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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q (Mark One)[X]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period
ended June 30, 2004 OR [  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period
from

to Commission file number 0-24947 UCBH Holdings, Inc. 
  Delaware
    
    94-3072450(State or other jurisdiction of incorporation
or organization)
    
    (I.R.S. Employer
Identification No.)
 555 Montgomery Street, San Francisco, California
    
    94111(Address of principal executive offices)
    
    (Zip Code)
 (415) 315-2800 
  711 Van Ness Avenue, San Francisco, California 94102 
  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes   [X]   No
   [   ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).
Yes   [X]   No   [   ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest
practicable date. As of August 6, 2004,
the Registrant had  45,265,116 shares of common stock outstanding.




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UCBH HOLDINGS, INC.
TABLE OF CONTENTS PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    1Notes to Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    38Item 4.
    
    Controls and Procedures
    
    
    38PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    38Item 2.
    
    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
    
    
    38Item 3.
    
    Defaults Upon Senior Securities
    
    
    38Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    39Item 5.
    
    Other Information
    
    
    39Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    40SIGNATURES
    
    
    41EXHIBIT 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.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands) At June 30,
    
    At December 31,2004
    
    2003ASSETSCash and due from banks
    
    $
    64,162
    
    
    $
    76,786Investment and mortgage-backed securities available for sale, at fair value
    
    
    1,320,002
    
    
    
    1,221,070Investment and mortgage-backed securities, at cost (fair value $322,753 at
June 30, 2004 and $287,372 at December 31, 2003)
    
    
    329,384
    
    
    
    284,712Federal Home Loan Bank stock and other equity securities
    
    
    43,166
    
    
    
    41,316Loans
    
    
    4,049,426
    
    
    
    3,791,643Allowance for loan losses
    
    
    (59,469
    )
    
    
    (58,126
    )Net loans
    
    
    3,989,957
    
    
    
    3,733,517Accrued interest receivable
    
    
    23,673
    
    
    
    21,756Premises and equipment, net
    
    
    86,660
    
    
    
    84,145Goodwill
    
    
    85,093
    
    
    
    87,437Core deposit intangible
    
    
    10,396
    
    
    
    11,111Other assets
    
    
    109,619
    
    
    
    26,077Total assets
    
    $
    6,062,112
    
    
    $
    5,587,927LIABILITIESNoninterest-bearing deposits
    
    $
    377,760
    
    
    $
    324,615Interest-bearing deposits
    
    
    4,456,047
    
    
    
    4,158,906Total deposits
    
    
    4,833,807
    
    
    
    4,483,521Borrowings
    
    
    585,875
    
    
    
    505,542Subordinated debentures
    
    
    136,000
    
    
    
    136,000Accrued interest payable
    
    
    8,258
    
    
    
    8,346Other liabilities
    
    
    59,156
    
    
    
    40,052Total liabilities
    
    
    5,623,096
    
    
    
    5,173,461Commitments and contingencies
    
    
    
    
    
    
    STOCKHOLDERS EQUITYPreferred stock, $.01 par value, authorized 10,000,000 shares, none issued
and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value, authorized 180,000,000 shares at June 30,
2004 and at December 31, 2003; shares issued and outstanding 45,224,490 at
June 30, 2004 and 45,038,378 at December 31, 2003
    
    
    452
    
    
    
    450Additional paid-in capital
    
    
    212,194
    
    
    
    208,990Accumulated other comprehensive loss
    
    
    (18,371
    )
    
    
    (3,245
    )Retained earnings  substantially restricted
    
    
    244,741
    
    
    
    208,271Total stockholders equity
    
    
    439,016
    
    
    
    414,466Total liabilities and stockholders equity
    
    $
    6,062,112
    
    
    $
    5,587,927
 The accompanying notes are an integral part of these financial statements. Page 1




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UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands, Except for Per Share Data) For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Interest income:Loans
    
    $
    52,548
    
    
    $
    45,805
    
    
    $
    105,441
    
    
    $
    89,979Funds sold and securities purchased under agreements to resell
    
    
    93
    
    
    
    12
    
    
    
    108
    
    
    
    19Investment and mortgage-backed securities
    
    
    18,992
    
    
    
    16,945
    
    
    
    36,401
    
    
    
    35,545Total interest income
    
    
    71,633
    
    
    
    62,762
    
    
    
    141,950
    
    
    
    125,543Interest expense:Deposits
    
    
    15,657
    
    
    
    17,369
    
    
    
    30,403
    
    
    
    35,259Short-term borrowings
    
    
    638
    
    
    
    263
    
    
    
    1,245
    
    
    
    475Subordinated debentures
    
    
    1,957
    
    
    
    1,991
    
    
    
    3,910
    
    
    
    4,000Long-term borrowings
    
    
    3,466
    
    
    
    3,508
    
    
    
    6,937
    
    
    
    6,880Total interest expense
    
    
    21,718
    
    
    
    23,131
    
    
    
    42,495
    
    
    
    46,614Net interest income
    
    
    49,915
    
    
    
    39,631
    
    
    
    99,455
    
    
    
    78,929Provision for loan losses
    
    
    1,009

    
    
    
    2,834
    
    
    
    3,183
    
    
    
    3,825Net interest income after provision for loan losses
    
    
    48,906
    
    
    
    36,797
    
    
    
    96,272
    
    
    
    75,104Noninterest income:Commercial banking and other fees
    
    
    2,156
    
    
    
    1,661
    
    
    
    4,025
    
    
    
    3,317Service charges on deposits
    
    
    714
    
    
    
    635
    
    
    
    1,331
    
    
    
    1,141Gain on sale of securities
    
    
    2,631
    
    
    
    3,822
    
    
    
    6,493
    
    
    
    4,892Gain on sale of loans
    
    
    1,371
    
    
    
    
    
    
    
    1,881
    
    
    
    517Equity loss in other equity investments
    
    
    (1,489
    )
    
    
    (38
    )
    
    
    (1,489
    )
    
    
    (76
    )Total noninterest income
    
    
    5,383
    
    
    
    6,080
    
    
    
    12,241
    
    
    
    9,791Noninterest expense:Personnel
    
    
    11,696
    
    
    
    9,249
    
    
    
    24,611
    
    
    
    20,373Occupancy
    
    
    2,179
    
    
    
    1,335
    
    
    
    3,724
    
    
    
    2,527Data processing
    
    
    1,400
    
    
    
    1,085
    
    
    
    2,694
    
    
    
    2,206Furniture and equipment
    
    
    1,385
    
    
    
    769
    
    
    
    2,414
    
    
    
    1,536Professional fees and contracted services
    
    
    1,601
    
    
    
    1,442
    
    
    
    3,124
    
    
    
    3,106Deposit insurance
    
    
    197
    
    
    
    161
    
    
    
    402
    
    
    
    326Communication
    
    
    319
    
    
    
    232
    
    
    
    615
    
    
    
    471Core deposit intangible amortization
    
    
    482
    
    
    
    538
    
    
    
    715
    
    
    
    1,132Miscellaneous expense
    
    
    3,692
    
    
    
    3,101
    
    
    
    7,467
    
    
    
    6,033Total noninterest expense
    
    
    22,951
    
    
    
    17,912
    
    
    
    45,766
    
    
    
    37,710Income before taxes
    
    
    31,338
    
    
    
    24,965
    
    
    
    62,747
    
    
    
    47,185Income tax expense
    
    
    11,070
    
    
    
    9,537
    
    
    
    22,660
    
    
    
    17,829Net income
    
    $
    20,268
    
    
    $
    15,428
    
    
    $
    40,087
    
    
    $
    29,356Basic earnings per share
    
    $
    0.45
    
    
    $
    0.36
    
    
    $
    0.89
    
    
    $
    0.70Diluted earnings per share
    
    $
    0.43
    
    
    $
    0.35
    
    
    $
    0.84
    
    
    $
    0.66Dividends declared per share
    
    $
    0.04
    
    
    $
    0.03
    
    
    $
    0.08
    
    
    $
    0.06
 The accompanying notes are an integral part of these financial statements. Page 2




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UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands) For the Six Months EndedJune 30,2004
    
    2003Operating activities:Net income
    
    $
    40,087
    
    
    $
    29,356Adjustments to reconcile net income to net cash provided by (used for)
operating activities:Provision for loan losses
    
    
    3,183
    
    
    
    3,825Amortization of purchase price adjustments
    
    
    (263
    )
    
    
    (2,560
    )Amortization of core deposit intangible
    
    
    715
    
    
    
    1,132Depreciation and amortization
    
    
    3,050
    
    
    
    2,587(Increase) decrease in accrued interest receivable
    
    
    (2,099
    )
    
    
    520Increase in other assets
    
    
    (72,223
    )
    
    
    (50,381
    )Decrease in accrued interest payable
    
    
    (88
    )
    
    
    (222
    )Increase in other liabilities
    
    
    19,986
    
    
    
    76,168Gain on sale of loans and securities
    
    
    (6,885
    )
    
    
    (5,333
    )Other, net
    
    
    1,583
    
    
    
    6,888Net cash (used for) provided by operating activities
    
    
    (12,954
    )
    
    
    61,980Investing activities:Investments and mortgage-backed securities, available for sale:Principal payments and maturities
    
    
    172,005
    
    
    
    300,644Purchases
    
    
    (690,068
    )
    
    
    (460,558
    )Sales
    
    
    490,544
    
    
    
    312,952Called
    
    
    55,036
    
    
    
    54,932Investments and mortgage-backed securities, held to maturity:Principal payments and maturities
    
    
    12,939
    
    
    
    11,398Purchases
    
    
    (57,768
    )
    
    
    (145,554
    )Loans originated and purchased, net of principal collections
    
    
    (474,902
    )
    
    
    (407,295
    )Proceeds from the sale of loans
    
    
    71,150
    
    
    
    69,861Purchases of premises and other equipment
    
    
    (5,838
    )
    
    
    (2,998
    )Other investing activities, net
    
    
    (2,361
    )
    
    
    Net cash used in investment activities
    
    
    (429,263
    )
    
    
    (266,618
    )Financing activities:Net increase in demand deposits, NOW, money market and savings accounts
    
    
    245,104
    
    
    
    146,505Net increase in time deposits
    
    
    105,217
    
    
    
    8,509Net increase in short-term borrowings
    
    
    60,562
    
    
    
    44,436Proceeds from long-term borrowings
    
    
    20,000
    
    
    
    Proceeds from stock option exercises
    
    
    1,866
    
    
    
    4,615Payment of cash dividend on common stock
    
    
    (3,156
    )
    
    
    (2,104
    )Net cash provided by financing activities
    
    
    429,593
    
    
    
    201,961Net decrease in cash and cash equivalents
    
    
    (12,624
    )
    
    
    (2,677
    )Cash and cash equivalents at beginning of period
    
    
    76,786
    
    
    
    58,954Cash and cash equivalents at end of period
    
    $
    64,162
    
    
    $
    56,277Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    55,831
    
    
    $
    46,836Cash paid during the period for income taxes
    
    
    12,044
    
    
    
    22,948Supplemental schedule of non-cash investing and financing activities:Loans securitized
    
    $
    147,134
    
    
    $
    107,587
 The accompanying notes are an integral part of these financial statements. Page 3




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UCBH HOLDINGS, INC. 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    
    Basis of Presentation and Summary of Significant Accounting and Reporting
Policies Organization UCBH Holdings, Inc. (the Company or UCBH) is a bank holding company
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 domestically 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 first quarter of 2004, the Companys wholly
owned subsidiary UCB Investment Services (UCBIS) commenced business. UCBIS
is a registered broker-dealer with the Securities and Exchange Commission and a
member of the National Association of Securities Dealers (NASD) and the
Securities Investor Protection Corporation (SIPC). Basis of Presentation and Principles of 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
presentation 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, Consolidation of Variable
Interest Entities (FIN 46R), 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 Opinion Number
18, The Equity Method of Accounting for Investments in Common Stock. None of
these investments meet the requirements of FIN 46R, and therefore, are not
consolidated. Operating results for the three and six months ended June 30, 2004, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2004. Please refer to the audited consolidated financial statements and related
notes thereto included in the Companys Form 10-K for the year ended December
31, 2003, 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. Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with generally
accepted accounting principles 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. Page 4




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Reclassification Certain prior period amounts have been reclassified to conform to the
current periods presentation.  2.
    
