##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One) þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.For the quarterly period ended March 31, 2005.ORo
    
    Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934.For the transition period from ___to ___.
 Commission File Number: 000-24947 UCBH HOLDINGS, INC. 
  Delaware
    
    94-3072450(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)555 Montgomery Street, San Francisco, California
    
    94111(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (415) 315-2800 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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes þ No o As of April 30, 2005, the Registrant had 91,492,672 shares of common stock, par value $0.01 per
share, outstanding.




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    1Notes to Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 4.
    
    Controls and Procedures
    
    
    46PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    47Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    47Item 3.
    
    Defaults Upon Senior Securities
    
    
    47Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    47Item 5.
    
    Other Information.
    
    
    47Item 6.
    
    Exhibits
    
    
    48SIGNATURESEXHIBIT INDEXEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32




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PART I  FINANCIAL INFORMATION 
 Item 1. Financial Statements UCBH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Par Value) March 31,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCash and due from banks
    
    $
    93,119
    
    
    $
    73,864Federal funds sold
    
    
    35,000
    
    
    
    134,500Investment and mortgage-backed securities available for sale, at fair value
    
    
    1,164,687
    
    
    
    1,169,140Investment and mortgage-backed securities held to maturity, at cost (fair
value of $322,455 and $331,969 at March 31, 2005, and December 31, 2004,
respectively)
    
    
    318,792
    
    
    
    325,202Federal Home Loan Bank stock and other equity securities
    
    
    57,318
    
    
    
    56,867Loans held for sale, at the lower of cost or market value
    
    
    278,817
    
    
    
    326,007Loans held in portfolio
    
    
    4,362,231
    
    
    
    4,050,741Allowance for loan losses
    
    
    (57,547
    )
    
    
    (56,472
    )Net loans held in portfolio
    
    
    4,304,684
    
    
    
    3,994,269Accrued interest receivable
    
    
    27,797
    
    
    
    24,507Premises and equipment, net
    
    
    88,069
    
    
    
    89,238Goodwill
    
    
    68,301
    
    
    
    68,301Other intangibles, net
    
    
    18,584
    
    
    
    17,576Other assets
    
    
    33,604
    
    
    
    36,210Total assets
    
    $
    6,488,772
    
    
    $
    6,315,681LIABILITIES AND STOCKHOLDERS EQUITYNoninterest-bearing deposits
    
    $
    451,566
    
    
    $
    428,602Interest-bearing deposits
    
    
    4,911,170
    
    
    
    4,787,260Total deposits
    
    
    5,362,736
    
    
    
    5,215,862Borrowings
    
    
    381,250
    
    
    
    407,262Subordinated debentures
    
    
    136,000
    
    
    
    136,000Accrued interest payable
    
    
    7,632
    
    
    
    6,110Other liabilities
    
    
    105,869
    
    
    
    66,435Total liabilities
    
    
    5,993,487
    
    
    
    5,831,669Commitments and contingencies (Note 8)Preferred stock, $0.01 par value, 10,000,000 shares authorized, none
issued and outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 180,000,000 shares authorized at March 31,
2005, and December 31, 2004; 91,440,406 and 91,131,824 shares issued and
outstanding at March 31, 2005, and December 31, 2004, respectively
    
    
    915
    
    
    
    456Additional paid-in capital
    
    
    205,965
    
    
    
    203,432Accumulated other comprehensive loss
    
    
    (17,737
    )
    
    
    (6,498
    )Retained earnings  substantially restricted
    
    
    306,142
    
    
    
    286,622Total stockholders equity
    
    
    495,285
    
    
    
    484,012Total liabilities and stockholders equity
    
    $
    6,488,772
    
    
    $
    6,315,681
 The accompanying notes are an integral part of these consolidated financial statements. 1




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Data)
(Unaudited) Three Months Ended March 31,2005
    
    
    2004Interest income:Loans
    
    $
    66,625
    
    
    $
    52,894Funds sold and due from banks
    
    
    638
    
    
    
    14Investment and mortgage-backed securities
    
    
    16,759
    
    
    
    17,408Total interest income
    
    
    84,022
    
    
    
    70,316Interest expense:Deposits
    
    
    22,061
    
    
    
    14,746Short-term borrowings
    
    
    316
    
    
    
    606Subordinated debentures
    
    
    2,314
    
    
    
    1,953Long-term borrowings
    
    
    3,965
    
    
    
    3,471Total interest expense
    
    
    28,656
    
    
    
    20,776Net interest income
    
    
    55,366
    
    
    
    49,540Provision for loan losses
    
    
    1,190
    
    
    
    2,174Net interest income after provision for loan losses
    
    
    54,176
    
    
    
    47,366Noninterest income:Commercial banking and other fees
    
    
    2,348
    
    
    
    1,869Service charges on deposits
    
    
    664
    
    
    
    616Gain on sale of securities, net
    
    
    609
    
    
    
    3,861Gain on sale of SBA loans, net
    
    
    1,084
    
    
    
    511Gain on sale of multifamily loans
    
    
    3,752
    
    
    
    Equity loss in other equity investments
    
    
    (411
    )
    
    
    Total noninterest income
    
    
    8,046
    
    
    
    6,857Noninterest expense:Personnel
    
    
    14,740
    
    
    
    12,915Occupancy
    
    
    2,646
    
    
    
    1,546Data processing
    
    
    1,624
    
    
    
    1,294Furniture and equipment
    
    
    1,246
    
    
    
    1,029Professional fees and contracted services
    
    
    2,509
    
    
    
    1,523Deposit insurance
    
    
    188
    
    
    
    205Communication
    
    
    257
    
    
    
    296Core deposit intangible amortization
    
    
    284
    
    
    
    233Miscellaneous expense
    
    
    3,719
    
    
    
    3,773Total noninterest expense
    
    
    27,213
    
    
    
    22,814Income before income tax expenses
    
    
    35,009
    
    
    
    31,409Income tax expense
    
    
    13,203
    
    
    
    11,590Net income
    
    $
    21,806
    
    
    $
    19,819Basic earnings per share
    
    $
    0.24
    
    
    $
    0.22Diluted earnings per share
    
    $
    0.23
    
    
    $
    0.21Dividends declared per share
    
    $
    0.03
    
    
    $
    0.02
 The accompanying notes are an integral part of these consolidated financial statements. 2




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND
COMPREHENSIVE INCOME (LOSS)
(Dollars in Thousands, Except for Per Share Data)
(Unaudited) Common Stock
    
    
    Additional
    
    
    Accumulated Other
    
    
    
    
    
    
    TotalPaid-In
    
    
    Comprehensive
    
    
    Retained
    
    
    Stockholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Earnings
    
    
    Equity
    
    
    IncomeBalance at December
31, 2003
    
    
    90,076,756
    
    
    $
    450
    
    
    $
    208,990
    
    
    $
    (3,245
    )
    
    $
    208,271
    
    
    $
    414,466Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,819
    
    
    
    19,819
    
    
    $
    19,819Other comprehensive
gain, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,489
    
    
    
    
    
    
    
    9,489
    
    
    
    9,489Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    29,308Stock options exercised,
including related tax
benefit
    
    
    179,304
    
    
    
    1
    
    
    
    1,486
    
    
    
    
    
    
    
    
    
    
    
    1,487Cash dividend $0.02 per
share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,809
    )
    
    
    (1,809
    )Balance at March 31, 2004
    
    
    90,256,060
    
    
    $
    451
    
    
    $
    210,476
    
    
    $
    6,244
    
    
    $
    226,281
    
    
    $
    443,452Balance at December 31,
2004
    
    
    91,131,824
    
    
    $
    456
    
    
    $
    203,432
    
    
    $
    (6,498
    )
    
    $
    286,622
    
    
    $
    484,012Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,806
    
    
    
    21,806
    
    
    $
    21,806Other comprehensive
loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,239
    )
    
    
    
    
    
    
    (11,239
    )
    
    
    (11,239
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,567Stock options exercised,
including related tax
benefit
    
    
    308,582
    
    
    
    2
    
    
    
    2,990
    
    
    
    
    
    
    
    
    
    
    
    2,992Cash dividend $0.03 per
share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,286
    )
    
    
    (2,286
    )Stock split
    
    
    
    
    
    
    457
    
    
    
    (457
    )
    
    
    
    
    
    
    
    
    
    
    Balance at March 31, 2005
    
    
    91,440,406
    
    
    $
    915
    
    
    $
    205,965
    
    
    $
    (17,737
    )
    
    $
    306,142
    
    
    $
    495,285
 The accompanying notes are an integral part of these consolidated financial statements. 3




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited) Three Months Ended March 31,2005
    
    
    2004Cash Flows from operating activities:Net income
    
    $
    21,806
    
    
    $
    19,819Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    1,190
    
    
    
    2,174Amortization of purchase price adjustments
    
    
    (115
    )
    
    
    (149
    )Amortization of intangibles
    
    
    826
    
    
    
    233Depreciation and amortization of premises and equipment
    
    
    1,999
    
    
    
    1,360Gain on sale of loans held in portfolio, securities, and other assets, net
    
    
    (1,648
    )
    
    
    (4,372
    )Other, net
    
    
    (747
    )
    
    
    344Changes in operating assets and liabilities:Net change in loans held for sale
    
    
    45,853
    
    
    
    (Increase) decrease in accrued interest receivable
    
    
    (3,290
    )
    
    
    (546
    )(Increase) decrease in other assets
    
    
    10,592
    
    
    
    (14,907
    )Increase (decrease) in accrued interest payable
    
    
    1,522
    
    
    
    1,054Increase in other liabilities
    
    
    41,285
    
    
    
    11,064Net cash provided by operating activities
    
    
    119,273
    
    
    
    16,074Cash flows from investing activities:Investments and mortgage-backed securities, available for sale:Principal payments and maturities
    
    
    305,150
    
    
    
    60,366Purchases
    
    
    (347,610
    )
    
    
    (365,179
    )Sales
    
    
    26,345
    
    
    
    386,341Called
    
    
    2,000
    
    
    
    54,946Investments and mortgage-backed securities, held to maturity:Principal payments and maturities
    
    
    6,366
    
    
    
    4,792Purchases
    
    
    
    
    
    
    (32,941
    )Loans held in portfolio originated and purchased, net of principal collections
    
    
    (326,673
    )
    
    
    (193,311
    )Proceeds from the sale of loans held in portfolio
    
    
    18,414
    
    
    
    33,801Purchases of premises and other equipment
    
    
    (668
    )
    
    
    (2,271
    )Other investing activities, net
    
    
    (3,309
    )
    
    
    (899
    )Net cash used in investment activities
    
    
    (319,985
    )
    
    
    (54,355
    )Cash flows from financing activities:Net increase in demand deposits, NOW, money market and savings accounts
    
    
    79,948
    
    
    
    110,861Net increase (decrease) in time deposits
    
    
    66,926
    
    
    
    117,192Net decrease in short-term borrowings
    
    
    (25,897
    )
    
    
    (129,124
    )Repayments on long-term borrowings
    
    
    
    
    
    
    (6,000
    )Proceeds from stock option exercises
    
    
    1,313
    
    
    
    823Payment of cash dividend on common stock
    
    
    (1,823
    )
    
    
    (1,351
    )Net cash provided by financing activities
    
    
    120,467
    
    
    
    92,401Net increase (decrease) in cash and cash equivalents
    
    
    (80,245
    )
    
    
    54,120Cash and cash equivalents at beginning of period
    
    
    208,364
    
    
    
    76,786Cash and cash equivalents at end of period
    
    $
    128,119
    
    
    $
    130,906Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    27,133
    
    
    $
    20,250Income taxes
    
    
    1,953
    
    
    
    284Non-cash investing and financing activities:Loans securitized
    
    
    
    
    
    
    98,473Income tax benefit from stock option exercised
    
    
    1,679
    
    
    
    663
 The accompanying notes are an integral part of these consolidated financial statements. 4




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UCBH HOLDINGS, INC. AND SUBSIDIARIES 
 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 organized under the
laws of Delaware 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 and New York, and internationally through its full-service branch in Hong
Kong, which was opened during the second half of 2003 under a license granted by the Hong Kong
Monetary Authority. During the three months ended March 31, 2004, the Companys wholly owned
subsidiary, UCB Investment Services, Inc. (UCBIS), commenced business. UCBIS is a registered
broker-dealer with the Securities and Exchange Commission and a member of the National Association
of Securities Dealers (NASD) and the Securities Investor Protection Corporation (SIPC). The
Company also has representative offices in Shenzhen, China and Taipei, Taiwan. Basis of Presentation and Principles of Consolidation The accompanying unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America (GAAP) for interim
financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and
include all normal recurring adjustments which the Company considers necessary for a fair statement
of the financial statements of such periods. Certain information and note disclosures normally
included in financial statements prepared in accordance with GAAP have been omitted pursuant to
such rules and regulations. The unaudited consolidated financial statements include the accounts
of the Company and most of its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation. The wholly owned subsidiaries not
included in the consolidated results are certain special purpose trusts established for the purpose
of issuing Guaranteed Preferred Beneficial Interests in the Companys Junior Subordinated
Debentures. These trusts are excluded pursuant to Financial Accounting Standards Board (FASB)
Interpretation No. 46R (FIN 46R), Consolidation of Variable Interest Entities, issued by the
FASB in December of 2003, as the Company is not deemed to be the primary beneficiary. The Company
also invests in affordable housing and small business corporations, limited liability companies,
and limited partnerships as a result of Community Reinvestment Act (CRA) requirements. Such
investments are generally accounted for under the equity or cost method pursuant to Accounting
Principles Board (the APB) Opinion No. 18, The Equity Method of Accounting for Investments in
Common Stock. Additionally, the Company recognizes a liability and a corresponding increase in
CRA investments for delayed equity contributions that are unconditional and legally binding
relating to affordable housing investments pursuant to Emerging Issues Task Force (EITF) Issue
No. 94-1, Accounting for Tax Benefits Resulting from Investments in Affordable Housing Projects.
Other commitments are disclosed in Note 8. None of these investments meet the requirements of FIN
46R, and therefore, are not consolidated. On January 27, 2005, the Company declared a two-for-one stock split in the form of a stock
dividend for the shareholders of record as of March 31, 2005, and distributable on April 12, 2005.
Accordingly, the financial statements for all periods presented have been restated to reflect the
effect of the stock split. Operating results for the three months ended March 31, 2005, are not necessarily indicative of
the results that may be expected for the year ending December 31, 2005. Please refer to the audited consolidated financial statements and related notes thereto
included in the Companys annual report on Form 10-K for the year ended December 31, 2004, for
additional details of the Companys financial position, as well as for a description of the
Companys significant accounting policies, which have been continued without material change. The
details included in the notes have not changed except as a result of normal transactions in the
interim period and the events mentioned in the notes below. 5




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Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those
estimated results. Reclassification Certain reclassifications have been made to prior years consolidated financial statements in
order to conform to the current periods presentation. Accounting for Stock-Based Compensation The Company has elected to continue accounting for employee stock-based compensation using the
intrinsic value method in accordance with APB Opinion No. 25, Accounting for Stock Issued to
Employees, rather than the alternative fair value accounting allowed by Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by
SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. Under APB No.
25, the Company records no stock-based employee compensation cost if the stock options are granted
with an exercise price equal to or greater than the market value of the underlying common stock on
the date of grant. Had compensation cost for the Companys stock-based compensation arrangements for employees
been determined based on the fair value at grant date of the awards for the three months ended
March 31, 2005 and 2004, consistent with the provisions of SFAS No. 123, the Companys net income
and earnings per share would have been the pro forma amounts as follows (dollars in thousands,
except for per share data): Three Months Ended March 31,2005
    
    
    2004Net income:As reported
    
    $
    21,806
    
    
    $
    19,819Deduct: Total stock-based
employee compensation expense
determined under fair value
based method of all awards, net
of related tax effects
    
    
    (2,162
    )
    
    
    (1,292
    )Pro forma net income
    
    $
    19,644
    
    
    $
    18,527Basic earnings per share:As reported
    
    $
    0.24
    
    
    $
    0.22Pro forma
    
    $
    0.22
    
    
    $
    0.21Diluted earnings per share:As reported
    
    $
    0.23
    
    
    $
    0.21Pro forma
    
    $
    0.20
    
    
    $
    0.20
 If the computed fair values of the stock awards had been amortized to expense over the vesting
period of the awards, pro forma amounts would have been as shown in the above table. The impact of
outstanding non-vested stock options has been excluded from the pro forma calculation. 6




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These calculations require the use of option pricing models, even though such models were
developed to estimate the fair value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the Companys stock option awards. These models as
required by current accounting pronouncements also require subjective assumptions, including 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 for the three months ended March 31, 2005 and 2004: Three Months Ended March 31,2005
    
    2004Dividend yield
    
    0.56%
    
    0.42%Volatility
    
    22.07%
    
    26.03%Risk-free interest rate
    
    4.16%
    
    4.04%Expected lives (years).
    
