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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
  þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the fiscal year ended December 31, 2005.
  o
    
    Transition Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the transition period from  to .
 000-24947
 UCBH Holdings, Inc.
  Delaware
    
    94-3072450(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)555 Montgomery Street, San Francisco, California
    
    94111(Address of principal executive offices)
    
    (Zip Code)
 415) 315-2800
 None
 Common Stock, Par Value $0.01 Per Share
Preferred Stock Purchase Rights
 þ  ̈
  ̈ þ
 þ  ̈
 þ
  Large accelerated filer þ
    
    Accelerated filer  ̈
    
    Non-accelerated filer  ̈
  ̈ þ
    Proxy Statement for the May 18, 2006, Annual Meeting of Stockholders is incorporated by reference
into Part III.




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##### 










UCBH HOLDINGS, INC. AND SUBSIDIARIES
Table of Contents


PageEXPLANATORY
NOTE
    
    
    1PART IIItem 7
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    2Item 8
    
    Financial Statements and Supplementary Data
    
    
    47Item 9A
    
    Controls and Procedures
    
    
    96PART IVItem 15
    
    Exhibits, Financial Statement Schedules
    
    
    98SIGNATURES
    
    
    
    
    100Exhibit 23.0EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.0









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EXPLANATORY NOTE
  1




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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operation

EXECUTIVE SUMMARY

UCBH Holdings, Inc. (UCBH) is a
$7.96 billion bank holding company with headquarters in
San Francisco, California. Its operations are conducted
primarily through its banking subsidiary, United Commercial Bank
(UCB; UCBH, UCB and UCBs wholly owned
subsidiaries are collectively referred to as the
Company, we, us or
our). UCB operates through 58 offices in the United
States and Asia and is a leader in providing financial services
to the ethnic Chinese in the United States. UCBs ability
to generate revenue is affected not only by changes in economic
conditions, changes in interest rates and levels of customer
confidence, but also by UCBs competition and the
regulatory environment in which UCB operates.

In providing its services, UCB has two primary
goals:



| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | To be the best performing commercial bank
    primarily serving the ethnic Chinese in the United States by
    continuing to expand our franchise in areas of high growth
    opportunities.                
|
| |  | To further differentiate ourselves from our
    competitors by providing seamless service to customers doing
    business across the Pacific Rim by establishing offices in
    strategic locations in Asia.



| |                           
| | --------------------------
| | Services to Ethnic Chinese

UCB intends to continue establishing branches in
areas of high Asian population concentration to attract retail
deposits through de novo branch openings as well as through
acquisitions. At the beginning of 2005, we had 46 domestic
branches and offices; twenty-seven in Northern California,
nineteen in Southern California and two in the New York
metropolitan area. UCB also has a branch in Hong Kong and
representative offices in Shenzhen, China and Taipei, Taiwan.
During 2005, UCB expanded its franchise by adding two additional
branches in the New York metropolitan area, and by completing
two acquisitions that added a presence in the Pacific Northwest
and the Greater New England area.

In the Pacific Northwest, we completed the
acquisition of Pacifica Bancorp, Inc. (Pacifica), a
$176.9 million bank holding company with two branches in
the Seattle metropolitan area. The addition of Pacifica has
expanded UCBs retail banking operations such that UCB is
now located in the three largest centers of ethnic Chinese
population on the west coast. UCB is planning on additional
expansion in this market in 2006.

In the Greater New England area, we completed the
acquisition of Asian American Bank & Trust Company
(AABT), a $133.0 million bank with three branch
offices in the Boston metropolitan area. For 2006, UCB is
planning additional branch openings in both the New York
metropolitan and in Boston metropolitan areas.



| |               
| | --------------
| | Asia Locations

Currently, UCB has a fully operational branch in
Hong Kong and representative offices in Shenzhen, China and
Taipei, Taiwan. Our fully operational Hong Kong branch is authorized to conduct a complete range of banking
operations, including offering deposit, foreign exchange and remittance services, issuing cashier
orders, and providing trade finance, commercial banking and lending services. Our representative
offices in Shenzhen and Taipei, on the other hand, cannot conduct any profit generating banking
business and are restricted to the specific activities that have been approved by the local banking
authorities of their respective country, such as providing market research and acting in the
capacity of a liaison to existing bank customers. As of December 31, 2005, UCBs Hong
Kong branch had total deposits of $555.5 million, a 69.0%
increase over year-end 2004. This office has expanded its trade
finance services since its opening and the fees associated with
those services have also increased over last year. In addition,
Pacifica has added a strong trade finance platform to UCBs
domestic operations and we anticipate growth opportunities in
the trade finance area.

UCB intends to establish additional overseas
offices and branches to facilitate international trade across
the Pacific Rim. In this regard, UCB has focused much of its
growth strategies toward the expanding opportunities that have
been emerging from China. Trade between China and the United
States has increased steadily over the past several years and
the trade finance business has followed. We anticipate that the
opportunities for growth presented by the expansion of the
Chinese economy will continue for some time.

2



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| |                
| | ---------------
| | Keys to Success

Success in attaining our goals will be dependent
on our adherence to the fundamentals that we believe are vital
to our ongoing successful growth. These fundamentals include:



| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continued enhancement of UCBs business
    development capabilities, in terms of both diversification in
    the development of products and services and in developing new
    ways to differentiate UCB in the marketplace.
|
| |  | Continued development of a strong trade finance
    platform, which will enable UCB to take advantage of the
    opportunities as they continue to develop in the Pacific Rim.                                                
|
| |  | Continued maintenance of credit quality at the
    highest level.                                                                                                                                                             
|
| |  | Continued focus on maintaining and enhancing our
    risk and compliance management infrastructures.                                                                                                                          
|
| |  | Continued attention to the design and development
    of our existing unique delivery networks to ensure that UCB
    products and services are easily available to its customers.                                            
|
| |  | Continued concentration on maintaining a senior
    management team with the financial services expertise required
    by our operations and goals.                                                                           
|
| |  | Continued development of UCBs systems
    infrastructure to support our planned growth.                                                                                                                                      

In addition, we believe that we have a unique set
of capabilities that provide us with an in-depth understanding
of the ethnic Chinese population, our targeted market. These
capabilities help to differentiate us and enable us to enhance
the service that we provide. These capabilities include:



| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | Trilingual branch staff, lending/relationship
    officers, marketing team and phone banking service.
|
| |  | Automated teller machines in both Chinese and
    English.                                           
|
| |  | Product brochures in both Chinese and English.                                                       
|
| |  | 7-day banking in selected locations.                                                                 
|
| |  | E-business services in both Chinese and English.                                                     
|
| |  | Products other than just loans and deposits,
    including investment products and services.         

MANAGEMENTS OVERVIEW OF 2005
PERFORMANCE

We are providing you with an overview of what we
believe are the most significant factors and developments that
impacted the Companys results for 2005 and that could
impact future results. We encourage you to carefully read this
full document for more detailed information with regard to the
trends, events and uncertainties that have impacted us.

The Companys primary or core
business consists of providing commercial and retail banking
services to both individuals and companies in markets with high
concentration of ethnic Chinese. We believe that this core
banking business performed well in 2005 as the general economic
environment both in these markets and generally throughout the
United States improved. However, the challenges presented by the
general interest rate environment that we must work within did
impact the Companys performance in 2005.