    Recent Accounting Pronouncements Accounting for Stock-Based Compensation In December 2002, the FASB issued Statements of Financial Accounting
Standards (SFAS) No. 148, Accounting for Stock-Based Compensation  Transition
and Disclosure, which provides guidance on alternative methods of transition
for an entity that voluntarily changes to the fair value based method of
accounting for stock-based employee compensation. It also amends the
disclosure provision of that statement to require prominent disclosure about
the effects on reported net income of an entitys accounting policy decisions
with respect to stock-based employee compensation. Finally, this statement
amends Accounting Principles Board (APB) Opinion No. 28, Interim Financial
Reporting, to require disclosure about those effects in interim financial
information. The Company has elected to continue accounting for stock-based
compensation in accordance with APB Opinion No. 25, Accounting for Stock
Issued to Employees. Under APB No. 25, no stock-based employee compensation
cost is reflected in the statement of operations, as all options granted have
an exercise price equal to the market value of the underlying common stock on
the date of grant. The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation. For the Three Months
    
    For the Six Months EndedEnded June 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003(Dollars in Thousands, Except Earnings Per Share)Net income:As reported
    
    $
    20,268
    
    
    $
    15,428
    
    
    $
    40,087
    
    
    $
    29,356Deduct: Total stock-based employee compensation
expense determined under fair value based
method
of all awards, net of related tax effects
    
    
    (1,460
    )
    
    
    (1,075
    )
    
    
    (2,752
    )
    
    
    (2,090
    )Pro forma net income
    
    $
    18,808
    
    
    $
    14,353
    
    
    $
    37,335
    
    
    $
    27,266Basic earnings per share:As reported
    
    $
    0.45
    
    
    $
    0.36
    
    
    $
    0.89
    
    
    $
    0.70Pro forma
    
    $
    0.42
    
    
    $
    0.34
    
    
    $
    0.83
    
    
    $
    0.65Diluted earnings per share:As reported
    
    $
    0.43
    
    
    $
    0.35
    
    
    $
    0.84
    
    
    $
    0.66Pro forma
    
    $
    0.40
    
    
    $
    0.32
    
    
    $
    0.79
    
    
    $
    0.62
 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. Page 5




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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 during the three and six months ended June 30, 2004, and 2003: For the Three Months Ended
    
    For the Six Months EndedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Dividend yield
    
    
    0.42
    %
    
    
    0.60
    %
    
    
    0.42
    %
    
    
    0.60
    %Volatility
    
    
    24.05
    %
    
    
    23.72
    %
    
    
    25.04
    %
    
    
    20.40
    %Risk-free interest rate
    
    
    4.36
    %
    
    
    2.97
    %
    
    
    4.20
    %
    
    
    3.05
    %Expected lives (years)
    
    
    7.5
    
    
    
    7.8
    
    
    
    7.5
    
    
    
    7.1
 Consolidation of Variable Interest Entities In January 2003, the FASB issued FASB Interpretation No. 46, (FIN 46)
Consolidation of Variable Interest Entities. This interpretation applies
immediately to variable interest entities (VIE) in which an enterprise
obtains an interest after that date. It applies in the first fiscal year or
interim period beginning after June 15, 2003, to any VIE in which an enterprise
holds a variable interest that is acquired before February 1, 2003. Previously
issued accounting pronouncements require the consolidation of one entity in the
financial statements of another if the second entity has a controlling interest
in the first. In effect, FIN 46 applies broader criteria than just voting
rights in determining whether one entity has a controlling financial interest
in another. Specifically, if by design the owners of the entity have not made
an equity investment sufficient to absorb its expected losses and the owners
lack any one of three essential characteristics of controlling financial
interest, the entity is to be consolidated in the financial statements of its
primary beneficiary. The three characteristics are: (1) the ability to make
decisions about the entitys activities, (2) the obligation to absorb the
expected losses of the entity, and (3) the right to receive the expected
residual returns of the entity. At December 31, 2003, the Company adopted FIN 46R. As discussed in Note
1, the FASB issued Fin 46R to clarify the application of Accounting Research
Bulletin No. 51, Consolidated Financial Statements and finalizes this statement
for public entities. Under FIN 46R, a VIE is defined as an entity subject to
consolidation based on criteria specified in FIN 46R. In 1998, 2001 and 2002, the Company created certain special purpose trusts
for the purpose of issuing capital securities. Through the third quarter of
2003, these trusts were consolidated into the financial results of the Company.
Under FIN 46R, the trusts are no longer consolidated as the trusts are deemed
VIEs and the Company is not the primary beneficiary. Consequently, the trusts
have been deconsolidated from the financial results of the Company effective
December 31, 2003 with consistent presentation for periods presented. The impact of this deconsolidation on the Companys financial condition
and operating results was immaterial, resulting primarily in classification
changes on the Balance Sheet. A potential outcome arising as a result of FIN
46R is that the Federal Reserve Bank may no longer allow the capital securities
issued by the trusts to be included in Tier I capital of the Company. The
Federal Reserve has issued proposed rules that these securities will be
grandfathered and continues to be included in the Companys Tier I capital. If
regulatory requirements required exclusion of these securities from Tier I
capital, the Company would be well capitalized at June 30, 2004. The Banks
Tier I capital would be unaffected as the trusts and their securities have been
issued at the holding company level. Page 6




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Derivative Instruments and Hedging Activities In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities (SFAS No. 149). The
provisions of SFAS No. 149 that relate to SFAS No. 133 and No. 138
implementation issues that have been effective for fiscal quarters that began
prior to June 15, 2003, should continue to be applied in accordance with their
respective effective dates. SFAS No. 133 and No. 138 clarify when a derivative
contains a financing component, amend the definition of an underlying
derivative instrument to conform it to language used in FIN 45, and amend
certain other existing pronouncements. Those changes will result in more
consistent reporting of contracts as either derivatives or hybrid instruments.
In addition, provisions of SFAS No. 149 which relate to forward purchases or
sales of when-issued securities or other securities that do not yet exist,
should be applied to both existing contracts and new contracts entered into
after June 30, 2003. The changes in SFAS No. 149 improve financial reporting
by requiring that contracts with comparable characteristics be accounted for in
the same manner. In particular, SFAS No. 149 clarifies under what
circumstances a contract with an initial net investment meets the
characteristic of a derivative discussed in paragraph 6(b) of SFAS 133. SFAS
No. 149 is effective for contracts entered into or modified after June 30,
2003, except as stated above and for hedging relationships designated after
June 30, 2003. In addition, except as stated above, all provisions of SFAS No.
149 should be applied prospectively. The Company adopted SFAS No. 149 on July 1, 2003. The adoption did not a
have a material impact on our consolidated financial statements. Certain Financial Instruments with Characteristics of Both Liabilities and
Equities In May 2003, the FASB issued SFAS No. 150 Accounting for Certain
Financial Instruments with Characteristics of both Liability and Equity (SFAS
No. 150). This statement requires that an issuer classify financial
instruments that are within its scope as liabilities. Many of those
instruments were classified as equities under previous guidance. Most of the guidance in SFAS No. 150 is effective for all financial
instruments entered into or modified after May 31, 2003, and otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. Certain provisions of SFAS No. 150 as they apply to mandatorily
redeemable noncontrolling interests have been deferred. The deferral of these
provisions is expected to remain in effect while these noncontrolling interests
are addressed in later phases of FASB projects. Excluding these deferred provisions, the adoption of the SFAS No. 150 did
not have a material impact on our consolidated financial statements. 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 loan or debt securities acquired from business combinations 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 in 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. Page 7




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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 Company does not expect the adoption of SOP 03-3 to
have a material impact on the financial condition or operating results of the
Company. Other-Than-Temporary Impairment and Its Application to Certain Investments In early 2003, the Emerging Issues Task Force (EITF) of the FASB issued
EITF 03-1 The Meaning of Other-Than-Temporary Impairment and Its Application
to Certain Investments; this rule clarification is effective for fiscal years
rending after June 15, 2004. EITF 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. The Company does not expect the adoption of
EITF 03-1 to 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 on the dates
indicated (dollars in thousands): At June 30,
    
    At December 31,2004
    
    2003Interest-bearing
    
    $
    8,573
    
    
    $
    13,899Noninterest-bearing
    
    
    55,589
    
    
    
    62,887Total Cash and Due From Banks
    
    $
    64,162
    
    
    $
    76,786
 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 both
June 30, 2004 and December 31, 2003, the reserve requirement was $6.8 million.  4.
    
    Business Combinations, Goodwill and Intangibles Assets In July 2003, the Company completed the acquisition of privately held
First Continental Bank (FCB), a full-service commercial bank headquartered in
Rosemead, California. Pro forma consolidated results of operations for the
three and six months ended June 30, 2003 as though FCB had been acquired as of
January 1, 2003 follow (dollars in thousands, except earnings per share): For the Three Months Ended
    
    For the Six Months EndedJune 30, 2003
    
    June 30, 2003Net interest income
    
    $
    42,530
    
    
    $
    84,427Net income
    
    
    15,881
    
    
    
    30,468Basic earnings per share
    
    $
    0.36
    
    
    $
    0.68Diluted earnings per share
    
    
    0.34
    
    
    
    0.65
 In accordance with SFAS No. 142 and No. 141, goodwill resulting from the
Companys acquisitions will not be amortized to expense over a fixed period of
time but will be tested for impairment at least annually. During the second
quarter of 2004, the Company finalized its purchase accounting with respect to
the acquisition and as a result, there was a $2.3 million reduction in
goodwill. As of June 30, 2004 and December 31, 2003, the balance of goodwill
totaled $85.1 million and $87.4 million, respectively. The Company will
continue to review goodwill for impairment in the future. Other than goodwill, the Company has no intangible assets with indefinite
lives. Intangible assets with finite lives, consisting primarily of core
deposit intangibles, are amortized over their estimated period of remaining
benefit; such amortization expense was $482,000 and $538,000 for the three
months ended June 30, 2004 and Page 8




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2003, respectively. Amortization expense of
$715,000 and $1.1 million were recorded for the six months ended June 30, 2004
and 2003, respectively. Additionally, loan servicing assets are capitalized,
reported as Other Assets and amortized into non-interest income in proportion
to, and over the period of, the estimated future net servicing income of the
underlying financial assets. Amortization expense for loan servicing assets
was $463,000 and $58,000 for the three months ended June 30, 2004 and 2003,
respectively. Amortization expense of $617,000 and $147,000 were recorded for
the six months ended June 30, 2004 and 2003, respectively. Intangible assets
are analyzed for impairment annually and adjusted accordingly. During the
three months ended June 30, 2004, approximately $80,000 of the capitalized
servicing asset was deemed impaired; no such impairment was recorded during the
first quarter of 2004. The net carrying amount of intangible assets and the associated
accumulated amortization are as follows: As of June 30, 2004
    
    As of December 31, 2003Net Carrying
    
    Accumulated
    
    Net Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Amount
    
    Amortization(Dollars in Thousands)Intangibles
    
    $
    10,396
    
    
    $
    (2,704
    )
    
    $
    11,111
    
    
    $
    (1,989
    )Loan servicing assets
    
    
    6,072
    
    
    
    (1,018
    )
    
    
    4,006
    
    
    
    (469
    )Total intangible assets
    
    $
    16,468
    
    
    $
    (3,722
    )
    
    $
    15,117
    
    
    $
    (2,458
    )
 The amortization expense for amortizable intangible assets for the years
ending December 31, 2004, 2005, 2006, 2007 and 2008 is estimated to be $2.7
million, $2.5 million, $2.1 million, $1.8 million and $1.6 million,
respectively.  5.
    
    Earnings per Share The following are the basic and diluted earnings per share for the periods
then ended: Three Months Ended June 30, 2004
    
    Three Months Ended June
30, 2003 (1)Income
    
    Shares
    
    Per Share
    
    Income
    
    Shares
    
    Per Share(Numerator)
    
    (Denominator)
    
    Amount
    
    (Numerator)
    
    (Denominator)
    
    Amount(Dollars in Thousands, Except Per Share Amounts)Basic:Net income
    
    $
    20,268
    
    
    
    45,177,249
    
    
    $
    0.45
    
    
    $
    15,428
    
    
    
    42,341,872
    
    
    $
    0.36Diluted:Dilutive potential common shares
    
    
    
    
    
    
    2,299,864
    
    
    
    
    
    
    
    
    
    
    
    2,096,252Net income and assumed conversion
    
    $
    20,268
    
    
    
    47,477,113
    
    
    $
    0.43
    
    
    $
    15,428
    
    
    
    44,438,124
    
    
    $
    0.35
 Six Months Ended June 30, 2004
    
    Six Months Ended June 30, 2003 (1)Income
    
    Shares
    
    Per Share
    
    Income
    
    Shares
    
    Per Share(Numerator)
    
    (Denominator)
    
    Amount
    
    (Numerator)
    
    (Denominator)
    
    Amount(Dollars in Thousands, Except Per Share Amounts)Basic:Net income
    
    $
    40,087
    
    
    
    45,137,875
    
    
    $
    0.89
    
    
    $
    29,356
    
    
    
    42,208,607
    
    
    $
    0.70Diluted:Dilutive potential common shares
    
    
    
    
    
    
    2,341,695
    
    
    
    
    
    
    
    
    
    
    
    2,033,571Net income and assumed conversion
    
    $
    40,087
    
    
    
    47,479,570
    
    
    $
    0.84
    
    
    $
    29,356
    
    
    
    44,242,178
    
    
    $
    0.66
  (1)
    
    Effective April 8, 2003, the Company completed a two-for-one stock split. Accordingly, the financial statements for the three and six
months ended June 30, 2003 presented have been restated to reflect the effect of the stock split.  6.
    
