share |                                                                             | $                                                   | 0.03                      |        |                            | $      | 0.03                      |        |        | $      | 0.09   |         |         | $      | 0.08   |        

The accompanying notes are an integral part of these financial statements.

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##### Table of Contents



UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: Dollars in Thousands)

|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |          |        | 
|--------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | -------- | ------------------------- | ------ | ------ | -------- | -------- | ------ | 
|                                                                      |                                                                                                       |                                                         |                                           |          | For the Nine months Ended
|                                                                      |                                                                                                       |                                                         |                                           |          | September 30,            
|                                                                      |                                                                                                       |                                                         |                                           |          |                          
|                                                                      |                                                                                                       |                                                         |                                           |          | 2003                      |        | 2002  
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |       
|Operating activities:                                                 |                                                                                                       |                                                         |                                           |          |                           |        |        |         
|                                                                      | Net income                                                                                            |                                                         | $                                         | 46,124   |                           |        | $      | 26,223   |         
|                                                                      | Adjustments to reconcile net income to net cash provided by (used for)
operating activities:          |                                                         |                                           |          |                           |        |        |          |         
|                                                                      |                                                                                                       | Provision for loan losses                               |                                           |          | 6,644                     |        |        |          | 6,516    |       
|                                                                      |                                                                                                       | Decrease in accrued interest receivable                 |                                           |          | 1,137                     |        |        |          | 167      |       
|                                                                      |                                                                                                       | Amortization
of purchase accounting adjustments         |                                           |          | (3,003                    | )      |        |          |         |       
|                                                                      |                                                                                                       | Amortization of core deposit intangible                 |                                           |          | 1,317                     |        |        |          |         |       
|                                                                      |                                                                                                       | Depreciation and amortization of premises and equipment |                                           |          | 4,116                     |        |        |          | 1,839    |       
|                                                                      |                                                                                                       | Decrease (increase) in other assets                     |                                           |          | 11,246                    |        |        |          | (12,655  | )     
|                                                                      |                                                                                                       | (Decrease) increase in other liabilities                |                                           |          | (19,037                   | )      |        |          | 16,199   |       
|                                                                      |                                                                                                       | (Decrease) increase in accrued interest payable         |                                           |          | (1,192                    | )      |        |          | 461      |       
|                                                                      |                                                                                                       | Gain on sale of loans, securities and other assets      |                                           |          | (9,612                    | )      |        |          | (3,621   | )     
|                                                                      |                                                                                                       | Other, net                                              |                                           |          | 9,353                     |        |        |          | 906      |       
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|                                                                      |                                                                                                       |                                                         | Net cash provided by operating activities |          |                           | 47,093 |        |          |          | 36,035 | 
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|Investing activities:                                                 |                                                                                                       |                                                         |                                           |          |                           |        |        |         
|                                                                      | Acquisition, net cash acquired                                                                        |                                                         |                                           | 48,244   |                           |        |        |         |         
|                                                                      | Investments and mortgage-backed securities, available for sale:                                       |                                                         |                                           |          |                           |        |        |          |         
|                                                                      |                                                                                                       | Principal payments and maturities                       |                                           |          | 499,035                   |        |        |          | 173,795  |       
|                                                                      |                                                                                                       | Purchases                                               |                                           |          | (802,502                  | )      |        |          | (275,140 | )     
|                                                                      |                                                                                                       | Sales                                                   |                                           |          | 663,985                   |        |        |          | 160,784  |       
|                                                                      |                                                                                                       | Called                                                  |                                           |          | 98,932                    |        |        |          | 23,334   |       
|                                                                      | Investments and mortgage-backed securities, held to maturity:                                         |                                                         |                                           |          |                           |        |        |          |         
|                                                                      |                                                                                                       | Principal payments and maturities                       |                                           |          | 18,319                    |        |        |          | 78       |       
|                                                                      |                                                                                                       | Purchases                                               |                                           |          | (185,470                  | )      |        |          | (13,139  | )     
|                                                                      | Loans originated, net of principal collections                                                        |                                                         |                                           | (649,740 | )                         |        |        | (473,159 | )       
|                                                                      | Proceeds from the sale of loans                                                                       |                                                         |                                           | 108,880  |                           |        |        | 52,253   |         
|                                                                      | Purchases of premises and other equipment                                                             |                                                         |                                           | (5,996   | )                         |        |        | (732     | )       
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|                                                                      |                                                                                                       | Net cash used in investing activities                   |                                           |          | (206,313                  | )      |        |          | (351,926 | )     
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|Financing activities:                                                 |                                                                                                       |                                                         |                                           |          |                           |        |        |         
|                                                                      | Net increase in demand deposits, NOW, money market and savings accounts                               |                                                         |                                           | 271,257  |                           |        |        | 191,387  |         
|                                                                      | Net (decrease) increase in time deposits                                                              |                                                         |                                           | (69,562  | )                         |        |        | 92,122   |         
|                                                                      | Net (decrease) increase in borrowings                                                                 |                                                         |                                           | (33,375  | )                         |        |        | 20,000   |         
|                                                                      | Proceeds from issuance of common stock                                                                |                                                         |                                           | 5,232    |                           |        |        | 2,850    |         
|                                                                      | Payment of cash dividend on common stock                                                              |                                                         |                                           | (3,381   | )                         |        |        | (2,731   | )       
|                                                                      | Proceeds from issuance of guaranteed preferred beneficial interests in
junior subordinated debentures |                                                         |                                           |         |                           |        |        | 35,000   |         
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|                                                                      |                                                                                                       | Net cash provided by financing activities               |                                           |          | 170,171                   |        |        |          | 338,628  |       
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|Net increase in cash and cash equivalents                             |                                                                                                       |                                                         | 10,951                                    |          |                           |        | 22,737 |         
|Cash and cash equivalents at beginning of period                      |                                                                                                       |                                                         | 58,954                                    |          |                           |        | 32,606 |         
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|Cash and cash equivalents at end of period                            |                                                                                                       | $                                                       | 69,905                                    |          |                           | $      | 55,343 |         
|                                                                      |                                                                                                       |                                                         |                                           |          |                           |        |        |          |         
|Supplemental disclosure of cash flow information:                     |                                                                                                       |                                                         |                                           |          |                           |        |        |         
|                                                                      |                                                                                                       | Cash paid during the period for interest                |                                           | $        | 71,032                    |        |        | $        | 56,140   |       
|                                                                      |                                                                                                       | Cash paid during the period for income taxes            |                                           |          | 32,480                    |        |        |          | 17,090   |       
|Supplemental schedule of non-cash investing and financing activities: |                                                                                                       |                                                         |                                           |          |                           |        |        |         
|                                                                      |                                                                                                       | Loans securitized                                       |                                           | $        | 194,178                   |        |        | $        | 242,554  |       

The accompanying notes are an integral part of these financial statements.

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UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. |  | Basis of Presentation and Summary of Significant Accounting and Reporting Policies
|-- |  | ----------------------------------------------------------------------------------

Organization

UCBH Holdings, Inc. (the Company or UCBH) is a bank holding company
that conducts its business through its principal subsidiary, United Commercial
Bank (the Bank or UCB), 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.

Basis of Presentation

The Consolidated Balance Sheets as of September 30, 2003; the Consolidated
Statements of Income for the three and nine months ended September 30, 2003,
and 2002; and the Consolidated Statements of Cash Flows for the nine months
ended September 30, 2003, and 2002, have been prepared by the Company and are
not audited.

The unaudited financial statement information presented was prepared on
the same basis as the audited financial statements for the year ended December
31, 2002. In the opinion of management, such unaudited financial statements
reflect all adjustments necessary for a fair statement of the results of
operations and balances for the interim periods presented. Such adjustments
are of a normal recurring nature. The results of operations for the three and
nine months ended September 30, 2003, are not necessarily indicative of the
results to be expected for the full year.

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. The wholly-owned subsidiaries include
special purpose trusts established for the purpose of issuing Guaranteed
Preferred Beneficial Interests in the Companys Junior Subordinated Debentures.
These trusts are consolidated in the Companys financial statements.

All significant intercompany balances and transactions have been
eliminated in consolidation.

Recent Accounting Pronouncements

Accounting for Stock-Based Compensation.In December 2002, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure (SFAS No. 148), which provides guidance on
alternative methods of transition for an entity that voluntarily changes to the
fair value based method of accounting stock-based employee compensation. It
also amends the disclosure provision of that statement to require prominent
disclosure about the effects on reported net income of an entitys accounting
policy decisions with respect to stock-based employee compensation. Finally,
this statement amends APB Opinion No. 28, Interim Financial Reporting, to
require disclosure about those effects in interim financial information.

The Company elects to continue accounting for stock-based compensation in
accordance with APB Opinion No. 25.

Certain Financial Instruments with Characteristics of Both Liabilities and
Equities.In May 2003, the FASB issued SFAS No. 150 Accounting for Certain
Financial Instruments with Characteristics of both Liability and Equity (SFAS
No. 150). This statement requires that an issuer classify financial
instruments that are within its scope as a liability. Many of those
instruments were classified as equity under previous guidance.

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Most of the guidance in SFAS No. 150 is effective for all financial
instruments entered into or modified after May 31, 2003, and otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. Certain provisions of SFAS No. 150 as they apply to mandatorily redeemable
noncontrolling interests have been deferred. The deferral of these provisions
is expected to remain in effect while these noncontrolling interests are
addressed in later phases of FASB projects.

Excluding these deferred provisions, the adoption of the SFAS No. 150 did
not have a material impact on our consolidated financial statements.

Consolidation of Variable Interest Entities.In January 2003, the FASB
issued FASB Interpretation No. 46, (FIN 46) Consolidation of Variable
Interest Entities. This interpretation applies immediately to variable
interest entities (VIE) in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after
June 15, 2003, to VIE in which an enterprise holds a variable interest that is
acquired before February 1, 2003. Previously issued accounting pronouncements
require the consolidation of one entity in the financial statements of another
if the second entity has a controlling interest in the first. In effect, FIN
46 applies broader criteria than just voting rights in determining whether
controlling financial interest in one entity by another exists. Specifically,
if by design the owners of the entity have not made an equity investment
sufficient to absorb its expected losses and the owners lack any one of three
essential characteristics of controlling financial interest, the entity is to
be consolidated in the financial statements of its primary beneficiary. The
three characteristics are the ability to make decisions about the entitys
activities, the obligation to absorb the expected losses of the entity, and the
right to receive the expected residual returns of the entity.

A public entity need not apply the provisions of FIN 46 to an interest
held in a VIE or potential VIE until the end of the first interim or annual
period ending after December 15, 2003, if both of the following conditions
apply:



| | 1. |  | The VIE was created before February 1, 2003                                                                                       
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | The public entity has not issued financial statements reporting
that VIE in accordance with FIN 46, other than in the disclosures.

As of September 30,
2003, the Company does not have interests in unconsolidated VIE. The impact of
FIN 46 is
currently being evaluated by the accounting community. Under one potential
interpretation of FIN 46, the trusts which have issued our trust preferred
securities would no longer be consolidated. Conversely, SFAS No. 150 requires
consolidation of these trust subsidiaries and the presentation of the related
debt instruments as a liability. The accounting community is currently working
to resolve this contradictory guidance. Our current presentation is in
compliance with SFAS No. 150.

One potential impact of not including these trusts in our consolidated
liabilities is that The Federal Reserve Bank may no longer allow the trust
preferred securities to count towards the Tier I capital of the Company. Even
in such event, the Company would continue to be well capitalized. The Banks
Tier I capital would be unaffected, since all trust preferred securities have
been issued at the holding company level.

The Federal Reserve has issued
interim guidance allowing the inclusion of these instruments in
Tier I capital
regardless of the FIN 46 interpretation, although such a determination may
change at a later date. The ultimate decision of the banking regulators is not
known at this time. We do not expect the adoption of FIN 46 to have any
significant impact on our financial condition or operating results.

Derivative Instruments and Hedging Activities.In April 2003, the FASB
issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and
Hedging Activities (SFAS No. 149). The provisions of SFAS No. 149 that
relate to SFAS No. 133 and No. 138 implementation issues that have been
effective for fiscal quarters that began prior to June 15, 2003, should
continue to be applied in accordance with their respective effective dates. In
addition, provisions of SFAS No. 149 which relate to forward purchases or sales
of when-issued securities or other securities that do not yet exist, should be
applied to both existing contracts and new contracts entered into after June
30, 2003. The changes in SFAS No. 149 improve financial reporting by requiring
that contracts with comparable characteristics be accounted for similarly. In
particular, SFAS No. 149 (1) clarifies under what circumstances a contract with
an initial net investment meets the characteristic of a derivative discussed in
paragraph 6(b) of SFAS

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No. 133 and No. 138, (2) clarifies when a derivative contains a financing
component, (3) amends the definition of an underlying to conform it to language
used in FIN 45, and (4) amends certain other existing pronouncements. Those
changes will result in more consistent reporting of contracts as either
derivatives or hybrid instruments.

SFAS No. 149 is effective for contracts entered into or modified after
June 30, 2003, except as stated above and for hedging relationships designated
after June 30, 2003. In addition, except as stated above, all provisions of
SFAS No. 149 should be applied prospectively.

We do not believe that the provisions of this statement will have a
material impact on our consolidated financial statements.

2.     Business Combinations

On July 14, 2003, the Company announced the completion of its
acquisition of privately-held First Continental Bank
(FCB), a full-service commercial bank headquartered in
Rosemead, California, with four branches serving the San Gabriel
Valley in southern California. Under the terms of the agreement
announced on April 3, 2003, FCB merged into the Companys
subsidiary, UCB, and the Company issued approximately
2.3 million shares of its common stock in exchange for all of
the outstanding shares of common stock of FCB. The merger was
effected under the charter and insurance of deposits of UCB, and UCB,
as the surviving entity, will continue to operate as the wholly-owned
subsidiary of the Company under the name United Commercial
Bank.