The Company reported earnings for 2005 of
$97.8 million or $1.02 per diluted share. This
compares with $85.6 million or $0.90 per diluted share
in 2004 and $64.6 million or $0.71 per diluted share
in 2003. The per diluted share amounts for both 2004 and 2003
have been adjusted to reflect a two-for-one stock split that
took effect in 2005. The 2005 earnings differ from the
$1.03 per diluted share that was included in our Earnings
Release dated January 26, 2006, as a result of events that
came to managements attention subsequent to the issuance
of the Earnings Release. Return on average equity was 18.42% and
return on average assets was 1.40% in 2005, compared with 18.92%
and 1.44% in 2004 and 18.84% and 1.26% in 2003, respectively.

When we evaluate the Companys performance,
we focus on five primary areas: (1) loan and deposit
growth, (2) credit quality, (3) net interest margin,
(4) expense control and (5) capital adequacy.

3



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| |                        
| | -----------------------
| | Loan and Deposit Growth

Since 2001, UCB has experienced steady and strong
growth in loans and deposits. This was accomplished in light of
a challenging economic environment that was present during a
large portion of this time period. The changes in net loans and
total deposits for each of the five years ended
December 31, 2005, were as follows (dollars in thousands):

|                             |  |              |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|---------------------------- |  | ------------ | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                             |  |             
|                             |  | December 31,
|                             |  |             
|                             |  | 2005         |           | 2004 |  | 2003 |           | 2002 |  | 2001
|                             |  |              |           |      |  |      |           |      |  |     
|Loans held in portfolio, net |  | $            | 5,774,118 |      |  | $    | 3,994,269 |      |  | $    | 3,713,255 |  |  | $ | 2,978,945 |  |  | $ | 2,229,753 | 
|Deposits                     |  |              | 6,264,169 |      |  |      | 5,215,862 |      |  |      | 4,483,521 |  |  |   | 4,006,818 |  |  |   | 2,466,173 | 

The loan portfolio has increased 159.0% since
2001 and deposits have grown 154.0% during this same period. The
growth that was experienced in loans and deposits reflects
growth achieved both organically and from acquisitions. Over the
past four years, the Company acquired four banking companies,
which added an aggregate of $972.4 million in net loans
held in portfolio and $1.84 billion in deposits as of the
date of acquisition.

Assuming that the current economic momentum
continues, we expect continued growth in loans and deposits,
especially in the areas of commercial business and international
trade finance loans. In addition, UCB has established an ongoing
program for loan sales as part of a balance sheet restructuring
plan. We expect selected commercial real estate loan sales in
the range of $150 million to $200 million per quarter
during 2006.



| |               
| | --------------
| | Credit Quality

While loan growth has been substantial over the
past several years, UCB has maintained strong credit quality
levels. We believe that this has been accomplished through
UCBs conservative credit underwriting criteria and credit
risk management processes, which are discussed in more detail in
Credit Risk Management that follows later in this
document. We expect that if UCBs loan portfolio increases,
UCBs allowance for loan losses would increase accordingly.

|                                          |  |                                          |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|----------------------------------------- |  | ---------------------------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | - |  | - | --------- | -
|                                          |  |                                         
|                                          |  | As of or For the Year Ended December 31,
|                                          |  |                                         
|(Dollar amounts in thousands)             |  | 2005                                     |           | 2004 |  | 2003 |           | 2002 |  | 2001
|                                          |  |                                          |           |      |  |      |           |      |  |     
|Average gross loans(1)                    |  | $                                        | 5,148,952 |      |  | $    | 4,077,799 |      |  | $    | 3,380,121 |   |  | $ | 2,442,790 |   |  | $ | 2,062,419 |  
|Total charge-offs                         |  |                                          | 1,614     |      |  |      | 4,798     |      |  |      | 3,349     |   |  |   | 5,563     |   |  |   | 121       |  
|Nonperforming loans to total loans        |  |                                          | 0.32      | %    |  |      | 0.29      | %    |  |      | 0.15      | % |  |   | 0.15      | % |  |   | 0.04      | %
|Net charge-offs to average gross loans(1) |  |                                          | 0.03      |      |  |      | 0.11      |      |  |      | 0.06      |   |  |   | 0.23      |   |  |   | 0.00      |  



---



|    |                                                 
|--- | ------------------------------------------------
|(1) | Average gross loans include loans held for sale.



| |                    
| | -------------------
| | Net Interest Margin

Despite the difficult and challenging interest
rate environment that has been affecting financial institutions
over the past three years, we were able to maintain a stable net
interest margin. However, we expect to continue our efforts to
improve the net interest margin in the future through balance
sheet management and growth in core deposits. See Interest
Rate and Market Risk Management later in this document.

|                           |  |                         |      |      |  |      |      |      |  |      |      |   |  |  |      |   |  |  |      |  
|-------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | - |  |  | ---- | -
|                           |  |                        
|                           |  | Year Ended December 31,
|                           |  |                        
|                           |  | 2005                    |      | 2004 |  | 2003 |      | 2002 |  | 2001
|                           |  |                         |      |      |  |      |      |      |  |     
|Net interest margin(1)     |  |                         | 3.58 | %    |  |      | 3.63 | %    |  |      | 3.41 | % |  |  | 3.73 | % |  |  | 3.69 | %
|Average federal funds rate |  |                         | 3.19 |      |  |      | 1.36 |      |  |      | 1.12 |   |  |  | 1.67 |   |  |  | 3.90 |  



---



|    |                                         
|--- | ----------------------------------------
|(1) | Calculated on a nontax equivalent basis.

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| |                
| | ---------------
| | Expense Control

We are continuously monitoring our costs and
expenses and seeking new ways to maintain them at acceptable
levels. These efforts have resulted in a relatively constant
efficiency ratio over the past five years. For 2005, we
experienced an increase in our noninterest expense and, as a
result, our efficiency ratio. Much of this increase was a result
of increased personnel expense as we added staff to support the
growth in our commercial banking business, the expansion of the
Hong Kong branch and the further development of UCBs
infrastructure to support a larger and growing organization. The
AABT and Pacifica acquisitions also contributed on a small scale
to our staffing increase, but will impact our personnel expenses
in 2006.



| |                 
| | ----------------
| | Capital Adequacy

As regulated financial institutions, the Company
and UCB (on a consolidated basis) are required to maintain
adequate levels of capital as measured by several regulatory
capital ratios. One of our goals is to maintain our well
capitalized level of regulatory capital for both the
Company and UCB.

|                                          |                           |              |  |       |   |      |  |       |   |      |  |       |   |  |  |       |   |  |  |       |  
|----------------------------------------- | ------------------------- | ------------ |  | ----- | - | ---- |  | ----- | - | ---- |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|                                          |                           |             
|                                          |                           | December 31,
|                                          |                           |             
|                                          |                           | 2005         |  | 2004  |   | 2003 |  | 2002  |   | 2001
|                                          |                           |              |  |       |   |      |  |       |   |     
|United Commercial Bank:                   |                           |              |  |       |   |      |  |       |   |      |  |       |   |  |  |       |   |  |  |      
|                                          | Tier 1 leverage           |              |  | 8.26  | % |      |  | 8.49  | % |      |  | 7.86  | % |  |  | 7.57  | % |  |  | 7.26  | %
|                                          | Tier 1 risk-based capital |              |  | 9.91  |   |      |  | 11.42 |   |      |  | 10.92 |   |  |  | 10.26 |   |  |  | 9.65  |  
|                                          | Total risk-based capital  |              |  | 10.98 |   |      |  | 12.67 |   |      |  | 12.18 |   |  |  | 11.52 |   |  |  | 10.91 |  
|UCBH Holdings, Inc. and
    subsidiaries: |                           |              |  |       |   |      |  |       |   |      |  |       |   |  |  |       |   |  |  |      
|                                          | Tier 1 leverage           |              |  | 8.56  |   |      |  | 8.92  |   |      |  | 8.42  |   |  |  | 7.15  |   |  |  | 7.52  |  
|                                          | Tier 1 risk-based capital |              |  | 10.26 |   |      |  | 11.98 |   |      |  | 11.69 |   |  |  | 9.70  |   |  |  | 9.99  |  
|                                          | Total risk-based capital  |              |  | 11.33 |   |      |  | 13.23 |   |      |  | 12.94 |   |  |  | 10.95 |   |  |  | 11.24 |  