    Comprehensive Income SFAS No. 130, Reporting Comprehensive Income, establishes presentation
and disclosure requirements for comprehensive income. For the Company,
comprehensive income consists of net income and the change in
unrealized gains and losses on available-for-sale securities. For the
three months ended June 30, 2004, total Page 9




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comprehensive loss was $4.3 million, a
decrease of $16.0 million compared to the three months ended June 30, 2003.
Net income for the three months ended June 30, 2004, was $20.3 million, and net
unrealized losses on available-for-sale securities increased by $24.6 million.
For the corresponding period of 2003, net income was $15.4 million, and net
unrealized gains on available-for-sale securities decreased by $3.8 million. For the six months ended June 30, 2004 and 2003, total comprehensive
income was $25.0 million and $27.7 million, respectively. Net income for the
six months ended June 30, 2004, was $40.1 million, and net unrealized losses on
available-for-sale securities increased by $15.1 million. For the
corresponding period of 2003, net income was $29.4 million and net unrealized
gains on available-for-sale securities decreased by $1.6 million.  7.
    
    Derivative Financial Instruments and Financial Instruments with
Off-Balance-Sheet Risk The Company is party to derivative financial instruments and financial
instruments with off-balance-sheet credit risk in the normal course of business
to meet the financing needs of its customers and to reduce its own exposure to
fluctuations in foreign currency and interest rates. The Company does not hold
or issue financial instruments for trading or speculative purposes. 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, forward commitments to sell loans and foreign
exchange contracts, 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, and foreign exchange contracts 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. The following table sets forth the contractual or notional amounts of
derivative financial instruments and financial instruments with
off-balance-sheet risk as of June 30, 2004 and December 31, 2003 (dollars in
thousands): At June 30,
    
    At December 31,2004
    
    2003Financial instruments whose contract amounts
represent credit risk:Commitments to extend credit:Consumer (including residential mortgage)
    
    $
    66,344
    
    
    $
    59,751Commercial (excluding construction)
    
    
    343,465
    
    
    
    279,433Construction
    
    
    218,884
    
    
    
    207,601Letters of credit
    
    
    38,817
    
    
    
    39,484Foreign exchange contracts receivable
    
    
    94,895
    
    
    
    17,121Foreign exchange contracts payable
    
    
    94,678
    
    
    
    17,122
 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 inventories or by deposits held at the Company. Page 10




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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 hedged with an offsetting
position. 
  ITEM 2.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This report on Form 10-Q may include projections or other forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 regarding future events or the future financial performance of the
Company or the Companys wholly-owned subsidiary, the Bank. Such
forward-looking statements include without limitation, statements containing
the words confident that, believes, plans, expects, anticipates,
projects and words of similar import and involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company or the Bank to be materially different from
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things:  
    
    general economic and business conditions in those areas in
which the Company or the Bank operates;  
    
    demographic changes;  
    
    competition;  
    
    fluctuations in market conditions, including interest or foreign exchange rates;  
    
    the ability of the Bank to assimilate recent acquisitions and to open new branches successfully;  
    
    changes in business strategies;  
    
    changes in governmental regulations;  
    
    changes in credit quality; and  
    
    other risks and uncertainties including those detailed in the
documents the Company files from time to time with the Securities
and Exchange Commission (SEC). Further description of the risks and uncertainties are included in detail
in the Companys most recent Annual Report on Form 10-K for the year ended
December 31, 2003, as filed with the SEC. The following discussion and analysis is intended to provide details of
the results of operations of the Company for the three and six months ended
June 30, 2004 and 2003, and financial condition at June 30, 2004 and at
December 31, 2003. 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 Company), operating through its
principal subsidiary, United Commercial Bank (Bank), earned $20.3 million for
the second quarter of 2004, compared to $15.4 million in
the second quarter last year, an increase of $4.8 million, or 31.4%.
Fully diluted earnings per share for the second quarter of 2004 were $0.43
compared to $0.35 in the second quarter of 2003. For the six months ended June
30, 2004, we earned $40.1 million, an increase of 10.7 million or 36.6%
compared to the same period in 2003. Fully diluted earnings per share for the
six months ended June 30, 2004 and 2003 were $0.84 and $0.66, respectively. For
the 2004 year, we anticipate our earnings per share to be in the $1.72 to $1.75
range. Page 11




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Our revenues consist of approximately 90% net interest income, which
represents the difference between interest income and interest expense, and 10%
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 U.S. Small Business
Administration (SBA) loans and securities. As a result of the increased earnings of the organization, our return on
average assets (ROA) increased to 1.39% and 1.40% for the three months and
six month periods ended June 30, 2004, compared with 1.25% and 1.21%,
respectively, for corresponding periods of 2003. Our return on average equity
(ROE) was 18.54% and 18.56% for the same periods in 2004, compared to 20.12%
and 19.68%, respectively, for the corresponding periods in 2003. The decrease
in the ROE reflects the net effect of the ROE reduction created by the
acquisition of First Continental Bank (FCB) for 100% stock in 2003, partially
offset by our increased earnings in 2004 compared with 2003. We anticipate
that our earnings will continue to increase for the rest of the year, which
will improve our ROA and ROE as well. Our Efficiency Ratio, which represents the ratio of total noninterest
expense to the sum of net interest income and noninterest income, increased to
41.50% for the second quarter of 2004, compared to 39.19% for the corresponding
period of the prior year. The Efficiency Ratio for the six months ended June
30, 2004 and 2003 was 40.97% and 42.50%, respectively. The quarter over
quarter increase was primarily due to increased expenses related to growth
associated with our commercial banking division and the Hong Kong branch, as
well as the acquisition of FCB in July 2003. Compared to the prior periods, our interest income increased by $8.9
million and $16.4 million, or 14.1% and 13.1% for the three and six months
ended June 30, 2004, respectively, primarily as a result of increases in our
average interest-earning assets. The average interest-earning assets increased
as a result of our loan production and as a result of our acquisition of FCB in
July 2003. Our average loans outstanding were $3.94 billion and $3.89 billion
in the three and six months ended June 30, 2004, compared with $3.19 billion
and $3.13 billion for the same period in 2003. As a financial institution, we are sensitive to fluctuations in market
interest rates. As a result of the decreases in market interest rates during
the first six months of 2004, the yields on our loans and securities have been
decreasing. The interest rate decreases however have also reduced the cost of
our deposits and borrowings. The decrease in the loan loss provision for the three and six months ended
June 30, 2004 compared with the corresponding periods of the prior year reflect
the net effect of lower provisions necessary for increased multifamily and
residential loans, partially offset by an increased provision resulting from
the increase in the commercial real estate and commercial business loan
commitments. Further, the asset quality of the residential (one to four
family) and multifamily loan portfolios was strong during these periods. This
strong asset quality resulted in a decrease in the provision for these
portfolios. Our noninterest income decreased in the second quarter of 2004, to $5.4
million from $6.1 million in the second quarter of 2003, as a result of
decreased gains on sales of securities and increase equity losses in other
equity investments. These were partially offset by increases in commercial
banking and other fees and gains on
sales of SBA loans. Noninterest income for the six months ended June 30,
2004 and 2003 totaled $12.2 million and $9.8 million, respectively. Our noninterest expenses increased to $23.0 million and $45.8 million in
the three and six months ended June 30, 2004, from $17.9 million and $37.7
million for the corresponding periods of 2003. This increase reflects the
acquisition of FCB in July 2003, the expansion of our Commercial Banking
Division and the expansion of our Hong Kong Branch. Page 12




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TRENDS 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: (TOTAL BALANCE SHEET GRAPHS) Page 13




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(CORE DEPOSITS GRAPH) We have grown our balance sheet at a compounded rate of 20.8% since 1998.
In 2002, we acquired Bank of Canton California (BCC), with assets of $1.45
billion, which accounts for the substantial increase in the assets that year.
Similarly, in 2003, we acquired First Continental Bank with assets of $356.7
million. The balance sheet growth without these acquisitions was at a
compounded annualized rate of 12.5% since 1998. Our ongoing goal is to grow
our balance sheet organically in a range of 14% to 17% per annum. Our loan portfolio has grown at a compounded rate of 19.9% since 1998.
Without the acquisitions of BCC and FCB, the growth rate was 15.4%, compounded
annually. Our ongoing goal is to increase our loan portfolio by a range of 15%
to 20% annually. We grow our loan portfolio origination network and do not
rely on the purchase of loans to meet our growth objectives. Our deposits have grown at a compounded rate of 21.8% since 1998. Without
the acquisitions of BCC and FCB, the growth rate was 13.4%, compounded
annually. Our core deposits have grown at a rate of 36.0% since becoming a
commercial bank. Through making further incursions in our Asian customer-oriented niche
market and by expanding into new market areas, management believes that it will
meet the stated growth objectives for 2004. Following is a table reflecting our asset quality since becoming a
commercial bank: 1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    June 2004Charge-offs as a % of average loans
    
    
    0.05
    %
    
    
    0.07
    %
    
    
    0.02
    %
    
    
    0.00
    %
    
    
    0.23
    %
    
    
    0.06
    %
    
    
    0.04
    %Loan delinquency ratio (30 days +)
    
    
    0.78
    %
    
    
    1.12
    %
    
    
    0.75
    %
    
    
    0.64
    %
    
    
    0.88
    %
    
    
    0.86
    %
    
    
    0.82
    %Ratio of nonperforming loans to total loans
    
    
    0.41
    %
    
    
    0.27
    %
    
    
    0.13
    %
    
    
    0.04
    %
    
    
    0.15
    %
    
    
    0.15
    %
    
    
    0.17
    %
 We have maintained a high credit quality by adhering to our credit
underwriting criteria. Our goal is to maintain nonperforming assets to 25
basis points or less of ending assets. We have achieved this operating
performance metric for twenty-one consecutive quarters. Page 14




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The chart below presents selected operating metrics of the Company since
becoming a commercial bank: 1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    June 2004Return on Average Assets
    
    
    0.60
    %
    
    
    0.87
    %
    
    
    1.02
    %
    
    
    1.12
    %
    
    
    1.14
    %
    
    
    1.26
    %
    
    
    1.39
    %Return on Average Equity
    
    
    12.52
    %
    
    
    18.00
    %
    
    
    20.12
    %
    
    
    19.58
    %
    
    
    18.42
    %
    
    
    18.84
    %
    
    
    18.54
    %Efficiency Ratio (1)
    
    
    60.32
    %
    
    
    49.74
    %
    
    
    45.70
    %
    
    
    46.79
    %
    
    
    46.94
    %
    
    
    41.83
    %
    
    
    41.50
    %Net Interest Margin (2)
    
    
    2.98
    %
    
    
    3.34
    %
    
    
    3.62
    %
    
    
    3.73
    %
    
    
    3.79
    %
    
    
    3.49
    %
    
    
    3.66
    %
  (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 results from the continuing balance
sheet restructuring, by reducing the concentration in lower yielding loans and
increasing core deposits. The ROA and ROE have increased, accordingly. When
we acquired BCC, we blended our 4.02% margin with their 2.23% margin. BCC had
a heavy concentration of securities and Certificates of Deposit, which caused
compression in the margin. Through restructuring the BCC assets and deposits,
we have improved our margin. 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 Tier I and Total risk-based capital ratios
since 1998. As of June 30, 2004, the Bank met the well capitalized
requirements under these guidelines. (OPERATING METRICS GRAPHS) Page 15




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(TOTAL RISK-BASED RATIO GRAPH) We have declared dividends since 1999 and plan to continue dividend
payments for the next year. The chart below presents our dividend payments on
a per share basis and in total since 1998. The dividends for 2004 have been
annualized to be comparable with prior periods. (FIVIDENDS DICLARED PER SHARE GRAPH) CORPORATE DEVELOPMENTS The Bank plans to expand its branch presence in key target markets during
2004. In June 2004, the Bank opened a new branch in Torrance, California, the
Banks sixteenth in the Southern California region. A second branch in the
region is also planned with lease negotiations currently in process and an
anticipated opening date in the third quarter of 2004. Also in June 2004, the
Bank opened a new branch in Foster City, California. Recently, the Bank signed
a lease for a second branch in New York City. The Bank is currently in the
process of pursuing a lease for a third metropolitan New York location. Page 16




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During the first quarter of 2004, the Companys wholly owned subsidiary
UCB Investment Services (UCBIS) commenced business. UCBIS is a registered
broker-dealer with the SEC and a member of the NASD and Securities Investor
Protection Corporation (SIPC). UCBIS will act as an introducing broker in
the sales of mutual funds, listed and over-the-counter equity securities, and
corporate, municipal, and U.S. government debt. UCBIS will also sell fixed and
variable annuities and covered options for its customers. UCBIS is registered
with the Municipal Securities Rulemaking Board (MSRB). UCBIS will not have
custody or possession of customer funds or securities. Customer accounts will
be carried on a fully-disclosed basis at UCBIS clearing firm National
Financial Services, LLC. CRITICAL ACCOUNTING ESTIMATES 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 accounting principles generally accepted in the
United States of America (GAAP) requires management to make certain estimates
and assumptions that 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 covers the
commercial and consumer loan portfolios and is intended to adjust the value of
the Companys loan assets for probable credit losses inherent at a balance
sheet date in accordance with GAAP. The methodology for calculating the
allowance involves significant judgment. First and foremost, it involves early
detection of credits that are deteriorating. Second, it involves managements
judgment to derive loss factors. The Company uses a risk grading system to determine the credit quality of
its loans. Loans are reviewed for information affecting the obligors ability
to fulfill contractual obligations. In assessing the risk grading of a
particular loan, the factors considered include:  
    
    the borrower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 would 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 and loss factors assigned to loans are appropriate. Page 17