    7.6
    
    7.4
 2. Recent Accounting Pronouncements Other-Than-Temporary Impairment and Its Application to Certain Investments In March 2004, the FASB approved the consensus reached on the EITF Issue No. 03-1, The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF Issue
No. 03-1 clarifies the investment impairment methodology for debt and equity securities within the
scope of SFAS No. 115, Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities, and SFAS No. 124, Accounting for Certain Investments Held by
Not-For-Profit Organizations, and for equity securities that are not subject to the scope of SFAS
No. 115 and not accounted for under the equity method under APB Opinion No. 18 and related
interpretations (hereinafter referred to as cost method investments). Certain disclosure requirements regarding investments accounted for under SFAS No. 115 and
SFAS No. 124 are effective for annual financial statements for fiscal years ending after December
31, 2003. These currently effective disclosure requirements have been adopted by the Company and
did not have a material impact on the financial condition or operating results of the Company.
Additional disclosure requirements regarding cost method investments are effective for annual
periods ending after June 15, 2004. The adoption of these disclosure requirements did not have a
material impact on the financial condition or operating results of the Company. In September 2004, the FASB issued a final FASB Staff Position (FSP), FSP EITF 03-1-1,
delaying the effective date of the measurement and recognition guidance indefinitely. Excluding
the deferred guidance, the adoption of EITF No. 03-01 did not have a material impact on the
financial condition or operating results of the Company. Accounting for Stock-Based Compensation On December 16, 2004, the FASB issued SFAS No. 123R, Share-Based Payment. SFAS No. 123R is
a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123R eliminates
the ability to account for share-based compensation transactions using the intrinsic value method
as prescribed under APB Opinion No. 25, Accounting for Stock Issued to Employees, and requires
that such transactions be accounted for using a fair value-based method. SFAS No. 123R covers a
wide range of share-based compensation arrangements including share options, restricted share
plans, performance-based awards, share appreciation rights, and employee share purchase plans.
SFAS No. 123R had been scheduled to be effective for the interim and annual periods beginning after
June 15, 2005. However, in April 2005, the Securities and Exchange Commission amended Rule 4-01(a)
of Regulation S-X to amend the date for compliance with SFAS No. 123R, so that each registrant that
is not a small business issuer will be required to prepare financial statements in accordance with
SFAS No. 123R beginning with the first interim or annual reporting period of the registrants first
fiscal year beginning on or after June 15, 2005. Thus, SFAS No. 123R will not become effective for
the Company until January 1, 2006. 7




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SFAS No. 123R may be adopted using one of two methods: (1) A modified perspective method in
which compensation cost is recognized beginning with the effective date (a) based on the
requirements of SFAS No. 123R for all share-based payments granted after the effective date and (b)
based on the requirements of SFAS No. 123 for all awards granted to employees prior to the
effective date of SFAS No. 123R that remain unvested on the effective date; (2) A modified
retrospective method which includes the requirements of the modified prospective method described
above, but also permits entities to restate based on the amounts previously recognized under SFAS
No. 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior
interim periods of the year of adoption. The adoption of SFAS No. 123R may have a material impact
on the Companys financial position and results of operation. Accounting for Certain Loans or Debt Securities Acquired in a Transfer In December 2003, the American Institute of Certified Public Accountants (AICPA) issued
Statement of Position 03-3 (SOP 03-3), which addresses accounting for loans or debt securities
acquired in a transfer and the resulting differences between contractual cash flows and cash flows
expected to be collected. This SOP does not apply to loans originated by the Bank. This SOP
limits the yield that may be accreted to the excess of the investors estimate of undiscounted
expected principal, interest, and other cash flows over the investors initial investment in the
loan. SOP 03-3 requires that the excess of contractual cash flows over cash flows expected to be
collected not be recognized as an adjustment of yield, loss accrual, or valuation allowance. SOP
03-3 also prohibits carrying over or creation of valuation allowances in the initial accounting
of all loans acquired in a transfer that are within the scope of this SOP. The prohibition of the
valuation allowance carryover applies to the purchase of individual loans, pools of loans and loans
acquired in a purchase business combination. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004.
For loans acquired in fiscal years beginning on or before December 15, 2004, decreases in cash
flows expected to be collected should be applied prospectively. The adoption of SOP 03-3 did not
have a material impact on the financial condition or operating results of the Company. 3. Cash and Due From Banks The following table summarizes the interest-bearing and noninterest-bearing components of cash
and due from banks at March 31, 2005, and December 31, 2004 (dollars in thousands): March 31,
    
    
    December 31,2005
    
    
    2004Interest-bearing
    
    $
    24,013
    
    
    $
    16,556Noninterest-bearing
    
    
    69,106
    
    
    
    57,308Total Cash and Due From Banks
    
    $
    93,119
    
    
    $
    73,864
 The Bank is required to maintain a percentage of its deposit balances as reserves either in
cash or on deposit at the Federal Reserve Bank. At March 31, 2005, and December 31, 2004, the
reserve requirement was $10.1 million and $6.8 million, respectively. 8




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4. Loans Loans held in portfolio in the commercial banking business consist of the following at March
31, 2005, and December 31, 2004 (dollars in thousands): March 31,
    
    
    December 31,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    2,083,232
    
    
    $
    1,951,020Secured by real estate  multifamily
    
    
    908,412
    
    
    
    865,483Construction
    
    
    326,271
    
    
    
    291,080Business
    
    
    544,308
    
    
    
    468,220Total commercial loans
    
    
    3,862,223
    
    
    
    3,575,803Consumer:Residential mortgage (one to four family)
    
    
    455,708
    
    
    
    434,323Other
    
    
    51,124
    
    
    
    47,926Total consumer loans
    
    
    506,832
    
    
    
    482,249Gross loans held in portfolio
    
    
    4,369,055
    
    
    
    4,058,052Net deferred loan fees
    
    
    (6,824
    )
    
    
    (7,311
    )Loans held in portfolio
    
    
    4,362,231
    
    
    
    4,050,741Allowance for loan losses
    
    
    (57,547
    )
    
    
    (56,472
    )Net loans held in portfolio
    
    $
    4,304,684
    
    
    $
    3,994,269
 The activity in the allowance for loan losses and allowance for losses related to unfunded
commitments consists of the following for the three months ended March 31, 2005 and 2004 (dollars
in thousands): Three Months Ended March 31,2005
    
    
    2004Balance at beginning of year:Allowance for loan losses
    
    $
    56,472
    
    
    $
    58,126Allowance for losses  unfunded commitments
    
    
    3,940
    
    
    
    2,737Total allowance for losses at beginning of year
    
    
    60,412
    
    
    
    60,863Provision for losses
    
    
    1,190
    
    
    
    2,174Loans charged off
    
    
    (134
    )
    
    
    (748
    )Recoveries of loans previously charged off
    
    
    27
    
    
    
    15Total allowance for losses at end of period
    
    $
    61,495
    
    
    $
    62,304Allowance for loan losses
    
    $
    57,547
    
    
    $
    59,488Allowance for losses  unfunded commitments
    
    
    3,948
    
    
    
    2,816Total allowance for losses at end of period
    
    $
    61,495
    
    
    $
    62,304
 9




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Loans held for sale portfolio consists of the following at March 31, 2005, and December 31,
2004 (dollars in thousands): March 31,
    
    
    December 31,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    28,205
    
    
    $
    26,882Secured by real estate  multifamily
    
    
    246,990
    
    
    
    295,253Business
    
    
    2,431
    
    
    
    3,337Gross loans held for sale
    
    
    277,626
    
    
    
    325,472Net deferred loan costs
    
    
    1,191
    
    
    
    535Loans held for sale, at lower of cost or market value
    
    $
    278,817
    
    
    $
    326,007
 5. Core Deposit Intangibles The gross carrying amount and the associated accumulated amortization for core deposit
intangibles, which are included in other intangibles on the consolidated balance sheets, as of
March 31, 2005, and December 31, 2004, are as follows (dollars in thousands): March 31,
    
    
    December 31,2005
    
    
    2004Core deposit intangibles, gross
    
    $
    13,100
    
    
    $
    13,100Accumulated amortization
    
    
    (3,555
    )
    
    
    (3,271
    )Core deposit intangibles, net
    
    $
    9,545
    
    
    $
    9,829
 For the three months ended March 31, 2005, core deposit intangibles were reviewed for
impairment, and it was determined there was no impairment. The activity in core deposit
intangibles, net consists of the following for the three months ended March 31, 2005 and 2004
(dollars in thousands): Balance at December 31, 2004
    
    $
    9,829Addition/Capitalization
    
    
    Purchases
    
    
    Amortization
    
    
    (284
    )Write-downs
    
    
    Other
    
    
    Balance at March 31, 2005
    
    $
    9,545Balance at December 31, 2003
    
    $
    11,111Addition/Capitalization
    
    
    Purchases
    
    
    Amortization
    
    
    (233
    )Write-downs
    
    
    Other
    
    
    Balance at March 31, 2004
    
    $
    10,878
 10




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6. Mortgage Servicing Rights The gross carrying amount and the associated accumulated amortization for mortgage servicing
rights, which are included in other intangibles on the consolidated balance sheets, as of
March 31, 2005, and December 31, 2004, are as follows (dollars in thousands): March 31,
    
    
    December 31,2005
    
    
    2004Mortgage servicing rights, gross
    
    $
    10,983
    
    
    $
    9,149Accumulated amortization
    
    
    (1,944
    )
    
    
    (1,402
    )Mortgage servicing rights, net
    
    $
    9,039
    
    
    $
    7,747
 Amortization expense on mortgage servicing rights is recorded as a reduction in loan servicing
fee income and reported as part of commercial banking and other fees. For the three months ended
March 31, 2005, mortgage servicing rights were reviewed for impairment and it was determined there
was no impairment. The activity in mortgage servicing rights, net consists of the following for
the three months ended March 31, 2005 and 2004 (dollars in thousands): Balance at December 31, 2004
    
    $
    7,747Addition/Capitalization
    
    
    1,834Purchases
    
    
    Amortization
    
    
    (542
    )Write-downs
    
    
    Other
    
    
    Balance at March 31, 2005
    
    $
    9,039Balance at December 31, 2003
    
    $
    4,006Addition/Capitalization
    
    
    188Purchases
    
    
    Amortization
    
    
    (154
    )Write-downs
    
    
    Other
    
    
    Balance at March 31, 2004
    
    $
    4,040
 The Company services real estate loans for others of $1.28 billion and $1.11 billion at March
31, 2005, and December 31, 2004, respectively. These loans are not included in the consolidated
balance sheets. In connection therewith, the Company held trust funds of approximately $12.0
million and $14.1 million at March 31, 2005, and December 31, 2004, respectively, all of which were
segregated in separate accounts and included in the respective balance sheets. Some agreements
with investors to whom the Company has sold loans have provisions that could require repurchase of
loans under certain circumstances. Management does not believe that any such repurchases will be
significant. 11




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##### Table of Contents



7. Earnings Per Share On January 27, 2005, the Company declared a two-for-one stock split in the form of a stock
dividend to shareholders of record as of March 31, 2005 and distributable on April 12, 2005.
Accordingly, basic and diluted earnings per share on the consolidated statements of income for the
three months ended March 31, 2005 and 2004, have been restated to reflect the impact of the stock
split. Additionally, the numbers of issued and outstanding shares of the Companys common stock on
the consolidated balance sheets at March 31, 2005, and December 31, 2004, take into account the
stock split. The following is a reconciliation of the numerators and denominators of the basic and
diluted earnings per share for the three months ended March 31, 2005 and 2004 (dollars in
thousands, except shares and per share amounts): Three Months Ended March 31, 2005
    
    
    Three Months Ended March 31, 2004Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    AmountNet income  basic
    
    $
    21,806
    
    
    
    91,228,070
    
    
    $
    0.24
    
    
    $
    19,819
    
    
    
    90,199,188
    
    
    $
    0.22Effect of stock options
    
    
    
    
    
    
    4,653,568
    
    
    
    
    
    
    
    
    
    
    
    4,767,050Net income  diluted
    
    $
    21,806
    
    
    
    95,881,638
    
    
    $
    0.23
    
    
    $
    19,819
    
    
    
    94,966,238
    
    
    $
    0.21
 8. Derivative Financial Instruments and Financial Instruments with Off-Balance-Sheet Risk The Company is a party to derivative financial instruments and financial instruments with
off-balance-sheet risk in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuations in interest rates. The Company does not
hold or issue financial instruments for trading purposes. Financial instruments in the normal
course of business include commitments to extend and purchase credit, forward commitments to sell
loans, letters of credit, foreign exchange contracts, and interest-rate caps. Those instruments
involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount
recognized in the statement of financial position. The contract or notional amounts of those
instruments reflect the extent of involvement the Company has in particular classes of financial
instruments. The Companys exposure to credit loss in the event of nonperformance by the other party to the
financial instrument for commitments to extend credit is represented by the contractual or notional
amount of those instruments. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. For interest-rate swap and
cap transactions and forward commitments to sell loans, the contract or notional amounts do not
represent exposure to credit loss. The Company controls the credit risk of its interest-rate swap
and cap agreements, foreign exchange contracts, and forward commitments to sell loans through
credit approvals, limits, and monitoring procedures. The Company does not require collateral or
other security to support interest-rate swap transactions with credit risk. 12




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The contractual or notional amounts of derivative financial instruments and financial
instruments with off-balance-sheet risk as of March 31, 2005 and December 31, 2004 are as follows
(dollars in millions): March 31,
    
    
    December 31,2005
    
    
    2004Financial instruments whose contract amounts represent credit risk:Commitments to extend credit:Consumer (including residential mortgage)
    
    $
    77.7
    
    
    $
    75.6Commercial (excluding construction)
    
    
    457.2
    
    
    
    451.9Construction
    
    
    254.5
    
    
    
    260.4Letters of credit
    
    
    48.2
    
    
    
    44.8Foreign exchange contracts receivable
    
    
    (275.0
    )
    
    
    (176.6
    )Foreign exchange contracts payable
    
    
    275.1
    
    
    
    176.0Put options to buy
    
    
    32.8
    
    
    
    18.7Put options to sell
    
    
    (32.8
    )
    
    
    (18.7
    )Unfunded CRA investment commitments
    
    
    7.4
    
    
    
    8.3
 Commitments 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. The Company evaluates each customers credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the
Company upon extension of credit, is based on managements credit evaluation of the counter party.
Collateral held generally includes residential or commercial real estate, accounts receivable, or
other assets. Letters of credit are conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending loan facilities to customers. These letters
of credit are usually secured by the customers inventories or by deposits held at the 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. Entering
into foreign exchange contract agreements involves the risk of dealing with counter parties and
their ability to meet the terms of the contracts. The Bank purchases or sells foreign exchange
contracts in order to hedge a balance sheet or off-balance-sheet foreign exchange position.
Additionally, the Bank purchases and sells foreign exchange contracts for customers, as long as the
foreign exchange risk is fully hedged with an offsetting position. Interest-rate caps are interest rate protection instruments that involve the payment from the
seller to the buyer of an interest differential. This differential represents the difference
between current interest rates and agreed-upon rate applied to a notional principal amount.
Entering into interest-rate cap agreements involves the risk of dealing with counter parties and
their ability to meet the terms of the contracts. Notional principal amounts often are used to
express the volume of these transactions, but the amounts potentially subject to credit risk are
much smaller. The Company may be a purchaser of interest-rate caps and swaps. At March 31, 2005,
and December 31, 2004, no interest-rate caps or swaps were outstanding. For the three months ended
March 31, 2005 and 2004, the impact of interest-rate caps and swaps to interest income was nil. Put options to buy are part of currency-linked deposits with other financial institutions. At
the option of these third parties, UCB is required to buy a currency at a predefined exchange rate
with another currency. Put options to sell are part of currency-linked deposits that customers
have placed with UCB. At the option of UCB, the customer is obligated to buy a currency at a
predefined exchange rate with another currency. The put options to buy and put options to sell,
along with the related currency-linked deposits, offset each other. 13