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT
ESTIMATES

The notes to the consolidated financial
statements contain a summary of the Companys significant
accounting policies that are presented elsewhere in this annual
report on Form 10-K. We believe that an understanding of
certain policies, along with the related estimates that we are
required to make in recording the financial transactions of the
Company, is important to have a complete picture of the
Companys financial condition. In addition, in arriving at
these estimates, we are required to make complex and subjective
judgments, many of which include a high degree of uncertainty.
The following is a discussion of these critical accounting
policies and significant estimates related to these policies. We
have discussed each of these accounting policies and the related
estimates with the Audit Committee of the Companys Board
of Directors.



| |                          
| | -------------------------
| | Allowance for Loan Losses

The allowance for loan losses represents our
estimate of the losses that are inherent in the loan and lease
portfolios, excluding loans held for sale. Similarly, loans held for
sale are excluded from any of the information included in
Note 8, Loans held in Portfolio and Allowance for Loan
Losses. The determination of the appropriate level of the
allowance is based on periodic evaluations of the portfolios
along with other relevant factors. These evaluations require us
to make certain assumptions, estimates and judgments.

UCB continuously monitors the quality of its loan
portfolio and maintains an allowance for loan losses sufficient
to absorb probable losses inherent in the loan portfolio. At
December 31, 2005, UCBs total allowance was
$64.5 million, which represented 1.11% of year end gross
loans held in portfolio.

UCBs methodology for assessing the adequacy
of the allowance for loan losses includes the evaluation of two
distinct allowance components: an allowance applied to the
portfolio as a whole and a specific allowance for each loan
deemed to be impaired. Loans that are determined to be impaired
are excluded from the allowance analysis and are assessed
individually.

Loans are considered impaired when we believe it
is probable that UCB will not be able to collect all amounts
due, including interest payments, in accordance with the
loans contractual terms. Unless the loan is

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collateral dependent, loan impairment is measured
based on the present value of expected future cash flows that
have been discounted at the loans effective interest rate.
If the loan is collateral dependent, either the observable
market price or the current fair value of the collateral,
reduced by estimated disposition costs, is used.


In assessing the adequacy of the allowance, we
apply an internal risk rating system and an evaluation of
various internal and external conditions. The evaluation takes
into account the loan portfolio mix, the credit quality of the
portfolio, growth in the portfolio, trends relating to
delinquent and classified loans, general economic conditions and
any other characteristics that directly relate to the
collectibility of the loans in the portfolio.

UCB divides the loan portfolio into major
segments based primarily on loan type, and applies loss factors
to the portfolio segments. These loss factors have been
developed considering historic charge-off experience, trends in
collateral values, portfolio segment delinquency and
classification trends, portfolio concentrations, macro-economic
conditions, as well as other qualitative aspects. Additionally,
for our heterogeneous loan portfolio, we perform comparative
analyses, utilizing both a peer data benchmarking approach and
an expected loss approach. A heterogeneous loan is one that is
evaluated individually for impairment. This contrasts to smaller
balance homogeneous loans that are collectively evaluated for
impairment.

During 2005, UCB continued its ongoing process of
evaluating the loss factors in light of current economic
conditions, UCBs historical loss experience, loan
delinquency trends and the changes in classified and other
problem loans. As part of this evaluation, the portion of the
allowance previously presented as non-loan category
specific was allocated to specific loan portfolios in 2004
and 2005, to align the potential imprecision arising from the
accuracy of the risk rating process and general business and
economic conditions affecting our key lending areas with the
underlying loan portfolio.

In assessing the adequacy of the allowance, UCB
applies standard loss factors for classified and criticized
loans.

UCB also estimates a reserve related to unfunded
commitments. In assessing the adequacy of this reserve, UCB uses
a process similar to the one it uses in estimating the allowance
for loan losses including comparative analysis using an expected
loss approach. The reserve for unfunded commitments is included
in other liabilities on the statement of financial position.
During 2005, UCB updated the loss factors associated with these
commitments. The loss factors were lowered as a result of these
evaluations, reflecting continued improvement in the loss
experience associated with these exposures.

There are numerous components that enter into the
evaluation of the allowance for loan losses. Some are
quantitative while others required UCB to make qualitative
judgments. Although UCB believes that its processes for
determining an appropriate level for the allowance adequately
address all of the components that could potentially result in
credit losses, the processes and their elements include features
that may be susceptible to significant change. Any unfavorable
differences between the actual outcome of credit-related events
and UCBs estimates and projections could require an
additional allowance for credit losses, which would negatively
impact the Companys results of operations in future
periods. As an example, if classified loans were to increase by
10% in the same proportion as the existing portfolio, the amount
of the allowance for loan losses at December 31, 2005,
would increase by approximately $1.0 million. This
sensitivity analysis is hypothetical and has been provided only
to indicate the potential impact that changes in the level of
the criticized and classified loans may have on the allowance
estimation process. We believe that given the procedures that
UCB follows in determining the potential losses in the loan
portfolio, the various components used in the current estimation
processes are appropriate.

Loan Sales
and Mortgage Service Rights

UCB periodically enters into transactions that
transfer loans from UCB to third-party purchasers. In most
instances, UCB continues to provide the servicing on these loans
as a condition of the transfer. In addition, as part of these
transactions, UCB may retain a cash reserve account or an
interest-only strip, all of which are considered to be retained
interests in the sold loans.

6



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Whenever UCB initiates a loan transfer, the first
determination that it must make in connection with the
transaction is whether the transfer constitutes a sale under
accounting principles generally accepted in the United States of
America (GAAP). If it does, the assets are removed
from UCBs consolidated statement of financial condition
with a gain or loss recognized. Otherwise, the transfer is
considered a financing, resulting in no gain or loss being
recognized on the transfer and is recorded as a liability on
UCBs consolidated statement of financial condition. The
financing treatment could have unfavorable financial
implications including an adverse effect on the Companys
results of operations and capital ratios. Generally, UCBs
loan transfers have been structured to meet the existing
criteria for sale treatment.

UCB must also make assumptions to determine the
amount of gain or loss resulting from a sale transaction as well
as the subsequent carrying amount for the above-discussed
servicing rights and retained interests. Initially, the total
carrying value of the loans being sold is allocated among the
loans themselves, the servicing rights and any retained
interests based on their relative fair values. The purchase
price is then compared to the amount assigned to the loans, and
any difference is recorded as either a gain or a loss on the
sale. In determining the fair values of the components of the
transaction, UCB uses estimates and assumptions that are based
on the facts surrounding each sale. Using different assumptions
could affect the amount of gain or loss recognized on the
transaction and, in turn, the Companys results of
operations.