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Managements judgment is also applied when considering uncertainties based
on current macroeconomic conditions and other factors. For example, judgment
as to the economic outlook in California will affect managements assessment of
probable 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 at the
balance sheet date. In the second quarter of 2004, we reclassified
approximately $3.1 million of the allowance for loan losses to other
liabilities. This reclassification represents allocated loss allowances for
unfunded loan commitments and off-balance-sheet commitments for letters of
credit. For comparison purposes, $2.8 million of the allowance for loan losses
in December 31, 2003 was also reclassified. 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. If after the Company
had to sell one of these assets and then discover that its estimate of fair
value had been too high, then losses not anticipated or greater than
anticipated could result. Gains not anticipated or greater than anticipated
could result if the Company were to sell one of these assets, subsequently
discovering that its estimate of fair value had been too low. The Company
arrives at estimates of fair value as follows: Available-for-Sale Securities.The fair values of most securities
classified as available for sale are based on quoted market prices. If quoted
market prices are not available, fair values are extrapolated from the quoted
prices of similar instruments. Goodwill and Other Intangible Assets.The Company establishes goodwill
and other intangible assets including core deposit intangibles and capitalized
servicing rights by estimating 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.Mortgage servicing rights arise from the sale
of loans through securitization and retention of 1-4 single-family and
multifamily loans. 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 at inception is based upon
managements best estimate of the market value based upon discounted cash
flows. 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. Page 18




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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 that 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 quarter 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 2 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 would have been
recognized. RESULTS OF OPERATIONS General. The Companys primary source of income is net interest income,
which is the difference between interest income from interest-earning assets,
such as loans and securities, and interest paid on interest-bearing
liabilities, such as deposits and other borrowings used to fund those assets.
The Companys net interest income is affected by changes in the volume of
interest-earning assets and interest-bearing liabilities as well as by changes
in yields earned on interest-earning assets and rates paid on interest-bearing
deposits and other borrowed funds. The Company also generates noninterest
income, including commercial banking fees, gain on sale of U.S. Small Business
Administration (SBA) loans, gain on sale of securities, and other
transactional fees. The Companys source of noninterest income derives
predominantly from commercial banking fees plus any gains on sale of loans and
securities. The Companys noninterest expenses consist primarily of personnel,
occupancy, professional fees, and other operating expenses. The Companys
results of operations are affected by its provision for loan losses and may
also be significantly affected by other factors including general economic and
competitive conditions, changes in market interest rates, governmental policies
and the actions of regulatory agencies. Operating Data and Ratios Following is a table of selected operating metrics for the quarters ended
June 30, 2004 and 2003: For the Three MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $/Basis Points
    
    %(Dollars in Thousands)Net Income
    
    $
    20,268
    
    
    $
    15,428
    
    
    $
    4,840
    
    
    
    31.37
    %Diluted Earnings per Share
    
    $
    0.43
    
    
    $
    0.35
    
    
    $
    0.08
    
    
    
    22.86
    %Return on Average Assets
    
    
    1.39
    %
    
    
    1.25
    %
    
    14 bp
    
    
    11.20
    %Return on Average Equity
    
    
    18.54
    %
    
    
    20.12
    %
    
    (158) bp
    
    
    (7.85
    %)Efficiency Ratio
    
    
    41.50
    %
    
    
    39.19
    %
    
    231 bp
    
    
    5.89
    %
 The consolidated net income of the Company during the three months ended
June 30, 2004, increased by $4.8 million compared with the corresponding period
of the preceding year. The increase in net income was primarily due to an
increase in net interest income, which was partially offset by an increase in
noninterest expense, during the current period as compared to the corresponding
period in the prior year. The annualized return on average assets (ROA) ratio for the three months
ended June 30, 2004 improved primarily due to higher net interest income. The
annualized return on average equity (ROE) for the three months ended June 30,
2004 was 1.58% lower than the ROE for the corresponding period of the prior
year, reflecting the Companys acquisition of First Continental Bank (FCB )
in July 2003 for 100% stock. Page 19




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##### Table of Contents



Following is a table of selected operating metrics for the six-month
periods ended June 30, 2004 and 2003: For the Six MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $/Basis Points
    
    %(Dollars in Thousands)Net Income
    
    $
    40,087
    
    
    $
    29,356
    
    
    $
    10,731
    
    
    
    36.55
    %Diluted Earnings per Share
    
    $
    0.84
    
    
    $
    0.66
    
    
    $
    0.18
    
    
    
    27.27
    %Return on Average Assets
    
    
    1.40
    %
    
    
    1.21
    %
    
    19 bp
    
    
    15.70
    %Return on Average Equity
    
    
    18.56
    %
    
    
    19.68
    %
    
    (112) bp
    
    
    (5.69
    %)Efficiency Ratio
    
    
    40.97
    %
    
    
    42.50
    %
    
    (153) bp
    
    
    (3.60
    %)
 The consolidated net income of the Company during the six months ended
June 30, 2004, increased by $10.7 million, or 36.5%, to $40.1 million, compared
to $29.4 million for the corresponding period of the preceding year, primarily
as a result of the increase in interest-earning assets. The ROA for the six months ended June 30, 2004 improved primarily due to
higher net income. The ROE decreased for the six months ended June 30, 2004
compared to the corresponding period in the prior year due to the Companys
purchase of FCB. Net Interest Income. Following is a table of selected ratios that reflect
the dynamics of the interest income for the Company for the three-month periods
ending June 30, 2004 and 2003: For the Three MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $/Basis Points
    
    %(Dollars in Thousands)Net interest income before
provision for loan losses
    
    $
    49,915
    
    
    $
    39,631
    
    
    $
    10,284
    
    
    
    25.95
    %Net interest margin (1)
    
    
    3.66
    %
    
    
    3.42
    %
    
    24 bp
    
    
    7.02
    %Average yield on loans
    
    
    5.34
    %
    
    
    5.74
    %
    
    (40) bp
    
    
    (6.97
    %)Average yield on securities
    
    
    4.60
    %
    
    
    4.37
    %
    
    23 bp
    
    
    5.26
    %Average cost of deposits
    
    
    1.32
    %
    
    
    1.70
    %
    
    (38) bp
    
    
    (22.35
    %)Average cost of borrowings
    
    
    3.55
    %
    
    
    4.36
    %
    
    (81) bp
    
    
    (18.58
    %)
  (1)
    
    Calculated on a tax equivalent basis. Net interest income before provision for loan losses increased $10.3
million for the three months ended June 30, 2004 compared to the corresponding
quarter in prior year. The increase in net interest income reflects the growth
in interest-earning assets, primarily in the Companys loan portfolio, coupled
with a 24 basis point improvement in the net interest margin. The average cost of deposits decreased 38 basis points from the three
months ended June 30, 2003 to the three months ended June 30, 2004. This
savings was partially offset by a 40 basis point decrease in average loan
yields from the three-month period ended June 30, 2003 to the comparable period
in 2004. The decrease in all areas reflects the decline in the overall market
interest rate environment from the prior year. The decrease in
loan yields reflects 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. Page 20




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##### Table of Contents



Following is a table of selected ratios that reflect the dynamics of the
interest income for the Company for the six-month periods ending June 30, 2004
and 2003: For the Six MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $/Basis Points
    
    %(Dollars in Thousands)Net interest income before
provision for loan losses
    
    $
    99,455
    
    
    $
    78,929
    
    
    $
    20,526
    
    
    
    26.00
    %Net interest margin
    
    
    3.72
    %
    
    
    3.45
    %
    
    27 bp
    
    
    7.83
    %Average yield on loans
    
    
    5.42
    %
    
    
    5.75
    %
    
    (33) bp
    
    
    (5.74
    %)Average yield on securities
    
    
    4.58
    %
    
    
    4.60
    %
    
    (  2) bp
    
    
    (0.43
    %)Average cost of deposits
    
    
    1.31
    %
    
    
    1.75
    %
    
    (44) bp
    
    
    (25.14
    %)Average cost of borrowings
    
    
    3.56
    %
    
    
    4.35
    %
    
    (79) bp
    
    
    (18.16
    %)
 Net interest income before provision for loan losses increased $20.5
million for the six months ended June 30, 2004 compared to the corresponding
period in prior year. The increase in net interest income reflects the growth
in interest-earning assets, primarily in the Companys loan portfolio, coupled
with a 27 basis point improvement in the net interest margin. The average cost
of deposits decreased 44 basis points from the six-month period ended June 30,
2003 to the corresponding period in 2004. This savings was partially offset by
a 33 basis point decrease in average loan yields from for the three months
ended June 30, 2003 to the comparable period in 2004. The decrease in loan
yields and the deposit cost reflects the decline in the overall market interest
rate environment from the prior year. The decrease in loan yields reflects
repricing of adjustable-rate loans resulting from reductions in market interest
rate indices, as well as the impact of accelerated prepayments on
higher-yielding loans due to the lower market interest rates. The net interest margin, calculated on a tax equivalent basis, was 3.72%
for the six months ended June 30, 2004, as compared to 3.45% for the
corresponding period of 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. Following is a table reflecting selected average balances of the Companys
assets and liabilities for the six-months ended June 30, 2004 and 2003: For the six months endedJune 30,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in Thousands)Average interest-earning assets
    
    $
    5,487,116
    
    
    $
    4,677,515
    
    
    $
    809,601
    
    
    
    17.31
    %Average interest-bearing liabilities
    
    
    4,881,170
    
    
    
    4,248,776
    
    
    
    632,394
    
    
    
    14.88
    %Average loans outstanding
    
    
    3,889,384
    
    
    
    3,128,412
    
    
    
    760,972
    
    
    
    24.32
    %Average securities outstanding
    
    
    1,591,002
    
    
    
    1,546,546
    
    
    
    44,456
    
    
    
    2.87
    %Average outstanding deposits
    
    
    4,636,573
    
    
    
    4,034,329
    
    
    
    602,244
    
    
    
    14.93
    %Average outstanding borrowings
    
    
    459,956
    
    
    
    338,123
    
    
    
    121,833
    
    
    
    36.03
    %
 Page 21




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##### Table of Contents



The following table presents the composition of the Banks average loan
portfolio at the dates indicated: For the six months endedJune 30,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in Thousands)Average commercial loans
    
    $
    3,537,100
    
    
    $
    2,775,813
    
    
    $
    761,287
    
    
    
    27.43
    %Average consumer loans
    
    
    352,284
    
    
    
    352,599
    
    
    
    (315
    )
    
    
    (0.09
    %)Average gross loans
    
    $
    3,889,384
    
    
    $
    3,128,412
    
    
    $
    760,972
    
    
    
    24.32
    %
 The following table presents components of the Banks average outstanding
deposits at the dates indicated: For the six months endedJune 30,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in Thousands)Average non-interest bearing deposits
    
    $
    351,358
    
    
    $
    259,676
    
    
    $
    91,682
    
    
    
    35.31
    %Average interest bearing deposits
    
    
    4,285,215
    
    
    
    3,774,653
    
    
    
    510,562
    
    
    
    13.53
    %Total average outstanding deposits
    
    $
    4,636,573
    
    
    $
    4,034,329
    
    
    $
    602,244
    
    
    
    14.93
    %
 The increase of $809.6 million on average earning assets for the six
months ended June 30, 2004 resulted primarily from organic commercial loan
growth. Average outstanding loans increased $761.0 million for the six months
ended June 30, 2004 from the same period last year as a result of the Banks
continued focus on commercial lending activities, and the FCB acquisition.
Average commercial loan balances increased $761.3 million for the six months
ended June 30, 2004. This increase is primarily due to the Banks continued
emphasis on commercial real estate and commercial business loans, and expansion
of its Hong Kong branch. Average consumer loans for the six months ended June
30, 2004 and 2003 remained relatively constant at $352.3 million and $352.6
million. New loan commitments of $1.17 billion for the six months ended June
30, 2004 were comprised of $1.02 billion in commercial and $148.1 million in
consumer commitments. As of the June 30, 2004 the loan pipeline approximated
$1.21 billion, which was comprised of $1.17 billion for commercial loans and
$40.1 million for consumer loans. Average securities increased $44.5 million for the first six months ended
June 30, 2004. This increase was primarily due to purchases that occurred
early as well as internal securitizations during the year. Securities
prepayments, which accelerated with the lower market interest rate environment,
were substantially replaced with new securities purchases. During the first
six months of 2004, the Company also sold securities with an aggregate
principal balance of $484.6 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 outstanding deposits increased $602.2 million for the six months
ended June 30, 2004 compared to the corresponding period of 2003. This
increase is a result of the Companys ongoing focus on the generation of
commercial and consumer demand deposits and the FCB acquisition. Both average
interest-bearing and average noninterest bearing deposits increased $510.6
million and $91.7 million, respectively, for the six months ended June 30, 2004
compared to the corresponding period in 2003. Page 22




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The following table presents condensed average balance sheet information
for the Company, together with interest rates earned and paid on the various
sources and uses of funds for each of the periods indicated: For the Six Months Ended
    
    For the Six Months EndedJune 30, 2004
    
    June 30, 2003(Dollars in Thousands)Average
    
    Interest
    
    Average
    
    Average
    
    Interest
    
    AverageBalance
    
    Income or Expense
    
    Yield/Cost
    
    Balance
    
    Income or Expense
    
    Yield/CostInterest-earning assets:Loans (1)
    