The
acquisition was effective July 11, 2003 and was accounted for using the purchase method of accounting
in accordance with FASB SFAS No. 141, Business Combinations (SFAS No. 141).
The results of FCBs operations have been included in the consolidated
financial statements since that date. The aggregate purchase price
was approximately $70.0
million based on the value of the Companys common stock. The valuation of
common stock was based upon the per share closing prices on the Nasdaq of the
Companys common stock on the closing date of the acquisition.

In accordance with SFAS No. 141, the assets acquired and liabilities
assumed were recorded by the Company at their fair values at the acquisition
date. The total acquisition cost (including direct transaction costs) exceeded
the fair value of the new assets acquired by $43.8 million. This amount was
recognized as intangible assets, consisting of goodwill of $41.6 million and a
core deposit intangible of $2.2 million.

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets,
goodwill will not be expensed over a fixed period of time, but will be tested
for impairment on a regular basis. The $41.6 million goodwill was assigned to
the consumer segment in the amount of $13.2 million and the commercial segment
in the amount of $28.4 million. None of the goodwill is expected to be
deductible for income tax purposes. Identifiable intangible assets, namely
core deposit intangibles of $2.2 million, are amortized over their estimated
period of benefit which is approximately seven years. Amortization expense for
the core deposit intangibles was $158,000 for the period from the acquisition
date through September 30, 2003, representing the accumulated amortization at
that date.

The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition (dollars in
thousands):

|                          |                           |   |         |         | 
|------------------------- | ------------------------- | - | ------- | ------- | 
|Cash and cash equivalents |                           | $ | 51,770  |        
|Securities                |                           |   | 56,854  |        
|Loans, net                |                           |   | 243,015 |        
|Goodwill                  |                           |   | 41,602  |        
|Core deposit intangibles  |                           |   | 2,225   |        
|Other assets              |                           |   | 4,460   |        
|                          |                           |   |         |        
|                          | Total assets acquired     |   | $       | 399,926 | 
|                          |                           |   |         |        
|Deposits                  |                           |   | 325,975 |        
|Other liabilities         |                           |   | 428     |        
|                          |                           |   |         |        
|                          | Total liabilities assumed |   | $       | 326,403 | 
|                          |                           |   |         |        
|                          | Net assets acquired       |   | $       | 73,523  | 
|                          |                           |   |         |        

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At the
date of the FCB acquisition, the Companys management determined the
estimated fair values of assets acquired and liabilities assumed. The fair
value determination of core deposit intangibles amounted to $2.2 million and was
based upon independent appraiser valuation. The professional service fees with
regard to the acquisition were capitalized and reflected as paid.

Unaudited pro forma consolidated results of operations for the nine months
ended September 30, 2003 and 2002 as though FCB had been acquired as of January
1, 2002 follow (dollars in thousands):

|                           |  |                            |        |                           |  |      |        |      |  |   |         |  |  |   |        | 
|-------------------------- |  | -------------------------- | ------ | ------------------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------ | 
|                           |  | For the Three Months Ended |        | For the Nine Months Ended
|                           |  | September 30,              |        | September 30,            
|                           |  |                            |        |                          
|                           |  | 2003                       |        | 2002                      |  | 2003 |        | 2002
|                           |  |                            |        |                           |  |      |        |     
|Net interest income        |  | $                          | 43,403 |                           |  | $    | 34,031 |      |  | $ | 127,831 |  |  | $ | 95,825 | 
|Net income                 |  | $                          | 16,800 |                           |  | $    | 8,235  |      |  | $ | 47,269  |  |  | $ | 28,225 | 
|Basic earnings per share   |  | $                          | 0.37   |                           |  | $    | 0.20   |      |  | $ | 1.10    |  |  | $ | 0.68   | 
|Diluted earnings per share |  | $                          | 0.36   |                           |  | $    | 0.19   |      |  | $ | 1.05    |  |  | $ | 0.65   | 



|3. |  | Earnings Per Share
|-- |  | ------------------

The following are the basic and diluted earnings per share for the three
and nine months ended September 30, 2003, and 2002:

|         |                                   |  |                                                  |        |                                           |  |           |            |             |  |               |      |           |  |   |       |  |  |  |            |  |  |   |      | 
|-------- | --------------------------------- |  | ------------------------------------------------ | ------ | ----------------------------------------- |  | --------- | ---------- | ----------- |  | ------------- | ---- | --------- |  | - | ----- |  |  |  | ---------- |  |  | - | ---- | 
|         |                                   |  | Three Months Ended September 30, 2003            |        | Three
Months Ended September 30, 2002 (1)
|         |                                   |  |                                                  |        |                                          
|         |                                   |  | Income                                           |        | Shares                                    |  | Per Share |            | Income      |  | Shares        |      | Per Share
|         |                                   |  | (Numerator)                                      |        | (Denominator)                             |  | Amount    |            | (Numerator) |  | (Denominator) |      | Amount   
|         |                                   |  |                                                  |        |                                           |  |           |            |             |  |               |      |          
|         |                                   |  | (Dollars in Thousands, Except Per Share Amounts)
|Basic:   |                                   |  |                                                  |        |                                           |  |           |            |             |  |               |      |           |  |   |       |  |  |  |            |  |  |   |     
|         | Net income                        |  | $                                                | 16,768 |                                           |  |           | 44,896,592 |             |  | $             | 0.37 |           |  | $ | 7,328 |  |  |  | 39,300,460 |  |  | $ | 0.19 | 
|         | Dilutive potential common shares  |  |                                                  |       |                                           |  |           | 2,171,994  |             |  |               |      |           |  |   |      |  |  |  | 1,860,380  |  |  |   |      | 
|         |                                   |  |                                                  |        |                                           |  |           |            |             |  |               |      |           |  |   |       |  |  |  |            |  |  |   |     
|Diluted: |                                   |  |                                                  |        |                                           |  |           |            |             |  |               |      |           |  |   |       |  |  |  |            |  |  |   |     
|         | Net income and assumed conversion |  | $                                                | 16,768 |                                           |  |           | 47,068,586 |             |  | $             | 0.36 |           |  | $ | 7,328 |  |  |  | 41,160,840 |  |  | $ | 0.18 | 
|         |                                   |  |                                                  |        |                                           |  |           |            |             |  |               |      |           |  |   |       |  |  |  |            |  |  |   |     

|         |                                   |  |                                                  |        |                                          |  |           |            |             |  |               |      |           |  |   |        |  |  |  |            |  |  |   |      | 
|-------- | --------------------------------- |  | ------------------------------------------------ | ------ | ---------------------------------------- |  | --------- | ---------- | ----------- |  | ------------- | ---- | --------- |  | - | ------ |  |  |  | ---------- |  |  | - | ---- | 
|         |                                   |  | Nine months Ended September 30, 2003             |        | Nine
months Ended September 30, 2002 (1)
|         |                                   |  |                                                  |        |                                         
|         |                                   |  | Income                                           |        | Shares                                   |  | Per Share |            | Income      |  | Shares        |      | Per Share
|         |                                   |  | (Numerator)                                      |        | (Denominator)                            |  | Amount    |            | (Numerator) |  | (Denominator) |      | Amount   
|         |                                   |  |                                                  |        |                                          |  |           |            |             |  |               |      |          
|         |                                   |  | (Dollars in Thousands, Except Per Share Amounts)
|Basic:   |                                   |  |                                                  |        |                                          |  |           |            |             |  |               |      |           |  |   |        |  |  |  |            |  |  |   |     
|         | Net income                        |  | $                                                | 46,124 |                                          |  |           | 43,104,602 |             |  | $             | 1.07 |           |  | $ | 26,223 |  |  |  | 39,135,874 |  |  | $ | 0.67 | 
|         | Dilutive potential common shares  |  |                                                  |       |                                          |  |           | 2,079,712  |             |  |               |      |           |  |   |       |  |  |  | 1,826,894  |  |  |   |      | 
|         |                                   |  |                                                  |        |                                          |  |           |            |             |  |               |      |           |  |   |        |  |  |  |            |  |  |   |     
|Diluted: |                                   |  |                                                  |        |                                          |  |           |            |             |  |               |      |           |  |   |        |  |  |  |            |  |  |   |     
|         | Net income and assumed conversion |  | $                                                | 46,124 |                                          |  |           | 45,184,314 |             |  | $             | 1.02 |           |  | $ | 26,223 |  |  |  | 40,962,768 |  |  | $ | 0.64 | 
|         |                                   |  |                                                  |        |                                          |  |           |            |             |  |               |      |           |  |   |        |  |  |  |            |  |  |   |     



|(1) |  | Effective April 8, 2003, the Company completed a two-for-one stock split. Accordingly, the financial statements for the three and nine months ended September 30, 2002
presented have been restated to reflect the effect of the stock split.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|4.  |  | Comprehensive Income                                                                                                                                                                                                                         

SFAS No. 130, Reporting
Comprehensive Income, establishes presentation and disclosure requirements for
comprehensive income. For the Company, comprehensive income consists of net
income and the change in unrealized gains and losses on available for sale
securities. For the three months ended September 30, 2003, total comprehensive
income was $9.0 million, a decrease of $4.6 million compared to the three months
ended September 30, 2002. Net income for the three months ended September 30,
2003, was $16.8 million, and unrealized gains (losses) on
available for sale
securities decreased by $7.8 million. For the corresponding period of 2002,
net income was $7.3 million, and unrealized gains on available
for sale
securities increased by $6.3 million.

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For the nine months ended September 30, 2003, total comprehensive income
was $36.7 million, a decrease of $2.0 million compared to the nine months ended
September 30, 2002. Net income for the nine months ended September 30, 2003,
was $46.1 million, and unrealized gains (losses) on
available for sale
securities decreased by $9.4 million. For the corresponding period of 2002,
net income was $26.2 million, and unrealized losses on available
for sale
securities decreased by $12.5 million.



|5. |  | Goodwill and Core Deposit Intangibles
|-- |  | -------------------------------------

On October 28, 2002, the Company acquired all of the outstanding shares of
Bank of Canton of California, a California banking corporation (BCC). On
December 13, 2002, the Company acquired certain assets and assumed certain
liabilities of a branch of Broadway National Bank in Brooklyn, New York. On
July 11, 2003, the Company acquired all of the outstanding shares of First
Continental Bank, a California banking corporation (FCB). The acquisitions
were accounted for using the purchase method of accounting in accordance with
SFAS No. 147 Acquisition of Certain Financial Institutions, an amendment to
FAS No. 72, FAS No. 144, and FIN No. 9 (SFAS No. 147), which states that
business combinations, other than mutual enterprises of financial institutions,
should be accounted for under SFAS No. 141 Business Combinations (SFAS No.
141) and SFAS No. 142 Goodwill and Intangible Assets (SFAS No. 142).

In accordance with SFAS No. 141, the assets acquired and liabilities
assumed were recorded by the Company at their fair values at the acquisition
date. The resulting aggregate goodwill of $87.8 million and core deposit
intangibles of $11.6 million are recorded on the balance sheet at September 30,
2003.

In accordance with SFAS No. 142, goodwill will not be expensed over a
fixed period of time, but will be tested for impairment on a regular basis.
None of the goodwill is expected to be deductible for income tax purposes.
Core deposit intangibles of $11.6 million, are amortized over their estimated
period of benefit which is approximately seven years. At September 30, 2003,
the gross carrying amount for core deposit intangibles was $13.1 million and
the associated accumulated amortization was $1.5 million.

In accordance with SFAS No. 142, intangible assets, including goodwill,
will be reviewed annually to determine if circumstances related to their
valuation have been materially affected. In the event that there is
impairment, meaning that the current market values are determined to be less
than the current book values, a charge against current earnings will be
recorded. No such impairment existed at September 30, 2003, or at December 31,
2002.



|6. |  | Segment Information
|-- |  | -------------------

The Company defines its reportable segments to reflect the Companys
method of internal reporting, which disaggregates its business into two
reportable segments: Commercial Banking and Consumer Banking. These segments
serve businesses and consumers, primarily in the state of California.
Historically, our customer base has been primarily the ethnic Chinese
communities located mainly in the San Francisco Bay Area, Sacramento/Stockton
and Greater Los Angeles.

The financial results of the Companys operating segments are presented on
an accrual basis. There are no significant differences between the accounting
policies of the segments and the Companys consolidated financial statements.
The Company evaluates the performance of its segments and allocates resources
to them based on interest income, interest expense and net interest income.
There are no material intersegment revenues.