UCB uses a third-party service to calculate the
ongoing fair values of the servicing rights and retained
interests subsequent to the transaction date. In valuing the
servicing rights and retained interests, UCB stratifies its
mortgage servicing rights based on the risk characteristics of
the underlying loan pools. The fair value of mortgage servicing
rights is determined by calculating the present value of
estimated future net servicing cash flows, using assumptions of
prepayments, defaults, ancillary income, servicing costs and
discount rates that UCB believes market participants would use
for similar assets. These value estimations require a number of
assumptions, including:



| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | the appropriateness of the method to use in
    computing the prepayments of the loans;
|
| |  | the annualized prepayment speed of the loans;                                          
|
| |  | the weighted average life of the loans;                                                
|
| |  | the expected annual net credit loss rate; and                                          
|
| |  | the discount rate for the residual cash flows.                                         

If the carrying amounts of the servicing assets
and residual interests are greater than their fair values,
impairment is recognized through a valuations allowance for each
type of asset.

Since the valuations are based upon estimates and
assumptions, any unfavorable differences between the actual
outcome of the future performance of the sold loans and our
estimates and assumptions could result in future impairment in
excess of that currently recorded. For example, if prepayment
speeds were to change adversely in a static environment by 10%,
the fair value of our mortgage servicing rights would decrease
by $617,000. A 20% adverse change would reduce the fair value by
$1.2 million. If the discount rate for the residual cash
flows were to change adversely by 100 basis points, the fair
value of our mortgage servicing rights would decrease by
$355,000. A 200 basis points adverse change would reduce the
fair value by $693,000.

The sensitivities discussed above are
hypothetical and should be considered with caution. As is shown,
changes in fair value based on variations in assumptions are not
subject to simple extrapolation, as the relationship of the
change in the assumption to the change in the fair value may not
be linear. In addition, the effect of a variation in one
assumption is in reality likely to cause changes in other
assumptions, which could potentially magnify or counteract the
sensitivities.

Accounting
for Goodwill

Goodwill arises from business acquisitions and
represents the value attributable to the unidentifiable
intangible elements in our acquired businesses. Goodwill is
initially recorded at fair value and is subsequently evaluated
at least annually for impairment in accordance with Statement of
Financial Accounting Standards (SFAS) No. 142.
The Company performs this annual test as of September 30 of
each year. Evaluations are

7



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also performed on a more frequent basis if events
or circumstances indicate that an impairment could have taken
place. Such events could include, among others, a significant
adverse change in the business climate, an adverse action by a
regulator, an unanticipated change in the competitive
environment, and a decision to change the operations or dispose
of a reporting unit.


The first step in this evaluation process is to
determine if a potential impairment exists in any of the
Companys reporting units, and, if required from the
results of this step, a second step measures the amount of any
impairment loss. The computations required by both steps one and
two call for us to make a number of estimates and assumptions.

In completing step one, we determine the fair
value of the reporting unit that is being evaluated. There are a
number of methods that we can use in completing this step,
including market capitalization and the discounted present value
of managements estimates of future cash or income flows.

If step one indicates a potential impairment of a
reporting unit, step two requires us to estimate the
implied fair value of that unit. This process
estimates the fair value of the units individual assets
and liabilities in the same manner as if a purchase of the
reporting unit were taking place. To do this, we must determine
the fair value of the assets, liabilities and identifiable
intangible assets of the reporting unit based upon the best
available information. If the value of goodwill calculated in
step two is less than the carrying amount of goodwill for the
reporting unit, an impairment is indicated and the carrying
value of goodwill is written down to the calculated value.

Since estimates are an integral part of the
impairment computations, changes in these estimates could have a
significant impact on any calculated impairment amount. Factors
that may significantly affect the estimates include, among
others, changes in revenue growth trends, changes in stock
prices, market values of mergers and acquisitions, and changes
in industry or market sector conditions.

As of September 30, 2005, we performed our
annual goodwill impairment evaluation for the entire
organization. Step one was performed by using a market value
approach for the reporting units. In the market value approach,
we determined the Companys market capitalization and
compared that to the Companys stockholders equity.

Upon completion of step one of the evaluation
process, we concluded that no potential impairment existed for
any of the Companys reporting units. In reaching this
conclusion, we determined that the fair value of goodwill
exceeded the recorded value of goodwill. Since this evaluation
process required us to make estimates and assumptions with
regard to the fair value of the Companys reporting units,
actual values may differ significantly from these estimates.
Such differences could result in future impairment of goodwill
that would, in turn, negatively impact the Companys
results of operations. However, had our estimated fair value of
our reporting units been as much as 20% lower, there would still
have been no indication of impairment for our reporting units.

Stock-Based
Compensation

We account for the Companys stock-based
compensation in accordance with SFAS No. 123, Accounting
for Stock-Based Compensation. Under SFAS No. 123,
companies have a choice of two alternatives to account for stock
options. One alternative is to expense the estimated fair value
of the options on a straight-line basis over their respective
vesting periods. The other is to use the intrinsic method of
accounting as prescribed by Accounting Principles Board (the
APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and disclose in the footnotes to the
financial statements the pro forma impact on net income and
income per common share as if the fair values of our options had
been expensed. In accounting for our options under APB Opinion
No. 25, we have not recorded any compensation expense as
the exercise price of all of our stock options was equal to the
quoted market price of the stock on the date of the grant.

Effective December 27, 2005, UCBHs
Board of Directors authorized the Company to accelerate the
vesting of all unvested options associated with grants issued on
or prior to October 26, 2005. By accelerating the vesting
of these Options, the Company estimates that approximately
$16.4 million of future compensation expense, net of taxes,
has been eliminated, of which $10.6 million would have been
incurred in the year ending

8



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##### Table of Contents



December 31, 2006. The decision to
accelerate the vesting of the options, which UCBH believes is in
the best interests of its stockholders, was made primarily to
reduce the impact of recording approximately $22.7 million
of noncash compensation expense over the next three years upon
the implementation of SFAS No. 123 (revised 2004)
(SFAS No. 123R), Share-Based Payment,
which the Company has adopted effective January 1, 2006.
SFAS No. 123R requires that all share-based payments to
employees, officers and directors, including grants of employee
stock options, be recognized as compensation expense over the
vesting period of each award, based on their fair values at the
grant date.


The options acceleration was treated as a
modification of the terms of the existing option grants, thereby
requiring a new value measurement as of the acceleration date.
Any increase between the newly measured value and the original
grant price is viewed as additional intrinsic value and may need
to be included in future compensation expense under certain
conditions related to prospective employee terminations. We
prepared an estimate of expense that may result during the next
three years as a result of the acceleration using the new grant
values and using assumptions regarding the potential for future
employee terminations. These assumptions incorporated the
forfeiture rates that we use to compute the previously discussed
pro forma disclosures as required by SFAS No. 123 (see Note
1 to the Consolidated Financial Statements for additional
information). Our estimate indicated a potential after tax
expense of less than $50,000 as a result of the acceleration.
Since our estimate required us to make assumptions with regard
to future terminations of employees, there is no assurance that
the actual future expense incurred will be the same as the
estimate. However, the maximum amount of expense that the
Company could incur during the next three years as a result of
the acceleration amounts to approximately $1.0 million on
an after-tax basis. Management believes, however, that it would
be unlikely that the expense would approach that amount.