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As disclosed in Note 1, the Company has CRA investments of which a portion has been funded or
remains unfunded at March 31, 2005, and December 31, 2004. Fundings are made upon request by
underlying investee companies based on original commitment amounts. 9. Segment Information In accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, the Company designates the internal organization that is used by management for
making operating decisions and assessing performance as the source of the Companys reportable
segments. The Company has determined that its reportable segments are those that are based on the
Companys method of internal reporting. The Company has determined that it has three reportable
segments, which include domestic commercial banking, the Hong Kong branch and UCB Investment
Services, Inc. The other column consists of the Hong Kong branch and UCB Investment Services, Inc.
The intersegment column identifies the intersegment activities between the domestic commercial
banking and other. Intersegment activities consist of funds sold and related interest by the Hong
Kong branch to domestic commercial banking, Hong Kong branch short-term borrowings and related
transfer pricing interest with domestic commercial banking, and a UCB Investment Services, Inc.
deposit account with domestic commercial banking. Transfer pricing interest income is based on the
Companys internal funds transfer pricing system, which assigns a cost of funds or a credit for
funds to assets or liabilities based on their type, maturity or repricing characteristics. UCB
Investment Services, Inc. and the Hong Kong branch commenced operations in the last half of 2003.
The following is segment information for the three months ended March 31, 2005 and 2004 (dollars in
thousands): DomesticCommercialBanking
    
    
    Other
    
    
    Intersegment
    
    
    TotalThree months ended March 31, 2005:Total interest income
    
    $
    82,890
    
    
    $
    3,742
    
    
    $
    (2,610
    )
    
    $
    84,022Net interest income
    
    
    56,561
    
    
    
    725
    
    
    
    (1,920
    )
    
    
    55,366Net income (loss)
    
    
    24,292
    
    
    
    (533
    )
    
    
    (1,953
    )
    
    
    21,806Three months ended March 31, 2004:Total interest income
    
    
    70,095
    
    
    
    529
    
    
    
    (308
    )
    
    
    70,316Net interest income
    
    
    49,540
    
    
    
    207
    
    
    
    (207
    )
    
    
    49,540Net income
    
    
    21,405
    
    
    
    (1,389
    )
    
    
    (197
    )
    
    
    19,819
 10. Federal and State Taxes on Income The American Jobs Creation Act of 2004 (AJCA), which was signed by the President of the
United States of America on October 22, 2004, allows the Company, upon satisfaction of certain
conditions, to repatriate reinvested foreign earnings, as defined by new Section 965 of the
Internal Revenue Code (IRC) of 1986 (as amended), at an effective tax rate of 5.25%. As of April 21, 2005, the Company is considering a repatriation of up to $30 million of
unremitted earnings and may record an income tax benefit of between $0 and $3.9 million as a result
of the above mentioned repatriation provision for the calendar year ending December 31, 2005. As
the Company has not yet completed the analysis necessary to determine the amount, if any, of the
repatriation of foreign earnings subject to Section 965, no effect of any such repatriation has
been reflected in its financial statements as of March 31, 2005. The Company expects to complete
its evaluation of the effects of the repatriation no later than the third quarter of 2005. 11. Subsequent Event Management is preparing an evaluation of the merits of repaying the $30.0 million of Junior
Subordinated Debentures issued in 1998, which have an interest rate of 9.375% and may be prepaid at
par commencing in the second quarter of 2005. 14




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This quarterly report onForm 10-Qmay include forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based
upon specific assumptions that may or may not prove correct. Forward-looking statements are also
subject to known and unknown risks, uncertainties and other factors relating to the Companys and
the Banks operations and business environment, all of which are difficult to predict, and many of
which are beyond the control of the Company and the Bank. The factors include, among others:  
    economic and business conditions in the areas and markets in which the Company and the Bank operate, particularly those
affecting loans secured by real estate;  
    deterioration or improvement in the ability of the Banks borrowers to pay their debts to the Bank;  
    market fluctuations such as those affecting interest and foreign exchange rates and the value of securities in which
the Bank invests;  
    competition from other financial institutions, whether banks, investment banks, insurance companies or others;  
    the ability of the Bank to assimilate acquisitions, enter new markets and lines of business, and open new branches,
successfully;  
    changes in business strategies;  
    changes in tax law and governmental regulation of financial institutions;  
    demographic changes; and  
    other risks and uncertainties, including those discussed in the documents the Company files with the Securities and
Exchange Commission (SEC). The foregoing may cause the actual results and performance of the Company and the Bank to be
materially different from the results and performance indicated or suggested by the forward-looking
statements. Further description of the risks and uncertainties are included in detail in the
Companys most recent Annual Report onForm 10-Kfor the year ended December 31, 2004, as filed
with the SEC. The following discussion and analysis is intended to provide details of the results of
operations of the Company for the three months ended March 31, 2005 and 2004, and financial
position at March 31, 2005, and at December 31, 2004. The following discussion should be read in
conjunction with the information set forth in the Companys consolidated financial statements and
notes thereto and other financial data included in this report. SUMMARY RESULTS UCBH Holdings, Inc. (we, our, and the Company), the holding company of United Commercial
Bank (the Bank), had net income of $21.8 million for the three months ended March 31, 2005, up
10%, compared with net income of $19.8 million for the three months ended March 31, 2004. Diluted
earnings per share on a post-split basis was $0.23 for the three months ended March 31, 2005,
compared with $0.21 for the three months ended March 31, 2004, adjusted for the April 12, 2005,
two-for-one stock split. Our revenues for the three months ended March 31, 2005, consist of approximately 87.3% net
interest income, which represents the difference between interest income and interest expense, and
12.7% noninterest income. We generate interest income primarily on the loans and securities that
we hold in our portfolios. Interest expense results from the interest that we pay customers on
their deposits and debt holders on our borrowings. Noninterest income results primarily from
commercial banking fees, charges on deposit accounts, and gains on sales of multifamily loans, U.S.
Small Business Administration (SBA) loans and securities. Our return on average assets (ROA) was 1.37% for the three months ended March 31, 2005,
compared with 1.42% for the three months ended March 31, 2004. Our return on average equity
(ROE) was 17.79% for the three months ended March 31, 2005, compared to 18.45% for the three
months ended March 31, 2004. The reduced ROA and ROE in 2005 primarily reflect lower securities
sales in the first quarter of 2005. 15




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##### Table of Contents



Our efficiency ratio, which represents the ratio of total noninterest expense to the sum of
net interest income and noninterest income, was comparable at 42.91% and 40.45% for the three
months ended March 31, 2005 and 2004, respectively. The increase also primarily affects the
reduced securities sales in the first quarter of 2005. Compared to the three months ended March 31, 2004, our interest income increased by $13.7
million, or 19.5%, to $84.0 million for the three months ended March 31, 2005, as a result of a
$679.1 million increase in our average interest-earning assets primarily due to loan production.
Our average loans outstanding were $4.51 billion for the three months ended March 31, 2005,
compared with $3.84 billion for the three months ended March 31, 2004. As a financial institution, we are sensitive to fluctuations in market interest rates. As a
result of the increases in market interest rates for the three months ended March 31, 2005, the
yields on our loans and deposits have been increasing. Since the rate of the increase on loan
yields was less than the rate of the increase on the cost of our deposits, our net interest margin,
calculated on a tax equivalent basis, decreased from 3.74% to 3.72% for the three months ended
March 31, 2005, when compared with the three months ended March 31, 2004. The ratio of allowance for loan losses was 1.32% at March 31, 2005, compared with 1.39% at
December 31, 2004. The allowance for loan losses was $57.5 million at March 31, 2005, compared
with $56.5 million at December 31, 2004. The increase in the allowance for loan losses reflects
the growth in the loan portfolio and the increase in commercial loans during the first quarter of
2005. During the first quarter of 2005, the Bank continued its ongoing process of reviewing its
loan portfolio by evaluating the loss factors and current economic conditions in light of its own
historical loss experience, loan delinquency and classification in determining the adequate level
of allowance for loan losses. In addition, the Bank experienced significantly lower net loan
charge-offs during the first quarter of 2005, when compared with the net loan charge-offs for the
first quarter of 2004. Accordingly, the Company provided $1.2 million for loan losses in the first
quarter of 2005, compared with $2.2 million in the first quarter of 2004. Our noninterest income increased by 17.3% to $8.0 million for the three months ended March 31,
2005, compared with noninterest income of $6.9 million for the three months ended March 31, 2004.
The
Bank plans to continue to originate multifamily loans of which it intends to sell a portion. These
loans will be classified as loans held for sale and are presented separately on the consolidated
balance sheets. This increase resulted from: a) $3.8 million of gains on sales of multifamily loans in the first
quarter of 2005, compared with no gains on sales of multifamily loan sales in the corresponding
quarter of 2004; b) an increase of $479,000, or 25.6%, in commercial banking fees due to increased
trade finance activity; and c) an increase of $573,000, or 112.1%, in gain on sale of SBA loans in
the first quarter of 2005, compared with the first quarter of 2004. These gains were partially
offset by a decrease in the gain on sale of securities from $3.9 million in the first quarter of
2004, compared with a gain on sale of securities of $609,000 in the first quarter of 2005. Noninterest expense was $27.2 million for the three months ended March 31, 2005, as compared
to $22.8 million for the three months ended March 31, 2004. The overall increase primarily related to overall growth and
Sarbanes-Oxley Act compliance costs. Personnel expenses increased to $14.7
million for the three months ended March 31, 2005, up from $12.9 million for the three months ended
March 31, 2004, an increase of $1.8 million, or 14.1%. Occupancy expenses of $2.6 million are net
of rental income of $2.0 million for the three months ended March 31, 2005. Occupancy expenses of
$1.5 million are net of rental income of $1.5 million for the three months ended March 31, 2004.
The increased occupancy expenses resulted from branch expansions. Professional fees and contracted services were $2.5 million for the three months
ended March 31, 2005, compared with $1.5 million for the three months ended March 31, 2004.
Included in noninterest expense is core deposit intangible amortization of $284,000 for the three
months ended March 31, 2005, compared with $233,000 for the three months ended March 31, 2004. The
core deposit intangible was recorded in connection with the acquisitions of Bank of Canton of
California (BCC), the New York branch, and First Continental Bank (FCB). Miscellaneous expenses of $3.7 million for the
three months ended March 31, 2005, decreased $54,000, or 1.43%, compared with $3.8 million for the
three months ended March 31, 2004. 16




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##### Table of Contents



TREND ANALYSIS Although we have operated in California since 1974, we operated as a thrift until 1998. In
1998, we changed our charter to that of a commercial bank and began operating as a commercial bank.
Presented below are charts reflecting our growth trends since becoming a commercial bank. Following are graphs reflecting our total balance sheet, loan and deposit growth since 1998 as
of the end of the specified periods: (BAR GRAPH) (BAR GRAPH) 17




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##### Table of Contents



(BAR GRAPH) (BAR GRAPH) We have grown our balance sheet at a compounded rate of 19.4% since 1998. In 2002, we
acquired BCC, with assets of $1.55 billion, which accounts for the substantial increase in the
assets that year. In 2003, we acquired FCB with adjusted assets of $383.4 million. Without these
acquisitions, we would have grown our balance sheet at a compounded annualized rate of 12.8% since
1998. Our loans held in portfolio has grown at a compounded rate of 18.7% since 1998. Without the
acquisitions of BCC and FCB, the growth rate would have been 15.1%, compounded annually. Our deposits have grown at a compounded rate of 20.9% since 1998. Without the acquisitions of
BCC and FCB, the growth rate would have been 14.4%, compounded annually. Our core deposits have
grown at a rate of 34.3% since becoming a commercial bank. Without the acquisitions of BCC and
FCB, the growth rate would have been 30.4%, compounded annually. 18




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##### Table of Contents



Following is a table reflecting our asset quality since becoming a commercial bank as of the
end of the specified periods: Three MonthsEndedYear Ended December 31,
    
    
    March 31,1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005Charge-offs as a % of average loans
    
    
    0.05
    %
    
    
    0.07
    %
    
    
    0.02
    %
    
    
    0.00
    %
    
    
    0.23
    %
    
    
    0.06
    %
    
    
    0.11
    %
    
    
    0.01
    % (1)Loan delinquency ratio (30 days +)
    
    
    0.78
    %
    
    
    1.12
    %
    
    
    0.75
    %
    
    
    0.64
    %
    
    
    0.88
    %
    
    
    0.87
    %
    
    
    0.90
    %
    
    
    1.06
    %Ratio of nonperforming loans to total loans
held in portfolio
    
    
    0.41
    %
    
    
    0.27
    %
    
    
    0.13
    %
    
    
    0.04
    %
    
    
    0.15
    %
    
    
    0.16
    %
    
    
    0.31
    %
    
    
    0.37
    %Ratio of nonperforming loans to total assets
    
    
    0.32
    %
    
    
    0.23
    %
    
    
    0.11
    %
    
    
    0.03
    %
    
    
    0.10
    %
    
    
    0.10
    %
    
    
    0.20
    %
    
    
    0.25
    %
   (1)
    
    Annualized percentage We have maintained credit quality by adhering to our credit underwriting criteria. The
nonperforming loans at March 31, 2005, primarily consists of five nonperforming commercial real estate
loans totaling $11.3 million, and three nonperforming construction loans of $4.6 million. The chart below presents selected operating metrics of the Company since becoming a commercial
bank: Three MonthsEndedYear Ended December 31,
    
    
    March 31,1998
    
    
    1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005Return on average assets
    
    
    0.60
    %
    
    
    0.87
    %
    
    
    1.02
    %
    
    
    1.12
    %
    
    
    1.14
    %
    
    
    1.26
    %
    
    
    1.44
    %
    
    
    1.37
    %Return on average equity
    
    
    12.52
    %
    
    
    18.00
    %
    
    
    20.12
    %
    
    
    19.58
    %
    
    
    18.42
    %
    
    
    18.84
    %
    
    
    18.92
    %
    
    
    17.79
    %Efficiency ratio (1)
    
    
    60.32
    %
    
    
    49.74
    %
    
    
    45.70
    %
    
    
    46.79
    %
    
    
    46.94
    %
    
    
    41.83
    %
    
    
    41.60
    %
    
    
    42.91
    %Net interest margin (2).
    