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The following is segment information of the Company for the three and nine
months ended September 30, 2003, and 2002:

|                                               |                                                        |  |                        |           |          |  |       |           |  |  |   |           | 
|---------------------------------------------- | ------------------------------------------------------ |  | ---------------------- | --------- | -------- |  | ----- | --------- |  |  | - | --------- | 
|                                               |                                                        |  | Commercial             |           | Consumer |  | Total
|                                               |                                                        |  |                        |           |          |  |      
|                                               |                                                        |  | (Dollars in Thousands)
|For the Three Months Ended
September 30, 2003: |                                                        |  |                        |           |          |  |       |           |  |  |   |          
|                                               | Net interest income (before provision for loan losses) |  | $                      | 30,741    |          |  | $     | 12,331    |  |  | $ | 43,072    | 
|                                               | Segment net income                                     |  |                        | 15,408    |          |  |       | 1,360     |  |  |   | 16,768    | 
|                                               | Segment total assets                                   |  |                        | 3,193,945 |          |  |       | 2,233,729 |  |  |   | 5,427,674 | 
|September 30, 2002:                            |                                                        |  |                        |           |          |  |       |           |  |  |   |          
|                                               | Net interest income (before provision for loan losses) |  | $                      | 21,906    |          |  | $     | 9,615     |  |  | $ | 31,521    | 
|                                               | Segment net income                                     |  |                        | 5,297     |          |  |       | 2,031     |  |  |   | 7,328     | 
|                                               | Segment total assets                                   |  |                        | 2,185,210 |          |  |       | 1,140,855 |  |  |   | 3,326,065 | 
|For the Nine months Ended
September 30, 2003:  |                                                        |  |                        |           |          |  |       |           |  |  |   |          
|                                               | Net interest income (before provision for loan losses) |  | $                      | 82,101    |          |  | $     | 39,901    |  |  | $ | 122,002   | 
|                                               | Segment net income                                     |  |                        | 36,675    |          |  |       | 9,449     |  |  |   | 46,124    | 
|                                               | Segment total assets                                   |  |                        | 3,193,545 |          |  |       | 2,233,729 |  |  |   | 5,427,674 | 
|September 30, 2002:                            |                                                        |  |                        |           |          |  |       |           |  |  |   |          
|                                               | Net interest income (before provision for loan losses) |  | $                      | 58,423    |          |  | $     | 30,730    |  |  | $ | 89,153    | 
|                                               | Segment net income                                     |  |                        | 18,003    |          |  |       | 8,220     |  |  |   | 26,223    | 
|                                               | Segment total assets                                   |  |                        | 2,185,210 |          |  |       | 1,140,855 |  |  |   | 3,326,065 | 

The $87.8 million goodwill was assigned to the consumer segment in the
amount of $40.9 million and the commercial segment in the amount of $46.9
million for the three and nine month periods ending September 30, 2003.



|7. |  | Stock Option Plans
|-- |  | ------------------

In May 1998, the Company adopted a Stock Option Plan (Plan) that
provides for the granting of stock options to eligible officers, employees and
directors of the Company and the Bank. The Plan was amended in April 1999 and
April 2001 to increase the number of shares reserved for issuance pursuant to
the Plan from 2,613,332 shares to 7,466,664 shares on a post-split basis. The
Plan was amended in April 2003 to increase the number of shares reserved for
issuance pursuant to the Plan from 7,466,664 shares to 9,567,600 shares, on a
post-split basis.

In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123). This statement establishes a new fair value
based accounting method for stock-based compensation for plans and encourages,
but does not require, employers to adopt the new method in place of the
provisions of Accounting Principles Board Release No. 25 (APB No. 25).
Companies may continue to apply the accounting provisions of APB No. 25 in
determining net income. However, they must apply the disclosure requirements
of SFAS No. 123 for all grants issued after 1994. In December 2002, the FASB
issued SFAS No. 148 Accounting for Stock-Based Compensations  Transition and
Disclosure, which provides guidance on alternative methods of transition for
an entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation. It also amends the disclosure provision
of that statement to require prominent disclosure about the effects on reported
net income of an entitys accounting policy decisions with respect to
stock-based employee compensation. Finally, this statement amends APB Opinion
No. 28, Interim Financial Reporting, to require disclosure about those
effects on interim financial information.

The Company elected to apply the provisions of APB No. 25 in accounting
for the employee stock plan described above. Accordingly, no compensation cost
has been recognized for stock options granted under the Plan.

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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 following table. The impact of outstanding nonvested
stock options has been excluded from the pro forma calculation.

|                    |                                                                                                                                    |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |        |      | 
|------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ----------- | - | -------------------------- | ---- | ------------------------- | - | ----- | ---- | ---- | - | ------ | ---- |  | - | ------ | ---- | 
|                    |                                                                                                                                    |             |   | For the Three Months Ended |      | For the Nine months Ended
|                    |                                                                                                                                    |             |   | September 30,              |      | September 30,            
|                    |                                                                                                                                    |             |   |                            |      |                          
|                    |                                                                                                                                    |             |   | 2003                       |      | 2002                      |   | 2003  |      | 2002
|                    |                                                                                                                                    |             |   |                            |      |                           |   |       |      |     
|Net income:         |                                                                                                                                    |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |       
|                    | As reported                                                                                                                        |             | $ | 16,768                     |      |                           | $ | 7,328 |      |      | $ | 46,124 |      |  | $ | 26,223 |     
|Deduct:             |                                                                                                                                    |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |       
|                    | Total stock-based
employee
compensation
expense determined
under fair value
based method of all
awards, net of
related tax effects |             |   | (1,154                     | )    |                           |   | (993  | )    |      |   | (3,245 | )    |  |   | (2,910 | )   
|                    |                                                                                                                                    |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |       
|                    | Pro forma net income                                                                                                               |             | $ | 15,614                     |      |                           | $ | 6,335 |      |      | $ | 42,879 |      |  | $ | 23,313 |     
|                    |                                                                                                                                    |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |       
|Earnings per share: |                                                                                                                                    |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |       
|                    | Basic                                                                                                                              |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |        |     
|                    |                                                                                                                                    | As reported |   | $                          | 0.37 |                           |   | $     | 0.19 |      |   | $      | 1.07 |  |   | $      | 0.67 | 
|                    |                                                                                                                                    | Pro forma   |   | $                          | 0.35 |                           |   | $     | 0.16 |      |   | $      | 0.99 |  |   | $      | 0.60 | 
|Earnings per share: |                                                                                                                                    |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |       
|                    | Diluted                                                                                                                            |             |   |                            |      |                           |   |       |      |      |   |        |      |  |   |        |     
|                    |                                                                                                                                    | As reported |   | $                          | 0.36 |                           |   | $     | 0.18 |      |   | $      | 1.02 |  |   | $      | 0.64 | 
|                    |                                                                                                                                    | Pro forma   |   | $                          | 0.33 |                           |   | $     | 0.15 |      |   | $      | 0.95 |  |   | $      | 0.57 | 

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 also require subjective
assumptions, including future 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 during the nine months ended September 30,
2003, and 2002:

|                        |  |                            |       |                           |  |      |       |      |  |  |       |   |  |  |       |  
|----------------------- |  | -------------------------- | ----- | ------------------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|                        |  | For the Three Months Ended |       | For the Nine months Ended
|                        |  | September 30,              |       | September 30,            
|                        |  |                            |       |                          
|                        |  | 2003                       |       | 2002                      |  | 2003 |       | 2002
|                        |  |                            |       |                           |  |      |       |     
|Dividend yield          |  |                            | 0.50  | %                         |  |      | 0.40  | %    |  |  | 0.57  | % |  |  | 0.40  | %
|Volatility              |  |                            | 22.25 | %                         |  |      | 30.45 | %    |  |  | 21.01 | % |  |  | 30.45 | %
|Risk-free interest rate |  |                            | 3.40  | %                         |  |      | 3.90  | %    |  |  | 3.16  | % |  |  | 3.90  | %
|Expected lives (years)  |  |                            | 7.5   |                           |  |      | 6.5   |      |  |  | 7.5   |   |  |  | 6.5   |  



|8. |  | Guarantees
|-- |  | ----------

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees Including Indirect
Guarantees of Indebtedness to Others (FIN 45), which requires us to disclose
information about obligations under certain guarantee arrangements. FIN 45
defines a guarantee as a contract that contingently requires us to pay a
guaranteed party based on:



| | 1. |  | Changes in the underlying asset, liability or equity security of
the guaranteed party or 
| | -- |  | -----------------------------------------------------------------------------------------
|
| | 2. |  | A third partys failure to perform under an obligating guarantee
(performance guarantee).

We consider the following off-balance sheet lending arrangements to be
guarantees under FIN 45:

Financial Standby Letters of Credit and Financial Guarantees are
conditional lending commitments issued by us to guarantee the performance of a
customer to a third party in borrowing arrangements. At September 30, 2003,
the maximum undiscounted future payments that could be required to be made were
$18.0 million. All of these arrangements mature within one year. We generally
have recourse to recover from the customer any amounts paid under these
guarantees.

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Premiums that are received for the referral of SBA loans may be refundable
in the event of delinquency or early payoff of the underlying loans. At
September 30, 2003, the maximum undiscounted future payments that could be
required to be made totaled $262,000 and the maximum guarantee period was nine
months.




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q may include projections or other forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
regarding future events or the future financial performance of the Company or
the Companys wholly-owned subsidiary, the Bank. Such forward-looking
statements include without limitation, statements containing the words
confident that, believes, plans, expects, anticipates, projects and
words of similar import and involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company or the Bank to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things: the ability of the
Company and the Bank to integrate Bank of Canton of California and First
Continental Bank with their current operations and to achieve the efficiencies
anticipated; the ability of the Company and the Bank to assimilate a bank
branch in New York and to meet the competitive challenges of a new market;
general economic and business conditions in those areas in which the Company or
the Bank operates; demographic changes; competition; fluctuations in market
conditions, including interest rates; changes in business strategies; changes
in governmental regulations; changes in credit quality; and other risks and
uncertainties including those detailed in the documents the Company files from
time to time with the Securities and Exchange Commission. Further description
of the risks and uncertainties are included in detail in the Companys most
recent quarterly and annual reports, including the Annual Report on Form 10-K
for the year ended December 31, 2002, as filed with the Securities and Exchange
Commission.

The following discussion and analysis is intended to provide details of
the results of operations of the Company for the three and nine months ended
September 30, 2003, and 2002 and financial condition at September 30, 2003, and
at December 31, 2002. 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.

CORPORATE DEVELOPMENT

On
July 14, 2003, the Company announced the completion of its
acquisition of privately-held First Continental Bank
(FCB), a full-service commercial bank headquartered
in Rosemead, California, with four branches serving the San Gabriel
Valley in southern California. Under the terms of the agreement
announced on April 3, 2003, FCB merged into the Companys
subsidiary, UCB, and the Company issued approximately 2.3 million shares of
its common stock in exchange for all of the outstanding shares of common stock of FCB.
As of the acquisition date of July 11, 2003, FCB had total assets of $356.7 million,
loans of $243.1 million and deposits of
$325.6 million.

CRITICAL ACCOUNTING POLICIES

A number of critical accounting policies are used in the preparation of
the Consolidated Financial Statements, which this discussion accompanies.

The Use of Estimates.The preparation of the Consolidated Financial
Statements in accordance with Generally Accepted Accounting Principles (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.

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Allowance for Loan Losses.The allowance for loan losses covers the
commercial and consumer loan portfolio. The allowance for loan losses is
intended to adjust the value of the Companys loan assets for probable credit
losses inherent at the balance sheet date in accordance with GAAP. The
methodology for calculating the allowance involves significant judgment. First
and foremost, it involves early detection of credits that are deteriorating.
Second, it involves managements judgment to derive loss factors.

The Company uses a risk grading system to determine the credit quality of
its loans. Loans are reviewed for information affecting the obligors ability
to fulfill its obligations. In assessing the risk grading of a particular
loan, the factors considered include the obligors debt capacity and financial
flexibility, the level of earnings of the borrowers, the amount and sources of
repayment, the level and nature of contingencies, management strength, the
quality of the collateral, and the industry in which the borrower operates.
These factors are based on an evaluation of historical information as well as
subjective assessment and interpretation. Emphasizing one factor over another
or considering additional factors that may be relevant in determining the risk
grading of a particular loan, but which are not currently an explicit part of
the Companys methodology, could affect the risk grade assigned to that loan.

Management also applies judgment to derive loss factors associated with
each credit facility. These loss factors are considered by type of obligor and
collateral. Whenever possible, the Company uses its own historical loss
experience or independent verifiable data to estimate the loss factors. Many
factors can affect managements estimates of a loss factor. The application of
different loss factors will change the amount of the allowance for credit
losses determined to be appropriate by the Company. Given the process the
Company follows in determining the risk grading of its loans, management
believes the current risk gradings assigned to loans are appropriate.

Managements judgment is also applied when considering uncertainties based
on current macroeconomic conditions and other factors. For example, judgment
as to the economic outlook in California will affect managements assessment of
potential losses based on exposure to that marketplace.

Notwithstanding the judgment required in assessing the allowance for loan
losses, the Company believes its estimate for the allowance for loan losses was
adequate.

Fair Value of Certain Assets.Certain assets of the Company 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 impacted
by changes in interest rates and other market conditions. Losses not
anticipated or greater than anticipated could result if the Company were forced
to sell 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 Company were to sell one of these assets, subsequently
discovering that its estimate of fair value had been too low. The Company
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.                                                                                                                                                                                                                         
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Goodwill and Other Intangible Assets: As discussed in Note 5 to the
Consolidated Financial Statements, which this discussion accompanies, the
Company must assess goodwill and other intangible assets each year for
impairment. This assessment involves estimating cash flows for future
periods. If the future cash flows are materially less than the estimates,
the Company would be required to take a charge against earnings to write
down the asset to the lower fair value.

Alternative Methods of Accounting.The accounting and reporting policies
of the Company are in accordance with Generally Accepted Accounting Principles
and conform to practices within the banking industry.

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When the Company adopted SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123) 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 year as if the Company had instead
elected to use the accounting method that recognizes compensation expense. The
pro forma compensation expense is computed using the Black-Scholes model for
pricing options. Effective with this interim reporting, pro forma amounts of
compensation expense and the pro forma effect on net income and earnings per
share are disclosed in Note 7 on an interim basis as required by SFAS No. 148
Accounting for Stock-Based Compensation  Transition and Disclosure.

RESULTS OF OPERATIONS

General. The Companys primary source of income is net interest income,
which is the difference between interest income from interest-earning assets
and interest paid on interest-bearing liabilities, such as deposits and other
borrowings used to fund those assets. The Companys net interest income is
affected by changes in the volume of interest-earning assets and
interest-bearing liabilities as well as by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds. The Company also generates noninterest income, including
commercial banking fees, gain on sale of Small Business Administration (SBA)
loans, the gain on sale of securities, and other transactional fees. The
Companys source of noninterest income has increasingly been derived from its
commercial banking business. The Companys noninterest expenses consist
primarily of personnel, occupancy, professional fees, and other operating
expenses. The Companys results of operations are affected by its provision
for loan losses and may also be significantly affected by other factors
including general economic and competitive conditions, changes in market
interest rates, governmental policies and the actions of regulatory agencies.