    $
    3,889,384
    
    
    $
    105,441
    
    
    
    5.42
    %
    
    $
    3,128,412
    
    
    $
    89,979
    
    
    
    5.75
    %Securities
    
    
    1,591,002
    
    
    
    36,401
    
    
    
    4.58
    
    
    
    1,546,546
    
    
    
    35,545
    
    
    
    4.60Other
    
    
    6,730
    
    
    
    108
    
    
    
    3.21
    
    
    
    2,557
    
    
    
    19
    
    
    
    1.49Total interest-earning assets
    
    
    5,487,116
    
    
    
    141,950
    
    
    
    5.17
    
    
    
    4,677,515
    
    
    
    125,543
    
    
    
    5.37Noninterest-earning assets
    
    
    229,913
    
    
    
    
    
    
    
    
    
    
    
    192,892
    
    
    
    
    
    
    
    Total assets
    
    $
    5,717,029
    
    
    $
    141,950
    
    
    
    4.97
    %
    
    $
    4,870,407
    
    
    $
    125,543
    
    
    
    5.16
    %Interest-bearing liabilities:Deposits:NOW, checking, and money market accounts
    
    $
    757,995
    
    
    $
    3,707
    
    
    
    0.98
    %
    
    $
    572,520
    
    
    $
    3,515
    
    
    
    1.23
    %Savings accounts
    
    
    883,849
    
    
    
    3,574
    
    
    
    0.81
    
    
    
    727,268
    
    
    
    3,799
    
    
    
    1.04Time deposits
    
    
    2,643,371
    
    
    
    23,122
    
    
    
    1.75
    
    
    
    2,474,865
    
    
    
    27,945
    
    
    
    2.26Total interest bearing deposits
    
    
    4,285,215
    
    
    
    30,403
    
    
    
    1.42
    
    
    
    3,774,653
    
    
    
    35,259
    
    
    
    1.87Borrowings
    
    
    459,955
    
    
    
    8,182
    
    
    
    3.56
    
    
    
    338,123
    
    
    
    7,355
    
    
    
    4.35Guaranteed preferred beneficial interests in junior
subordinated debentures
    
    
    136,000
    
    
    
    3,910
    
    
    
    5.75
    
    
    
    136,000
    
    
    
    4,000
    
    
    
    5.88Total interest-bearing liabilities
    
    
    4,881,170
    
    
    
    42,495
    
    
    
    1.74
    %
    
    
    4,248,776
    
    
    
    46,614
    
    
    
    2.19
    %Noninterest-bearing deposits
    
    
    351,358
    
    
    
    
    
    
    
    
    
    
    
    259,676Other noninterest-bearing liabilities
    
    
    52,506
    
    
    
    
    
    
    
    
    
    
    

    63,631Stockholders equity
    
    
    431,995
    
    
    
    
    
    
    
    
    
    
    
    298,324Total liabilities and stockholders equity
    
    $
    5,717,029
    
    
    
    
    
    
    
    
    
    
    $
    4,870,407Net interest income/net interest rate spread (2) (3)
    
    
    
    
    
    $
    99,455
    
    
    
    3.43
    %
    
    
    
    
    
    $
    78,929
    
    
    
    3.17
    %Net interest-earning assets/net interest margin (3) (4)
    
    $
    605,946
    
    
    
    
    
    
    
    3.63
    %
    
    $
    428,739
    
    
    
    
    
    
    
    3.37
    %Ratio of interest-earning assets to interest-bearing
Liabilities
    
    
    1.12
    x
    
    
    
    
    
    
    
    
    
    
    1.10
    x
  (1)
    
    Nonaccrual loans are included in the table for computation purposes, but
the foregoing interest on such loans is excluded.(2)
    
    Interest rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing
liabilities.(3)
    
    Calculated on a nontax equivalent basis.(4)
    
    Net interest margin represents net interest income divided by average
interest-earning assets. Provision for Loan Losses. The Company uses a systematic methodology to
calculate the allowance for loan losses. Through application of this
methodology, which takes into account the loan portfolio mix, credit quality,
loan growth, the amount and trends relating to the Companys delinquent and
nonperforming loans, regulatory policies, general economic conditions and other
factors relating to the collectibility of loans in the portfolio, management
determines the appropriateness of the allowance for loan losses, which is
adjusted by quarterly provisions charged against earnings. Page 23




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##### Table of Contents



For the three months ended June 30, 2004, our provision for loan losses
was $1.0 million, a decrease of $1.8 million, compared to a provision of $2.8
million for the corresponding period of 2003. For the six months ended June
30, 2004, our provision for loan losses was $3.2 million, a decrease of
$642,000, compared to a provision of $3.8 million for the corresponding period
of 2003. The provision for loan losses for the six months ended June 30, 2004,
resulted from the following factors:  
    
    Loan Growth and Portfolio Composition:Our overall loan portfolio grew $257.8 million from December 31, 2003 to
June 30, 2004, primarily as a result of the Banks continued focus on
commercial lending activities. Loan growth remained concentrated in the
Banks commercial portfolio.Although loan growth remained concentrated in the commercial loan
portfolio, the multifamily segment of the commercial commitments achieved
the strongest growth rate. The multifamily loan commitments increased by
37.6% and 36.5% in the three and six months ended June 30, 2004 from the
corresponding periods of 2003, respectively. Multifamily loans grew at
an annualized rate of 12.1% during the first six months of 2004.The residential mortgage loan commitments also increased substantially in
2004. Residential commitments increased by 168.3% in the second quarter
of 2004, compared with the second quarter of 2003. For the six months
ended June 30, 2004, residential commitments increased by 94.8% compared
with the corresponding period of 2003. Residential loans grew at an
annualized rate of 69.8% during the first six months of 2004.Commercial real estate commitments decreased by 3.5% in the quarter ended
June 30, 2004, compared with the corresponding period of the prior year.
For the six months ended June 30, 2004, commercial real estate
commitments increased by 15.2%. Commercial real estate loans increased
at an annualized rate of 4.5% during the first six months of 2004.During the second quarter of 2004, outstanding construction commitments
increased 15.9% compared to the corresponding period of the prior year.
For the first six months of 2004, outstanding construction commitments
increased 20.3% compared to the first half of 2003.  
    
    Asset Quality:Criticized loans, which are defined as those we
classify as risk-graded Special Mention, Substandard, Doubtful, or
Loss, were less than 2.0% of total loans at June 30, 2004 and December
31, 2003. Nonaccrual loans increased from $5.9 million at December 31,
2003, to $6.8 million at June 30, 2004. The increase reflects one new
commercial real-estate loan that was placed on nonaccrual during the
second quarter of 2004.
    
    Net Charge-offs.Net charge-offs of $1.4 million for the six
months ended June 30, 2004, increased as compared to net charge-offs of
$401,000 for the corresponding period of 2003. The charge-offs in the
six months ended June 30, 2004 and 2003 are related primarily to
commercial business lending.
    
    Management Judgment:To derive the provision for loan losses during
the three and six months ended June 30, 2004, judgment is applied when
considering uncertainties based on current macroeconomic conditions and
other factors. For example, judgment as to the economic outlook in
California will affect managements assessment of potential losses
based on exposure to that marketplace. Page 24




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The asset quality of the residential (one to four family) and multifamily
loan portfolios was strong during the three and six-month periods ended June
30, 2004. This strong asset quality resulted in a decrease in the provision
for these portfolios. The decrease in the loan loss provision for the three
and six months ended June 30, 2004 compared with the corresponding periods of
the prior year reflect the net effect of lower provisions necessary for
increased multifamily and residential loans, partially offset by an increased
provision resulting from the increase in the commercial real estate and
commercial business loan commitments. In the quarter ended June 30, 2004, the Company reclassified approximately
$3.1 million from the allowance for loan losses related to unfunded commitments
and off-balance-sheet commitments for letters of credit to other liabilities.
The reclassification reduced the allowance from $62.6 million, or 1.55% of
loans to $59.5 million, or 1.47% of loans. For comparison purposes, we
reclassified $2.8 million of the December 31, 2003 allowance for loan losses
balance, resulting in the reduction from $60.9 million or 1.61% of loans, to
$58.1 million or 1.53% of loans. Noninterest Income The following tables present the composition of noninterest income for the
periods indicated: For the Three MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in thousands)Commercial banking and other fees
    
    $
    2,156
    
    
    $
    1,661
    
    
    $
    495
    
    
    
    29.80
    %Service charges on deposit accounts
    
    
    714
    
    
    
    635
    
    
    
    79
    
    
    
    12.44
    %Gain on sale of securities
    
    
    2,631
    
    
    
    3,822
    
    
    
    (1,191
    )
    
    
    (31.16
    %)Gain on sale of loans
    
    
    1,371
    
    
    
    
    
    
    
    1,371
    
    
    
    100.00
    %Equity loss in other equity investments
    
    
    (1,489
    )
    
    
    (38
    )
    
    
    (1,451
    )
    
    
    (3818.4
    %)Total noninterest income
    
    $
    5,383
    
    
    $
    6,080
    
    
    $
    (697
    )
    
    
    (11.46
    %)
 Noninterest income for the three months ended June 30, 2004 decreased
$697,000 compared to the corresponding period of 2003 primarily as a result of
the recognition of our share of equity losses on CRA-related investments and a
lower level of securities sales. As disclosed in Note 1 to the financial
statements, the company invests in CRA qualified investments. Such investments
have increased in order to meet requirements under the Community Reinvestment
Act. In the Federal Deposit Insurance Corporations most recently released
public reports dated May 10, 2004, the Bank received an outstanding rating.
Approximately 38% of the Companys historical CRA investment portfolio is in
affordable housing projects which are expected to return a net of tax internal
rate of return of approximately 7%. The above $1.5 million is our share of the
underlying investment equity losses exclusive of tax benefits and credits. Commercial banking and other fees increased $495,000 for the three ended
June 30, 2004 compared to the corresponding period of 2003. This is a result
of increased commercial banking activities, primarily in trade finance
business. Gains on sale of Small Business Administration (SBA) loans totaled
$1.4 million for the three months ended June 30, 2004. There were no SBA loan
sales during the corresponding period in 2003. Gains recognized on sale of
securities decreased $1.2 million for the three months ended June 30, 2004 to
$2.6 million, compared to $3.8 million in the corresponding quarter of 2003.
The decrease in the securities gains reflects the June 2004 completion of the
securities restructuring program that the Company initiated in the second
quarter of 2003. Page 25




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The following tables present the composition of noninterest income for the
periods indicated: For the Six MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in thousands)Commercial banking fees
    
    $
    4,025
    
    
    $
    3,317
    
    
    $
    708
    
    
    
    21.34
    %Service charges on deposit accounts
    
    
    1,331
    
    
    
    1,141
    
    
    
    190
    
    
    
    16.65
    %Gain on sale of securities
    
    
    6,493
    
    
    
    4,892
    
    
    
    1,601
    
    
    
    32.73
    %Gain on sale of loans
    
    
    1,881
    
    
    
    517
    
    
    
    1,364
    
    
    
    263.83
    %Equity loss in other equity investments
    
    
    (1,489
    )
    
    
    (76
    )
    
    
    (1,413
    )
    
    
    (1859.21
    %)Total noninterest income
    
    $
    12,241
    
    
    $
    9,791
    
    
    $
    2,450
    
    
    
    25.02
    %
 Noninterest income for the six months ended June 30, 2004 increased $2.4
million compared to the corresponding period of 2003. This increase primarily
resulted from increases in gains from sale of securities and loans. Commercial
banking fees increased $708,000 for the six months ended June 30, 2004 compared
to the corresponding period of 2003. This is a result of increased commercial
banking activities, primarily in trade finance business. Gains recognized on
sale of securities increased $1.6 million for the six months ended June 30,
2004. The increase relates to the completion of the securities restructuring
program discussed above. Gains on sale of loans increased by $1.4 million for
the six months ended June 30, 2004 compared to the corresponding period in 2003
as a result of SBA Loan sales. As discussed above, the Company recognized $1.5
million of equity losses from CRA related investments during the six months
ended June 30, 2004. Noninterest Expense The following tables present the composition of noninterest expense during
the periods indicated: For the Three MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in Thousands)Personnel
    
    $
    11,696
    
    
    $
    9,249
    
    
    $
    2,447
    
    
    
    26.46
    %Occupancy
    
    
    2,179
    
    
    
    1,335
    
    
    
    844
    
    
    
    63.22
    %Data Processing
    
    
    1,400
    
    
    
    1,085
    
    
    
    315
    
    
    
    29.03
    %Furniture and equipment
    
    
    1,385
    
    
    
    769
    
    
    
    616
    
    
    
    80.10
    %Professional fees and
contracted services
    
    
    1,601
    
    
    
    1,442
    
    
    
    159
    
    
    
    11.03
    %Deposit Insurance
    
    
    197
    
    
    
    161
    
    
    
    36
    
    
    
    22.36
    %Communication
    
    
    319
    
    
    
    232
    
    
    
    87
    
    
    
    37.50
    %Intangible amortization
    
    
    482
    
    
    
    538
    
    
    
    (56
    )
    
    
    (10.41
    %)Miscellaneous expense
    
    
    3,692
    
    
    