Asset
Valuation

Certain assets of the Company are recorded on the
consolidated balance sheet at fair value. Included among these
assets are goodwill, mortgage servicing rights, which are
discussed separately in this Critical Accounting Policies
and Significant Estimates discussion, securities
classified as available for sale, other intangible assets, such
as core deposit intangibles and loans that are held-for-sale. In
determining the fair values of these assets, market values may
not be readily available and we must make estimates to arrive at
a value to record. These estimates may change from period to
period as they are affected by changes in interest rates or
other market conditions. As a result, the values that we have
assigned to these assets may not necessarily represent amounts
that could be ultimately realized upon their disposal.

Available for Sale
Securities.Securities that are held
to meet investment objectives, such as interest rate risk and
liquidity management, and may be sold to implement management
strategies are classified as available for sale. The fair values
of most securities classified as available for sale are based on
quoted market prices. If quoted market prices are unavailable,
fair values are extrapolated from the quoted prices of similar
instruments. Any declines in fair value that are determined to
be other-than-temporary result in a write-down of the security
and a corresponding charge to noninterest expense.

Core Deposit
Intangibles.Core deposit intangibles
are created as a result of the Companys acquisition of
another financial institution. They represent the value that the
acquired deposits have as a source of funding when compared to
alternative funding sources, such as borrowings. When acquired,
core deposit intangibles are valued by an outside service by
computing the present value of the expected cost savings
attributable to the core deposit funding relative to an
alternative source of funding. Subsequent to the initial
recording, core deposit intangibles are amortized based upon the
expected runoff rate of the related deposits. In addition, the
value of core deposit intangibles is reviewed each quarter for
possible impairment by comparing actual deposit runoff to
estimated runoff. Should the actual runoff exceed the estimate,
the core deposit intangible is written down to the adjusted
amount through a charge to noninterest expense. At that point,
the runoff estimates are adjusted to reflect the actual runoff
and the new estimates are used for subsequent amortization.

Loans Held For Sale.A loan is classified as being held-for-sale when it has been
identified as either available to be sold or when it has been
included in a pool of loans that are awaiting sale. During 2005,
loans held-for-sale included SBA loans, commercial real estate
loans and multifamily loans. As of December 31, 2005, only
commercial real estate loans and SBA loans were included in the
portfolio. Loans held for sale are valued at the lower of cost or
fair market value. Unless otherwise indicated, loans held for sale are
not included in any of the disclosures or discussions that address the
loan portfolio, including the allowance for loan losses, outstanding balances and portfolio
performance indicators for loans held in portfolio.

9



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Whenever UCB determines that a loan is for sale,
the loan is transferred from loans held in portfolio to loans
held for sale. At that time, UCB computes the market value of
the loan and compares that value with the carrying amount of the
loan. If the market value is less than the carrying amount, UCB
writes down the carrying amount to the market value through a
charge to the income statement.

UCB uses outside service companies to calculate
the market value of its held for sale loans. For SBA loans, the
service performing the valuation uses market prices for similar
loans to determine the value of the non-guaranteed portion of
each loan. For commercial loans, the outside service uses a CMBS
pricing matrix in which loans are converted to an equivalent
investment using various key factors associated with the loan.
These factors include the contractual interest rate, maturity
date, loan to value ratio, and current credit risk rating of the
loan, among others. The equivalent investment is then given a
market value rating and an associated premium or discount is
assigned to the loan. The related estimated selling costs
associated with each loan are also included in the valuation
calculation.

Recent Accounting Pronouncements



| |                                                        
| | -------------------------------------------------------
| | Accounting for Certain Hybrid Financial
    Instruments

In February 2006, the FASB issued SFAS
No. 155, Accounting for Certain Hybrid Financial
Instruments, an amendment of FASB Statements No. 133 and
140. SFAS No. 155 permits fair value remeasurement for
any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation; clarifies
which interest-only strips and principal-only strips are not
subject to the requirements of SFAS No. 133; establishes a
requirement to evaluate interests in securitized financial
assets to identify interests that are freestanding derivatives
or that are hybrid financial instruments that contain an
embedded derivative requiring bifurcation; clarifies that
concentrations of credit risk in the form of subordination are
not embedded derivatives; and amends SFAS No. 140 to
eliminate the prohibition on a qualifying special-purpose entity
from holding a derivative financial instrument that pertains to
a beneficial interest other than another derivative financial
instrument. The new standard is effective for all financial
instruments acquired or issued after the beginning of the
Companys first fiscal year that begins after
September 15, 2006. The Company does not expect the
adoption of SFAS No. 155 to have a material impact on its
consolidated financial position, results of operations or cash
flows.



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | The Meaning of Other-Than-Temporary
    Impairment and its Application to Certain
    Investments

In November 2005, the FASB issued FSP 115-1,
The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments. FSP 115-1 address the
determination as to when an investment is considered impaired,
whether that impairment is other than temporary and the
measurement of an impairment loss. FSP 115-1 also includes
accounting considerations subsequent to the recognition of an
other-than-temporary impairment and requires certain disclosures
about unrealized losses that have not been recognized as
other-than-temporary impairments. The guidance in FSP 115-1
amends SFAS No. 115, Accounting for Certain Investments
in Debt and Equity Securities, and APB Opinion No. 18,
The Equity Method of Accounting for Investments in Common
Stock. FSP 115-1 applies to reporting periods beginning
after December 15, 2005. We do not expect FSP 115-1 will
have a material impact on our financial position, results of
operations, or cash flows.



| |                                                        
| | -------------------------------------------------------
| | Determining Whether to Aggregate Operating
    Segments

In June 2005, the Emerging Issues Task Force (the
EITF) reached a consensus on EITF No. 04-10,
Determining Whether to Aggregate Operating Segments That Do
Not Meet the Quantitative Thresholds. EITF No. 04-10
provides guidance on SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information,and how to
determine whether operating segments, which do not meet certain
quantitative thresholds, may be aggregated and reported as a
single operating segment. The EITF is effective for fiscal years
ending after September 15, 2005, and corresponding
information for earlier periods, including interim periods,
should be restated unless it is impractical to do so. The
adoption of this standard did not have a material impact on the
Companys consolidated financial statements.

10



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| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | Determining the Amortization Period for
    Leasehold Improvements Purchased After Lease Inception or
    Acquired in a Business Combination

In June 2005, the EITF reached a consensus on
EITF No. 05-6, Determining the Amortization Period for
Leasehold Improvements Purchased after Lease Inception or
Acquired in a Business Combination, which was modified in
September 2005. EITF No. 05-6 provides guidance on whether
a lease term should be reevaluated at the time of a purchase
business combination or when leasehold improvements are
purchased after lease inception. EITF No. 05-6 is effective for
leasehold improvements that are purchased or acquired in
reporting periods beginning after June 29, 2005. The
adoption of this standard did not have a material impact on the
Companys consolidated financial statements.



| |                                            
| | -------------------------------------------
| | Accounting Changes and Error
    Correction

On June 7, 2005, the FASB issued SFAS
No. 154, Accounting Changes and Error
Corrections  a replacement of APB Opinion
No. 20, Accounting Changes, and SFAS No. 3, Reporting
Accounting Changes in Interim Financial Statements. SFAS No.
154 changes the requirements for the accounting for and the
reporting of a change in accounting principle. Previously, most
voluntary changes in accounting principles were required to be
recognized by way of a cumulative effect adjustment within net
income during the period of change. SFAS No. 154 requires
retrospective application to prior periods financial
statements, unless it is impracticable to determine either the
period-specific effects or the cumulative effect of the change.
SFAS No. 154 is effective for accounting changes made in
fiscal years beginning after December 15, 2005; however,
SFAS No. 154 does not change the transition provisions of
any existing accounting pronouncements. The Company does not
believe the adoption of SFAS No. 154 will have a material
effect on its consolidated financial position, results of
operations or cash flows.



| |                                            
| | -------------------------------------------
| | Accounting for Stock-Based
    Compensation

On December 16, 2004, the FASB issued SFAS
No. 123R, Share-Based Payment. SFAS No. 123R is
a revision of SFAS No. 123. SFAS No. 123R eliminates
the ability to account for share-based compensation transactions
using the intrinsic value method as prescribed under APB Opinion
No. 25, and requires that such transactions be accounted
for using a fair value-based method. SFAS No. 123R covers a
wide range of share-based compensation arrangements including
share options, restricted share plans, performance-based awards,
share appreciation rights, and employee share purchase plans.
For the Company, SFAS No. 123R became effective as of
January 1, 2006.