Net Income. The consolidated net income of the Company during the three
months ended September 30, 2003, increased by $9.4 million, or 128.8%, to $16.8
million, compared to $7.3 million for the corresponding period of the preceding
year. Included in net income for the three months ended September 30, 2002 was
a one-time $6.75 million pretax charge for settlement of litigation and a
one-time $350,000 tax benefit resulting from a California tax law change. The
annualized return on average equity (ROE) and average assets (ROA) ratios
for the three months ended September 30, 2003, were 17.96% and 1.25%,
respectively. These amounts compare with annualized ROE and ROA ratios of
14.12% and 0.91%, respectively, for the three months ended September 30, 2002.
The improvement in ROE and ROA results primarily from the absence of the
one-time litigation settlement charge that occurred during the three months
ended September 30, 2002, offset by a decreased net interest margin. The net
interest margin was impacted by the assets and liabilities acquired in the
October 28, 2002 acquisition of Bank of Canton of California (BCC), which had
a significantly lower net interest margin than the Company. The lower net
interest margin of BCC resulted from its high concentration in lower-yielding
securities and lower concentration in lower-costing core deposits, when
compared to the securities and core deposit concentrations of the Company. The
Company plans to continue restructuring the acquired BCC assets by reducing the
concentration of securities and increasing commercial loans. In addition, the
Company will increase the core deposits and decrease the reliance of
Certificates of Deposits as a funding source. The efficiency ratios were
39.88% for the three months ended September 30, 2003, compared with 58.04% for
the corresponding period of the preceding year. Diluted earnings per common
share on a post-split basis were $0.36 for the three months ended September 30,
2003, compared with $0.18 for the comparable period of the preceding year. The
2002 per share amount reflected after-tax effect of a one-time charge of $3.9
million, or $0.10 per diluted share. The increase in earnings per common share
reflects both the organic loan growth within the Bank and the acquisitions of
BCC and FCB.

The consolidated net income of the Company during the nine months ended
September 30, 2003, increased by $19.9 million, or 75.9%, to $46.1 million,
compared to $26.2 million for the corresponding period of the preceding year.
Included in net income for the nine months ended September 30, 2002 is a
one-time $6.75 million pretax charge for settlement of litigation and a
one-time $350,000 tax benefit resulting from a California tax law change. The
annualized ROE and ROA ratios for the nine months ended September 30, 2003,
were 19.02% and 1.22%, respectively. These amounts compare with annualized ROE
and ROA ratios of 18.06% and 1.13%, respectively, for the nine months ended
September 30, 2002. The improvement in ROE and ROA results primarily from the
absence

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of the one-time litigation settlement charge that occurred during the
nine months ended September 30, 2002, offset
by a decreased net interest margin which was affected by the assets and
liabilities acquired in the October 28, 2002 acquisition of BCC. BCC had a
significantly lower net interest margin than the Company. The Company plans to
continue restructuring the acquired BCC assets by reducing the concentration of
securities and increasing commercial loans. The efficiency ratios were 49.20%
for the nine months ended September 30, 2003, compared with 58.04% for the
corresponding period of the preceding year. Diluted earnings per common share
on a post-split basis were $1.02 for the nine months ended September 30, 2003,
compared with $0.64 for the comparable period of the preceding year. The
after-tax effect of the one-time charge was $3.9 million, or $0.10 per diluted
share for the nine months ended September 30, 2002. The increase in earnings
per common share reflects both the organic loan growth within the Bank and the
acquisitions of BCC and FCB.

Net Interest Income. Net interest income before provision for loan losses
of $43.1 million for the three months ended September 30, 2003, represented a
$11.6 million, or 36.6% increase over net interest income of $31.5 million for
the three months ended September 30, 2002. The increase in net interest income
reflects the asset growth resulting from the acquisitions of BCC and FCB and
organic growth of the Companys loan portfolio. The loan yield decreased from
6.45% for the three months ended September 30, 2002, to 5.66%, and the cost of
deposits also decreased from 2.08% to 1.57% for the three months ended
September 30, 2003. The decline in loan yield reflects repricing of
adjustable-rate loans as a result of reductions in market interest rate
indices, and the accelerated prepayment of the higher-yielding loans due to the
lower market interest rates. The securities yield decreased from 5.72% for the
three months ended September 30, 2002 to 4.14%. The decline in the securities
yield reflects the runoff of higher-yielding securities and their replacement
with lower-yielding securities due to the low market interest rate environment
and the sale of higher-yielding long-term fixed-rate securities.

Net interest income before provision for loan losses of $122.0 million for
the nine months ended September 30, 2003, represented a $32.8 million, or
36.8%, increase over net interest income of $89.2 million for the nine months
ended September 30, 2002. The increase in net income reflects the acquisitions
of BCC and FCB and the organic growth of the Companys loan portfolio. The
loan yield decreased from 6.59% for the nine months ended September 30, 2002,
to 5.72%. The cost of deposits also decreased from 2.25% to 1.69% for the nine
months ended September 30, 2003. The decline in loan yield reflects repricing
of adjustable-rate loans as a result of reductions in market interest rate
indices, and the accelerated prepayment of the higher-yielding loans due to the
lower market interest rates. The securities yield decreased from 5.63% for the
nine months ended September 30, 2002 to 4.44%. The decline in the securities
yield reflects the prepayment of higher-yielding securities due to the low
market interest rate environment and the sale of higher-yielding, long-term,
fixed-rate securities.

Interest on earning assets increased $46.1 million to $191.8 million for
the nine months ended September 30, 2003, up from $145.8 million for the nine
months ended September 30, 2002. This increase resulted primarily from
increases in average interest-earning assets in connection with the BCC and FCB
acquisitions and organic commercial loan growth, partially offset by a decrease
in interest rates. The Company had a $13.2 million increase in interest
expense, to $69.8 million for the nine months ended September 30, 2003, up from
$56.6 million for the nine months ended September 30, 2002. This reflects an
increase of $1.48 billion in average interest-bearing deposits resulting from
the addition of deposits from the BCC acquisition and organic deposit
generation, partially offset by reductions in market interest rates on
interest-bearing deposits.

Average outstanding loans increased to $3.26 billion for the nine months
ended September 30, 2003, from $2.33 billion for the corresponding period of
2002, an increase of $934.6 million, or 40.2%, as a result of the Banks
continued focus on commercial lending activities and the addition of loans from
the acquisitions of BCC and FCB. New loan commitments of $1.45 billion for the
nine months ended September 30, 2003, comprised of $1.28 billion in commercial
loans and $162.7 million in consumer loans fuelled the growth in the loan
portfolio. Loan growth during the nine months ended September 30, 2003, was
offset by the internal securitization of multifamily loans as discussed below.
Average commercial loans increased $906.0 million to $2.91 billion for the nine
months ended September 30, 2003, up from $2.00 billion for the nine months
ended September 30, 2002. Average consumer loans increased $28.6 million to
$351.8 million for the nine months ended September 30, 2003, up from $323.3
million for the nine months ended September 30, 2002, due to the acceleration
of principal prepayments resulting from the low market interest rate
environment.

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Average securities increased to $1.56 billion for the nine months ended
September 30, 2003, up from $727.1 million for the same period of 2002, an
increase of $832.3 million, or 114.5%. This increase was primarily due to the
addition of securities from the BCC acquisition, internal securitizations of
loans of $242.6 million during the nine months ended
September 30, 2002, and the internal
securitization of $194.2 million of multifamily loans during the nine months
ended September 30, 2003. Securities runoff which accelerated with the lower
market interest rate environment was substantially replaced with new securities
purchases. During the first nine months of 2003, the Company also sold
securities with an aggregate principal balance of $656.1 million. Such
securities generally carried the higher purchase premiums and had longer terms.
Such securities were sold to protect the Company from both accelerating
prepayments and from increases in market interest rates. As part of
the Companys restructuring strategy, securities that have high
prepayment and extension risk were replaced with shorter-dated
securities with less prepayment and extension risk.

Average interest-bearing deposits increased to $3.91 billion for the nine
months ended September 30, 2003, up from $2.43 billion in the corresponding
period of the prior year as a result of organic deposit generation and the
addition of deposits from the BCC and FCB acquisitions. Average
noninterest-bearing deposits increased to $281.3 million for the nine months
ended September 30, 2003, up from $146.3 million for the corresponding period
of the prior year. This increase of $135.1 million, or 92.3%, was a result of
the Companys ongoing focus on the generation of commercial and consumer demand
deposit accounts and from the acquisitions of BCC and FCB.

Net
Interest Margin. The net interest margin was 3.37% for the nine
months ended September 30, 2003 compared to 3.88% for the nine
months ended September 30, 2002. The net interest margin, calculated on a tax
equivalent basis, was 3.44% for the nine months ended September 30, 2003, as
compared to 3.94% for the corresponding period of 2002. Certain
interest-earning assets of the Company qualify for state or federal tax
exemptions or credits. The net interest margin, calculated on a tax equivalent
basis, considers the tax benefit derived from these assets. The decrease in
the net interest margin was primarily a result of the impact of the assets and
liabilities acquired in the October 28, 2002 acquisition of BCC, which had a
significantly lower net interest margin than the Company. The decrease in the
net interest margin was partially offset by the continuing growth in commercial
loans and in lower-costing core deposits.

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The following table presents condensed average balance sheet information
for the Company, together with interest rates earned and paid on the various
sources and uses of funds for each of the periods indicated:

|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |      |      |      |  
|---------------------------------------------------------------- | -------------- | --------------------------------------------------------------------------- | ---------------------------------------- | ---- | ---------------------- | ---- | ------------------------- | --------- | ------------------------- | --------- | ---------- | ------- | -------- | ------ | ------- | ---- | ---------- | ---- | --------- | --------- | ------ | --------- | -------- | ------- | ----- | ------ | ---- | ---- | ---- | ---- | -
|                                                                 |                |                                                                             |                                          |      | At                     |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |      |     
|                                                                 |                |                                                                             |                                          |      | September              |      | For the Nine months Ended |           | For the Nine months Ended
|                                                                 |                |                                                                             |                                          |      | 30, 2003               |      | September 30, 2003        |           | September 30, 2002       
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                          
|                                                                 |                |                                                                             |                                          |      | (Dollars in Thousands)
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         | Interest |        |         |      |            |      |           |           |        |           | Interest |         |       |        |     
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           | Average                   |           | Income or  |         | Average  |        | Average |      | Income or  |      | Average  
|                                                                 |                |                                                                             |                                          |      | Yield/Cost             |      | Balance                   |           | Expense                   |           | Yield/Cost |         | Balance  |        | Expense |      | Yield/Cost
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |           
|Interest-earning assets:                                         |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|                                                                 | Loans (1)      |                                                                             |                                          | 5.53 | %                      |      | $                         | 3,260,818 |                           |           | $          | 139,833 |          |        |         | 5.72 | %          |      | $         | 2,326,248 |        |           | $        | 114,942 |       |        |      | 6.59 | %   
|                                                                 | Securities     |                                                                             |                                          | 4.20 |                        |      |                           | 1,559,367 |                           |           |            | 51,947  |          |        |         | 4.44 |            |      |           | 727,075   |        |           |          | 30,724  |       |        |      | 5.63 |     
|                                                                 | Other          |                                                                             |                                          | 0.90 |                        |      |                           | 12,624    |                           |           |            | 62      |          |        |         | 0.65 |            |      |           | 6,919     |        |           |          | 87      |       |        |      | 1.67 |     
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Total interest-earning assets                                    |                |                                                                             | 5.12                                     |      |                        |      | 4,832,809                 |           |                           |           | 191,842    |         |          |        | 5.29    |      |            |      | 3,060,242 |           |        |           | 145,753  |         |       |        | 6.35 |     
|Noninterest-earning assets                                       |                |                                                                             |                                         |      |                        |      | 202,028                   |           |                           |           |           |         |          |        |        |      |            |      | 46,067    |           |        |           |         |         |       |        |     |     
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Total assets                                                     |                |                                                                             | 4.90                                     | %    |                        | $    | 5,034,837                 |           |                           | $         | 191,842    |         |          |        | 5.08    | %    |            | $    | 3,106,309 |           |        | $         | 145,753  |         |       |        | 6.26 | %   
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Interest-bearing liabilities:                                    |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|                                                                 | Deposits:      |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |      |     
|                                                                 |                |                                                                             | NOW, checking, and money market accounts |      |                        | 0.93 | %                         |           | $                         | 603,953   |            |         | $        | 5,145  |         |      |            | 1.14 | %         |           | $      | 355,443   |          |         | $     | 4,146  |      |      |      | 1.56 | %
|                                                                 |                |                                                                             | Savings accounts                         |      |                        | 0.80 |                           |           |                           | 755,765   |            |         |          | 5,366  |         |      |            | 0.95 |           |           |        | 484,686   |          |         |       | 4,618  |      |      |      | 1.27 |  
|                                                                 |                |                                                                             | Time deposits                            |      |                        | 2.04 |                           |           |                           | 2,545,895 |            |         |          | 42,424 |         |      |            | 2.22 |           |           |        | 1,590,471 |          |         |       | 34,727 |      |      |      | 2.91 |  
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|                                                                 | Total deposits |                                                                             |                                          | 1.61 |                        |      |                           | 3,905,613 |                           |           |            | 52,935  |          |        |         | 1.81 |            |      |           | 2,430,600 |        |           |          | 43,491  |       |        |      | 2.39 |     
|                                                                 | Borrowings     |                                                                             |                                          | 4.55 |                        |      |                           | 326,933   |                           |           |            | 10,946  |          |        |         | 4.46 |            |      |           | 259,553   |        |           |          | 10,421  |       |        |      | 5.35 |     
|                                                                 |                | Guaranteed preferred beneficial interests in
junior subordinated debentures |                                          |      | 5.68                   |      |                           |           | 136,000                   |           |            |         | 5,959    |        |         |      | 5.84       |      |           |           | 43,341 |           |          |         | 2,688 |        |      |      | 8.27 |     
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Total interest-bearing liabilities                               |                |                                                                             | 1.93                                     | %    |                        |      | 4,368,546                 |           |                           |           | 69,840     |         |          |        | 2.13    | %    |            |      | 2,733,494 |           |        |           | 56,600   |         |       |        | 2.76 | %   
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Noninterest-bearing deposits                                     |                |                                                                             |                                          |      |                        |      | 281,344                   |           |                           |           |            |         |          |        |         |      |            |      | 146,270   |           |        |           |          |         |       |        |      |     
|Other noninterest-bearing liabilities                            |                |                                                                             |                                          |      |                        |      | 61,549                    |           |                           |           |            |         |          |        |         |      |            |      | 32,971    |           |        |           |          |         |       |        |      |     
|Stockholders equity                                             |                |                                                                             |                                          |      |                        |      | 323,398                   |           |                           |           |            |         |          |        |         |      |            |      | 193,574   |           |        |           |          |         |       |        |      |     
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Total liabilities and stockholders equity                       |                |                                                                             |                                          |      |                        | $    | 5,034,837                 |           |                           |           |            |         |          |        |         |      |            | $    | 3,106,309 |           |        |           |          |         |       |        |      |     
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Net interest income/net interest rate spread (2) (4)             |                |                                                                             | 3.19                                     | %    |                        |      |                           |           |                           | $         | 122,002    |         |          |        | 3.16    | %    |            |      |           |           |        | $         | 89,153   |         |       |        | 3.59 | %   
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Net interest-earning assets/net interest margin (3) (4)          |                |                                                                             | 3.40                                     | %    |                        | $    | 464,263                   |           |                           |           |            |         |          |        | 3.37    | %    |            | $    | 326,748   |           |        |           |          |         |       |        | 3.88 | %   
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     
|Ratio of interest-earning assets to interest-bearing
liabilities |                |                                                                             | 1.12                                     | X    |                        |      | 1.11                      | x         |                           |           |            |         |          |        |         |      |            |      | 1.12      | x         |        |           |          |         |       |        |      |     
|                                                                 |                |                                                                             |                                          |      |                        |      |                           |           |                           |           |            |         |          |        |         |      |            |      |           |           |        |           |          |         |       |        |      |     