    3,101
    
    
    
    591
    
    
    
    19.06
    %Total noninterest expense
    
    $
    22,951
    
    
    $
    17,912
    
    
    $
    5,039
    
    
    
    28.13
    %
 Noninterest expense increased $5.0 million for the three months ended June
30, 2004, as compared with the corresponding period of 2003 primarily due to
higher personnel and occupancy expenses. Personnel expenses increased $2.4
million for the three months ended June 30, 2004 compared to the corresponding
period of 2003, as a result of additional staffing resulting from the FCB
acquisition and staffing required to support continued growth of the Banks
commercial banking business. Occupancy expenses are net of rental income of
$1.3 million
for the three months ended June 30, 2004. Occupancy expenses are net of
rental income of $1.6 million for the Page 26




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corresponding period of 2003. The
increased occupancy expenses resulted from the FCB acquisition and branch
expansion. Included in noninterest expense is core deposit intangible
amortization of $482,000 for the three months ended June 30, 2004, compared
with $538,000 for the corresponding period of 2003. The core deposit
intangible was recorded in connection with the acquisitions of Bank of Canton
of California (BCC), the New York branch, and FCB. The increase in
miscellaneous expenses of $591,000 for the three months ended June 30, 2004
compared with the corresponding period of 2003 was primarily related to the
Companys continued expansion, relocation costs as well as advertising costs. The following tables present the composition of noninterest expense during
the periods indicated: For the Six MonthsEnded June 30,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in Thousands)Personnel
    
    $
    24,611
    
    
    $
    20,373
    
    
    $
    4,238
    
    
    
    20.80
    %Occupancy
    
    
    3,724
    
    
    
    2,527
    
    
    
    1,197
    
    
    
    47.37
    %Data Processing
    
    
    2,694
    
    
    
    2,206
    
    
    
    488
    
    
    
    22.12
    %Furniture and equipment
    
    
    2,414
    
    
    
    1,536
    
    
    
    878
    
    
    
    57.16
    %Professional fees and
contracted services
    
    
    3,124
    
    
    
    3,106
    
    
    
    18
    
    
    
    0.58
    %Deposit Insurance
    
    
    402
    
    
    
    326
    
    
    
    76
    
    
    
    23.31
    %Communication
    
    
    615
    
    
    
    471
    
    
    
    144
    
    
    
    30.57
    %Intangible amortization
    
    
    715
    
    
    
    1,132
    
    
    
    (417
    )
    
    
    (36.84
    %)Miscellaneous expense
    
    
    7,467
    
    
    
    6,033
    
    
    
    1,434
    
    
    
    23.77
    %Total noninterest expense
    
    $
    45,766
    
    
    $
    37,710
    
    
    $
    8,056
    
    
    
    21.36
    %
 Noninterest expense increased $8.0 million for the six months ended June
30, 2004, as compared to the corresponding period of 2003 primarily due to the
increase in personnel, occupancy and miscellaneous expenses. Personnel
expenses increased $4.2 million for the six months ended June 30, 2004 compared
to the corresponding period of 2003, as a result of additional staffing
resulting from the FCB acquisition and staffing required to support continued
growth of the Banks commercial banking business. Occupancy expenses are net
of rental income of $2.8 million for the six months ended June 30, 2004.
Occupancy expenses are net of rental income of $3.2 million for the
corresponding period of 2003. The increased occupancy expenses resulted from
the FCB acquisition and branch expansion. Included in noninterest expense is
core deposit intangible amortization of $715,000 for the six months ended June
30, 2004, compared with $1.1 million for the corresponding period of 2003. The
core deposit intangible was recorded in connection with the acquisitions of
BCC, the New York branch, and FCB. The increase in miscellaneous expenses of
$1.4 million for the six months ended June 30, 2004 compared with the
corresponding period of 2003 was primarily related to the Companys continued
expansion, relocation costs as well as advertising costs. Provision for Income Taxes. The provision for income taxes was $11.1
million and $9.5 million on the income before taxes of $31.3 million and $25.0
million for the three months ended June 30, 2004 and 2003, respectively. The
provision for income taxes was $22.7 million and $17.8 million on the income
before taxes of $62.7 million and $47.2 million for the six months ended June
30, 2004 and 2003, respectively. The effective tax rate for the quarter ended
June 30, 2004, was 35.3%, compared with 38.2% for the three months ended June
30, 2003. The effective tax rate for the six months ended June 30, 2004, was
36.1%, compared with 37.8% for the corresponding period in 2003. These rates
are lower than the combined federal and state statutory rate of 42.0% primarily
due to federal and state tax credits and incentives, tax-exempt income and an
increase in CRA tax credits. Page 27




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FINANCIAL CONDITION The following table outlines the Companys securities, loans and total
assets at the dates indicated: At June 30,
    
    At December 31,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in thousands)Total loans
    
    $
    4,049,426
    
    
    $
    3,791,643
    
    
    $
    257,783
    
    
    
    6.80
    %Securities
    
    $
    1,649,386
    
    
    $
    1,505,782
    
    
    $
    143,604
    
    
    
    9.54
    %Total assets
    
    $
    6,062,112
    
    
    $
    5,587,927
    
    
    $
    474,185
    
    
    
    8.49
    %
 During the six months ended June 30, 2004, total loans increased by $257.8
million. This growth resulted from an organic increase in commercial loans
resulting from the Banks continuing focus on originating such loans. Loan growth prior to internal securitization (see Internal Loan
Securitizations below) of $48.7 million of multifamily loans was $245.0
million, or 25.4% annualized, in the second quarter of 2004. Total commercial
loans grew to $3.64 billion at June 30, 2004, up from $3.48 billion at December
31, 2003, as a result of new commercial loan commitments of $1.02 billion
during the first half of 2004, partially offset by principal repayments and the
internal securitization of multifamily loans. Consumer loans increased to
$415.5 million at June 30, 2004, from $317.5 million at December 31, 2003,
primarily due to new consumer loan commitments. As a result of lower market interest rates, the Company experienced a
higher level of new loan commitments; $1.17 billion for the six months ended
June 30, 2004, which was composed of $1.02 billion in commercial loan
commitments and $148.1 million in consumer commitments. In 2003, the Company implemented a securities restructuring strategy
intended to replace securities that have high prepayment and extension risk
with securities that are shorter-dated and have less prepayment and extension
risk. The Company also increased loan production and accelerated the planned
balance sheet restructuring announced at the time of the BCC acquisition to
reduce the percentage of securities and increase the percentage of loans on the
balance sheet. The securities restructuring strategy and increased loan
production were intended to protect the Company from mark-to-market volatility
in the securities portfolio and better position the Company for accelerated
margin expansion in an upward market interest rate environment. The securities balance (including the available for sale and held to
maturity portfolios) increased by $143.6 million from December 31, 2003 to June
30, 2004. This was primarily the result of purchases of $725.0 million and
internal securitizations of $147.1 million, partially offset by sales of $484.6
million and principal repayments and securities calls of $185.1 million during
the first half of 2004. The Company experienced continued asset and core deposit growth during the
first half of 2004. The increase of $474.2 million in total assets from
December 31, 2003 to June 30, 2004 was primarily related to increases in the
loan and securities portfolio. Page 28




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Loan Quality Data and Ratios The following table outlines certain information regarding the Companys
allowance for loan losses, past due and nonperforming loans for the periods
indicated: At June 30,
    
    At December 31,
    
    Increase (Decrease)2004
    
    2003
    
    $/Basis Points
    
    %(Dollars in thousands)Allowance for loan losses
    
    $
    59,469
    
    
    $
    58,126
    
    
    $
    1,343
    
    
    
    2.31
    %Allowance for loan losses to total loans
    
    
    1.47
    %
    
    
    1.53
    %
    
    (6) bp
    
    
    (3.92
    %)Past due loans to total loans
    
    
    0.82
    %
    
    
    0.86
    %
    
    (4) bp
    
    
    (4.65
    %)Nonperforming loans/assets
    
    $
    6,779
    
    
    $
    5,857
    
    
    $
    922
    
    
    
    15.74
    %Nonperforming assets to total assets
    
    
    0.11
    %
    
    
    0.10
    %
    
    1  bp
    
    
    10.00
    %
 The allowance for loan losses increased $ 1.3 million from December 31,
2003 to June 30, 2004 which reflected the growth in the loan portfolio during
the six months ended June 30, 2004 and the increased concentration in
commercial loans. The ratio of past due loans to total loans decreased 4 basis
points from December 31, 2003 as a result of our continued focus in maintaining
high asset quality. The increase of $922,000 in nonperforming assets is
primarily attributable to a commercial loan secured by nonresidential real
estate. The following table shows the composition of the Banks loan portfolio by
amount and percentage of gross loans in each major loan category at the dates
indicated: At June 30, 2004
    
    At December 31, 2003Amount
    
    %
    
    Amount
    
    %(Dollars in Thousands)Commercial:Secured by real estate-nonresidential
    
    $
    1,762,824
    
    
    
    43.46
    %
    
    $
    1,724,179
    
    
    
    45.37
    %Secured by real estate-multifamily
    
    
    1,233,052
    
    
    
    30.39
    
    
    
    1,162,565
    
    
    
    30.59Construction
    
    
    259,792
    
    
    
    6.40
    
    
    
    293,875
    
    
    
    7.74Commercial business
    
    
    385,608
    
    
    
    9.51
    
    
    
    302,159
    
    
    
    7.95Total commercial
    
    
    3,641,276
    
    
    
    89.76
    
    
    
    3,482,778
    
    
    
    91.65Consumer:Residential mortgage (one to four family)
    
    
    370,157
    
    
    
    9.12
    
    
    
    274,392
    
    
    
    7.22Other
    
    
    45,378
    
    
    
    1.12
    
    
    
    43,117
    
    
    
    1.13Total consumer
    
    
    415,535
    
    
    
    10.24
    
    
    
    317,509
    
    
    
    8.35Total gross loans
    
    
    4,056,811
    
    
    
    100.00
    %
    
    
    3,800,287
    
    
    
    100.00
    %Net deferred loan origination fees
    
    
    (7,385
    )
    
    
    
    
    
    
    (8,644
    )Loans
    
    
    4,049,426
    
    
    
    
    
    
    
    3,791,643Allowance for loan losses
    
    
    (59,469
    )
    
    
    
    
    
    
    (58,126
    )Net loans
    
    $
    3,989,957
    
    
    
    
    
    
    $
    3,733,517
 The Company continues to emphasize production of commercial real estate
and commercial business loans and to place reduced emphasis on the origination
volume of residential mortgage (one to four family) loans. The Company
originates and funds loans that qualify for guaranty issued by the SBA. The
U.S. Government guarantee on such loans is generally in the range of 75% to 85%
of the loan amount. The residual portion of the loan, ranging from 15% to 25%,
is not guaranteed by the U.S. government, and the Company bears the credit risk
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. The amount of the unsold guaranteed portion of SBA
loans was not material as of June 30, 2004, and December 31, 2003. Page 29




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Construction loans, commercial business loans and SBA loans generally have
monthly repricing terms. Commercial real estate loans generally reprice
monthly or are intermediate fixed, meaning that the loans have interest rates
that are fixed for a period, typically five years, and then generally reprice
monthly or become due and payable. Multifamily loans are generally
adjustable-rate and reprice semiannually. Residential mortgage (one to four
family) loans may be adjustable-rate and reprice semiannually or annually, have
fixed rates 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 loan composition by rate at the
dates indicated: At June 30,
    
    At December 31,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in thousands)Adjustable-rate loans
    
    $
    2,754,891
    
    
    $
    2,699,690
    
    
    $
    55,201
    
    
    
    2.04
    %Intermediate fixed-rated loans
    
    
    803,605
    
    
    
    563,570
    
    
    
    240,035
    
    
    
    42.59
    %Fixed-rate loans
    
    
    498,313
    
    
    
    537,027
    
    
    
    (38,714
    )
    
    
    (7.21
    %)Total gross loans
    
    $
    4,056,809
    
    
    $
    3,800,287
    
    
    $
    256,522
    
    
    
    6.75
    %
 Adjustable-rate loans increased $55.2 million from December 31, 2003 to
June 30, 2004 as a result of the change of focus to commercial lending.
Adjustable-rate loans represented 67.9% of gross loans at June 30, 2004,
compared with 71.0% of gross loans at December 31, 2003. The increase of
$240.0 million in intermediate fixed-rate loans from December 31, 2003 to June
30, 2004 is a result of the origination of new intermediate fixed-rate
multifamily loans. The decrease of $38.7 million from December 31, 2003 to
June 30, 2004 in fixed-rate loans is primarily due to the internal
securitization of fixed-rate multifamily loans. The following table reflects the Banks new loan commitments during the
periods indicated: For the Six Months EndedJune 30,2004
    
    2003(Dollars in Thousands)Commercial:Secured by real estate-nonresidential (1)
    
    $
    295,950
    
    
    $
    256,943Secured by real estate-multifamily (1)
    
    
    342,447
    
    
    
    250,803Construction
    
    
    175,025
    
    
    
    145,487Commercial business
    
    
    206,706
    
    
    
    115,426Total commercial loans
    
    
    1,020,128
    
    
    
    768,659Consumer:Residential mortgage (one to four family) (1)
    