    
    2.98
    %
    
    
    3.34
    %
    
    
    3.62
    %
    
    
    3.73
    %
    
    
    3.79
    %
    
    
    3.49
    %
    
    
    3.72
    %
    
    
    3.72
    %
   (1)
    
    Efficiency ratio represents total noninterest expense divided by the sum of net interest
income and total noninterest income.(2)
    
    Net interest margin represents net interest income divided by average interest-earning assets
and calculated on a tax equivalent basis. Our net interest margin improvement from 1998 results from continuing balance sheet
restructuring, as we have reduced the concentration in low yielding loans and increased core
deposits. Our ROA has increased accordingly since 1998. When we acquired BCC, we blended our 4.02%
margin with their 2.23% margin. BCC had a concentration of low interest yielding securities and
high interest costing certificates of deposit, which caused compression in the margin. Through
restructuring the BCC assets and deposits, we have improved our margin over time since the
acquisition in 2002. The reduction in ROA and ROE for the first quarter of 2005 compared with the full year of 2004
reflects the reduction in securities gains from $12.7 million in the full year of 2004 to $609,000
in the first quarter of 2005. The efficiency ratio for the first quarter of 2005 increased
accordingly. 19




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##### Table of Contents



Capital We have increased our capital since 1998 through the retention of earnings and the issuance of
new stock in conjunction with acquisitions. The charts below present our capital level, and the
Banks Tier I Leverage and Total Risk-Based Capital ratios since 1998. As of March 31, 2005, the
Bank met the well capitalized requirements under these guidelines. (BAR GRAPH) (BAR GRAPH) 20




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##### Table of Contents



(BAR GRAPH) We have declared dividends since 2000 and plan to continue dividend payments for the next
year. The chart below presents our dividend payments restated to reflect the effect of the
two-for-one stock splits of April 12, 2005, April 8, 2003, and April 11, 2001, on a per share basis
and in total since 1998. (BAR GRAPH) CORPORATE DEVELOPMENTS In April 2005, the Company announced that it opened two representative offices in Shenzhen,
China and Taipei, Taiwan, to further strengthen its ability to offer trade finance banking
services to its customers. Working in conjunction
with the Hong Kong branch, the new offices will enable the Banks ability to provide a
superior level of personalized service to customers with business interests in the Pacific Rim. CRITICAL ACCOUNTING POLICIES Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) and follow general industry practices.
The most significant accounting policies followed by the Company are presented in the Companys
most recent Annual Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC.
These policies, along with the disclosures presented in the other financial statement notes and in
this discussion and analysis, provide information on how significant assets and 21




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##### Table of Contents



liabilities are valued in the financial statements and how those values are determined. The
critical accounting policies include estimation techniques and judgments that are based on the
relevant variables and the Companys assumptions. A number of critical accounting policies are used in the preparation of the Consolidated
Financial Statements, which this discussion accompanies. The Use of Estimates.The preparation of the Consolidated Financial Statements in accordance
with GAAP requires management to make certain estimates and assumptions which affect the amounts of
reported assets and liabilities, as well as contingent assets and liabilities as of the date of
these financial statements. These estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting period(s). The Company has established detailed
policies and control procedures that are intended to ensure that valuation methods are well
controlled and applied consistently from period to period, unless actual results indicate a change
in estimate is required. Allowance for Loan Losses.The allowance for loan losses represents a reserve for probable
credit losses inherent in the commercial and consumer loan portfolios at the balance sheet date.
The methodology for calculating the allowance involves evaluation of the Companys historical
losses and management judgment of inherent losses in these portfolios, as well as an evaluation of
impaired loans. The Company uses a risk grading system to determine the credit quality of its loans. Loans
are reviewed to determine the obligors ability to fulfill its financial obligations to the
Company. The loss factors are applied to particular loan segments according to the severity of
classification or grade. Management believes the current risk grades assigned to loans are
appropriate. Whenever possible, the Company uses its own historical loss experience or independent
verifiable data to estimate the loss factors. Additionally, management evaluates the inherent
risks in the respective loan segment in determining the appropriate loss factor. The application
of these loss factors establishes the amount of the allowance for credit losses applicable to the
particular segments. Managements judgment is also applied when considering uncertainties based on
current macroeconomic conditions affecting the Companys existing portfolios. Furthermore, each impaired loan is evaluated individually. The evaluation includes an
assessment of the accounts collateral, marketability or other sources of repayment to establish an
appropriate reserve. The Company has and will continue to refine its allowance methodology as it improves its
processes and gathers additional data on customers. For the three months ended March 31, 2005, the
Company reduced the loan loss factors on the commercial real estate portfolio as a result of the
Company completing the review process of commercial real estate credits over $1.0 million. In
doing so, the Company determined that the inherent volatility risk in the portfolio was decreased
due to stronger identification, administration and action plan implementation on credits in the
commercial real estate portfolio. Included in other liabilities is approximately $3.9 million related to loan loss allowance for
unfunded loan commitments at March 31, 2005, and December 31, 2004. Excluding unfunded
commitments, the Companys allowance for loan losses was $57.5 million, or 1.32% of loans held in
portfolio, at March 31, 2005, compared to $56.5 million, or 1.39% of loans held in portfolio, at
December 31, 2004. In managements judgment, the estimate for allowance for loan losses is
adequate. 22




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##### Table of Contents



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 affected by
changes in interest rates and other market conditions. Losses not anticipated or greater than
anticipated could result if the Company sold one of these assets, subsequently discovering that its
estimate of fair value had been too high. Gains not anticipated or greater than anticipated could
result if the 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. Declines in fair value deemed
other-than-temporary that would result in a write-down of a security, if any, are reported in
noninterest expense. Goodwill and Other Intangible Assets:The Company establishes goodwill and other intangible
assets, including core deposit intangibles and capitalized servicing rights, by estimating the fair
value of assets and liabilities acquired using various valuation approaches, such as market value,
replacement costs and estimated cash flows for future periods. Additionally, the Company must
assess goodwill each year and other intangible assets each quarter for impairment. This assessment
involves reviewing or revising estimated cash flows for future periods. If the future cash flows
are materially less than the estimates, the Company would be required to take a charge against
earnings to write down the asset to the lower fair value. Mortgage servicing rights result from the sale of multifamily loans and SBA loans with the
servicing rights retained, and the securitization and retention of residential mortgage (one to
four family) and multifamily loans with the servicing rights retained. The market value for
servicing is based upon the coupon rates, maturity, and prepayment rates experienced for the
mortgages being serviced. The value of mortgage servicing rights is based on various assumptions
including prepayment speeds and discount rates. Income Taxes.The provision for income taxes is based on income reported for financial
statement purposes and differs from the amount of taxes currently payable, since certain income and
expense items are reported for financial statement purposes in different periods than those for tax
reporting purposes. The Company accounts for income taxes using the asset and liability approach, the objective of
which is to establish deferred tax assets and liabilities for the temporary differences between the
financial reporting basis and the tax basis of the Companys assets and liabilities at enacted tax
rates expected to be in effect when such amounts are realized or settled. A valuation allowance is
established for deferred tax assets if, based on the weight of available evidence, it is more
likely than not that some portion or all of the deferred tax assets will not be realized. A
valuation allowance is established, when necessary, to reduce the deferred tax assets to the amount
that is more likely than not to be realized. Alternative Methods of Accounting.The accounting and reporting policies of the Company are
in accordance with GAAP and conform to practices within the banking industry. When the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, in 1996 it elected to continue to use the method of
accounting for stock options which did not recognize compensation expense at the time options were
granted. As required by SFAS No. 123, pro forma amounts of compensation expense and the pro forma
effect on net income and earnings per share are disclosed each year, as if the Company had instead
elected to use the accounting method that recognizes compensation expense. The Company adopted
SFAS No. 148 Accounting for Stock-Based Compensation  Transition and Disclosure, during 2003.
The pro forma amounts of compensation expense and the pro forma effect on net income and earnings
per share are disclosed in Note 1 to the Consolidated Financial Statements using the Black-Scholes
model for pricing options. Had the Company elected to adopt the SFAS No. 123 fair value based
method of accounting instead of pro forma disclosure, additional compensation expense, as disclosed
in Note 1 to the Consolidated Financial Statements, would have been recognized. 23




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##### Table of Contents



Recent Accounting Pronouncements Note 2 to the Consolidated Financial Statements discusses new accounting policies adopted by
the Company during the financial periods presented and the expected impact of accounting policies
issued or proposed, but not yet required to be adopted. To the extent the adoption of new
accounting standards materially affects the Companys financial statements, the impacts are
discussed in the applicable sections of this financial review and Notes to the Consolidated
Financial Statements. Other-Than-Temporary Impairment and Its Application to Certain Investments. In March 2004,
the Financial Accounting Standards Board (FASB) approved the consensus reached on the Emerging
Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments. EITF Issue No. 03-1 clarifies the investment impairment
methodology for debt and equity securities within the scope of SFAS No. 115, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, and SFAS No. 124,
Accounting for Certain Investments Held by Not-For-Profit Organizations, and for equity
securities that are not subject to the scope of SFAS No. 115 and not accounted for under the equity
method under APB Opinion No. 18 and related interpretations (hereinafter referred to as cost
method investments). Certain disclosure requirements regarding investments accounted for under SFAS No. 115 and
SFAS No. 124 are effective for annual financial statements for fiscal years ending after December
31, 2003. These currently effective disclosure requirements have been adopted by the Company and
did not have a material impact on the financial condition or operating results of the Company.
Additional disclosure requirements regarding cost method investments are effective for annual
periods ending after June 15, 2004. The adoption of these disclosure requirements did not have a
material impact on the financial condition or operating results of the Company. In September 2004, the FASB issued a final FASB Staff Position (FSP), FSP EITF 03-1-1,
delaying the effective date of the measurement and recognition guidance indefinitely. Excluding
the deferred guidance, the adoption of EITF No. 03-01 did not have a material impact on the
financial condition or operating results of the Company. Accounting for Stock-Based Compensation. On December 16, 2004, the FASB issued SFAS No. 123R,
Share-Based Payment. SFAS No. 123R is a revision of SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123R eliminates the ability to account for share-based compensation
transactions using the intrinsic value method as prescribed under APB Opinion No. 25, Accounting
for Stock Issued to Employees, and requires that such transactions be accounted for using a fair
value-based method. SFAS No. 123R covers a wide range of share-based compensation arrangements
including share options, restricted share plans, performance-based awards, share appreciation
rights, and employee share purchase plans. SFAS No. 123R had not been scheduled to become
effective for the interim and annual periods beginning after June 15, 2005. However, in April
2005, the Securities and Exchange Commission amended Rule 4-01(a) of Regulation S-X to amend the
date for compliance with SFAS No. 123R, so that each registrant that is not a small business issuer
will be required to prepare financial statements in accordance with SFAS No. 123R beginning with
the first interim or annual reporting period of the registrants first fiscal year beginning on or
after June 15, 2005. Thus, SFAS No. 123R will not become effective for the Company until January
1, 2006. SFAS No. 123R may be adopted using one of two methods: (1) A modified perspective method in
which compensation cost is recognized beginning with the effective date (a) based on the
requirements of SFAS No. 123R for all share-based payments granted after the effective date and (b)
based on the requirements of SFAS No. 123 for all awards granted to employees prior to the
effective date of SFAS No. 123R that remain unvested on the effective date; (2) A modified
retrospective method which includes the requirements of the modified prospective method described
above, but also permits entities to restate based on the amounts previously recognized under SFAS
No. 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior
interim periods of the year of adoption. The adoption of SFAS No. 123R may have a material impact
on the Companys financial position and results of operation. 24




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##### Table of Contents



Accounting for Certain Loans or Debt Securities Acquired in a Transfer. In December 2003, the
American Institute of Certified Public Accountants (AICPA) issued Statement of Position 03-3
(SOP 03-3), which addresses accounting for loans or debt securities acquired in a transfer, and
the resulting differences between contractual cash flows and cash flows expected to be collected.
This SOP does not apply to loans originated by the Bank. This SOP limits the yield that may be
accreted to the excess of the investors estimate of undiscounted expected principal, interest, and
other cash flows over the investors initial investment in the loan. SOP 03-3 requires that the
excess of contractual cash flows over cash flows expected to be collected not be recognized as an
adjustment of yield, loss accrual, or valuation allowance. SOP 03-3 also prohibits carrying over
or creation of valuation allowances in the initial accounting of all loans acquired in a transfer
that are within the scope of this SOP. The prohibition of the valuation allowance carryover
applies to the purchase of individual loans, pools of loans and loans acquired in a purchase
business combination. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004.
For loans acquired in fiscal years beginning on or before December 15, 2004, decreases in cash
flows expected to be collected should be applied prospectively. The adoption of SOP 03-3 did not
have a material impact on the financial condition or operating results of the Company. RESULTS OF OPERATIONS General.Our main source of income is net interest income, which is the difference between
our interest income (generally interest paid to us by borrowers and paid on our investments) and
our interest expense (generally the interest we paid to depositors as well as interest we paid on
borrowings, such as loans from the Federal Home Loan Bank). Changes in the average amount of
interest-earning assets we hold (generally loans and investments) as well as in interest-bearing
liabilities we incur (generally deposits and other borrowings) during a period affect the amount of
net interest income we earn. Changes in the interest rates earned on loans and securities and paid
on deposits and other borrowings also affect our net interest income. We also earn noninterest income, which is generally made up of commercial banking fees and
other fees paid by our customers, and gains on sales of loans and securities. In addition to
interest expense, our income is impacted by noninterest expenses (primarily our personnel,
occupancy and professional fees), and our provision for loan losses. Other factors beyond our
control, such as economic and business conditions, competition from other financial institutions,
market fluctuations, changes in tax law and government regulation of financial institutions may
also significantly affect our results of operations. The Bank offers commercial deposit facilities and commercial loans. Included in the loans
offered are nonresidential real estate loans, commercial business loans, multifamily real estate
loans, construction loans, and small business loans. Through the consumer business division, the
Bank offers consumer deposit products including savings accounts, checking accounts and time
deposits. The consumer division also originates residential mortgage (one to four family) loans
and home equity lines of credit. The Bank originates commercial real estate loans for primary users, as well as for investors.
The Bank also originates multifamily mortgages, which are typically secured by five- to 50-unit
residential buildings, within its primary market areas. Loans secured by residential buildings in
excess of 50 units are underwritten pursuant to the Banks underwriting standards for commercial
nonresidential real estate loans. Both types of commercial real estate loans are generally
adjustable-rate or fixed-rate for an initial period of time and then become adjustable-rate loans.
Multifamily mortgages are generally amortized over 30 years and have balloon payments between 15 to
25 years. Commercial nonresidential real estate loans are generally amortized over 25 years and
have balloon payments between seven to ten years. Construction loans are originated primarily for the construction of entry-level and first-time
move-up housing within California or mixed-use properties. The Bank focuses on mid-tier builders.
Construction loans are generally prime based, are generally written for a one-year term and may
have up to a one-year renewal option. 25




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##### Table of Contents



The Bank provides commercial business loans to customers for working capital purposes for
accounts receivable and inventory, as well as loans to finance equipment. In addition, the Bank
offers small business loans, for which 75% of the principal balance is generally guaranteed by the
U.S. Small Business Administration. The Bank originates fixed-rate and adjustable-rate residential mortgage (one to four family)
loans within its primary market area. These loans are originated through its retail branches.
Such mortgage loans are originated primarily for owner-occupants. In addition to these residential
mortgage loans, the Bank offers home equity loans. The Bank originates home equity lines of credit secured by residential real estate. These
lines generally consist of floating rate loans tied to the prime rate. Operating Data and Ratios Following is a table of selected operating metrics for the three months ended March 31, 2005
and 2004 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Net income
    
    $
    21,806
    
    
    $
    19,819
    
    
    $
    1,987
    
    
    
    10.03
    %Diluted earnings per share
    
    $
    0.23
    
    
    $
    0.21
    
    
    $
    0.02
    
    
    
    9.52
    %Return on average assets
    
    
    1.37
    %
    
    
    1.42
    %
    
    (5
    ) bp
    
    
    (3.52
    )%Return on average equity
    
    
    17.79
    %
    
    
    18.45
    %
    
    (66
    ) bp
    
    
    (3.58
    )%Efficiency ratio
    
    
    42.91
    %
    
    
    40.45
    %
    
    246
    bp
    
    
    6.08
    %
 The consolidated net income of the Company for the three months ended March 31, 2005,
increased by $2.0 million, or 10.0%, to $21.8 million, compared to $19.8 million for the three
months ended March 31, 2004. The annualized return on average equity (ROE) and average assets
(ROA) ratios for the three months ended March 31, 2005, were 17.79% and 1.37%, respectively.
These amounts compare with annualized ROE and ROA ratios of 18.45% and 1.42%, respectively, for the
three months ended March 31, 2004. These ratios decreased primarily due to decreased securities
sales in the first quarter of 2005, compared with the first quarter of 2004. The efficiency ratio
was 42.91% for the three months ended March 31, 2005, compared with 40.45% for the three months
ended March 31, 2004. The efficiency ratio increase also relates to the securities sales
referenced above. Diluted earnings per common share on a post-split basis were $0.23 for the three
months ended March 31, 2005, compared with $0.21 for the three months ended March 31, 2004. Following is a table of selected operating metrics for the three months ended March 31, 2004
and 2003 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2004
    
    
    2003
    
    
    $/Basis Points
    
    
    %Net income
    
    $
    19,819
    
    
    $
    13,928
    
    
    $
    5,891
    
    
    
    42.30
    %Diluted earnings per share
    
    $
    0.21
    
    
    $
    0.16
    
    
    $
    0.05
    
    
    
    31.25
    %Return on average assets
    
    
    1.42
    %
    
    
    1.16
    %
    
    26
    bp
    
    
    22.41
    %Return on average equity
    
    
    18.45
    %
    
    
    19.22
    %
    
    (77
    ) bp
    
    
    (4.01
    )%Efficiency ratio
    
    
    40.45
    %
    
    
    46.03
    %
    
    (558
    ) bp
    
    
    (12.12
    )%
 The consolidated net income of the Company during the three months ended March 31, 2004,
increased by $5.9 million, or 42.3%, to $19.8 million, compared to $13.9 million for the three
months ended March 31, 2003. The annualized ROE and ROA ratios for the three months ended March
31, 2004, were 18.45% and 1.42%, respectively. These amounts compare with annualized ROE and ROA
ratios of 19.22% and 1.16%, respectively, for the three months ended March 31, 2003. ROA improved
primarily due to higher net income. ROE primarily decreased due to higher average equity in the
current quarter. The efficiency ratio was 40.45% for the three months ended March 31, 2004,
compared with 46.03% for the corresponding period of the preceding year. Diluted earnings per
common share on a post-split basis were $0.21 for the three months ended March 31, 2004, compared
with $0.16 for the three months ended March 31, 2003. 26