|(1) |  | Nonaccrual loans are included in the table for computation purposes, but the foregone interest on such loans is excluded.                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(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) |  | Calculated on a nontax equivalent basis.                                                                                                                 

Provision for Loan Losses. The provision for loan losses reflects
managements judgment of the current period cost associated with credit risk
inherent in the Companys loan portfolio. Specifically, the provision for loan
losses represents the amount charged against current period earnings to achieve
an allowance for loan losses that, in managements judgment, is adequate to
absorb losses inherent in the Companys loan portfolio.

For the three months ended September 30, 2003, our provision for loan
losses was $2.8 million, a decrease of $100,000 compared to a provision of $2.7
million for the corresponding period of 2002. For the nine months ended
September 30, 2003, our provision for loan losses was $6.6 million, an increase
of $100,000 compared to a provision of $6.5 million for the corresponding
period of 2002.

Our overall loan portfolio grew from $2.44 billion at September 30, 2002,
to $3.62 billion at September 30, 2003, an increase of $1.18 billion or 48.4%.
Of this increase, $515.1 million was attributable to loans acquired from the
BCC acquisition that had an associated allowance for loan losses of $8.9 million,
and $247.0 million was attributable to loans acquired from the FCB acquisition
that had an associated allowance for loan losses of $4.0 million. BCCs
allowance at the acquisition date of $8.9 million was increased by $1.2 million
by the Company to reflect a loss from the sale of a problem loan acquired from
BCC. The loan was identified during the due diligence process, and the loss
was factored into the acquisition cost.

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##### Table of Contents



Our
provision for loan losses for the three and nine months ended September 30, 2003,
resulted from the following factors:



| |  |  | We continued to focus on
commercial loan originations during 2003.
Total commercial loan originations were $1.28 billion during the nine
months ended September 30, 2003, compared with originations of $932.1
million for the corresponding quarter of 2002. The concentration of
commercial lending was 88.8% of total loans compared to 89.1% in the
corresponding period of 2002. Our allowance for loan loss methodology
attributes higher loss factors to commercial loans, reflecting the
higher inherent risk in that portfolio.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Criticized loans, which are defined as those we classify as
risk-graded Special Mention, Substandard, Doubtful, or Loss, were
approximately 1.13% of total loans at September 30, 2003, compared with
criticized loans of approximately 0.77% of total loans at September 30,
2002.                                                                                                                                                                                                                                                     
|
| |  |  | Nonaccrual loans increased from $3.2 million at September 30, 2002,
to $5.8 million at September 30, 2003. The increase reflects two
construction loans on one project that were over 90 days past due.                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | Net charge-offs of $1.4 million for the nine months ended September
30, 2003, decreased as compared to net charge-offs of $2.1 million for
the corresponding period of 2002. The charge-offs in the nine months
ended September 30, 2003 and 2002 related primarily to commercial
business lending.                                                                                                                                                                                                                                     

Noninterest Income. Noninterest income for the three months ended
September 30, 2003, was $6.5 million compared to $2.6 million for the
corresponding quarter of 2002, an increase of $3.9 million, or 151.8%,
primarily as a result of an increase in commercial banking fees and gain from
sale of loans and securities. Commercial banking fees increased 30.3% to $1.6
million for the three months ended September 30, 2003, as compared to $1.3
million for the corresponding period of 2002, a result of increased commercial
banking activities, primarily trade finance business. Gain on sale of loans
and securities increased by 432.9% to $4.3 million for the three months ended
September 30, 2003, compared with $803,000 for the corresponding period of
2002. Gains from sale of SBA loans for the three months ended September 30,
2003 were $1.2 million, compared to $408,000 for the corresponding period in
2002. Gains recognized on sale of securities were $3.1 million for the three
months ended September 30, 2003, in conjunction with the Companys securities
restructuring strategy further explained in the Financial Condition section.
The Company anticipates that the securities restructuring program will continue
in the fourth quarter of 2003.

Noninterest income for the nine months ended September 30, 2003, was $16.3
million compared to $8.5 million for the corresponding quarter of 2002, an
increase of $7.8 million, or 91.0%, primarily as a result of an increase in
commercial banking fees and gain from sale of SBA loans and securities.
Commercial banking fees increased 39.2% to $4.7 million for the nine months
ended September 30, 2003, as compared to $3.4 million for the corresponding
period of 2002, a result of increased commercial banking activities, primarily
trade finance business. Gain on sale of loans and securities increased by
165.5% to $9.6 million for the nine months ended September 30, 2003, compared
with $3.6 million for the corresponding period of 2002, due to increased
securities sales.

Noninterest Expense. Noninterest expense was $19.8 million for both the
three months ended September 30, 2003, and
2002. Personnel expenses increased to $10.1 million for the three months ended
September 30, 2003, up from $6.6 million for the corresponding period of 2002,
an increase of $3.5 million, or 52.9%. This increase is primarily due to the
additional staffing resulting from the BCC and FCB acquisitions and staffing required to
support continued growth of the Banks commercial banking business. Occupancy
expenses of $1.7 million are net of rental income of $1.6 million for the three
months ended September 30, 2003. Occupancy expenses of $1.5 million are net of
rental income of $251,000 for the corresponding period of 2002. The increased
occupancy expenses resulting from the BCC and FCB acquisitions were offset by
the increased rental income from the corporate office building acquired in the
BCC acquisition. Professional fees and contracted services were $1.2 million
for the three months ended September 30, 2003, compared with $1.1 million for
the corresponding period of 2002. Included in noninterest expense is core
deposit intangible amortization of $185,000 for the three months ended
September 30, 2003. The core deposit intangible was recorded in connection
with the acquisitions of BCC,

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##### Table of Contents



the New York branch, and FCB. Miscellaneous
expenses of $3.6 million for the three months ended September 30,
2003 increased $1.4 million, or 60.4%, compared with $2.2 million for the
corresponding quarter of 2002. The increase primarily related to additional
expenses resulting from the BCC and FCB acquisitions.

Noninterest expense of $57.5 million for the nine months ended September
30, 2003, increased $9.4 million, or 19.6%, compared with $48.1 million for the
corresponding period of 2002. Personnel expenses increased to $30.5 million
for the nine months ended September 30, 2003, up from $21.1 million for the
corresponding period of 2002, an increase of $9.4 million, or 44.7%. This
increase is primarily due to the additional staffing resulting from the BCC and
FCB acquisitions and staffing required to support continued growth of the Banks
commercial banking business. Occupancy expenses of $4.3 million are net of
rental income of $4.7 million for the nine months ended September 30, 2003.
Occupancy expenses of $4.2 million are net of rental income of $750,000 for the
nine months ended September 30, 2002. The increase in rental income results
primarily from rental income of the corporate office building acquired in the
BCC acquisition. Included in noninterest expense is core deposit intangible
amortization of $1.3 million for the nine months ended September 30, 2003. The
core deposit intangible was recorded in conjunction with the acquisitions of
BCC, the New York branch, and FCB. Miscellaneous expenses of $9.6 million for
the nine months ended September 30, 2003 increased $3.3 million, or 51.8%,
compared with $6.3 million for the corresponding period of 2002. The increase
primarily related to additional expenses resulting from the BCC and FCB
acquisitions.

Provision for Income Taxes. The provision for income taxes was $10.2
million and $4.2 million on the income before taxes of $27.0 million and $11.6
million for the three months ended September 30, 2003 and 2002, respectively.
The effective tax rate for the quarter ended September 30, 2003, was 37.90%,
compared with 36.67% for the quarter ended September 30, 2002.

The provision for income taxes was $28.1 million and $16.9 million on the
income before taxes of $74.2 million and $43.1 million for the nine months
ended September 30, 2003 and 2002, respectively. The effective tax rate for
the nine months ended September 30, 2003, was 37.83%, compared with 39.18% for
the period ended September 30, 2002. The lower effective tax rate reflects the
realization of Enterprise Zone tax benefits from lending activities associated
with the BCC acquisition and the increased municipal securities portfolio.

FINANCIAL CONDITION

The Company experienced continued asset and core deposit growth during the
third quarter of 2003. Total assets at September 30, 2003, were $5.43 billion,
an increase of $574.0 million, up from $4.85 billion at December 31, 2002. The
growth resulted primarily from the FCB acquisition.

During the nine months ended September 30, 2003, total loans increased by
$591.8 million, or 19.5%, to $3.62 billion, up from
$3.03 billion at December 31, 2002. This growth resulted from the acquisitions of BCC and FCB and an
organic increase in commercial loans resulting from the Banks continuing focus
on originating such loans. This growth was partially offset by the internal
securitization of $194.2 million of multifamily loans during the nine months
ended September 30, 2003. Total commercial loans grew to $3.24 billion at
September 30, 2003, up from $2.67 billion at December 31, 2002, as a result of
new commercial loan commitments of $1.28 billion, offset by principal
repayments and the internal securitization of multifamily loans. Consumer
loans increased to $385.3 million at September 30, 2003, from $360.4 million at
December 31, 2002, primarily due to new consumer loan commitments.

As a result of lower market interest rates,
the Company experienced a higher level of new loan commitments for
the nine months ended September 30, 2003. Total commitments of
$1.45 billion were comprised of $1.28 billion of commercial loans and $162.7 million of consumer loans. Securities
(including available for sale and held to maturity) totaled $1.53 billion at
September 30, 2003, a decrease of $51.3 million, or 3.2%, from $1.58 billion at
December 31, 2002. This was primarily the result of sales of $656.1 million
and principal repayments and securities calls of $605.6 million, partially
offset by purchases of $983.6 million and internal securitizations of $194.2
million.

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##### Table of Contents



During the second quarter of 2003, the Company implemented a securities
restructuring strategy intended to replace securities that have high prepayment
and extension risk with securities that are shorter-dated and have less
prepayment and extension risk. The Company also leveraged on the
talents of its loan officers to increase loan production and
accelerated the planned balance
sheet restructuring announced at the time of the BCC acquisition to reduce the
percentage of securities and increase the percentage of loans on the balance
sheet. The securities restructuring strategy and increased loan production
were intended to protect the Company from mark-to-market volatility in the
securities portfolio and better position the Company for accelerated margin
expansion in an upward market interest rate environment. The Company will
continue to monitor changing market conditions and actively manage its
securities restructuring strategy.

Total past due loans were 0.61% of total loans at September 30, 2003,
compared with 0.88% at December 31, 2002. Nonperforming assets were $5.8
million, or 0.11%, of total assets at September 30, 2003, compared with
nonperforming assets of $4.7 million, or 0.10%, of total assets at December 31,
2002. The allowance for loan losses was $58.1 million at September 30, 2003,
an increase of $9.2 million from $48.9 million at December 31, 2002. The
increase in the allowance for loan losses reflected the growth in the loan
portfolio during the nine months ended September 30, 2003, the increased
concentration in commercial loans, and the increase in Criticized loans and
nonperforming loans. The increase was also due to the acquisitions of BCC and
FCB and the reserves that came over from those acquisitions.