SFAS No. 123R may be adopted using one of
two methods: (1) A modified prospective method
in which compensation cost is recognized beginning with the
effective date (a) based on the requirements of SFAS
No. 123R for all share-based payments granted after the
effective date and (b) based on the requirements of SFAS
No. 123 for all awards granted to employees prior to the
effective date of SFAS No. 123R that remain unvested on the
effective date; or (2) A modified retrospective
method which includes the requirements of the modified
prospective method described above, but also permits entities to
restate based on the amounts previously recognized under SFAS
No. 123 for purposes of pro forma disclosures either
(a) all prior periods presented or (b) prior interim
periods of the year of adoption.

Effective January 1, 2006, the Company
adopted the modified prospective method to account for
share-based compensation as allowed by SFAS No. 123.
Depending on the level of future option grants, the adoption of
SFAS No. 123R may have a material impact on the
Companys future financial position and results of
operation. See Note 1 to the Consolidated Financial Statements
for additional information regarding the Companys decision
to accelerate the vesting of its stock options in anticipation
of the adoption of SFAS No. 123R.



| |                                                                           
| | --------------------------------------------------------------------------
| | Accounting for Certain Loans or Debt
    Securities Acquired in a Transfer

In December 2003, the American Institute of
Certified Public Accountants (the AICPA) issued
Statement of Position (SOP) 03-3, which addresses
accounting for loans or debt securities acquired in a transfer
and the resulting differences between contractual cash flows and
cash flows expected to be collected. SOP 03-3 limits the yield
that may be accreted into income 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

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##### Table of Contents



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. In addition, SOP 03-3 prohibits
carrying over or creating valuation allowances in
the initial accounting of all loans acquired in a transfer that
are within the scope of SOP 03-3. The prohibition of the
valuation allowance carryover applies to the purchase of
individual loans, pools of loans and loans acquired in a
purchase business combination. SOP 03-3 does not apply to loans
originated by UCB.


SOP 03-3 is effective for loans acquired in
fiscal years beginning after December 15, 2004. For loans
acquired in fiscal years beginning on or before
December 15, 2004, decreases in cash flows expected to be
collected should be applied prospectively. The adoption of SOP
03-3 did not have a material impact on the financial condition
or operating results of the Company.