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##### Table of Contents



Net Interest Income and Net Interest Margin Following is a table of selected ratios that reflect the changes in net interest income for
the Company for the three months ended March 31, 2005 and 2004 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Net interest income before provision for loan losses
    
    $
    55,366
    
    
    $
    49,540
    
    
    $
    5,826
    
    
    
    11.76
    %Net interest margin (1)
    
    
    3.72
    %
    
    
    3.74
    %
    
    (2
    ) bp
    
    
    (0.53
    )%Average yield on loans (2)
    
    
    5.90
    %
    
    
    5.51
    %
    
    39
    bp
    
    
    7.08
    %Average yield on securities
    
    
    4.44
    %
    
    
    4.38
    %
    
    6
    bp
    
    
    1.37
    %Average cost of deposits
    
    
    1.69
    %
    
    
    1.30
    %
    
    39
    bp
    
    
    30.00
    %Average cost of borrowings
    
    
    4.08
    %
    
    
    3.56
    %
    
    52
    bp
    
    
    14.61
    %
   (1)
    
    Calculated on a tax equivalent basis.(2)
    
    Includes loans held for sale. Net interest income before provision for loan losses of $55.4 million for the three months
ended March 31, 2005, represented a $5.8 million, or 11.8%, increase over net interest income of
$49.5 million for the three months ended March 31, 2004. The increase in net interest income was
primarily due to a $679.1 million increase in the average balance of interest earning assets, which
resulted primarily from organic loan growth. The average cost of deposits increased 39 basis
points from 1.30% for the three months ended March 31, 2004, to 1.69% for the three months ended
March 31, 2005, as a result of the increase in market interest rates during the past twelve months.
This was offset by a 39 basis point increase in average loan yields from 5.51% for the three
months ended March 31, 2004, to 5.90% for the three months ended March 31, 2005. Loan yield
reflects repricing of adjustable-rate loans resulting from increases in market interest rate
indices. The securities yield increased from 4.38% for the three months ended March 31, 2004, to
4.44% for the three months ended March 31, 2005. The increase in the securities yield reflects
higher-yielding securities due to the higher market interest rate environment. The net interest margin, calculated on a tax equivalent basis, was 3.72% for the three months
ended March 31, 2005, as compared to 3.74% for the three months ended March 31, 2004. 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 net interest margin reflects the increased cost of money market
accounts and certificates of deposit resulting from higher market interest rates, partially offset
by the favorable impact of growing higher yielding commercial loans and noninterest-bearing
deposits and increased securities yields. Following is a table of selected ratios that reflects the dynamics of the net interest income
for the Company for the three months ended March 31, 2004 and 2003 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2004
    
    
    2003
    
    
    $/Basis Points
    
    
    %Net interest income before provision for loan losses
    
    $
    49,540
    
    
    $
    39,299
    
    
    $
    10,241
    
    
    
    26.06
    %Net interest margin(1)
    
    
    3.74
    %
    
    
    3.48
    %
    
    26
    bp
    
    
    7.47
    %Average yield on loans(2)
    
    
    5.51
    %
    
    
    5.76
    %
    
    (25
    ) bp
    

    
    (4.34
    )%Average yield on securities
    
    
    4.38
    %
    
    
    4.83
    %
    
    (45
    ) bp
    
    
    (9.32
    )%Average cost of deposits
    
    
    1.30
    %
    
    
    1.79
    %
    
    (49
    ) bp
    
    
    (27.37
    )%Average cost of borrowings
    
    
    3.56
    %
    
    
    4.34
    %
    
    (78
    ) bp
    
    
    (17.97
    )%
   (1)
    
    Calculated on a tax equivalent basis.(2)
    
    Includes loans held for sale. 27




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##### Table of Contents



Net interest income before provision for loan losses of $49.5 million for the three months
ended March 31, 2004, represented a $10.2 million, or 26.1%, increase over net interest income of
$39.3 million for the three months ended March 31, 2003. The increase in net interest income
reflects the growth in interest earning assets, primarily in the Companys loan portfolio, coupled
with a 26 basis point improvement in the net interest margin. The average cost of deposits
decreased 49 basis points from 1.79% for the three months ended March 31, 2003, to 1.30% for the
three months ended March 31, 2004. This savings was partially offset by a 25 basis point decrease
in average loan yields from 5.76% for the three months ended March 31, 2003, to 5.51% for the three
months ended March 31, 2004. The decline in all areas reflects the decline in the overall rate
environment from early 2003. Loan yield reflects the repricing of adjustable-rate loans resulting
from reductions in market interest rate indices, plus the impact of accelerated prepayments on
higher-yielding loans due to the lower market interest rates. The securities yield decreased from
4.83% for the three months ended March 31, 2003, to 4.38% for the three months ended March 31,
2004. The decline in the securities yield reflects the prepayments 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. The net interest margin, calculated on a tax equivalent basis, was 3.74% for the three months
ended March 31, 2004, as compared to 3.48% for the three months ended March 31, 2003. 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 increase in the net interest margin reflects the favorable impact of increasing
loans while decreasing the cost of deposits. The following is a table reflecting selected average balances of the Companys assets and
liabilities for the three months ended March 31, 2005 and 2004 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average interest-earning assets
    
    $
    6,113,242
    
    
    $
    5,434,095
    
    
    $
    679,147
    
    
    
    12.50
    %Average interest-bearing liabilities
    
    
    5,355,161
    
    
    
    4,793,790
    
    
    
    561,371
    
    
    
    11.71
    %Average loans outstanding, including loans held for sale
    
    
    4,513,691
    
    
    
    3,841,443
    
    
    
    672,248
    
    
    
    17.50
    %Average securities outstanding
    
    
    1,511,488
    
    
    
    1,589,275
    
    
    
    (77,787
    )
    
    
    (4.89
    )%Average outstanding deposits
    
    
    5,218,458
    
    
    
    4,537,084
    
    
    
    681,374
    
    
    
    15.02
    %Average outstanding borrowings
    
    
    419,297
    
    
    
    457,845
    
    
    
    (38,548
    )
    
    
    (8.42
    )%
 The following table presents the composition of the Banks average loan portfolio, including
loans held for sale, for the three months ended March 31, 2005 and 2004 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average commercial loans
    
    $
    4,012,376
    
    
    $
    3,513,210
    
    
    $
    499,166
    
    
    
    14.21
    %Average consumer loans
    
    
    501,315
    
    
    
    328,233
    
    
    
    173,082
    
    
    
    52.73
    %Average gross loans
    
    $
    4,513,691
    
    
    $
    3,841,443
    
    
    $
    672,248
    
    
    
    17.50
    %
 The following table presents components of the Banks average outstanding deposits for the
three months ended March 31, 2005 and 2004 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Average noninterest-bearing deposits
    
    $
    418,594
    
    
    $
    337,139
    
    
    $
    81,455
    
    
    
    24.16
    %Average interest-bearing deposits
    
    
    4,799,864
    
    
    
    4,199,945
    
    
    
    599,919
    
    
    
    14.28
    %Total average outstanding deposits
    
    $
    5,218,458
    
    
    $
    4,537,084
    
    
    $
    681,374
    
    
    
    15.02
    %
 28




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##### Table of Contents



The increase of $679.1 million on average earning assets for the three months ended March 31,
2005 resulted primarily from organic commercial loan growth. Average outstanding loans increased
by $672.2 million for the three months ended March 31, 2005 from the same period last year as a
result of the Banks continued focus on commercial lending activities. Average commercial loan
balances increased $499.2 million for the three months ended March 31, 2005 as compared to the
corresponding period of 2004. This increase is primarily due to the Banks continued emphasis on
commercial real estate and commercial business loans, and expansion of its Hong Kong branch.
Average consumer loans for the three months ended March 31, 2005 increased slightly from the same
period in 2004. New loan commitments of $801.6 million for the three months ended March 31, 2005
were comprised of $748.4 million in commercial and $53.2 million in consumer commitments. Average securities were $1.51 billion for the three months ended March 31, 2005, were down
from $1.59 billion for the three months ended March 31, 2004, a decrease of $77.8 million, or 4.9%.
Securities prepayments and maturities were partially replaced with new securities purchases. The
general level of rates increased; however, there were still prepayments and maturities. The
long-term goal is to reduce the securities portfolio to a range of 10% to 15% of the balance sheet. Average total deposits increased $681.4 million to $5.22 billion for the three months ended
March 31, 2005, up from $4.54 billion for the three months ended March 31, 2004, a result of the
Companys ongoing focus on the generation of commercial and consumer demand deposits. Average
interest-bearing deposits increased to $4.80 billion for the three months ended March 31, 2005, up
from $4.20 billion for the three months ended March 31, 2004, and average noninterest-bearing
deposits increased to $418.6 million for the three months ended March 31, 2005, up from $337.1
million for the three months ended March 31, 2004. The following is a table reflecting selected average balances of the Companys assets and
liabilities for the three months ended March 31, 2004 and 2003 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2004
    
    
    2003
    
    
    $
    
    
    %Average interest-earning assets
    
    $
    5,434,095
    
    
    $
    4,611,636
    
    
    $
    822,459
    
    
    
    17.83
    %Average interest-bearing liabilities
    
    
    4,793,790
    
    
    
    4,203,021
    
    
    
    590,769
    
    
    
    14.06
    %Average loans outstanding, including loans held for sale
    
    
    3,841,443
    
    
    
    3,067,193
    
    
    
    774,250
    
    
    
    25.24
    %Average securities outstanding
    
    
    1,589,275
    
    
    
    1,541,838
    
    
    
    47,437
    
    
    
    3.08
    %Average outstanding deposits
    
    
    4,537,084
    
    
    
    3,993,758
    
    
    
    543,326
    
    
    
    13.60
    %Average outstanding borrowings
    
    
    457,845
    
    
    
    329,905
    
    
    
    127,940
    
    
    
    38.78
    %
 The following table presents the composition of the Banks average loan portfolio, including
loans held for sale, for the three months ended March 31, 2004 and 2003 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2004
    
    
    2003
    
    
    $
    
    
    %Average commercial loans
    
    $
    3,513,210
    
    
    $
    2,707,160
    
    
    $
    806,050
    
    
    
    29.77
    %Average consumer loans
    
    
    328,233
    
    
    
    360,033
    
    
    
    (31,800
    )
    
    
    (8.83
    )%Average gross loans
    
    $
    3,841,443
    
    
    $
    3,067,193
    
    
    $
    774,250
    
    
    
    25.24
    %
 29




---



##### Table of Contents



The following table presents components of the Banks average outstanding deposits for the
three months ended March 31, 2004 and 2003 (dollars in thousands): Three Months Ended March 31,
    
    
    Increase (Decrease)2004
    
    
    2003
    
    
    $
    
    
    %Average noninterest-bearing deposits
    
    $
    337,139
    
    
    $
    256,642
    
    
    $
    80,497
    
    
    
    31.37
    %Average interest-bearing deposits
    
    
    4,199,945
    
    
    
    3,737,116
    
    
    
    462,829
    
    
    
    12.38
    %Total average outstanding deposits
    
    $
    4,537,084
    
    
    $
    3,993,758
    
    
    $
    543,326
    
    
    
    13.60
    %
 Average outstanding loans increased to $3.84 billion for the three months ended March 31,
2004, from $3.07 billion for the three months ended March 31, 2003, an increase of $744.3 million,
or 25.2%, as a result of the Banks continued focus on commercial lending activities, and the FCB
acquisition. Average commercial loan balances increased $806.1 million to $3.51 billion for the
three months ended March 31, 2004, up from $2.71 billion for the three months ended March 31, 2003.
Average consumer loans decreased $31.8 million to $328.2 million for the three months ended March
31, 2004, down from $360.0 million for the three months ended March 31, 2003, primarily due to the
Banks securitization activity in the residential mortgage portfolio in the fourth quarter of 2004.
New loan commitments of $503.4 million for the three months ended March 31, 2004, comprised $456.8
million in commercial and $46.6 million in consumer commitments. Average securities increased slightly to $1.59 billion for the three months ended March 31,
2004, up from $1.54 billion for the three months ended March 31, 2003, an increase of $47.4
million, or 3.1%. This increase was primarily due to purchases that occurred early in the quarter.
Securities runoff which accelerated with the lower market interest rate environment was
substantially replaced with new securities purchases. During the first three months of 2004, the
Company also sold securities with an aggregate principal balance of $382.5 million. Such
securities were sold to protect the Company from both accelerating prepayments and from increases
in market interest rates. The Companys restructuring strategy was to replace securities that have
high prepayment and extension risk with shorter-dated securities with less prepayment and extension
risk. Average total deposits increased $543.3 million to $4.54 billion for the three months ended
March 31, 2004, up from $3.99 billion three months ended March 31, 2003, a result of the Companys
ongoing focus on the generation of commercial and consumer demand deposits and the FCB acquisition.
Average interest-bearing deposits increased to $4.20 billion for the three months ended March 31,
2004, up from $3.74 billion for the three months ended March 31, 2003, and average
noninterest-bearing deposits increased to $337.1 million for the three months ended March 31, 2004,
up from $256.6 million for the three months ended March 31, 2003. 30




---



##### Table of Contents



The following table presents the distribution of our average assets and liabilities, and
stockholders equity, as well as the total dollar amounts of interest income from average
interest-earning assets, and the resultant yields and dollar amounts of interest expense of average
interest-bearing liabilities, expressed both in dollars and rates for the three months ended March
31, 2005, 2004 and 2003 (dollars in thousands): Three Months Ended March 31,2005
    
    
    2004
    
    
    2003Interest
    
    
    
    
    
    
    
    
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income or
    
    
    Average
    
    
    Average
    
    
    Income or
    
    
    Average
    
    
    Average
    
    
    Income or
    
    
    AverageBalance
    
    
    Expense
    
    
    Yield/Cost
    
    
    Balance
    
    
    Expense
    
    
    Yield/Cost
    
    
    Balance
    
    
    Expense
    
    
    Yield/CostInterest-earning assetsLoans(1)(5)
    
    $
    4,513,691
    
    
    $
    66,625
    
    
    
    5.90
    %
    
    $
    3,841,443
    
    
    $
    52,894
    
    
    
    5.51
    %
    
    $
    3,067,193
    
    
    $
    44,174
    
    
    
    5.76
    %Securities(6)
    
    
    1,511,488
    
    
    
    16,759
    
    
    
    4.44
    
    
    
    1,589,275
    
    
    
    17,408
    
    
    
    4.38
    
    
    
    1,541,838
    
    
    
    18,600
    
    
    
    4.83Other
    
    
    88,063
    
    
    
    638
    
    
    
    2.90
    
    
    
    3,377
    
    
    
    14
    
    
    
    1.78
    
    
    
    2,605
    
    
    
    8
    
    
    
    1.23Total interest-earning assets
    
    
    6,113,242
    
    
    
    84,022
    
    
    
    5.50
    
    
    
    5,434,095
    
    
    
    70,316
    
    
    
    5.18
    
    
    
    4,611,636
    
    
    
    62,782
    
    
    
    5.45Noninterest-earning assets
    
    
    232,251
    
    
    
    
    
    
    
    
    
    
    
    165,191
    
    
    
    
    
    
    
    
    
    
    
    199,719
    
    
    
    Total assets
    
    $
    6,345,493
    
    
    $
    84,022
    
    
    
    5.30
    
    
    $
    5,599,286
    
    
    $
    70,316
    
    
    
    5.02
    
    
    $
    4,811,355
    
    
    $
    62,782
    
    
    
    5.22Interest-bearing liabilities:Deposits:NOW, checking and money
market accounts
    
    $
    979,227
    
    
    $
    3,446
    
    
    
    1.41
    
    
    $
    739,857
    
    
    $
    1,766
    
    
    
    0.95
    
    
    $
    554,027
    
    
    $
    1,717
    
    
    
    1.24Savings accounts
    
    
    950,252
    
    
    
    2,465
    
    
    
    1.04
    
    
    
    874,338
    
    
    
    1,672
    
    
    
    0.77
    
    
    
    705,172
    
    
    
    1,850
    
    
    
    1.05Time deposits
    
    
    2,870,385
    
    
    
    16,150
    
    
    
    2.25
    
    
    
    2,585,750
    
    
    
    11,308
    
    
    
    1.75
    
    
    
    2,477,917
    
    
    