The following table shows the composition of the Banks loan portfolio by
amount and percentage of gross loans in each major loan category at the dates
indicated:

|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |       |  
|---------------------------------- | ----------------------------------------- | - | --------------------- | --------- | -------------------- |  | ---------------------- | ----- | - | - | --------- | --------- |  |  | ------ | ----- | -
|                                   |                                           |   | At September 30, 2003 |           | At December 31, 2002
|                                   |                                           |   |                       |           |                     
|                                   |                                           |   | Amount                |           | %                    |  | Amount                 |       | %
|                                   |                                           |   |                       |           |                      |  |                        |       |  
|                                   |                                           |   |                       |           |                      |  | (Dollars in Thousands) |       |   |   |          
|Commercial:                        |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|                                   | Secured by real estate-nonresidential     |   | $                     | 1,616,322 |                      |  |                        | 44.54 | % |   | $         | 1,279,809 |  |  |        | 42.20 | %
|                                   | Secured by real estate-multifamily        |   |                       | 1,042,817 |                      |  |                        | 28.74 |   |   |           | 914,630   |  |  |        | 30.16 |  
|                                   | Construction                              |   |                       | 296,922   |                      |  |                        | 8.18  |   |   |           | 216,218   |  |  |        | 7.13  |  
|                                   | Commercial business                       |   |                       | 287,577   |                      |  |                        | 7.92  |   |   |           | 261,787   |  |  |        | 8.63  |  
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|                                   | Total commercial loans                    |   |                       | 3,243,638 |                      |  |                        | 89.38 |   |   |           | 2,672,444 |  |  |        | 88.12 |  
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|Consumer:                          |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|                                   | Residential mortgage (one to four family) |   |                       | 330,136   |                      |  |                        | 9.10  |   |   |           | 311,067   |  |  |        | 10.25 |  
|                                   | Other                                     |   |                       | 55,209    |                      |  |                        | 1.52  |   |   |           | 49,372    |  |  |        | 1.63  |  
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|                                   | Total consumer loans                      |   |                       | 385,345   |                      |  |                        | 10.62 |   |   |           | 360,439   |  |  |        | 11.88 |  
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|Total gross loans                  |                                           |   | 3,628,983             |           |                      |  | 100.00                 | %     |   |   | 3,032,883 |           |  |  | 100.00 | %    
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|Net deferred loan origination fees |                                           |   | (9,414                | )         |                      |  |                        |       |   |   | (5,073    | )         |  |  |        |      
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|Loans                              |                                           |   | 3,619,569             |           |                      |  |                        |       |   |   | 3,027,810 |           |  |  |        |      
|Allowance for loan losses          |                                           |   | (58,111               | )         |                      |  |                        |       |   |   | (48,865   | )         |  |  |        |      
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      
|Net loans                          |                                           | $ | 3,561,458             |           |                      |  |                        |       |   | $ | 2,978,945 |           |  |  |        |      
|                                   |                                           |   |                       |           |                      |  |                        |       |   |   |           |           |  |  |        |      

The Company continues to emphasize production of commercial real estate
and commercial business loans and to place reduced emphasis on the origination
volume of residential mortgage (one to four family) loans. The Company
originates substantially all of its loans for portfolio retention. The Company
also originates and funds loans that qualify for guaranty issued by the SBA.
The U.S. government guarantee on such loans is generally in the range of 75% to
85% of the loan amount. The residual portion of the loan, ranging from 15% to
25%, is not guaranteed by the U.S. government, and the Company bears the credit
risk of such loans. The Company generally sells the guaranteed portion of each
SBA loan at the time of loan origination. From time-to-time, the Company may
sell a portion of the unguaranteed segment of the SBA loans. SBA regulations
require that the originator retain a minimum of 5% of the total loan amount.
The amount of the unsold guaranteed portion of SBA loans was insignificant as
of September 30, 2003, and December 31, 2002.

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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,
fixed rate for terms of 15 or 30 years, or have interest rates that are fixed
for a period, typically five years, then generally repricing semiannually or
annually.

As a result of the change of focus to commercial lending, adjustable-rate
loans increased to $3.03 billion, an increase of $516.5 million, or 20.5%, from
$2.51 billion at December 31, 2002. Adjustable-rate loans represent 83.4% of
gross loans at September 30, 2003, compared with 82.8% of gross loans at
December 31, 2002. Fixed-rate loans increased slightly by $80.6 million, or
15.4%, to $603.0 million, or 16.6% of gross loans at September 30, 2003,
compared with $522.5 million, or 17.2% of the gross loans at December 31, 2002.
At September 30, 2003, adjustable-rate loans included $405.0 million of
intermediate fixed-rate loans compared with $205.6 million at December 31,
2002, an increase of $199.4 million, or 97.0%.

The following table reflects the Banks new loan commitments during the
periods indicated:

|            |                                               |                        |   |                           |           |      |   |           |         | 
|----------- | --------------------------------------------- | ---------------------- | - | ------------------------- | --------- | ---- | - | --------- | ------- | 
|            |                                               |                        |   | For the Nine months Ended
|            |                                               |                        |   | September 30,            
|            |                                               |                        |   |                          
|            |                                               |                        |   | 2003                      |           | 2002
|            |                                               |                        |   |                           |           |     
|            |                                               |                        |   | (Dollars in Thousands)   
|Commercial: |                                               |                        |   |                           |           |      |   |          
|            | Secured by real estate-nonresidential (1)     |                        | $ | 412,170                   |           |      | $ | 258,830   |        
|            | Secured by real estate-multifamily (1)        |                        |   | 434,687                   |           |      |   | 369,068   |        
|            | Construction                                  |                        |   | 258,012                   |           |      |   | 145,580   |        
|            | Commercial business                           |                        |   | 179,312                   |           |      |   | 158,592   |        
|            |                                               |                        |   |                           |           |      |   |           |        
|            |                                               | Total commercial loans |   |                           | 1,284,181 |      |   |           | 932,070 | 
|            |                                               |                        |   |                           |           |      |   |           |        
|Consumer:   |                                               |                        |   |                           |           |      |   |          
|            | Residential mortgage (one to four family) (1) |                        |   | 140,941                   |           |      |   | 89,031    |        
|            | Home equity and other                         |                        |   | 21,794                    |           |      |   | 25,010    |        
|            |                                               |                        |   |                           |           |      |   |           |        
|            |                                               | Total consumer loans   |   |                           | 162,735   |      |   |           | 114,041 | 
|            |                                               |                        |   |                           |           |      |   |           |        
|            | Total new commitments                         |                        | $ | 1,446,916                 |           |      | $ | 1,046,111 |        
|            |                                               |                        |   |                           |           |      |   |           |        



|(1) |  | For nonresidential loans, substantially all commitments have been funded. For multifamily
and residential mortgage (one to four family) loans, all commitments have been funded.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Internal
Loan Securitizations.The Company manages its risk-based capital level
through a variety of means, including internal loan securitizations. In such
securitizations, the Company exchanges either multifamily or residential
mortgage (one to four family) loans for 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 Company,
since selected loans from the Companys loan portfolio are exchanged for FNMA
securities. Such securities are represented by exactly the same loans
previously held in the Companys loan portfolio. The FNMA securities are
generally held as available for sale (AFS) securities in the Companys investment and mortgage
backed securities portfolio.

Through these securitization transactions, the Company also reduces its
credit risk. In these securitizations, the Company fully transfers credit risk
on the related loans to FNMA. The Company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
Company of the credit risk on these loans. Since the
Company retains all of the securities issued by FNMA in the
securitization, no gain or loss is recognized on the exchange transaction. The
Company continues to service the loans included in these securitizations.

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In addition, these securitization transactions improve the Companys
liquidity, since FNMA securities receive more favorable treatment as a
collateral base for borrowings than do whole loans.

During the nine months ended September 30, 2003, the Company internally
securitized $194.2 million of multifamily loans.

Risk Elements. Management generally places loans on nonaccrual status
when they become 90 days past due, unless they are both well secured and in the
process of collection. When a loan is placed on nonaccrual status, any
interest previously accrued but not collected is reversed from income.

Following is the Banks risk elements table:

|                                                      |          |                                           |                  |                        |       |                        |           |                 |       |       |       | 
|----------------------------------------------------- | -------- | ----------------------------------------- | ---------------- | ---------------------- | ----- | ---------------------- | --------- | --------------- | ----- | ----- | ----- | 
|                                                      |          |                                           |                  |                        |       | At September 30,       |           | At December 31,
|                                                      |          |                                           |                  |                        |       | 2003                   |           | 2002           
|                                                      |          |                                           |                  |                        |       |                        |           |                
|                                                      |          |                                           |                  |                        |       | (Dollars in Thousands)
|Nonaccrual loans:                                     |          |                                           |                  |                        |       |                        |           |                
|                                                      |          | Commercial                                |                  |                        |       |                        |           |                 |       |      
|                                                      |          | Secured by real estate-nonresidential     |                  | $                      |      |                        |           | $               |      |      
|                                                      |          | Secured by real estate-multifamily        |                  |                        |      |                        |           |                 |      |      
|                                                      |          | Construction                              |                  |                        | 4,848 |                        |           |                 | 4,533 |      
|                                                      |          | Commercial business                       |                  |                        | 951   |                        |           |                 | 68    |      
|                                                      |          |                                           |                  |                        |       |                        |           |                 |       |      
|                                                      |          |                                           | Total commercial |                        |       | 5,799                  |           |                 |       | 4,601 |      
|                                                      |          |                                           |                  |                        |       |                        |           |                 |      
|                                                      | Consumer |                                           |                  |                        |       |                        |           |                 |      
|                                                      |          | Residential mortgage (one to four family) |                  |                        |      |                        |           |                 |      |      
|                                                      |          | Other                                     |                  |                        |      |                        |           |                 | 53    |      
|                                                      |          |                                           |                  |                        |       |                        |           |                 |      
|                                                      |          |                                           | Total consumer   |                        |       |                       |           |                 |       | 53    |      
|                                                      |          |                                           |                  |                        |       |                        |           |                 |      
|                                                      |          |                                           |                  | Total nonaccrual loans |       |                        | 5,799     |                 |       |       | 4,654 | 
|                                                      |          |                                           |                  |                        |       |                        |           |                 |      
|Other real estate owned (OREO)                      |          |                                           |                 |                        |       |                        |          |                
|                                                      |          |                                           |                  |                        |       |                        |           |                 |      
|Total nonperforming assets                            |          | $                                         | 5,799            |                        |       | $                      | 4,654     |                
|                                                      |          |                                           |                  |                        |       |                        |           |                 |      
|Nonperforming assets to total assets                  |          |                                           | 0.11             | %                      |       |                        | 0.10      | %              
|Nonaccrual loans to loans                             |          |                                           | 0.16             |                        |       |                        | 0.15      |                
|Nonperforming assets to loans and OREO                |          |                                           | 0.16             |                        |       |                        | 0.15      |                
|Loans                                                 |          | $                                         | 3,619,569        |                        |       | $                      | 3,027,810 |                
|                                                      |          |                                           |                  |                        |       |                        |           |                 |      
|Gross income not recognized on nonaccrual loans       |          | $                                         | 140              |                        |       | $                      | 211       |                
|Accruing loans contractually past due 90 days or more |          | $                                         | 2,012            |                        |       | $                      | 4,302     |                
|Performing restructured loans not included above      |          | $                                         | 9,120            |                        |       | $                      |          |                

Total nonperforming assets were $5.8 million at September 30, 2003, an
increase of $1.1 million, from $4.7 million at December 31, 2002. The increase
was attributable to two construction loans to the same borrower on the same
property that were over 90 days past due. The Bank records OREO at the lower
of carrying value or fair value less estimated disposal costs. Any write-down
of OREO is charged to earnings. The Bank held no OREO at September 30, 2003, or
December 31, 2002.

The $9.1 million performing restructured loan in the table above
represents a performing commercial real estate loan. No interest rate
concessions were made on this loan. The restructured classification is due to
the Bank making interest rate concessions on a separate $965,000 loan to the
same obligor on the same property during the quarter. The $965,000 loan is
included in the nonaccrual construction loans balance in the table above. The
obligor may make additional draws under this facility, but such draws would not
have a material impact on the Companys nonperforming assets.

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.

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Allowance for Loan Losses.The Company has established a formal process
for establishing an adequate allowance for loan losses. This process results
in an allowance that has two components: allocated and unallocated. To
determine the allocated component, the Company arrives at estimates by
analyzing certain individual loans (including impaired loans) and analyzing
loans in groups. For the loans the Company analyzes individually, the Company
may use third-party information, such as appraisals, to help supplement our
internal analysis. For the loans the Company analyzes in groups, such as
residential mortgage (one to four family) loans, the Company reviews
delinquency trends, charge-off experience, the makeup of its loan portfolio,
current economic conditions, regional trends in collateral values, as well as
other factors.

The Company uses the unallocated portion of the allowance to compensate
for the imprecise nature of estimating an adequate allowance for incurred loan
losses, economic uncertainties, and other factors. The Companys loan
portfolio also undergoes an internal asset review, and portions are examined by
government regulators. The Company incorporates the results of these
examinations into its assessments.

The Companys allowance for loan losses is increased by provisions for
loan losses, which are charged against earnings, and is reduced by charge-offs,
net of any recoveries. Loans are charged off when they are classified as a
loss. For any loan which is deemed classified, the Company performs an
impairment assessment and charges off the amount by which the recorded loan
amount exceeds the value of the property securing the loan, unless the loan is
both well secured and in the process of collection. The Company generally
records recoveries of amounts that have been previously charged off only to the
extent that cash is received.

While the Company uses all available evidence in determining whether the
Company believes its allowance for loan losses is adequate, future additions to
the allowance will be subject to the continuing evaluation of the inherent
risks in its portfolio. The Company may need to make additional provisions for
loan losses if the economy declines or asset quality deteriorates. Also,
regulators review the allowance as part of their examinations. Although they
can require the Company to adjust its allowance as a result of such
examinations, they have not done so in any of the years presented. The Company
believes, however, that the allowance for loan losses is adequate to provide
for estimated losses inherent in its loan portfolio.

The Company considers the allowance for loan losses of $58.1 million
adequate to cover losses inherent in its loan portfolio at September 30, 2003.