    
    126,866
    
    
    
    65,134Home equity and other
    
    
    21,256
    
    
    
    15,906Total consumer loans
    
    
    148,122
    
    
    
    81,040Total new commitments
    
    $
    1,168,250
    
    
    $
    849,699
  (1)
    
    For nonresidential loans, substantially all commitments have been
funded. For multifamily and residential mortgage (one to four
family) loans, all commitments have been funded. Internal Loan Securitizations.The Company manages its risk-based capital
level through a variety of means, including internal loan securitizations. In
such securitizations, the Company transfers to Fannie Mae
(FNMA) either multifamily or residential mortgage (one to four family)
loans for FNMA securities. Residential mortgage 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. Page 30




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These internal securitizations do not have a material cash impact to the
Company, since selected loans from the Companys loan portfolio are transferred
to FNMA for FNMA securities. Such securities are represented by exactly the
same loans previously held in the Companys loan portfolio. The FNMA
securities are generally held as available-for-sale (AFS) securities in the
Companys investment and mortgage backed securities portfolio. Through these internal 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 and is paid servicing fees
for such servicing. 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 six months ended June 30, 2004, the Company internally
securitized $147.1 million of multifamily loans. Risk Elements. Management generally places loans on nonaccrual status
when they become 90 days past due, unless they are both well secured and in the
process of collection. Loans may be placed on nonaccrual status earlier if the
full and timely collection of principal or interest becomes uncertain. When a
loan is placed on nonaccrual status, unpaid accrued interest is charged against
interest income. The Company charges off loans when it determines that
collection has become unlikely. Other real estate owned (OREO) consists of
real estate acquired by the Company through foreclosure. Following is the Banks risk elements table: At June 30,
    
    At December 31,2004
    
    2003(Dollars in Thousands)Nonaccrual loans:CommercialSecured by real estate-nonresidential
    
    $
    1,733
    
    
    $
    Secured by real estate-multifamily
    
    
    
    
    
    
    Construction
    
    
    3,802
    
    
    
    5,102Commercial business
    
    
    1,244
    
    
    
    631Total commercial
    
    
    6,779
    
    
    
    5,733ConsumerResidential mortgage (one to four family)
    
    
    
    
    
    
    124Other
    
    
    
    
    
    
    Total consumer
    
    
    
    
    
    
    124Total nonaccrual loans
    
    
    
    
    
    
    5,857Other real estate owned (OREO)
    
    
    
    
    
    
    Total nonperforming assets
    
    $
    6,779
    
    
    $
    5,857Nonperforming assets to total assets
    
    
    0.11
    %
    
    
    0.10
    %Nonaccrual loans to total loans
    
    
    0.17
    %
    
    
    0.15
    %Nonperforming assets to total loans and OREO
    
    
    0.17
    %
    
    
    0.15
    %Loans
    
    $
    4,049,426
    
    
    $
    3,791,643Gross income not recognized on nonaccrual loans
    
    $
    511
    
    
    $
    363Accruing loans contractually past due 90 days or more
    
    $
    2,523
    
    
    $
    1,469Loans classified as troubled debt restructurings but not included above
    
    $
    9,014
    
    
    $
    9,094
 Page 31




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Total nonperforming assets increased $922,000 from December 31, 2003 to
June 30, 2004. The increase was attributable to a commercial loan secured by
real estate. The Bank records OREO at the lower of carrying value or fair
value less estimated disposal costs. Any write-down of OREO is charged to
earnings. The Bank held no OREO at June 30, 2004, or December 31, 2003. The $9.0 million troubled debt restructurings in the table above
represents a performing commercial real estate loan. No interest rate
concessions were made on this loan. The restructured classification is due to
the Bank making interest rate concessions on a separate $1.1 million loan to
the same obligor on the same property during the quarter. The $1.1 million
loan is included in the nonaccrual construction loans balance in the table
above. The obligor may make additional draws under this facility, but such
draws would not have a material impact on the Companys nonperforming assets. Management cannot predict the extent to which economic conditions in the
Banks market area may worsen or the full impact that such conditions may have
on the Banks loan portfolio. Accordingly, there can be no assurance that
other loans will not become 90 days or more past due, be placed on nonaccrual
status, or become impaired or restructured loans or OREO in the future. 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 carrying 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 for loan losses involves significant
judgment. See Critical Accounting Estimates section under this Item for a
thorough discussion regarding the methodology. Notwithstanding the judgment required in assessing the allowance for loan
losses, the Company believes its estimate for the allowance for loan losses is
adequate. The following table sets forth information concerning the Banks allowance
for loan losses for the periods indicated: At or for the Six MonthsEnded June 30,2004
    
    2003(Dollars in Thousands)Balance at beginning of period
    
    $
    58,126
    
    
    $
    46,464Provision for loan losses
    
    
    3,183
    
    
    
    3,825Loans charged off
    
    
    (1,511
    )
    
    
    (1,261
    )Recoveries
    
    
    77
    
    
    
    860Balance before reclassification
    
    
    59,875
    
    
    
    49,888(Increase) decrease in allowance for unfunded
commitments recorded as other liabilities
    
    
    (406
    )
    
    
    113Balance at end of period
    
    
    59,469
    
    
    $
    50,001Allowance for loan losses to loans
    
    
    1.47
    %
    
    
    1.54
    %Annualized net charge-offs to average loans
    
    
    0.07
    %
    
    
    0.03
    %
 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 composed of two segments:
Available For Sale (AFS) and Held to Maturity (HTM). The Company does not
maintain a trading portfolio. The Company carries the AFS portfolio at fair
value, with unrealized changes in the fair value of the securities reflected as
Accumulated Other Comprehensive Income. At the end of each month, the Company
adjusts the carrying value of its AFS portfolio to reflect the current fair
value of each security. The HTM portfolio is carried at amortized cost. At
the time a security is purchased, the Company classifies it either as AFS or
HTM. Securities are classified as HTM if the Company has the positive intent
and ability to hold such securities to maturity. Page 32




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The Companys portfolio investments are governed by an Asset and Liability
Policy (A/L Policy), which is approved by the Board of Directors of the
Company. The A/L Policy sets forth exposure limits for selected investments,
as a function of total assets, total securities and Tier I Capital. The A/L
Policy further sets forth maximum maturity and duration limits as well as
limits on premiums paid 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 balance the risk-based
capital utilization and interest rate sensitivity. The A/L Policy requires
that all securities be of investment grade at the time of purchase. To protect against the accelerating prepayment speed of the securities
portfolio due to lower market interest rate environment, the Company
implemented a securities portfolio restructuring strategy during the second
quarter of 2003. Under this strategy, the Company began selling AFS securities
that had the highest exposure to prepayment and extension risk, and purchased
shorter-dated securities with reduced prepayment and extension risk. The
restructuring strategy was complete as of June 30, 2004. The following table represents the Companys securities portfolio by
available for sale and held to maturity at the dates indicated: At June 30,
    
    At December 31,
    
    Increase (Decrease)2004
    
    2003
    
    $
    
    %(Dollars in thousands)Available for sale
    
    $
    1,320,002
    
    
    $
    1,221,070
    
    
    $
    98,932
    
    
    
    8.10
    %Held to maturity
    
    
    329,384
    
    
    
    284,712
    
    
    
    44,672
    
    
    
    15.69
    %Total securities
    
    $
    1,649,386
    
    
    $
    1,505,782
    
    
    $
    143,604
    
    
    
    9.54
    %
 The securities portfolio (including available for sale and held to
maturity) increased slightly by $143.6 million during the six months ended June
30, 2004. The increase in the portfolio was a result of purchases of $725.0
million and $147.1 million of FNMA securities received in the internal
securitization of multifamily loans, partially offset by sales of $484.6
million and principal repayments and securities calls of $185.1 million. The AFS portfolio provides liquidity for the Companys operations. Such
liquidity can either be realized through the sale of AFS securities or through
borrowing. Securities are generally pledged as collateral for any such
borrowings. During the six months ended June 30, 2004, the Company increased its
held-to-maturity portfolio by $44.7 million from December 31, 2003. This
increase resulted from purchased securities during the period that were
classified as held to maturity, a reflection of the Companys intent and
ability to hold these securities to maturity based upon our liquidity position
and the size of our portfolio. The Company plans from time-to-time to continue
to purchase securities for its held-to-maturity portfolio. Page 33




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The following table presents the Companys securities portfolio on the
dates indicated: At June 30, 2004
    
    At December 31, 2003Amortized
    
    Market
    
    Amortized
    
    MarketCost
    
    Value
    
    Cost
    
    Value(Dollars in Thousands)Investment securities available for sale:Trust Preferred Securities
    
    $
    14,440
    
    
    $
    14,097
    
    
    $
    13,189
    
    
    $
    12,795Federal Agency Notes
    
    
    146,734
    
    
    
    140,448
    
    
    
    222,309
    
    
    
    218,753Foreign Debt Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Asset-backed Securities
    
    
    2,371
    
    
    
    2,315
    
    
    
    16,426
    
    
    
    16,285Municipals
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    90Domestic Corporate Bonds
    
    
    
    
    
    
    
    
    
    
    5,153
    
    
    
    5,148Commercial Paper
    
    
    
    
    
    
    
    
    
    
    9,991
    
    
    
    9,991Total investment securities available for sale
    
    
    163,545
    
    
    
    156,860
    
    
    
    267,158
    
    
    
    263,062Mortgage-backed securities available for sale:FNMA
    
    
    500,721
    
    
    
    491,998
    
    
    
    440,835
    
    
    
    440,453GNMA
    
    
    132,404
    
    
    
    127,983
    
    
    
    79,103
    
    
    
    78,842FHLMC
    
    
    344,659
    
    
    
    334,895
    
    
    
    275,882
    
    
    
    273,940Other
    
    
    210,347
    
    
    
    208,266
    
    
    
    163,687
    
    
    
    164,773Total mortgage-backed securities available for sale
    
    
    1,188,131
    
    
    
    1,163,142
    
    
    
    959,507
    
    
    
    958,008Total investment and mortgage-backed securities available for sale
    
    $
    1,351,676
    
    
    $
    1,320,002
    
    
    $
    1,226,665
    
    
    $
    1,221,070Investment securities held to maturity:Municipals
    
    $
    204,266
    
    
    $
    200,752
    
    
    $
    184,264
    
    
    $
    187,735Mortgage-backed securities held to maturity:FNMA
    
    
    6,462
    
    
    
    6,267
    
    
    
    
    
    
    
    FHLMC
    
    
    1,595
    
    
    
    1,549
    
    
    
    
    
    
    
    GNMA
    
    
    116,241
    
    
    
    113,365
    
    
    
    99,524
    
    
    
    98,713Other
    
    
    820
    
    
    
    820
    
    
    
    924
    
    
    
    924Total mortgage-backed securities held to maturity
    
    
    125,118
    
    
    
    122,001
    
    
    
    100,448
    
    
    
    99,637Total investment and mortgage-backed securities held to maturity
    
    
    329,384
    
    
    
    322,753
    
    
    
    284,712
    
    
    
    287,372Total securities
    
    $
    1,681,060
    
    
    $
    1,642,755
    
    
    $
    1,511,377
    
    
    $
    1,508,442
 As of June 30, 2004, the carrying value and the market value of the
available-for-sale securities was $1.32 billion. The total net unrealized loss
on these securities was $31.7 million. Such unrealized losses, net of tax, are
$18.4 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 to a loss of $6.6 million, has not been
recognized in the financial statements as of June 30, 2004. The unrealized net
losses are the result of movements in market interest rates. In conjunction with the Companys review of the fair value of securities,
for the six months ended June 30, 2004, there were no additional other than
temporary impairment charges recorded since December 31, 2003. Deposits. Deposits are the Banks primary source of funds to use in
lending and investment activities. Deposit balances were $4.83 billion at June
30, 2004, which represented an increase of $350.3 million from $4.48 billion at
December 31, 2003. Core deposit balances increased by $245.1 million, or 12.8%
to $2.16 billion at June 30, 2004, compared with $1.91 billion at December 31,
2003. Core deposits include NOW, demand deposit, money market and savings
accounts. The growth in core deposits resulted primarily from the Banks
continued focus on developing new and expanding existing commercial and
consumer relationships in the ethnic Chinese community, its retail niche
market. At June 30, 2004, 55.4% of our deposits were time deposits; 24.9% were
NOW, demand deposit and money market accounts; and 19.7% were savings accounts.
By comparison, at December 31, 2003, 57.4% of deposits were time deposits;
22.9% were NOW, demand deposit and money market accounts; and 19.7% were
savings accounts. Page 34




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The Bank obtains deposits primarily from the communities it serves. At
June 30, 2004, the 100 depositors with the largest aggregate deposit balances
comprised 20% of the Banks total deposits. The Bank accepts deposits in
excess of $100,000 from customers. Included in time deposits as of June 30,
2004, are $1.73 billion of deposits of $100,000 or greater. Such deposits
comprise 35.7% of total deposits. The majority of the time deposits as of June
30, 2004 mature in one year or less. With the exception of state and federal
government entities (Public Fund Sector) contributing 7.7% of total deposits
at June 30, 2004, no other material portion of our deposits were from or were
dependent upon any one customer or industry. The following table presents the balances and rates paid for categories of
deposits at the dates indicated (dollars in thousands): At June 30, 2004
    