    14,324
    
    
    
    2.31Total interest-bearing
deposits
    
    
    4,799,864
    
    
    
    22,061
    
    
    
    1.84
    
    
    
    4,199,945
    
    
    
    14,746
    
    
    
    1.40
    
    
    
    3,737,116
    
    
    
    17,891
    
    
    
    1.91Borrowings
    
    
    419,297
    
    
    
    4,281
    
    
    
    4.08
    
    
    
    457,845
    
    
    
    4,077
    
    
    
    3.56
    
    
    
    329,905
    
    
    
    3,583
    
    
    
    4.34Subordinated debentures
    
    
    136,000
    
    
    
    2,314
    
    
    
    6.81
    
    
    
    136,000
    
    
    
    1,953
    
    
    
    5.74
    
    
    
    136,000
    
    
    
    2,009
    
    
    
    5.91Total interest-bearing
liabilities
    
    
    5,355,161
    
    
    
    28,656
    
    
    
    2.14
    
    
    
    4,793,790
    
    
    
    20,776
    
    
    
    1.73
    
    
    
    4,203,021
    
    
    
    23,483
    
    
    
    2.23Noninterest-bearing deposits
    
    
    418,594
    
    
    
    
    
    
    
    
    
    
    
    337,139
    
    
    
    
    
    
    
    
    
    
    
    256,642Other noninterest-bearing
liabilities
    
    
    81,399
    
    
    
    
    
    
    
    
    
    
    
    38,790
    
    
    
    
    
    
    
    
    
    
    
    61,827Stockholders equity
    
    
    490,339
    
    
    
    
    
    
    
    
    
    
    
    429,567
    
    
    
    
    
    
    
    
    
    
    
    289,865Total liabilities and
stockholders equity
    
    $
    6,345,493
    
    
    
    
    
    
    
    
    
    
    $
    5,599,286
    
    
    
    
    
    
    
    
    
    
    $
    4,811,355Net interest income/net
interest rate spread(2)(4)
    
    
    
    
    
    $
    55,366
    
    
    
    3.36
    %
    
    
    
    
    
    $
    49,540
    
    
    
    3.44
    %
    
    
    
    
    
    $
    39,299
    
    
    
    3.21
    %Net interest-earning
assets/net interest
margin(3)(4)
    
    $
    758,081
    
    
    
    
    
    
    
    3.62
    %
    
    $
    640,305
    
    
    
    
    
    
    
    3.65
    %
    
    $
    408,615
    
    
    
    
    
    
    
    3.41
    %Ratio of interest-earning
assets to interest-bearing
liabilities
    
    
    1.14x
    
    
    
    
    
    
    
    
    
    
    
    1.13x
    
    
    
    
    
    
    
    
    
    
    
    1.10x
   (1)
    
    Nonaccrual loans are included in the table for computation purposes, but interest for such
loans is included on a cash basis.(2)
    
    Interest rate spread represents the difference between the average yield on interest-earning
assets and the average cost of interest-bearing liabilities.(3)
    
    Net interest margin represents net interest income divided by average interest-earning
assets.(4)
    
    Calculated on a non-tax equivalent basis.(5)
    
    Average loans balance includes loans held for sale.(6)
    
    Average yield on investment securities is computed using historical cost balances; the yield
information does not give effect to changes in fair value that are reflected as a component of
stockholders equity. Allowance and Provision for Loan Losses The Company uses a systematic methodology in accordance with GAAP to calculate its allowance
for loan losses. This methodology involves significant judgments. See the Impact of Critical
Accounting Policies section under this Item for a discussion on the methodology. Through
application of this methodology, which takes into account our loan portfolio mix, credit quality,
loan growth, the amount and trends relating to our delinquent and nonperforming loans, regulatory
policies, general economic conditions and other factors relating to the collectibility of loans in
our portfolio, we determine the appropriateness of our allowance for loan losses, which is adjusted
by quarterly provisions charged against earnings. 31




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##### Table of Contents



Total nonperforming assets as of March 31, 2005 were $16.2 million, or 0.25%, reflecting
managements continued focus on maintaining high credit quality assets. This compares with total
nonperforming assets of $12.6 million, or 0.20%, at December 31, 2004. Net loan charge-offs were
$107,000 for the quarter ended March 31, 2005, compared with net loan charge-offs of $733,000 for
the corresponding quarter of the prior year. Annualized net loan charge-offs for the first quarter
of 2005 was 0.01%, compared with 0.08% for the corresponding quarter of 2004. The ratio of allowance for loan losses was 1.32% at March 31, 2005, compared with 1.39% at
December 31, 2004. The allowance for loan losses was $57.5 million at March 31, 2005, compared
with $56.5 million at December 31, 2004. The increase in the allowance for loan losses reflects
the growth in the loan portfolio and the increase in commercial loans during the first quarter of
2005. During the first quarter of 2005, the Bank continued its ongoing process of reviewing its
loan portfolio by evaluating the loss factors and current economic conditions in light of its own
historical loss experience, loan delinquency and classification in determining the adequate level
of allowance for loan losses. In addition, the Bank experienced significantly lower net loan
charge-offs during the first quarter of 2005, when compared with the net loan charge-offs for the
first quarter of 2004. Accordingly, the Company provided $1.2 million for loan losses in the first
quarter of 2005, compared with $2.2 million in the first quarter of 2004. Noninterest Income The following table presents the composition of our noninterest income for the periods
indicated (dollars in thousands): Three Months Ended March 31,2005
    
    
    2004
    
    
    2003Commercial banking and other fees
    
    $
    2,348
    
    
    $
    1,869
    
    
    $
    1,657Service charges on deposits
    
    
    664
    
    
    
    616
    
    
    
    507Gain on sale of securities, net
    
    
    609
    
    
    
    3,861
    
    
    
    1,031Gain on sale of multifamily loans
    
    
    3,752
    
    
    
    
    
    
    
    Gain on sale of SBA loans, net
    
    
    1,084
    
    
    
    511
    
    
    
    517Equity loss in other equity investments
    
    
    (411
    )
    
    
    
    
    
    
    Total noninterest income
    
    $
    8,046
    
    
    $
    6,857
    
    
    $
    3,712
 Noninterest income increased by 17.3% to $8.0 million for the three months ended March 31,
2005, compared with noninterest income of $6.9 million for the three months ended March 31, 2004.
This increase resulted from: a) $3.8 million of gains on sales of multifamily loans in the first
quarter of 2005, compared with no gains on sales of multifamily loan sales in the corresponding
quarter of 2004; b) an increase of $479,000, or 25.6%, in commercial banking fees due to increased
trade finance activity; and c) an increase of $573,000, or 112.1%, in gain on sale of SBA loans in
the first quarter of 2005, compared with the first quarter of 2004. These gains were partially
offset by a decrease in the gain on sale of securities from $3.9 million in the first quarter of
2004, compared with a gain on sale of securities of $609,000 in the first quarter of 2005. Noninterest income for the three months ended March 31, 2004, was $6.9 million compared to
$3.7 million for the three months ended March 31, 2003, an increase of $3.1 million, or 84.7%,
primarily as a result of an increase in commercial banking and other fees and gains from sale of
loans and securities. Commercial banking and other fees increased 12.8% to $1.9 million for the
three months ended March 31, 2004, as compared to $1.7 million for the three months ended March 31,
2003, a result of increased commercial banking activities, primarily in trade finance business.
Gains on sale of loans and securities increased by 182.4% to $4.4 million for the three months
ended March 31, 2004, compared with $1.5 million for the three months ended March 31, 2003. Gains
from sale of SBA loans for the three months ended March 31, 2004 were $511,000 compared to $517,000
for the three months ended March 31, 2003. Gains recognized on sale of securities were $3.9
million and $1.0 million for the three months ended March 31, 2004 and 2003, respectively. 32




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##### Table of Contents



Noninterest Expense The following table presents the composition of our noninterest expense for the three months
ended March 31, 2005, 2004 and 2003 (dollars in thousands): Three Months Ended March 31,2005
    
    
    2004
    
    
    2003Personnel
    
    $
    14,740
    
    
    $
    12,915
    
    
    $
    11,125Occupancy
    
    
    2,646
    
    
    
    1,546
    
    
    
    1,191Data processing
    
    
    1,624
    
    
    
    1,294
    
    
    
    1,121Furniture and equipment depreciation
    
    
    1,246
    
    
    
    1,029
    
    
    
    767Professional fees and contracted services
    
    
    2,509
    
    
    
    1,523
    
    
    
    1,665Deposit insurance
    
    
    188
    
    
    
    205
    
    
    
    164Communication
    
    
    257
    
    
    
    296
    
    
    
    239Core deposit intangible amortization
    
    
    284
    
    
    
    233
    
    
    
    595Miscellaneous expense
    
    
    3,719
    
    
    
    3,773
    
    
    
    2,933Total noninterest expense
    
    $
    27,213
    
    
    $
    22,814
    
    
    $
    19,800Efficiency ratio
    
    
    42.91
    %
    
    
    40.45
    %
    
    
    46.03
    %Noninterest expenses to average assets
    
    
    1.72
    %
    
    
    1.63
    %
    
    
    1.65
    %
 Our noninterest expenses increased 19.3% to $27.2 million for the three months ended March 31,
2005, compared with $22.8 million for the three months ended March 31, 2004. The increase resulted
primarily from an increase in personnel expenses, occupancy expenses, and professional fees and
contracted services. For the three months ended March 31, 2005, personnel expenses increased to
$14.7 million from $12.9 million for the three months ended March 31, 2004, as a result of
additional staffing required to support the growth of the Banks commercial banking business, the
expansion of the Hong Kong branch, the opening of new branches in California and New York, and the
expansion of the Banks infrastructure to support a larger and growing organization. Occupancy
expenses increased to $2.6 million for the three months ended March 31, 2005, from $1.5 million for
the three months ended March 31, 2004, as a result of the opening of the branches in California,
New York, and representative offices in Shenzhen, China and Taipei, Taiwan, the relocation of the
San Francisco headquarters and the expansion of the Hong Kong branch. Also, for the three months
ended March 31, 2005, occupancy expenses reflect a full quarter of occupancy expenses of the new
branches and representative offices opened in the latter part of 2004. Professional fees and
contracted services increased by 64.7% to $2.5 million for the three months ended March 31, 2005,
from $1.5 million for the three months ended March 31, 2004, predominantly as a result of
professional fees, primarily accounting fees, associated with the Sarbanes-Oxley Act compliance
costs. Noninterest expense was $22.8 million for the three months ended March 31, 2004, as compared
to $19.8 million for the three months ended March 31, 2003. Personnel expenses increased to $12.9
million for the three months ended March 31, 2004, up from $11.1 million for the three months ended
March 31, 2003, an increase of $1.8 million, or 16.1%. This increase was primarily due to the
additional staffing resulting from the FCB acquisition and staffing required to support continued
growth of the Banks commercial banking business. Occupancy expenses of $1.5 million are net of
rental income of $1.5 million for the three months ended March 31, 2004. Occupancy expenses of
$1.2 million are net of rental income of $1.6 million for the three months ended March 31, 2003.
The increased occupancy expenses resulted from the FCB acquisition and branch expansion.
Professional fees and contracted services were $1.5 million for the three months ended March 31,
2004, compared with $1.7 million for the three months ended March 31, 2003. Included in
noninterest expense is core deposit intangible amortization of $233,000 for the three months ended
March 31, 2004, compared with $595,000 for the three months ended March 31, 2003. The core deposit
intangible was recorded in connection with the acquisitions of BCC, the New York branch, and FCB.
Miscellaneous expenses of $3.8 million for the three months ended March 31, 2004 increased
$840,000, or 28.6%, compared with $2.9 million for the three months ended March 31, 2003. The
increase primarily related to additional expenses as a result of the FCB acquisition and overall
growth. 33




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##### Table of Contents



Provision for Income Taxes The provision for income taxes was $13.2 million and $11.6 million on the income before taxes
of $35.0 million and $31.4 million for the three months ended March 31, 2005 and 2004,
respectively. The effective tax rate for the three months ended March 31, 2005, was 37.71%,
compared with 36.90% for the three months ended March 31, 2004. These rates are lower than the
combined federal and state statutory rate of 42.05%, primarily due to federal and state tax credits
and incentives, and tax-exempt income. The American Jobs Creation Act of 2004 (AJCA), which was signed by the President of the
United States of America on October 22, 2004, allows the Company, upon satisfaction of certain
conditions, to repatriate reinvested foreign earnings, as defined by new Section 965 of the
Internal Revenue Code (IRC) of 1986 (as amended), at an effective tax rate of 5.25%. As of April 21, 2005, the Company is considering a repatriation of up to $30 million of
unremitted earnings and may record an income tax benefit of between $0 and $3.9 million as a result
of the above mentioned repatriation provision for the calendar year ending December 31, 2005. As
the Company has not yet completed the analysis necessary to determine the amount, if any, of the
repatriation of foreign earnings subject to Section 965, no effect of any such repatriation has
been reflected in its financial statements as of March 31, 2005. The Company expects to complete
its evaluation of the effects of the repatriation no later than the third quarter of 2005. Financial Position The following table outlines the Companys loans, securities and total assets at March 31,
2005, and December 31, 2004 (dollars in thousands): March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Total loans held in portfolio
    
    $
    4,362,231
    
    
    $
    4,050,741
    
    
    $
    311,490
    
    
    
    7.69
    %Securities
    
    $
    1,483,479
    
    
    $
    1,494,342
    
    
    $
    (10,863
    )
    
    
    (0.73
    )%Total assets
    
    $
    6,488,772
    
    
    $
    6,315,681
    
    
    $
    173,091
    
    
    
    2.74
    %
 The Company experienced continued asset and core deposit growth for the three months ended
March 31, 2005. The increase of $173.1 million in total assets from December 31, 2004, to March
31, 2005, was primarily related to increases in the loan portfolio. During the three months ended March 31, 2005, total loans held in portfolio increased by
$311.5 million. This growth resulted primarily from an organic increase in commercial loans from
the Banks continuing focus on originating such loans. Total commercial loans grew to $3.86
billion at March 31, 2005, up from $3.58 billion at December 31, 2004, as a result of new
commercial loan commitments of $748.4 million for the three months ended March 31, 2005, due to
continued loan generation efforts, partially offset by principal repayments, and loan sales.
Consumer loans increased to $506.8 million at March 31, 2005, from $482.2 million at December 31,
2004, primarily due to organic growth. As a result of favorable market conditions and continued marketing efforts, the Company experienced a higher level of new loan
commitments; $801.6 million for the three months ended March 31, 2005, which was composed of $748.4
million in commercial loan commitments and $53.2 million in consumer commitments. The securities balance (including the available-for-sale and held-to-maturity portfolios)
decreased by $10.9 million from December 31, 2004, to March 31, 2005. This was primarily the
result of sales of $25.7 million, principal repayments and securities calls of $41.8 million, and
maturities and payoffs of $271.7 million, partially offset by purchases of $303.1 million for the
three months ended March 31, 2005. 34




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##### Table of Contents



Loan Quality Data and Ratios The following table outlines certain information regarding the Companys allowance for loan
losses, past due and nonperforming loans at March 31, 2005, and December 31, 2004: March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $/Basis Points
    
    
    %Allowance for loan losses
    
    $
    57,547
    
    
    $
    56,472
    
    
    $
    1,075
    
    
    
    1.90
    %Allowance for loan losses to loans held in portfolio
    
    
    1.32
    %
    
    
    1.39
    %
    
    (7
    ) bp
    
    
    (5.04
    )%Past due loans to total loans held in portfolio
    
    
    1.06
    %
    
    
    0.90
    %
    
    16
    bp
    
    
    17.78
    %Nonperforming loans/assets
    
    $
    16,151
    
    
    $
    12,574
    
    
    $
    3,577
    
    
    
    28.45
    %Nonperforming assets to total assets
    
    
    0.25
    %
    
    
    0.20
    %
    
    5
    bp
    
    
    25.00
    %
 The allowance for loan losses increased by $1.1 million from December 31, 2004, to March 31,
2005, due to loan originations, partially offset by the Banks continued quarterly re-evaluation
process as previously disclosed in the Allowance and Provision for Loan Losses section under
Results of Operations. The following table shows the composition of our loan portfolio by amount and percentage of
total gross loans in each major loan category in the commercial banking business at March 31, 2005,
and December 31, 2004 (dollars in thousands): March 31, 2005
    