The following table sets forth information concerning the Banks allowance
for loan losses for the dates indicated:

|                                            |  |                           |        |      |  |   |        |  
|------------------------------------------- |  | ------------------------- | ------ | ---- |  | - | ------ | -
|                                            |  | For the Nine months Ended
|                                            |  | September 30,            
|                                            |  |                          
|                                            |  | 2003                      |        | 2002
|                                            |  |                           |        |     
|                                            |  | (Dollars in Thousands)   
|Balance at beginning of period              |  | $                         | 48,865 |      |  | $ | 34,550 |  
|Acquired allowance for loan losses          |  |                           | 4,028  |      |  |   |       |  
|Provision for loan losses                   |  |                           | 6,644  |      |  |   | 6,516  |  
|Loans charged off                           |  |                           | (2,661 | )    |  |   | (2,126 | )
|Recoveries                                  |  |                           | 1,235  |      |  |   | 26     |  
|                                            |  |                           |        |      |  |   |        |  
|Balance at end of period                    |  | $                         | 58,111 |      |  | $ | 38,966 |  
|                                            |  |                           |        |      |  |   |        |  
|Allowance for loan losses to loans          |  |                           | 1.61   | %    |  |   | 1.60   | %
|Annualized net charge-offs to average loans |  |                           | 0.06   | %    |  |   | 0.12   | %

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Securities. The Company maintains an investment and mortgage-backed
securities portfolio (portfolio) to provide both liquidity and enhance the
income of the organization. The portfolio is comprised of two segments:
Available For Sale (AFS) and Held to Maturity (HTM). The Company does not
maintain a trading portfolio. The Company carries the AFS portfolio at fair
value, with unrealized changes in the fair value of the securities reflected as
Accumulated Other Comprehensive Income. At the end of each month, the Company
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 Company classifies it either as AFS or
HTM. Securities are classified as HTM if the Company has the positive intent
and ability to hold such securities to maturity.

The Companys portfolio investments are governed by the Asset and
Liability Policy (A/L Policy), which is approved by the Board of Directors of
the Company. 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 Return on Assets, Return on Equity
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 Companys Board
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.

To protect against the accelerating prepayment speed of the securities
portfolio due to lower market interest rate environment, the Company
implemented a securities portfolio restructuring strategy during the three
months ended June 30, 2003. Under this strategy, the Company began selling
securities which had the highest exposure to prepayment and extension risk, and
purchased shorter-dated securities with reduced prepayment and extension risk.

The
securities portfolio (including available for sale and
held to maturity) decreased by $51.3 million, or 3.2%, to $1.53 billion during
the nine months ended September 30, 2003, down from
$1.58 billion at December 31, 2002. The decrease in
securities is a result of sales of $656.1 million,
and principal repayments and securities calls of $605.6 million, mostly offset by
purchases of $983.6 million and $194.2 million of FNMA securities received in
the internal securitization of multifamily loans.

The portfolio provides liquidity for the Companys operations. Such
liquidity can either be realized through the sale of AFS securities or through
borrowing. Securities are generally pledged as collateral for any such
borrowings.

During the nine months ended September 30, 2003, the Company increased its
held to maturity portfolio from $112.0 million at December 31, 2002 to $284.8
million. This increase of $172.8 million resulted from purchased securities
during the period that were classified as held to maturity, a reflection of the
Companys intent and ability to hold these securities to maturity based upon
our liquidity position and the size of our portfolio. The Company plans from
time-to-time to continue to purchase securities for its held to maturity
portfolio. However, for the foreseeable future, the Company expects
that the preponderance of its securities portfolio will be classified
as available for sale.

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The following table presents the Companys securities portfolio on the
dates indicated:

|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |         |           | 
|------------------------------------------------------------------ | ---------------------------------------------------------------- | --------------------------------------------------- | --------- | --------------------- | --------- | -------------------- | --------- | ---------------------- | --------- | ------ | --------- | ------- | --------- | - | --------- | ------- | --------- | 
|                                                                   |                                                                  |                                                     |           | At September 30, 2003 |           | At December 31, 2002
|                                                                   |                                                                  |                                                     |           |                       |           |                     
|                                                                   |                                                                  |                                                     |           | Amortized             |           | Market               |           | Amortized              |           | Market
|                                                                   |                                                                  |                                                     |           | Cost                  |           | Value                |           | Cost                   |           | Value 
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |       
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           | (Dollars in Thousands) |           |        |           |        
|Investment securities available for sale:                          |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   | Trust Preferred Securities                                       |                                                     | $         | 13,189                |           |                      | $         | 11,757                 |           |        | $         | 62,313  |           |   | $         | 58,176  |          
|                                                                   | Federal Agency Notes                                             |                                                     |           | 162,800               |           |                      |           | 160,829                |           |        |           | 45,252  |           |   |           | 45,304  |          
|                                                                   | Asset-backed Securities                                          |                                                     |           | 18,541                |           |                      |           | 18,530                 |           |        |           | 5,826   |           |   |           | 5,739   |          
|                                                                   | Municipals                                                       |                                                     |           | 90                    |           |                      |           | 90                     |           |        |           | 360     |           |   |           | 360     |          
|                                                                   | Corporate Bonds                                                  |                                                     |           | 11,906                |           |                      |           | 11,672                 |           |        |           |        |           |   |           |        |          
|                                                                   | Foreign Debt Securities                                          |                                                     |           |                      |           |                      |           |                       |           |        |           | 8,017   |           |   |           | 8,014   |          
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   |                                                                  | Total investment securities available for sale      |           |                       | 206,526   |                      |           |                        | 202,878   |        |           |         | 121,768   |   |           |         | 117,593   | 
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|Mortgage-backed securities available for sale:                     |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   | FNMA                                                             |                                                     |           | 597,332               |           |                      |           | 601,008                |           |        |           | 577,731 |           |   |           | 590,373 |          
|                                                                   | GNMA                                                             |                                                     |           | 117,646               |           |                      |           | 118,042                |           |        |           | 280,263 |           |   |           | 286,153 |          
|                                                                   | FHLMC                                                            |                                                     |           | 228,415               |           |                      |           | 227,387                |           |        |           | 289,094 |           |   |           | 289,959 |          
|                                                                   | Other                                                            |                                                     |           | 96,048                |           |                      |           | 96,029                 |           |        |           | 184,919 |           |   |           | 185,309 |          
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   |                                                                  | Total mortgage-backed securities available for sale |           |                       | 1,039,441 |                      |           |                        | 1,042,466 |        |           |         | 1,332,007 |   |           |         | 1,351,794 | 
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|Total investment and mortgage-backed securities available for sale |                                                                  | $                                                   | 1,245,967 |                       |           | $                    | 1,245,344 |                        |           | $      | 1,453,775 |         |           | $ | 1,469,387 |        
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|Investment securities held to maturity:                            |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   | Municipals                                                       |                                                     | $         | 180,665               |           |                      | $         | 181,442                |           |        | $         | 111,049 |           |   | $         | 113,637 |          
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|Mortgage-backed securities held to maturity:                       |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   | GNMA                                                             |                                                     |           | 103,158               |           |                      |           | 103,256                |           |        |           |        |           |   |           |        |          
|                                                                   | Other                                                            |                                                     |           | 930                   |           |                      |           | 930                    |           |        |           | 945     |           |   |           | 945     |          
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   |                                                                  | Total mortgage-backed held to maturity              |           |                       | 104,088   |                      |           |                        | 104,186   |        |           |         | 945       |   |           |         | 945       | 
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        
|                                                                   | Total investment and mortgage-backed securities held to maturity |                                                     | $         | 284,753               |           |                      | $         | 285,628                |           |        | $         | 111,994 |           |   | $         | 114,582 |          
|                                                                   |                                                                  |                                                     |           |                       |           |                      |           |                        |           |        |           |         |           |   |           |        

As of September 30, 2003, both the carrying value and the market value of
the available for sale securities was $1.53 billion. The total net unrealized
gain on these securities was $252,000. Included in net unrealized gains is
$623,000 of net unrealized losses relating to securities that are available for
sale on which, the net unrealized loss, net of tax, is included as a reduction
to stockholders equity. The difference between the carrying value and market
value of securities, which are held to maturity, aggregating a gain of
$875,000, has not been recognized in the financial statements as of September
30, 2003. The unrealized net gains are the result of movements in market
interest rates.

In conjunction with the Companys review of the fair value of securities,
for the nine months ended September 30, 2003, an other than temporary
impairment charge of $787,000 was recorded for trust preferred securities
contained in the available for sale portfolio due to the downgrading of the
issuing bank holding companies from rating agencies.

Deposits. Deposits are the Banks primary source of funds to use in
lending and investment activities. Deposit balances were $4.53 billion at
September 30, 2003, which represented an increase of $525.0 million from $4.01
billion at December 31, 2002. Core deposit balances increased by $369.0
million, or 24.5% to $1.87 billion at September 30, 2003, compared with $1.50
billion at December 31, 2002. Core deposits include NOW, demand deposit, money
market and savings accounts. The growth in core deposits resulted primarily
from the Banks continued focus on developing new and expanding existing
commercial and consumer relationships in the ethnic Chinese community, its
retail niche market, and the FCB acquisition. At September 30, 2003, 58.7% of
our deposits were time deposits; 22.6% were NOW, demand deposit and money
market accounts; and 18.7% were savings accounts. By comparison, at December
31, 2002, 62.4% of deposits were time deposits; 20.3% were NOW, demand deposit
and money market accounts; and 17.3% were savings accounts.

The Bank obtains deposits primarily from the communities it serves. No
material portion of its deposits are from or are dependent on any one person or
industry. At September 30, 2003, the 100 depositors with the largest aggregate
deposit balances comprised less than 20% of the Banks total deposits. The
Bank accepts deposits in excess of $100,000 from customers. Included in time
deposits as of September 30, 2003, is $1.56 billion of
deposits

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of $100,000 or greater. Such deposits comprise 34.4% of total
deposits. The majority of the time deposits as of September 30, 2003, mature
in one year or less.

The following table presents the balances and rates paid for categories of
deposits at the dates indicated:

|                                               |                     |   |                       |           |                      |  |                        |      |              |   |           |           |          |  |      |      | 
|---------------------------------------------- | ------------------- | - | --------------------- | --------- | -------------------- |  | ---------------------- | ---- | ------------ | - | --------- | --------- | -------- |  | ---- | ---- | 
|                                               |                     |   | At September 30, 2003 |           | At December 31, 2002
|                                               |                     |   |                       |           |                     
|                                               |                     |   |                       |           |                      |  | Weighted               |      |              |   |           |           | Weighted
|                                               |                     |   | Balance               |           | Average Rate         |  | Balance                |      | Average Rate
|                                               |                     |   |                       |           |                      |  |                        |      |             
|                                               |                     |   |                       |           |                      |  | (Dollars in Thousands) |      |              |   |          
|NOW, demand deposits and money market accounts |                     | $ | 1,025,205             |           |                      |  | 0.61                   | %    |              | $ | 813,122   |           |          |  | 0.86 | %   
|Savings accounts                               |                     |   | 848,219               |           |                      |  | 0.80                   |      |              |   | 691,318   |           |          |  | 1.10 |     
|Time deposits:                                 |                     |   |                       |           |                      |  |                        |      |              |   |           |           |          |  |      |     
|                                               | Less than $100,000  |   |                       | 1,100,271 |                      |  |                        | 1.95 |              |   |           | 1,109,633 |          |  |      | 2.36 | 
|                                               | $100,000 or greater |   |                       | 1,558,136 |                      |  |                        | 2.10 |              |   |           | 1,392,740 |          |  |      | 2.53 | 
|                                               |                     |   |                       |           |                      |  |                        |      |              |   |           |           |          |  |      |     
|                                               | Total time deposits |   |                       | 2,658,407 |                      |  |                        | 2.04 |              |   |           | 2,502,373 |          |  |      | 2.45 | 
|                                               |                     |   |                       |           |                      |  |                        |      |              |   |           |           |          |  |      |     
|Total deposits                                 |                     | $ | 4,531,831             |           |                      |  | 1.48                   | %    |              | $ | 4,006,813 |           |          |  | 1.90 | %   
|                                               |                     |   |                       |           |                      |  |                        |      |              |   |           |           |          |  |      |     

Other Borrowings.The Bank maintains borrowing lines with numerous
correspondent banks and brokers and with the Federal Home Loan Bank (FHLB) of
San Francisco to supplement our supply of lendable funds. 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
our stock in the FHLB of San Francisco. At September 30, 2003, the Bank had
$319.6 million of advances outstanding compared to $353.4 million outstanding
at December 31, 2002.

Included in the $319.6 million of FHLB advances as of September 30, 2003,
were $48.1 million of short-term advances, which mature within one year. Of
the $271.5 million in long-term advances, $29.0 million mature between 2005 and
2008. An additional $242.5 million mature between 2006 and 2008 with
provisions that allow the FHLB of San Francisco, at their option, to terminate
the advances at quarterly intervals at specified periods ranging from three to
five years beyond the original advance dates. As of September 30, 2003, $226.6
million of these advances may be terminated at the option of the FHLB.

The following table sets forth certain information regarding short and
long-term borrowings of the Bank at or for the dates indicated:

|                                |                                                                         |  |                                 |         |      |  |   |         |  
|------------------------------- | ----------------------------------------------------------------------- |  | ------------------------------- | ------- | ---- |  | - | ------- | -
|                                |                                                                         |  | At or For the Nine months Ended
|                                |                                                                         |  | September 30,                  
|                                |                                                                         |  |                                
|                                |                                                                         |  | 2003                            |         | 2002
|                                |                                                                         |  |                                 |         |     
|                                |                                                                         |  | (Dollars in Thousands)         
|Short-term borrowings:          |                                                                         |  |                                 |         |      |  |   |        
|FHLB of San Francisco advances: |                                                                         |  |                                 |         |      |  |   |        
|                                | Average balance outstanding                                             |  | $                               | 54,565  |      |  | $ | 10,656  |  
|                                | Maximum amount outstanding at any month end                             |  |                                 | 125,936 |      |  |   | 42,500  |  
|                                | Balance outstanding at end of period                                    |  |                                 | 48,125  |      |  |   | 9,000   |  
|                                | Weighted average interest rate during the period                        |  |                                 | 1.43    | %    |  |   | 4.23    | %
|                                | Weighted average interest rate at end of period                         |  |                                 | 1.38    | %    |  |   | 4.63    | %
|                                | Weighted average remaining term to maturity at end of period (in years) |  |                                 |        |      |  |   |        |  
|Long-term borrowings:           |                                                                         |  |                                 |         |      |  |   |        
|FHLB of San Francisco advances: |                                                                         |  |                                 |         |      |  |   |        
|                                | Average balance outstanding                                             |  | $                               | 272,368 |      |  | $ | 248,896 |  
|                                | Maximum amount outstanding at any month end                             |  |                                 | 275,835 |      |  |   | 253,000 |  
|                                | Balance outstanding at end of period                                    |  |                                 | 271,523 |      |  |   | 249,000 |  
|                                | Weighted average interest rate during the period                        |  |                                 | 5.06    | %    |  |   | 5.40    | %
|                                | Weighted average interest rate at end of period                         |  |                                 | 5.12    | %    |  |   | 5.36    | %
|                                | Weighted average remaining term to maturity at end of period (in years) |  |                                 | 4       |      |  |   | 5       |  

Guaranteed Preferred Beneficial Interests in Junior Subordinated
Debentures.The Company 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 Junior Subordinated Debentures issued by the Company. The trusts
are subsidiaries of the Company and are consolidated with the Company for
reporting purposes. Payment of

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distributions out of the monies held by the trust and payments on
liquidation of the trust, or the redemption of the Capital Securities, are
guaranteed by the Company to the extent the trusts have funds available. The
obligations of the Company under the guarantees and Junior Subordinated
Debentures are subordinate and junior in right of payment to all indebtedness
of the Company and will be structurally subordinated to all liabilities and
obligations of the Companys subsidiaries.