12



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##### Table of Contents



RESULTS OF OPERATIONS

Financial Highlights

|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |        |          |       | 
|--------------- | ------------------------------------------------------- | -------------------------------------------------------------------------- | ---------- | ------------------------------------------- | ------- | ------ | - | ------- | ------- | ------ | - | ------- | ------- | ------ | - | ------ | ------- | ------ | - | ------- | ------- | ------ | - | ------- | ------- | ------ | - | ------ | ------ | ----- |  | ------ | -------- | ----- | 
|                |                                                         |                                                                            |            |                                            
|                |                                                         | Year Ended December 31, Increase (Decrease)                                |            | Year Ended December 31, Increase (Decrease)
|                |                                                         |                                                                            |            |                                            
|                |                                                         | 2005                                                                       |            | 2004                                        |         | Amount |   | %       |         | 2004   |   | 2003    |         | Amount |   | %     
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |       
|                |                                                         |                                                                           
|                |                                                         | (Dollars in Thousands, Except Per Share Data)                             
|Operating Data: |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Interest & dividend income:                             |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |        |         
|                |                                                         | Loans                                                                      |            | $                                           | 333,159 |        |   | $       | 226,292 |        |   | $       | 106,867 |        |   |        | 47.23   | %      |   | $       | 226,292 |        |   | $       | 191,754 |        |   | $      | 34,538 |       |  |        | 18.01    | %    
|                |                                                         | Funds sold and due from bank                                               |            |                                             | 2,121   |        |   |         | 649     |        |   |         | 1,472   |        |   |        | 226.81  |        |   |         | 649     |        |   |         | 106     |        |   |        | 543    |       |  |        | 512.26   |      
|                |                                                         | Investment & mortgage-backed securities:                                   |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |        |          |      
|                |                                                         |                                                                            | Taxable    |                                             |         | 56,503 |   |         |         | 63,646 |   |         |         | (7,143 | ) |        |         | (11.22 | ) |         |         | 63,646 |   |         |         | 60,870 |   |        |        | 2,776 |  |        |          | 4.56  | 
|                |                                                         |                                                                            | Nontaxable |                                             |         | 10,617 |   |         |         | 9,477  |   |         |         | 1,140  |   |        |         | 12.03  |   |         |         | 9,477  |   |         |         | 7,532  |   |        |        | 1,945 |  |        |          | 25.82 | 
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Total interest & dividend income                        |                                                                            |            | 402,400                                     |         |        |   | 300,064 |         |        |   | 102,336 |         |        |   | 34.10  |         |        |   | 300,064 |         |        |   | 260,262 |         |        |   | 39,802 |        |       |  | 15.29  |         
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Interest expense:                                       |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |        |         
|                |                                                         | Deposits                                                                   |            |                                             | 123,317 |        |   |         | 67,267  |        |   |         | 56,050  |        |   |        | 83.32   |        |   |         | 67,267  |        |   |         | 68,724  |        |   |        | (1,457 | )     |  |        | (2.12    | )    
|                |                                                         | Short-term borrowings                                                      |            |                                             | 10,605  |        |   |         | 2,165   |        |   |         | 8,440   |        |   |        | 389.84  |        |   |         | 2,165   |        |   |         | 1,084   |        |   |        | 1,081  |       |  |        | 99.72    |      
|                |                                                         | Subordinated debentures                                                    |            |                                             | 9,353   |        |   |         | 8,185   |        |   |         | 1,168   |        |   |        | 14.27   |        |   |         | 8,185   |        |   |         | 7,922   |        |   |        | 263    |       |  |        | 3.32     |      
|                |                                                         | Long-term borrowings                                                       |            |                                             | 18,635  |        |   |         | 14,966  |        |   |         | 3,669   |        |   |        | 24.52   |        |   |         | 14,966  |        |   |         | 13,984  |        |   |        | 982    |       |  |        | 7.02     |      
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Total interest expense                                  |                                                                            |            | 161,910                                     |         |        |   | 92,583  |         |        |   | 69,327  |         |        |   | 74.88  |         |        |   | 92,583  |         |        |   | 91,714  |         |        |   | 869    |        |       |  | 0.95   |         
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Net interest income                                     |                                                                            |            | 240,490                                     |         |        |   | 207,481 |         |        |   | 33,009  |         |        |   | 15.91  |         |        |   | 207,481 |         |        |   | 168,548 |         |        |   | 38,933 |        |       |  | 23.10  |         
|                | Provision for loan losses                               |                                                                            |            | 6,091                                       |         |        |   | 4,201   |         |        |   | 1,890   |         |        |   | 44.99  |         |        |   | 4,201   |         |        |   | 9,967   |         |        |   | (5,766 | )      |       |  | (57.85 | )       
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Net interest income after provision for loan
    losses |                                                                            |            | 234,399                                     |         |        |   | 203,280 |         |        |   | 31,119  |         |        |   | 15.31  |         |        |   | 203,280 |         |        |   | 158,581 |         |        |   | 44,699 |        |       |  | 28.19  |         
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Noninterest income:                                     |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |        |         
|                |                                                         | Commercial banking fees                                                    |            |                                             | 10,607  |        |   |         | 8,254   |        |   |         | 2,353   |        |   |        | 28.51   |        |   |         | 8,254   |        |   |         | 6,650   |        |   |        | 1,604  |       |  |        | 24.12    |      
|                |                                                         | Service charges on deposits                                                |            |                                             | 3,038   |        |   |         | 2,654   |        |   |         | 384     |        |   |        | 14.47   |        |   |         | 2,654   |        |   |         | 2,249   |        |   |        | 405    |       |  |        | 18.01    |      
|                |                                                         | Gain (loss) on sale of securities, net                                     |            |                                             | (5      | )      |   |         | 12,713  |        |   |         | (12,718 | )      |   |        | (100.04 | )      |   |         | 12,713  |        |   |         | 11,013  |        |   |        | 1,700  |       |  |        | 15.44    |      
|                |                                                         | Gain on sale of SBA loans, net                                             |            |                                             | 3,356   |        |   |         | 1,463   |        |   |         | 1,893   |        |   |        | 129.39  |        |   |         | 1,463   |        |   |         | 3,030   |        |   |        | (1,567 | )     |  |        | (51.72   | )    
|                |                                                         | Gain on sale of multifamily & commercial
    real estate loans, net        |            |                                             | 12,207  |        |   |         | 7,732   |        |   |         | 4,475   |        |   |        | 57.88   |        |   |         | 7,732   |        |   |         |        |        |   |        | 7,732  |       |  |        |         |      
|                |                                                         | Unrealized loss on loans held for sale                                     |            |                                             | (1,152  | )      |   |         |        |        |   |         | (1,152  | )      |   |        |        |        |   |         |        |        |   |         |        |        |   |        |       |       |  |        |         |      
|                |                                                         | Equity loss in other equity investments                                    |            |                                             | (2,296  | )      |   |         | (2,210  | )      |   |         | (86     | )      |   |        | 3.89    |        |   |         | (2,210  | )      |   |         | (152    | )      |   |        | (2,058 | )     |  |        | 1,353.95 |      
|                |                                                         | Other fees                                                                 |            |                                             | 929     |        |   |         | 271     |        |   |         | 658     |        |   |        | 242.80  |        |   |         | 271     |        |   |         | 413     |        |   |        | (142   | )     |  |        | (34.38   | )    
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Total noninterest income                                |                                                                            |            | 26,684                                      |         |        |   | 30,877  |         |        |   | (4,193  | )       |        |   | (13.58 | )       |        |   | 30,877  |         |        |   | 23,203  |         |        |   | 7,674  |        |       |  | 33.07  |         
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Noninterest expense:                                    |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |        |         
|                |                                                         | Personnel                                                                  |            |                                             | 60,152  |        |   |         | 50,931  |        |   |         | 9,221   |        |   |        | 18.10   |        |   |         | 50,931  |        |   |         | 42,310  |        |   |        | 8,621  |       |  |        | 20.38    |      
|                |                                                         | Occupancy                                                                  |            |                                             | 12,238  |        |   |         | 10,164  |        |   |         | 2,074   |        |   |        | 20.41   |        |   |         | 10,164  |        |   |         | 5,869   |        |   |        | 4,295  |       |  |        | 73.18    |      
|                |                                                         | Data processing                                                            |            |                                             | 6,847   |        |   |         | 5,896   |        |   |         | 951     |        |   |        | 16.13   |        |   |         | 5,896   |        |   |         | 4,826   |        |   |        | 1,070  |       |  |        | 22.17    |      
|                |                                                         | Furniture & equipment                                                      |            |                                             | 6,534   |        |   |         | 6,458   |        |   |         | 76      |        |   |        | 1.18    |        |   |         | 6,458   |        |   |         | 4,456   |        |   |        | 2,002  |       |  |        | 44.93    |      
|                |                                                         | Professional fees & contracted services                                    |            |                                             | 10,763  |        |   |         | 7,496   |        |   |         | 3,267   |        |   |        | 43.58   |        |   |         | 7,496   |        |   |         | 5,802   |        |   |        | 1,694  |       |  |        | 29.20    |      
|                |                                                         | Deposit insurance                                                          |            |                                             | 742     |        |   |         | 774     |        |   |         | (32     | )      |   |        | (4.13   | )      |   |         | 774     |        |   |         | 695     |        |   |        | 79     |       |  |        | 11.37    |      
|                |                                                         | Communication                                                              |            |                                             | 955     |        |   |         | 1,287   |        |   |         | (332    | )      |   |        | (25.80  | )      |   |         | 1,287   |        |   |         | 1,066   |        |   |        | 221    |       |  |        | 20.73    |      
|                |                                                         | Core deposit intangible amortization                                       |            |                                             | 1,345   |        |   |         | 1,282   |        |   |         | 63      |        |   |        | 4.91    |        |   |         | 1,282   |        |   |         | 1,762   |        |   |        | (480   | )     |  |        | (27.24   | )    
|                |                                                         | Loss on extinguishment of subordinated
    debentures & secured borrowings |            |                                             | 1,246   |        |   |         |        |        |   |         | 1,246   |        |   |        |        |        |   |         |        |        |   |         |        |        |   |        |       |       |  |        |         |      
|                |                                                         | Other general & administrative                                             |            |                                             | 16,091  |        |   |         | 14,865  |        |   |         | 1,226   |        |   |        | 8.25    |        |   |         | 14,865  |        |   |         | 13,422  |        |   |        | 1,443  |       |  |        | 10.75    |      
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Total noninterest expense                               |                                                                            |            | 116,913                                     |         |        |   | 99,153  |         |        |   | 17,760  |         |        |   | 17.91  |         |        |   | 99,153  |         |        |   | 80,208  |         |        |   | 18,945 |        |       |  | 23.62  |         
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Income before income tax expense                        |                                                                            |            | 144,170                                     |         |        |   | 135,004 |         |        |   | 9,166   |         |        |   | 6.79   |         |        |   | 135,004 |         |        |   | 101,576 |         |        |   | 33,428 |        |       |  | 32.91  |         
|                | Income tax expense                                      |                                                                            |            | 46,344                                      |         |        |   | 49,401  |         |        |   | (3,057  | )       |        |   | (6.19  | )       |        |   | 49,401  |         |        |   | 36,938  |         |        |   | 12,463 |        |       |  | 33.74  |         
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       
|                | Net income                                              |                                                                            | $          | 97,826                                      |         |        | $ | 85,603  |         |        | $ | 12,223  |         |        |   | 14.28  |         |        | $ | 85,603  |         |        | $ | 64,638  |         |        | $ | 20,965 |        |       |  | 32.43  |         
|                |                                                         |                                                                            |            |                                             |         |        |   |         |         |        |   |         |         |        |   |        |         |        |   |         |         |        |   |         |         |        |   |        |        |       |  |       