    
    December 31, 2004Amount
    
    
    %
    
    
    Amount
    
    
    %Commercial:Secured by real estate  nonresidential
    
    $
    2,083,232
    
    
    
    47.68
    %
    
    $
    1,951,020
    
    
    
    48.08
    %Secured by real estate  multifamily
    
    
    908,412
    
    
    
    20.79
    
    
    
    865,483
    
    
    
    21.33Construction
    
    
    326,271
    
    
    
    7.47
    
    
    
    291,080
    
    
    
    7.17Business
    
    
    544,308
    
    
    
    12.46
    
    
    
    468,220
    
    
    
    11.54Total commercial
    
    
    3,862,223
    
    
    
    88.40
    
    
    
    3,575,803
    
    
    
    88.12Consumer:Residential mortgage (one to four family)
    
    
    455,708
    
    
    
    10.43
    
    
    
    434,323
    
    
    
    10.70Other
    
    
    51,124
    
    
    
    1.17
    
    
    
    47,926
    
    
    
    1.18Total consumer
    
    
    506,832
    
    
    
    11.60
    
    
    
    482,249
    
    
    
    11.88Gross loans held in portfolio
    
    
    4,369,055
    
    
    
    100.00
    %
    
    
    4,058,052
    
    
    
    100.00
    %Net deferred loan origination (fees) costs
    
    
    (6,824
    )
    
    
    
    
    
    
    (7,311
    )Loans held in portfolio
    
    
    4,362,231
    
    
    
    
    
    
    
    4,050,741Allowance for loan losses
    
    
    (57,547
    )
    
    
    
    
    
    
    (56,472
    )Net loans held in portfolio
    
    $
    4,304,684
    
    
    
    
    
    
    $
    3,994,269
 35




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##### Table of Contents



At March 31, 2005, and December 31, 2004, the composition of the loans held for sale portfolio
was as follows (dollars in thousands): March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Commercial:Secured by real estate  nonresidential
    
    $
    28,205
    
    
    $
    26,882
    
    
    $
    1,323
    
    
    
    4.92
    %Secured by real estate  multifamily
    
    
    246,990
    
    
    
    295,253
    
    
    
    (48,263
    )
    
    
    (16.35
    )%Business
    
    
    2,431
    
    
    
    3,337
    
    
    
    (906
    )
    
    
    (27.15
    )%Gross loans held for sale
    
    $
    277,626
    
    
    $
    325,472
    
    
    $
    (47,846
    )
    
    
    (14.70
    )%Net deferred loan fees
    
    
    1,191
    
    
    
    535
    
    
    
    656
    
    
    
    122.62
    %Loans held for sale
    
    $
    278,817
    
    
    $
    326,007
    
    
    $
    (47,190
    )
    
    
    (14.48
    )%
 The Bank has identified certain loans that will be sold during 2005. As a result, such loans
are classified as held for sale at March 31, 2005, and December 31, 2004. The Company continues to emphasize production of commercial real estate and commercial
business loans. The Bank also originates and funds loans that qualify for guarantees issued by the
SBA. The SBA guarantees on such loans are generally 75% of the loan amount. The residual portion
of the loan is not guaranteed by the U.S. government, and the Company bears the credit risk on that
portion 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 part of the unguaranteed portion
of the SBA loans. SBA regulations require that the originator retain a minimum of 5% of the total
loan amount. As a result of changing the loan origination focus to commercial loans, we are originating
more loans that reprice in shorter time periods than the traditional repricing terms of residential
mortgage (one to four family) loans. Construction loans, commercial business loans and SBA loans
generally have monthly repricing terms. Commercial real estate loans generally reprice monthly or
are intermediate fixed, meaning that the loans have interest rates that are fixed for a period,
typically five years, and then generally reprice monthly or become due and payable. Multifamily
loans are generally adjustable-rate and reprice semiannually. Residential mortgage (one to four
family) loans may be adjustable-rate and reprice semiannually or annually, have fixed rates,
meaning that the loans have interest rates that are fixed over the term of the loans, for terms of
15 or 30 years, or have interest rates that are fixed for a period, typically five years, and then
generally reprice semiannually or annually. The following table reflects the Banks gross loans held in portfolio composition by type at
March 31, 2005, and December 31, 2004 (dollars in thousands): March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2005
    
    
    2004
    
    
    $
    
    
    %Adjustable-rate loans
    
    $
    2,814,180
    
    
    $
    2,603,889
    
    
    $
    210,291
    
    
    
    8.08
    %Intermediate fixed-rated loans
    
    
    942,701
    
    
    
    881,744
    
    
    
    60,957
    
    
    
    6.91
    %Fixed-rate loans
    
    
    612,174
    
    
    
    572,419
    
    
    
    39,755
    
    
    
    6.95
    %Gross loans held in portfolio
    
    $
    4,369,055
    
    
    $
    4,058,052
    
    
    $
    311,003
    
    
    
    7.66
    %
 Adjustable-rate loans increased $210.3 million from December 31, 2004, to March 31, 2005.
Adjustable-rate loans represented 64.4% of gross loans at March 31, 2005, compared with 64.2% of
gross loans at December 31, 2004. The increase of $61.0 million in intermediate fixed-rate loans
from December 31, 2004, to March 31, 2005, is a result of the origination of new intermediate
fixed-rate multifamily loans based on market demand. The fixed-rate loans increased $39.7 million
from December 31, 2004, to March 31, 2005. 36




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##### Table of Contents



The table below shows new loan commitments in the commercial banking business for the three
months ended March 31, 2005 and 2004 (dollars in thousands): Three Months Ended March 31,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    212,982
    
    
    $
    142,836Secured by real estate  multifamily
    
    
    253,018
    
    
    
    155,014Construction
    
    
    142,932
    
    
    
    56,945Business
    
    
    139,424
    
    
    
    102,013Total commercial loans
    
    
    748,356
    
    
    
    456,808Consumer:Residential mortgage (one to four family)
    
    
    45,349
    
    
    

    37,746Home equity and other
    
    
    7,899
    
    
    
    8,895Total consumer loans
    
    
    53,248
    
    
    
    46,641Gross loans held in portfolio
    
    $
    801,604
    
    
    $
    503,449
 As a result of our continued focus on commercial lending activities, loan growth remained
concentrated in our commercial loan portfolio, which totaled $3.86 billion at March 31, 2005, an
8.01% increase from $3.58 billion at December 31, 2004. 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 Fannie Mae
(FNMA) securities. Residential mortgage (one to four family) loans are generally included in the
50% risk weight for risk-based capital purposes, whereas multifamily loans may fall either into the
50% or 100% risk weight depending on the specific criteria of each individual loan. FNMA
securities are classified as a 20% risk weight. These internal securitizations do not have a cash impact to the Company, since selected loans
from the Companys loans held in portfolio are exchanged for FNMA securities. Such securities are
represented by exactly the same loans previously held in the Companys loans held in 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. 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 three months ended March 31, 2004, the Company internally securitized $98.5 million
of multifamily loans. There were no securitizations during the three months ended March 31, 2005. Risk Elements.We generally place loans on nonaccrual status when they become 90 days past
due, unless the loan is both well secured and in the process of collection. Loans may be placed on
nonaccrual status earlier if, in managements opinion, the full and timely collection of principal
or interest becomes uncertain. When a loan is placed on nonaccrual status, unpaid accrued interest
is charged against interest income. We charge off loans when we determine that collection has
become unlikely. Other real estate owned (OREO), of which the Bank has none, would consist of
real estate acquired by us through foreclosure. 37




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##### Table of Contents



The following is the Banks risk elements table at the dates indicated: March 31,
    
    
    December 31,2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    11,349
    
    
    $
    8,085Secured by real estate  multifamily
    
    
    
    
    
    
    Construction
    
    
    4,633
    
    
    
    4,353Business
    
    
    169
    
    
    
    136Total commercial loans
    
    
    16,151
    
    
    
    12,574Consumer:Residential mortgage (one to four family)
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Total consumer loans
    
    
    
    
    
    
    Total nonaccrual loans
    
    
    16,151
    
    
    
    12,574Total nonperforming assets
    
    
    
    
    
    
    Total nonperforming assets
    
    $
    16,151
    
    
    $
    12,574Nonperforming assets to total assets
    
    
    0.25
    %
    
    
    0.20
    %Nonaccrual loans to total loans
    
    
    0.37
    %
    
    
    0.31
    %Nonperforming assets to total loans and OREO
    
    
    0.37
    %
    
    
    0.31
    %Loans held in portfolio
    
    $
    4,362,231
    
    
    $
    4,050,741Gross income not recognized on nonaccrual loans
    
    
    988
    
    
    
    699Accruing loans contractually past due 90 days or more
    
    
    9,670
    
    
    
    3,101Loans classified as troubled debt restructurings but not included above
    
    
    10,943
    
    
    
    11,329
 Total nonperforming assets were $16.2 million at March 31, 2005, an increase of $3.6 million,
from $12.6 million at December 31, 2004. The increase was primarily attributable to one
non-residential loan secured by real estate of $3.4 million. The ratio of nonperforming assets to total assets was 0.25% at March 31, 2005, compared with
0.20% at December 31, 2004. The Banks policy is to record OREO at the lower of carrying value or fair value less
estimated disposal costs. Any write-down of OREO would be charged to earnings. The $10.9 million performing restructured amount in the table above represents one commercial
real estate loan and one commercial loan. The first performing restructured loan is represented by
a non-residential loan secured by real estate for $8.9 million. The $8.9 million non-residential
loan secured by real estate has been classified as a performing restructured loan as a result of
the Bank making interest rate concessions on a separate loan in the amount of $1.6 million to the
same obligator and is secured by the same property. The separate loan of $1.6 million is included
in the nonaccrual commercial real estate in the table above. The other performing restructured
loan is represented by a commercial business loan of $2.0 million where the Company provided an
interest rate concession. With the exception of the loans described in the above and the classified loans, we are not
aware of any other loans as of March 31, 2005, where the known credit problems of the borrower lead
us to believe that they will not comply with their repayment schedule, or that would result in the
loan being included in the nonperforming loan table at a future date. 38




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##### Table of Contents



Since 1998, we have engaged an independent loan review firm to examine the classification of
our commercial loan portfolio. The firm reviews new commercial loan commitments in excess of
$100,000 and also conducts annual reviews based on specified criteria. The firm is comprised of
former bank regulators and former bankers. Management cannot predict the extent to which economic conditions in the Banks market area
may worsen or the full impact that such conditions may have on the Banks loan portfolio.
Accordingly, there can be no assurance that other loans will not become 90 days or more past due,
be placed on nonaccrual status, or become impaired or restructured loans or OREO in the future. We have a risk rating process to which all loans in the portfolio are subjected. Criticized
loans are classified in the following categories:  
    Special Mention: loans that should not yet be adversely classified, but have credit
deficiencies or potential weaknesses that warrant our attention.
    Substandard: loans with one or more well-defined weaknesses, which have the distinct
possibility that we will sustain some loss if the weaknesses are not corrected.
    Doubtful: loans with the weaknesses of a substandard loan plus such weaknesses, which
make collection or liquidation in full questionable, based on current information, and have
a high probability of loss.
    Loss: loans considered uncollectible. 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. 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 and business
conditions in the areas and markets in which the Company and the Bank operate 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 is adequate. 39




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##### Table of Contents



The following table sets forth information concerning our allowance for loan losses and
allowance for losses related to unfunded commitments for the for the three months ended March 31,
2005 and 2004 (dollars in thousands): March 312005
    
    
    2004Balance at beginning of year:Allowance for loan losses
    
    $
    56,472
    
    
    $
    58,126Allowance for losses  unfunded commitments
    
    
    3,940
    
    
    
    2,737Total allowance for losses at beginning of year
    
    
    60,412
    
    
    
    60,863Provision for loan losses
    
    
    1,190
    
    
    
    2,174Charge-offs:Commercial:Secured by real estate  nonresidential
    
    
    
    
    
    
    Secured by real estate  multifamily
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    Business
    
    
    134
    
    
    
    716Total commercial
    
    
    134
    
    
    
    716Consumer:Residential mortgage (one to four family)
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    32Total consumer
    
    
    
    
    
    
    32Total charge-offs
    
    
    134
    
    
    
    748Recoveries:Commercial:Secured by real estate  nonresidential
    
    
    
    
    
    
    Secured by real estate  multifamily
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    Business
    
    
    19
    
    
    
    5Total commercial
    
    
    19
    
    
    
    5Consumer:Residential mortgage (one to four family)
    
    
    
    
    
    
    Other
    
    
    8
    
    
    
    10Total consumer
    
    
    8
    
    
    
    10Total recoveries
    
    
    27
    
    
    
    15Total allowance for losses at end of period
    
    $
    61,495
    
    
    $
    62,304Allowance for loan losses
    
    $
    57,547
    
    
    $
    59,488Allowance for losses  unfunded commitments
    
    
    3,948
    
    
    
    2,816Total allowance for losses at end of period
    
    $
    61,495
    
    
    $
    62,304Allowance for loan losses to ending loans(1)
    
    
    1.32
    %
    
    
    1.54
    %Annualized net charge-offs to average loans outstanding(2)
    
    
    0.01
    %
    
    
    0.08
    %
   (1)
    
    Ratio of allowance for loan losses to ending loans for March 31, 2005 and 2004, are based on
loans held in portfolio, and excludes loans held for sale.(2)
    
    Average loans balance includes loans held for
sale. 40




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##### Table of Contents



Securities.The 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 (Loss). 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/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. The securities balance (including the available-for-sale and held-to-maturity portfolios)
decreased by $10.9 million from December 31, 2004, to March 31, 2005. This was primarily the
result of sales of $25.7 million, principal repayments and securities calls of $41.8 million, and
maturities and payoffs of $271.7 million, partially offset by purchases of $303.1 million for the
three months ended March 31, 2005. The Company intends to continue reducing its balance sheet by
accelerating the organic growth of its loan portfolio and decreasing its securities concentration. The portfolio provides liquidity for the 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 such borrowings. At March 31, 2005, the Companys held-to-maturity securities portfolio declined from $325.2
million at December 31, 2004, to $318.8 million. This decrease resulted from principal repayments
of $6.4 million. 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. 41




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##### Table of Contents



The following table presents our securities portfolio at the dates indicated (dollars in
thousands): March 31, 2005
    
    
    December 31, 2004Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueInvestment securities available for sale:Trust Preferred Securities
    
    $
    18,442
    
    
    $
    17,983
    
    
    $
    18,441
    
    
    $
    18,219Federal Agency Notes
    
    
    182,120
    
    
    
    177,232
    
    
    
    232,594
    
    
    
    230,046Foreign Debt Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Asset-backed Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Municipals
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Domestic Corporate Bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial Paper
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total investment securities available for sale
    
    
    200,562
    
    
    
    195,215
    
    
    
    251,035
    
    
    
    248,265Mortgage-backed securities available for sale:FNMA
    
    
    370,517
    
    
    
    361,129
    
    
    
    366,307
    
    
    
    363,097GNMA
    
    
    104,225
    
    
    
    101,357
    
    
    
    106,501
    
    
    
    105,072FHLMC
    
    
    323,186
    
    
    
    313,369
    
    
    
    288,789
    
    
    
    285,965Other
    
    
    196,803
    
    
    
    193,617
    
    
    
    167,719
    
    
    
    166,741Total mortgage-backed securities available for sale
    
    
    994,731
    
    
    
    969,472
    
    
    
    929,316
    
    
    
    920,875Total investment and mortgage-backed securities
available for sale
    
    $
    1,195,293
    
    
    $
    1,164,687
    
    
    $
    1,180,351
    
    
    $
    1,169,140Investment securities held to maturity:Municipals
    
    $
    215,615
    
    
    $
    220,606
    
    
    $
    215,594
    
    
    $
    222,297Mortgage-backed securities held to maturity:FNMA
    

    
    5,578
    
    
    
    5,424
    
    
    
    5,765
    
    
    
    5,689GNMA
    
    
    96,363
    
    
    
    95,217
    
    
    
    102,439
    
    
    
    102,595FHLMC
    
    
    1,236
    
    
    
    1,208
    
    
    
    1,404
    
    
    
    1,388Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total mortgage-backed securities held to maturity
    
    
    103,177
    
    
    
    101,849
    
    
    
    109,608
    
    
    