The Company had $136.0 million of Capital Securities outstanding at
September 30, 2003, and December 31, 2002. The proceeds of the 2002 issuances
were primarily used to fund the acquisition of BCC in October 2002.

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
September 30, 2003, the Bank met the Well Capitalized requirements under
these guidelines. The total risk-based capital ratio of the Bank at September
30, 2003, was 12.14%, as compared with 11.52% at December 31, 2002. The ratio
of Tier I Capital (as defined in the regulations) to average assets (as
defined) of the Bank at September 30, 2003, was 7.66% as compared with 7.57% at
December 31, 2002. The decrease in the Tier I Capital to average assets ratio
in comparison to the increase in the total risk-based capital ratio is due to
the impact the acquisition of BCC had on the average balance sheet at December
31, 2002. 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, which
this discussion accompanies, the Federal Reserve has issued interim guidance
allowing the inclusion of trust preferred securities in Tier I capital
regardless of the FIN 46 interpretation, although such a determination may change at a later date. The ultimate decision of the banking
regulators is not known at this time. One potential impact of not
including these trusts in our consolidated liabilities is that The
Federal Reserve Bank may no longer allow the trust
preferred securities to count towards Tier I capital of the
Company. Even in such event, the Company would continue to be well
capitalized. The Banks Tier I capital would be unaffected,
since all trust preferred securities have been issued at the holding
company level.

Contractual Obligation and Off-Balance Sheet Arrangements.The following
table presents, as of September 30, 2003, the Companys significant contractual
obligations by payment date. The payment amounts represent those amounts
contractually due to the recipient.

|                                                                            |  |                 |         |      |  |      |           |      |  |                        |        |                |  |   |        |  |  |   |       |  |  |   |         | 
|--------------------------------------------------------------------------- |  | --------------- | ------- | ---- |  | ---- | --------- | ---- |  | ---------------------- | ------ | -------------- |  | - | ------ |  |  | - | ----- |  |  | - | ------- | 
|                                                                            |  | Payments Due In
|                                                                            |  |                
|                                                                            |  | 2003            |         | 2004 |  | 2005 |           | 2006 |  | 2007                   |        | 2008 and after
|                                                                            |  |                 |         |      |  |      |           |      |  |                        |        |               
|                                                                            |  |                 |         |      |  |      |           |      |  | (Dollars in Thousands) |        |                |  |   |        |  |  |  
|Time deposits                                                               |  | $               | 866,477 |      |  | $    | 1,706,486 |      |  | $                      | 65,740 |                |  | $ | 14,820 |  |  | $ | 3,241 |  |  | $ | 1,643   | 
|Borrowings                                                                  |  |                 | 44,125  |      |  |      | 4,000     |      |  |                        | 6,000  |                |  |   | 15,797 |  |  |   | 6,000 |  |  |   | 243,726 | 
|Guaranteed preferred beneficial interests in
junior subordinated debentures |  |                 |        |      |  |      |          |      |  |                        |       |                |  |   |       |  |  |   |      |  |  |   | 136,000 | 
|Lease payment commitments                                                   |  |                 | 1,300   |      |  |      | 4,703     |      |  |                        | 3,998  |                |  |   | 3,119  |  |  |   | 2,683 |  |  |   | 8,935   | 

The following table presents significant commitments at September 30, 2003
(dollars in millions):

|                                                                                           |                                       |                                           |  |                    |       |                   |  |      |       | 
|------------------------------------------------------------------------------------------ | ------------------------------------- | ----------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | 
|                                                                                           |                                       |                                           |  | September 30, 2003 |       | December 31, 2002
|                                                                                           |                                       |                                           |  |                    |       |                  
|Financial instruments whose contract amounts represent credit risk:                        |                                       |                                           |  |                    |       |                   |  |     
|                                                                                           | Commitments to extend credit:         |                                           |  |                    |       |                   |  |      |      
|                                                                                           |                                       | Consumer (including residential mortgage) |  | $                  | 104.2 |                   |  | $    | 86.5  | 
|                                                                                           |                                       | Commercial (excluding construction)       |  |                    | 339.7 |                   |  |      | 342.1 | 
|                                                                                           |                                       | Construction                              |  |                    | 255.1 |                   |  |      | 188.6 | 
|                                                                                           |                                       | Letters of credit                         |  |                    | 32.1  |                   |  |      | 49.1  | 
|                                                                                           | Commitments to purchase securities    |                                           |  |                   |       |                   |  | 17.3 |      
|Financial instruments whose notional or contract amounts exceed
the amount of credit risk: |                                       |                                           |  |                    |       |                   |  |     
|                                                                                           | Foreign exchange contracts receivable |                                           |  | 2.4                |       |                   |  | 10.2 |      
|                                                                                           | Foreign exchange contracts payable    |                                           |  | 2.4                |       |                   |  | 10.2 |      

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Commitments 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.
Letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. These letters of
credit are usually secured by inventories or by deposits held at the Company.
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. 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.

Liquidity.As a financial institution, we must maintain sufficient levels
of liquid assets at all times to meet our cash flow needs. The A/L Policy of
the Company, as approved by the Board of Directors, requires the Company to
maintain liquidity in an amount necessary to meet its business needs. The A/L
Policy further specifies that certain measures of liquidity be met and reported
periodically to the Board. The Board evaluates the adequacy of the Companys
available liquidity based upon current business trends. Further, the Company
projects its liquidity resources and requirements twelve months forward and
demonstrates to the Board how it will continue to meet the Board-specified
liquidity requirements during that period.

The Company has not recently experienced, nor does it anticipate, any
material changes in its liquidity resources or on its demands for such
resources, which may result from existing commitments.

The Company has not recently experienced, nor does it anticipate
experiencing, any material changes in its capital resources. The Company
maintains total borrowing capacity of approximately $977.3 million, of which
$659.2 million was available for use as of September 30, 2003.

The Company does not have any off-balance sheet financing arrangements as
of September 30, 2003, and December 31, 2002.

Capital Resources.The Company has continuously declared quarterly
dividends on common stock since 1999. During the nine months ended September
30, 2003, the Company paid aggregate dividends of $3.4 million. The payment
of such dividends did not have a significant impact of the liquidity of the
Company. As a result of the dividend payouts, the total capital of the Company
was reduced by $3.7 million during the nine months ended September 30, 2003.
The payment of dividends during the nine months ended 2003 had the effect of
reducing the Tier I leverage capital ratio by 10 basis points and risk-based
capital ratio by 9 basis points.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the Companys exposure to market risk
since the information was disclosed in the Companys Annual Report dated
December 31, 2002, on file with the Securities and Exchange Commission (SEC
File No. 0-24947).




ITEM 4. CONTROLS AND PROCEDURES

At the end of the period covered by this report, the Company carried out
an evaluation, under the supervision and with the participation of the
Companys management, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Companys
controls and procedures as defined in the Securities Exchange Act of 1934, as
amended (the Exchange Act), Rule 13(a)-15(e). Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that
such controls and procedures are effective. During the third quarter of 2003,
there were no changes in the Companys internal control over financial
reporting that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting.




PART II - OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

The Company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 the Companys consolidated financial condition, or
the results of operations.




ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

The Company entered into a Rights Agreement dated as of January 28, 2003,
with Mellon Investor Services LLC as Rights Agent (the Rights Plan). In
connection with the Rights Plan, the Companys Board of Directors authorized
the distribution of one right (Right) for each share of the Companys common
stock, outstanding as of the close of business on January 31, 2003. The Rights
were distributed on February 14, 2003, and expire on January 27, 2013. A
complete copy of the Rights Plan was attached as an exhibit to the Companys
current report on Form 8-K filed with the Securities and Exchange Commission on
January 29, 2003.




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.




ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | List of Exhibits (filed herewith unless otherwise noted)
|--- |  | --------------------------------------------------------

|     |  |                                                                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended and Restated Certificate of Incorporation of UCBH Holdings, Inc.*                                                                                                      
|     |  |                                                                                                                                                                                
|3.2  |  | Bylaws of UCBH Holdings, Inc.***                                                                                                                                               
|     |  |                                                                                                                                                                                
|3.3  |  | Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of UCBH Holdings, Inc.**                                                                     
|     |  |                                                                                                                                                                                
|3.3  |  | Certificate of Designation, Preferences and Rights of Series A
Participating Preferred Stock ***                                                                               
|     |  |                                                                                                                                                                                
|4.0  |  | Form of Stock Certificate of UCBH Holdings, Inc.*                                                                                                                              
|     |  |                                                                                                                                                                                
|4.1  |  | Indenture of UCBH Holdings, Inc., dated April 17, 1998, relating to
Series B Junior Subordinated Debentures****                                                                
|     |  |                                                                                                                                                                                
|4.2  |  | Form of Certificate of Series B Junior Subordinated Debenture****                                                                                                              
|     |  |                                                                                                                                                                                
|4.4  |  | Amended and Restated Declaration of Trust of UCBH Trust Co.****                                                                                                                
|     |  |                                                                                                                                                                                
|4.5  |  | Form of Series B Capital Security Certificate for UCBH Trust Co.****                                                                                                           
|     |  |                                                                                                                                                                                
|4.6  |  | Form of Series B Guarantee of the Company relating to the Series B Capital Securities****                                                                                      
|     |  |                                                                                                                                                                                
|4.7  |  | Rights Agreement dated as of January 28, 2003*****                                                                                                                             
|     |  |                                                                                                                                                                                
|10.1 |  | Employment Agreement between United Commercial Bank and Thomas S. Wu*                                                                                                          
|     |  |                                                                                                                                                                                
|10.2 |  | Employment Agreement between UCBH Holdings, Inc. and Thomas S. Wu*                                                                                                             
|     |  |                                                                                                                                                                                
|10.3 |  | Form of Termination and Change in Control Agreement between United
Commercial Bank and certain executive officers*                                                             
|     |  |                                                                                                                                                                                
|10.4 |  | Form of Termination and Change in Control Agreement between UCBH
Holdings, Inc. and certain executive officers*                                                                
|     |  |                                                                                                                                                                                
|10.5 |  | Amended UCBH Holdings, Inc. 1998 Stock Option Plan**                                                                                                                           
|     |  |                                                                                                                                                                                
|21.0 |  | Subsidiaries of UCBH Holdings, Inc.***                                                                                                                                         
|     |  |                                                                                                                                                                                
|31.1 |  | Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act, as
amended, signed and dated by Thomas S. Wu.                                                           
|     |  |                                                                                                                                                                                
|31.2 |  | Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act, as
amended, signed and dated by Jonathan H. Downing.                                                    
|     |  |                                                                                                                                                                                
|32   |  | 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 Jonathan H. Downing.



|(b) |  | Reports on Form 8-K
|--- |  | -------------------

The Company filed with the Securities and Exchange Commission a report on
Form 8-K on July 18, 2003, covering information reported under Item 9
(Regulation FD Disclosure) but furnished pursuant to Item 12 (Results of
Operation and Financial Condition) in accordance with SEC Release No. 33-8216.



---

|*     |  | Incorporated by reference to the exhibit of the same number from the
Companys Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on July 1, 1998 (SEC File No. 333-58325).                      
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|**    |  | Incorporated by reference to the exhibit of the same number from the
Companys Form 10-Q for the quarter ended September 30, 2001, filed with
the Securities and Exchange Commission on May 3, 2001 (SEC File No.
0-24947).         
|     
|***   |  | Incorporated by reference to the exhibit of the same number from the
Companys Form 10-K for the fiscal year ended December 31, 2002, filed
with the Securities and Exchange Commission on February 25, 2003 (SEC File
No. 0-24947).
|     
|****  |  | Incorporated by reference to the exhibit of the same number from the
Companys Registration Statement on Form S-4, filed with the Securities
and Exchange Commission on July 1, 1998 (SEC File No. 333-58325).                      
|     
|***** |  | Incorporated by reference to the exhibit of the same number from the
Companys current report on Form 8-K, filed with the Securities and
Exchange Commission on January 29, 2003 (SEC File No. 0-24947).                            

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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: November 14, 2003

| |                              
| | -----------------------------
| | /s/  Thomas S. Wu            
| | Thomas S. Wu                 
| | Chairman, President and      
| | Chief Executive Officer      
| | (principal executive officer)

Date: November 14, 2003

| |                              
| | -----------------------------
| | /s/  Jonathan H. Downing     
| | Jonathan H. Downing          
| | Executive Vice President and 
| | Chief Financial Officer      
| | (principal financial officer)

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EXHIBIT INDEX

|     |  |                                                                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act, as
amended, signed and dated by Thomas S. Wu.                                                           
|     |  |                                                                                                                                                                                
|31.2 |  | Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act, as
amended, signed and dated by Jonathan H. Downing.                                                    
|     |  |                                                                                                                                                                                
|32   |  | 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 Jonathan H. Downing.