    At December 31, 2003Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    AverageBalance
    
    Rate
    
    Balance
    
    RateNOW, checking and money market accounts
    
    $
    1,203,311
    
    
    
    0.72
    %
    
    $
    1,026,047
    
    
    
    0.65
    %Savings accounts
    
    
    951,904
    
    
    
    0.88
    
    
    
    884,064
    
    
    
    0.77Time deposits:Less than $100,000
    
    
    952,627
    
    
    
    1.61
    
    
    
    1,042,843
    
    
    
    1.73$100,000 or greater
    
    
    1,725,965
    
    
    
    1.80
    
    
    
    1,530,567
    
    
    
    1.82Total time deposits
    
    
    2,678,592
    
    
    
    1.73
    
    
    
    2,573,410
    
    
    
    1.79Total deposits
    
    $
    4,833,807
    
    
    
    1.31
    
    
    $
    4,483,521
    
    
    
    1.33
 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 its supply of lendable funds. Such borrowings are
generally secured with mortgage loans and/or securities with a market value at
least equal to outstanding balances. In addition to loans and securities,
advances from the FHLB of San Francisco are typically secured by a pledge of
our stock in the FHLB of San Francisco. At June 30, 2004, the Bank had $585.9
million of borrowings outstanding, as compared to $505.5 million outstanding at
December 31, 2003. Included in the $585.9 million of borrowings were $253.0 million of
short-term FHLB advances that mature within one year, and $285.2 million in
long-term FHLB advances that mature between 2006 and 2008. As of June 30,
2004, $261.0 million of these borrowings are long-term FHLB advances that may
be terminated at the option of FHLB of San Francisco. The FHLB, at their
option, 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 the option, the Company would need
to pay these advances back. If such event occurs, the Company could utilize
repurchase agreements with other firms to borrow against securities, raise
additional deposits, sell securities or other assets, enter into new advances
with the FHLB, or any combination of the above to pay off the terminated
advances. At June 30, 2004, the Company had $598.3 million of additional FHLB
borrowing capability that can be utilized. As of June 30, 2004 the Hong Kong branch had short-term borrowings of
$47.7 million principally denominated in Hong Kong dollars with local financial
institutions for liquidity management purposes. Page 35




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The following table sets forth certain information regarding short and
long-term borrowings of the Bank at or for the periods indicated: At or For the Six MonthsEnded June 30,2004
    
    2003Short-term borrowings:FHLB of San Francisco advances and other short-term borrowings:Average balance outstanding
    
    $
    174,747
    
    
    $
    65,371Maximum amount outstanding at any month end period
    
    
    300,695
    
    
    
    125,936Balance outstanding at end of period
    
    
    300,695
    
    
    
    125,936Weighted average interest rate during the period
    
    
    1.42
    %
    
    
    1.45
    %Weighted average interest rate at end of period
    
    
    1.32
    %
    
    
    1.46
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    
    
    
    
    Long-term borrowings:FHLB of San Francisco advances:Average balance outstanding
    
    $
    268,259
    
    
    $
    272,752Maximum amount outstanding at any month end period
    
    
    285,180
    
    
    
    275,835Balance outstanding at end of period
    
    
    285,180
    
    
    
    271,638Weighted average interest rate during the period
    
    
    5.17
    %
    
    
    5.04
    %Weighted average interest rate at end of period
    
    
    5.17
    %
    
    
    5.12
    %Weighted average remaining term to maturity at end of period (in years)
    
    
    4
    
    
    
    5
 Subordinated Debentures of the Company (Trust Preferred Securities or
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.
These trusts are not consolidated in our financial statements. Please see Note
2 to the Consolidated Financial Statements for further discussion. The Company had $136.0 million of TPS outstanding at June 30, 2004 and at
December 31, 2003. The proceeds of the 2002 issuances were primarily used to
fund the acquisition of BCC in October 2002. Regulatory Capital. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific capital
guidelines as calculated under regulatory accounting practices. As of June 30,
2004, the Bank met the Well Capitalized requirements under these guidelines.
The total risk-based capital ratio of the Bank at June 30, 2004, was 12.56%, as
compared with 12.18% at December 31, 2003. The ratio of Tier I Capital (as
defined in the regulations) to average assets (as defined) of the Bank at June
30, 2004, was 8.20% as compared with 7.86% at December 31, 2003. The increase
in these two ratios was primarily due to net income for the six months ended
June 30, 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 2 to the Consolidated Financial Statements, which
this discussion accompanies, the trusts were deconsolidated for reporting
purposes pursuant to the FIN 46R interpretation. The Federal Reserve has
issued proposed rules allowing the inclusion of capital securities in Tier I
capital. Page 36




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The Federal Reserve Bank has issued a proposal that would allow a
three-year phase-in period during which the amount of capital securities that
could be included in Tier I capital would remain unchanged at 25% after
deducting goodwill from the capital base. Based on the proposed rules, the
Company would be under the allowable limit by $12 million based on the June 30,
2004 capital position of the Company. Based upon management projections of the
capital position of the Company at the end of the proposed phase-in period, the
Company would not have any exclusion of capital securities. Contractual Obligation and Off-Balance-Sheet Arrangements.In the
ordinary course of operations, the Company enters into certain contractual
obligations. Such obligations include the funding of operations through debt
issuances as well as leases for premises and equipment. The Company also uses
derivative financial instruments on a limited basis, thus creating contractual
obligations, as part of its interest rate and foreign exchange risk management
process and customer accommodation activities. The Company engages in certain
financial transactions that are not recorded on the Companys balance sheet, in
accordance with generally accepted accounting principles, or may be recorded on
the Companys balance sheet in amounts that are different than the full
contract or notional amount of the transaction. Such transactions are
structured to meet the financial needs of customers, manage the Companys
credit, market or liquidity risks, diversify funding sources or optimize
capital. See Note 7 to the Consolidated Financial Statements for further
discussion on off-balance-sheet arrangements. Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses.
Letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. These letters of
credit are usually secured by inventories or by deposits held at the Company.
Foreign exchange contracts are contracts to purchase or sell currencies in the
over-the-counter market. Such contracts can be either for immediate or for
forward delivery. The Bank purchases or sells foreign exchange contracts in
order to hedge a balance sheet or off-balance-sheet foreign exchange position.
Additionally, the Bank purchases and sells foreign exchange contracts for
customers, as long as the foreign exchange risk is fully hedged with an
offsetting position. Liquidity.As a financial institution, we must maintain sufficient levels
of liquid assets at all times to meet our cash flow needs. These liquid assets
ensure that we have the cash available to pay out deposit withdrawals, meet the
credit needs of our customers and are 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, and payments of principal and interest on investments
and loans sales. Additional sources of liquidity can include increased
deposits, lines of credit and other borrowings. At June 30, 2004, we had $2.37 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 1999. During the six months ended June 30,
2004, the Company paid aggregate dividends of $3.2 million. The payment of
such dividends did not have a significant impact on the liquidity of the
Company. As a result of dividends declared, the total capital of the Company
was reduced by $3.6 million during the six months ended
June 30, 2004. The dividends declared during the quarter ended June 30,
2004 had the effect of reducing the Tier I leverage capital and risk-based
capital ratios by less than five basis points each. Page 37




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has been no material change in the Companys exposure to market risk
since the information was disclosed in the Companys Annual Report dated
December 31, 2003, on file with the Securities and Exchange Commission (SEC
File No. 0-24947). 
 ITEM 4. CONTROLS AND PROCEDURES As of 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 the Securities Exchange Act of
1934, as amended (the Exchange Act), Rule 13(a)-15(e). Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that such controls and procedures are effective. During the second
quarter of 2004, there were no changes in the Companys internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting. 
 PART II  OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS The Companys wholly owned subsidiary, United Commercial Bank, has been a
party to litigation incidental to various aspects of its operations, in the
ordinary course of business. Management is not currently aware of any litigation that will have a
material adverse impact on the Companys consolidated financial condition, or
the results of operations. 
  ITEM 2.
    CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES None. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. Page 38




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On April 29, 2004, the Company held its annual meeting of stockholders for
the purpose of the election of directors of the Company; the approval of the
amendment to the Companys Amended and Restated Certificate; and for the
ratification of the appointment of PricewaterhouseCoopers LLP as the Companys
independent auditors for the year ending December 31, 2003. Number
    
    Numberof Votes
    
    of VotesFor
    
    Withheld1. Election of Directors of the
CompanyAnthony Y. Chan
    
    
    41,075,730
    
    
    
    356,041Joseph J. Jou
    
    
    41,078,790
    
    
    
    352,981Dr. Godwin Wong
    
    
    40,608,070
    
    
    
    823,701Thomas S. Wu
    
    
    39,772,369
    
    
    
    1,659,402
 Messrs. Chan, Wong and T. Wu were elected for terms which expire in 2007.
Messr. Jou was elected for a term which expires in 2006. The continuing
directors on the Board consist of Messrs. Jonathan H. Downing, Ronald S.
McMeekin, and Joseph S. Wu, and Ms. Li-Lin Ko. Number of
    
    Number
    
    Number ofVotes
    
    of Votes
    
    Votes
    
    BrokerFor
    
    Against
    
    Abstaining
    
    Non-Votes2. Approval of
amendment to the
Companys Amended
and Restated
Certificate of
Incorporation
    
    
    36,853,825
    
    
    
    566,857
    
    
    
    64,608
    
    
    
    3,972,458
 Number of
    
    Number
    
    Number ofVotes
    
    of Votes
    
    Votes
    
    BrokerFor
    
    Against
    
    Abstaining
    
    Non-Votes3. Ratification of
the appointment of
PricewaterhouseCoopers LLP as the
Companys
independent
auditors
    
    
    38,837,791
    
    
    
    2,596,980
    
    
    
    22,977
    
    
    
    
 
 ITEM 5. OTHER INFORMATION None. Page 39




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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)
    
    List of Exhibits (filed herewith unless otherwise noted)3.1
    
    Second Amended and Restated Certificate of Incorporation of UCBH Holdings, Inc.*3.2
    
    Amended and Restated Bylaws of UCBH Holdings, Inc.*4.0
    
    Form of Stock Certificate of UCBH Holdings, Inc.*4.1
    
    Indenture of UCBH Holdings, Inc., dated April 17, 1998, relating to
Series B Junior Subordinated Debentures****4.2
    
    Form of Certificate of Series B Junior Subordinated Debenture****4.4
    
    Amended and Restated Declaration of Trust of UCBH Trust Co.****4.5
    
    Form of Series B Capital Security Certificate for UCBH Trust Co.****4.6
    
    Form of Series B Guarantee of the Company relating to the Series B Capital Securities****4.7
    
    Rights Agreement dated as of January 28, 2003*****10.1
    
    Employment Agreement between United Commercial Bank and Thomas S. Wu*10.2
    
    Employment Agreement between UCBH Holdings, Inc. and Thomas S. Wu*10.3
    
    Form of Termination and Change in Control Agreement between United
Commercial Bank and certain executive officers*10.4
    
    Form of Termination and Change in Control Agreement between UCBH
Holdings, Inc. and certain executive officers*10.5
    
    Amended UCBH Holdings, Inc. 1998 Stock Option Plan**21.0
    
    Subsidiaries of UCBH Holdings, Inc.***31.1
    
    Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended, signed and dated by Thomas S. Wu.31.2
    
    Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended, signed and dated by Jonathan H. Downing.32
    
    Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Thomas
S. Wu and Jonathan H. Downing.(b)
    
    Reports on Form 8-K
 On April 16, 2004, the Company furnished a current report on Form 8-K,
under Item 12 Results of Operations and Financial Operations, for the
Companys press release announcing first quarter 2004 financial results.  *
    
    Incorporated by reference to the exhibit of the same number from the
Companys Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on July 1, 1998 (SEC File No. 333-58325).**
    
    Incorporated by reference to the exhibit of the same number from the
Companys Form 10-Q for the quarter ended June 30, 2001, filed with the
Securities and Exchange Commission on May 3, 2001 (SEC File No. 0-24947).***
    
    Incorporated by reference to the exhibit of the same number from the
Companys Form 10-K for the fiscal year ended December 31, 2003, filed
with the Securities and Exchange Commission on February 25, 2003 (SEC File
No. 0-24947).****
    
    Incorporated by reference to the exhibit of the same number from the
Companys Registration Statement on Form S-4, filed with the Securities
and Exchange Commission on July 1, 1998 (SEC File No. 333-58325).*****
    
    Incorporated by reference to the exhibit of the same number from the
Companys current report on Form 8-K, filed with the Securities and
Exchange Commission on January 29, 2003 (SEC File No. 0-24947). Page 40




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. UCBH HOLDINGS, INC.Date: August 9, 2004
    
    /s/ Thomas S. WuThomas S. WuChairman, President andChief Executive Officer(principal executive officer)Date: August 9, 2004
    
    /s/ Jonathan H. DowningJonathan H. DowningExecutive Vice President andChief Financial Officer(principal financial officer)
 Page 41




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EXHIBIT INDEX 31.1
    
    Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended, signed and dated by Thomas S. Wu.31.2
    
    Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended, signed and dated by Jonathan H. Downing.32
    
    Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Thomas
S. Wu and Jonathan H. Downing.