    109,672Total investment and mortgage-backed securities
held to maturity
    
    $
    318,792
    
    
    $
    322,455
    
    
    $
    325,202
    
    
    $
    331,969Total investment and mortgage-backed securities
    
    $
    1,514,085
    
    
    $
    1,487,142
    
    
    $
    1,505,553
    
    
    $
    1,501,109
 As of March 31, 2005, the carrying value and the market value of the available-for-sale
securities were $1.20 billion and $1.16 billion, respectively. The total net unrealized loss on
these securities was $30.6 million. Such unrealized losses, net of tax, are $17.7 million and are
reflected as a reduction to stockholders equity. The difference between the carrying value and
market value of securities that are held to maturity, aggregating a gain of $3.7 million, has not
been recognized in the financial statements as of March 31, 2005. The unrealized net gains are the
result of movements in market interest rates. Deposits.Deposits have traditionally been our primary source of funds to use in lending and
investment activities. At March 31, 2005, 53.2% of our deposits were time deposits, 28.1% were
negotiable order of withdrawal (NOW) accounts, demand deposit and money market accounts, and
18.6% were savings accounts. By comparison, at December 31, 2004, 53.4% of our deposits were time
deposits, 27.4% were NOW accounts, demand deposit and money market accounts, and 19.2% were savings
accounts. 42




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##### Table of Contents



We obtain our deposits primarily from the communities we serve. With the exception of state
and federal government entities (Public Fund Sector) contributing 7.4% of total deposits, no
other material portion of our deposits were from or were dependent upon any one customer or
industry. We accept deposits over $100,000 from customers. Included in the figure for time
deposits at March 31, 2005, is $1.95 billion of deposits of $100,000 or greater, compared to $1.87
billion at December 31, 2004. Such deposits made up 36.3% of total deposits at March 31, 2005,
compared to 35.8% at December 31, 2004. The following table presents the balances and rates paid for categories of deposits at March
31, 2005, and December 31, 2004 (dollars in thousands): March 31, 2005
    
    
    December 31, 2004Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageAmount
    
    
    Rate
    
    
    Amount
    
    
    RateNOW, checking and money market accounts
    
    $
    1,509,121
    
    
    
    1.09
    %
    
    $
    1,427,366
    
    
    
    0.96
    %Savings accounts
    
    
    998,681
    

    
    
    1.22
    
    
    
    1,000,489
    
    
    
    1.03Time deposits:Less than $100,000
    
    
    907,308
    
    
    
    2.03
    
    
    
    918,650
    
    
    
    1.79$100,000 or greater
    
    
    1,947,625
    
    
    
    2.54
    
    
    
    1,869,357
    
    
    
    2.26Total time deposits
    
    
    2,854,933
    
    
    
    2.38
    
    
    
    2,788,007
    
    
    
    2.11Total deposits
    
    $
    5,362,735
    
    
    
    1.80
    %
    
    $
    5,215,862
    
    
    
    1.59
    %
 Other Borrowings.The Bank maintains borrowing lines with numerous correspondent banks and
brokers and with the Federal Home Loan Bank (FHLB) of San Francisco to supplement our supply of
lendable funds and to manage liquidity. Such borrowings are generally secured with mortgage loans
and/or securities with a market value at least equal to outstanding balances. In addition to loans
and securities, advances from the FHLB of San Francisco are typically secured by a pledge of our
stock in the FHLB of San Francisco. At March 31, 2005, we had $354.8 million of advances
outstanding and $407.3 million outstanding at December 31, 2004. At March 31, 2005, we had $884.2
million of additional FHLB borrowings available for future borrowing capacity. Included in the $354.8 million of FHLB advances as of March 31, 2005, were $20.0 million of
short-term, fixed-rate advances that mature within one year. All of the $334.9 million in
long-term advances mature between 2006 and 2008. As of March 31, 2005, $241.0 million of these
advances may be terminated at the option of the FHLB of San Francisco. The FHLB may terminate the
advances at quarterly intervals at specified periods ranging from three to five years beyond the
original advance dates. To date, the FHLB has not exercised its option to terminate any advances
to the Company. In the event the FHLB decided to exercise this option, the Company would need to
pay the advances back. 43




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##### Table of Contents



The following table sets forth certain information regarding short and long-term borrowings of
the Bank at or for the three months ended March 31, 2005 and 2004 (dollars in thousands): At or for theThree Months Ended March 31,2005
    
    
    2004Short-term borrowings:FHLB of San Francisco advances and other short-term borrowings:Average balance outstanding
    
    $
    79,217
    
    
    $
    188,561Maximum amount outstanding at any month end period
    
    
    92,081
    
    
    
    222,444Balance outstanding at end of period
    
    
    46,413
    
    
    
    105,009Weighted average interest rate during the period
    
    
    1.58
    %
    
    
    1.29
    %Weighted average interest rate at end of period
    
    
    1.95
    %
    
    
    0.62
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    
    
    
    
    Long-term borrowings:FHLB of San Francisco advances:Average balance outstanding
    
    $
    334,912
    
    
    $
    269,284Maximum amount outstanding at any month end period
    
    
    334,913
    
    
    
    271,395Balance outstanding at end of period
    
    
    334,837
    
    
    
    265,294Weighted average interest rate during the period
    
    
    4.74
    %
    
    
    5.16
    %Weighted average interest rate at end of period
    
    
    4.89
    %
    
    
    5.32
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    3
    
    
    
    4
 Subordinated Debentures of the Company (TPS).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 Subordinated Debentures issued
by the Company. Payment of distributions out of the monies held by the trusts and payments on
liquidation of the trusts, or the redemption of the Capital Securities, are guaranteed by the
Company to the extent the trusts have funds available thereof. The obligations of the Company
under the guarantees and the 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. Included in the total TPS is $30.0 million of TPS,
which were issued in 1998 at the time of the management-led buyout of the Company. The cost of
that debt is 9.38% and the debt has a par call in May 2005. These trusts are not consolidated on
our financial statements. The Company had $136.0 million of TPS outstanding at March 31, 2005, and
December 31, 2004. Management is preparing an evaluation of the merits of repaying the $30.0 million of Junior Subordinated
 Debentures issued in 1998, which have an interest rate of 9.375% and may be prepaid at par commencing in the second quarter of 2005. 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 March 31, 2005, the Bank met the Well Capitalized requirements under
these guidelines. The total risk-based capital ratio of the Bank at March 31, 2005, was 12.29%, as
compared with 12.67% at December 31, 2004. The ratio of Tier I Capital (as defined in the
regulations) to average assets (as defined) of the Bank at March 31, 2005, was 8.46% as compared
with 8.49% at December 31, 2004. The Company is categorized as Well Capitalized. The Companys total risk-based capital
ratio is higher than the Banks due to the inclusion of the Capital Securities as capital in the
risk-based capital calculation. Capital Securities are includable as capital up to 25% of Tier I
Capital. As discussed in Note 1 to the Consolidated Financial Statements, the trusts were
deconsolidated for reporting purposes pursuant to the FIN 46R interpretation. In March 2005, the
Federal Reserve issued final guidance allowing the inclusion of capital securities in Tier I
capital subject to tightened quantitative limits and a broader range of restricted core capital
elements, as defined. The Banks Tier I capital is unaffected, since all trust preferred
securities have been issued at the holding company level. 44




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##### Table of Contents



Stockholders Equity.Total common shares outstanding at March 31, 2005, were 91.4 million,
compared with 91.1 million outstanding at December 31, 2004; prior periods have been restated for
the April 12, 2005, two-for-one stock split. On January 27, 2005, the Company declared a
two-for-one stock split in the form of a stock dividend to shareholders of record as of March 31,
2005, and distributable on April 12, 2005. Liquidity.As a financial institution, we must maintain sufficient levels of liquid assets at
all times to meet our cash flow needs. These liquid assets ensure that we have the cash available
to pay out deposit withdrawals, meet the credit needs of our customers and be able to take
advantage of investment opportunities as they arise. In addition to liquid assets, certain
liabilities can provide liquidity as well. Liquid assets can include cash and deposits that we
have with other banks, federal funds sold and other short-term investments, maturing loans and
investments, payments by borrowers of principal and interest on loans, payments of principal and
interest on investments and loans sales. Additional sources of liquidity can include increased
deposits, lines of credit and other borrowings. Net cash used in operating activities for the three months ended March 31, 2005, was $119.3
million. Of this amount, net cash used in operating activities was due to $21.8 million from net
income, $1.5 million from net non-cash charges, $45.9 million from net change in loans held for
sale, $7.3 million net decrease in operating assets, and $42.8 million net increase in operating
liabilities. Non-cash charges primarily consist of gain on sale of loans held in portfolio,
securities and other assets, net amounting to $1.6 million, and other, net amounting to $747,000,
which includes the amortization of deferred loan fees and the write off of loans, offset by
provision for loan losses amounting to $1.2 million, and depreciation and amortization of premises
and equipment amounting to $2.0 million. Net cash used in investing activities for the three months ended March 31, 2005, was $320.0
million. Of this amount, $326.7 million was used in loans originated and purchased, net of
principal collections, offset by $18.4 million in proceeds from sale of loans held in portfolio and
$7.7 million from net activities related to the investments and mortgage back activities. Net cash provided by financing activities for the three months ended March 31, 2005, was
$120.5 million primarily due to $146.9 million from net activities related to deposits, offset by
$25.9 million reduction of net borrowings from the Federal Home Loan Bank of San Francisco. The Company considers the impairment of value to certain investment and mortgage-backed
securities is attributable to the movement of market interest rates and believes the fair value
will improve over time due to the high credit ratings of the securities. There are no credit
concerns with any of these investment and mortgage-backed securities, and the Company has the
intent and ability to hold these securities to maturity. At March 31, 2005, we had $2.7 billion of certificates of deposit scheduled to mature within
one year. We believe that our liquidity resources will provide us with sufficient amounts of cash
necessary to meet these commitments. Our liquidity may be adversely affected by unexpected withdrawals of deposits, excessive
interest rates paid by competitors and other factors. We review our liquidity position regularly
in light of our expected growth in loans and deposits. We believe that we maintain adequate
sources of liquidity to meet our needs. Capital Resources.The Company has continuously declared quarterly dividends on common stock
since 2000. The Company paid aggregate dividends of $1.8 million for the three months ended March
31, 2005. The payment of such dividends did not have a significant impact on the liquidity of the
Company. As a result of the dividends declared, the total capital of the Company was reduced by
$2.3 million for the three months ended March 31, 2005. Dividends declared for the three months
ended March 31, 2005, had the effect of reducing the Tier I leverage capital ratio by three basis
points and risk-based capital ratio by four basis points. 45




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##### Table of Contents



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, 2004, on file with the
Securities and Exchange Commission (SEC File No. 000-24947). 
 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 disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended. As discussed in Managements Report on Internal Control over Financial Reporting in Item 9A of
the Companys Form 10-K filed with the SEC on March 17, 2005, as of December 31, 2004, there was a
material weakness in the Companys internal control over financial reporting due to a shortage of
qualified financial personnel with sufficient depth, skills and experience to apply generally
accepted accounting principles to the Companys transactions and to prepare financial statements
that comply with accounting principles generally accepted in the United States of America. As a
result of that material weakness, the Chief Executive Officer and the Chief Financial Officer
concluded that the Companys disclosure controls and procedures were not effective as of December
31, 2004. The Company has authorized the addition of sufficient staff members to the finance department
to ensure that it has the depth, skills and experience within the department to prepare its
financial statements and disclosures in accordance with GAAP. In that regard, the Company has
hired two senior finance executives for the finance department, including a tax specialist and a
senior vice president responsible for managing a team focused on improving the Companys financial
accounting processes. The Company is currently in the process of recruiting additional finance
executives to further strengthen the finance department and has not yet completed implementation of
the changes it believes are required to remediate the previously reported material weakness in
internal control over financial reporting. Because the material
weakness was in the process of being remediated as of March 31, 2005, the Chief Executive Officer and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures were still not effective as of March 31, 2005. Changes in Internal Control Over Financial Reporting Other than as described above, there have been no changes that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over financial
reporting. The Company believes it is addressing the deficiencies that affected its internal control over
financial reporting as of March 31, 2005. However, the effectiveness of any system of internal
controls is subject to inherent limitations and there can be no assurance that the Companys
internal control over financial reporting will prevent or detect all errors. The Company intends
to continue to evaluate and further strengthen its internal controls over the financial reporting
system. 46




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##### Table of Contents



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. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. 
 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. 47




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##### Table of Contents



ITEM 6. EXHIBITS Index to Exhibits Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith3.1
    
    Second Amended and Restated
Certificate of Incorporation of UCBH
Holdings, Inc.
    
    10-Q
    
    000-24947
    
    
    3.1
    
    
    May 10, 20043.2
    
    Amended and Restated Bylaws of UCBH
Holdings, Inc., as amended and
restated
    
    10-Q
    
    000-24947
    
    
    3.2
    
    
    May 10, 20043.3
    
    Certificate of Designation,
Preferences and Rights of Series A
Participating Preferred Stock (filed
as Exhibit A to Exhibit 4.7 hereto)
    
    8-K
    
    000-24947
    
    
    1
    
    
    January 29, 20034.0
    
    Form of Stock Certificate of UCBH
Holdings, Inc.
    
    S-1
    
    333-58325
    
    
    4.0
    
    
    July 1, 19984.1
    
    Indenture of UCBH Holdings, Inc.,
dated April 17, 1998, relating to
Series B Junior Subordinated
Debentures
    
    S-4
    
    333-58335
    
    
    4.1
    
    
    July 1, 19984.2
    
    Form of Certificate of Series B
Junior Subordinated Debenture
    
    S-4
    
    333-58335
    
    
    4.2
    
    
    July 1, 19984.3
    
    Certificate of Trust of UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.3
    
    
    July 1, 19984.4
    
    Amended and Restated Declaration of
Trust of UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.4
    
    
    July 1, 19984.5
    
    Form of Series B Capital Security
Certificate for UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.5
    
    
    July 1, 19984.6
    
    Form of Series B Guarantee of the
Company relating to the Series B
Capital Securities
    
    S-4
    
    333-58335
    
    
    4.6
    
    
    July 1, 19984.7
    
    Rights Agreement dated as of January
28, 2003
    
    8-K
    
    000-24947
    
    
    1
    
    
    January 29, 200310.1
    
    Employment Agreement between UCBH
Holdings, Inc., United Commercial
Bank and Thomas S. Wu
    
    10-Q
    
    000-24947
    
    
    10.1
    
    
    November 9, 200410.2
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Jonathan H.
Downing
    
    10-Q
    
    000-24947
    
    
    10.2
    
    
    November 9, 200410.3
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Sylvia Loh as
well as certain other Executive Vice
Presidents of UCBH Holdings, Inc. or
United Commercial Bank
    
    10-Q
    
    000-24947
    
    
    10.3
    
    
    November 9, 200410.4
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Ka Wah (Tony)
Tsui as well as certain other Senior
Vice Presidents of UCBH Holdings,
Inc. or United Commercial Bank
    
    10-Q
    
    000-24947
    
    
    10.4
    
    
    November 9, 2004
 48




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.5
    
    Amended UCBH Holdings, Inc. 1998
Stock Option Plan
    
    S-8
    
    333-119518
    
    
    4.2
    
    
    October 4, 200410.6
    
    Executive Deferred Compensation Plan
    
    10-K
    
    000-24947
    
    
    10.6
    
    
    March 17, 200510.7
    
    Director Deferred Compensation Plan
    
    10-K
    
    000-24947
    
    
    10.7
    
    
    March 17, 200521.0
    
    Subsidiaries of UCBH Holdings, Inc.
    
    10-K
    
    000-24947
    
    
    21.0
    
    
    March 17, 200531.1
    
    Certificate pursuant to Rule
13a-14(a) of the Securities Exchange
Act, as amended, signed and dated by
Thomas S. Wu.
    
    
    
    
    
    
    
    
    
    
    
    P31.2
    
    Certificate pursuant to Rule
13a-14(a) of the Securities Exchange
Act, as amended, signed and dated by
Jonathan H. Downing.
    
    
    
    
    
    
    
    
    
    
    
    P32.0
    
    Certificate pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act
of 2002, signed and dated by Thomas
S. Wu and Jonathan H. Downing.
    
    
    
    
    
    
    
    
    
    
    
    P
 49




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##### Table of Contents



SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UCBH HOLDINGS, INC.Date: May 10, 2005
    
    /s/ Thomas S. WuThomas S. WuChairman, President andChief Executive Officer(principal executive officer)Date: May 10, 2005
    
    /s/ Jonathan H. DowningJonathan H. DowningExecutive Vice President andChief Financial Officer(principal financial officer)
 50