13



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##### Table of Contents



|                                 |                                       |                                               |   |                                             |   |        |   |       |  |      |   |      |      |        |  |        |    |  |   |       |   |  |   |       |  |  |   |      |     |  |  |       |  
|-------------------------------- | ------------------------------------- | --------------------------------------------- | - | ------------------------------------------- | - | ------ | - | ----- |  | ---- | - | ---- | ---- | ------ |  | ------ | -- |  | - | ----- | - |  | - | ----- |  |  | - | ---- | --- |  |  | ----- | -
|                                 |                                       |                                               |   |                                            
|                                 |                                       | Year Ended December 31, Increase (Decrease)   |   | Year Ended December 31, Increase (Decrease)
|                                 |                                       |                                               |   |                                            
|                                 |                                       | 2005                                          |   | 2004                                        |   | Amount |   | %     |  | 2004 |   | 2003 |      | Amount |  | %     
|                                 |                                       |                                               |   |                                             |   |        |   |       |  |      |   |      |      |        |  |       
|                                 |                                       |                                              
|                                 |                                       | (Dollars in Thousands, Except Per Share Data)
|Per Share Data:                  |                                       |                                               |   |                                             |   |        |   |       |  |      |   |      |      |        |  |        |    |  |   |       |   |  |   |       |  |  |   |      |     |  |  |      
|                                 | Basic earnings per share(1)           |                                               | $ | 1.06                                        |   |        | $ | 0.95  |  |      | $ | 0.11 |      |        |  | 11.58  | %  |  | $ | 0.95  |   |  | $ | 0.74  |  |  | $ | 0.21 |     |  |  | 28.38 | %
|                                 | Diluted earnings per share(1)         |                                               |   | 1.02                                        |   |        |   | 0.90  |  |      |   | 0.12 |      |        |  | 13.33  |    |  |   | 0.90  |   |  |   | 0.71  |  |  |   | 0.19 |     |  |  | 26.76 |  
|                                 | Dividends declared per share(1)       |                                               |   | 0.10                                        |   |        |   | 0.08  |  |      |   | 0.02 |      |        |  | 25.00  |    |  |   | 0.08  |   |  |   | 0.06  |  |  |   | 0.02 |     |  |  | 33.33 |  
|Operating Ratios and Other Data: |                                       |                                               |   |                                             |   |        |   |       |  |      |   |      |      |        |  |        |    |  |   |       |   |  |   |       |  |  |   |      |     |  |  |      
|                                 | Return on average assets              |                                               |   | 1.40                                        | % |        |   | 1.44% |  |      |   | (4   | )bp* |        |  | (2.78  | )% |  |   | 1.44  | % |  |   | 1.26% |  |  |   | 18   | bp* |  |  | 14.29 | %
|                                 | Return on average equity              |                                               |   | 18.42                                       |   |        |   | 18.92 |  |      |   | (50  | )    |        |  | (2.64  | )  |  |   | 18.92 |   |  |   | 18.84 |  |  |   | 8    |     |  |  | 0.42  |  
|                                 | Efficiency ratio(2)                   |                                               |   | 43.76                                       |   |        |   | 41.60 |  |      |   | 216  |      |        |  | 5.19   |    |  |   | 41.60 |   |  |   | 41.83 |  |  |   | (23  | )   |  |  | (0.55 | )
|                                 | Noninterest expense to average assets |                                               |   | 1.68                                        |   |        |   | 1.67  |  |      |   | 1    |      |        |  | 0.60   |    |  |   | 1.67  |   |  |   | 1.56  |  |  |   | 11   |     |  |  | 7.05  |  
|                                 | Average equity to average assets      |                                               |   | 7.61                                        |   |        |   | 7.62  |  |      |   | (1   | )    |        |  | (0.13  | )  |  |   | 7.62  |   |  |   | 6.66  |  |  |   | 96   |     |  |  | 14.41 |  
|                                 | Dividend payout ratio(3)              |                                               |   | 9.80                                        |   |        |   | 8.89  |  |      |   | 91   |      |        |  | 10.24  |    |  |   | 8.89  |   |  |   | 8.51  |  |  |   | 38   |     |  |  | 4.47  |  
|                                 | Net loan charge-offs to average loans |                                               |   | 0.03                                        |   |        |   | 0.11  |  |      |   | (8   | )    |        |  | (72.73 | )  |  |   | 0.11  |   |  |   | 0.06  |  |  |   | 5    |     |  |  | 83.33 |  
|                                 | Interest rate spread(4)               |                                               |   | 3.33                                        |   |        |   | 3.51  |  |      |   | (18  | )    |        |  | (5.13  | )  |  |   | 3.51  |   |  |   | 3.29  |  |  |   | 22   |     |  |  | 6.69  |  
|                                 | Net interest margin(4)                |                                               |   | 3.66                                        |   |        |   | 3.72  |  |      |   | (6   | )    |        |  | (1.61  | )  |  |   | 3.72  |   |  |   | 3.49  |  |  |   | 23   |     |  |  | 6.59  |  



---



|    |                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company completed a two-for-one stock split
    during the years ended December 31, 2005 and 2003.
    Accordingly, for the years ended December 31, 2004 and
    2003, basic earnings per share, diluted earnings per share and
    dividends per share have been restated to reflect the effect of
    the stock split.
|   
|(2) | Represents noninterest expense divided by the
    total of our net interest income before provision for loan
    losses and our noninterest income.                                                                                                                                                                          
|   
|(3) | Dividends declared per share as a percentage of
    diluted earnings per share.                                                                                                                                                                                                                                              
|   
|(4) | Calculated on a tax equivalent basis. Interest
    income from nontaxable investment securities calculated on a tax
    equivalent basis was $5.2 million, $5.4 million and
    $4.0 million for the years ended December 31, 2005,
    2004 and 2003, respectively.                                                         

*   Basis point



| |                                                                           
| | --------------------------------------------------------------------------
| | Year Ended December 31, 2005, Compared
    to Year Ended December 31, 2004

The consolidated net income of the Company for
the year ended December 31, 2005, increased by
$12.2 million, or 14.3%, to $97.8 million, compared to
$85.6 million for the year ended December 31, 2004.
The annualized return on average equity (ROE) and
return on average assets (ROA) ratios for the year
ended December 31, 2005, were 18.42% and 1.40%,
respectively. These amounts compare with annualized ROE and ROA
ratios of 18.92% and 1.44%, respectively, for the year ended
December 31, 2004. These lower ratios are reflective of the
increases in the growth rates of assets and equity that exceeded
the growth in net income. The efficiency ratio was 43.76% for
the year ended December 31, 2005, compared with 41.60% for
the same period in 2004. The efficiency ratio increased
primarily due to higher personnel costs, occupancy costs,
professional fees and contracted services, and the loss on
extinguishment of subordinated debentures for the year ended
December 31, 2005, compared with the year ended
December 31, 2004. Diluted earnings per share were $1.02
for the year ended December 31, 2005, compared with $0.90
on a post-split basis for the year ended December 31, 2004.

Net Interest Income and Net Interest
Margin.Net interest income increased
15.3%, compared to the same period in 2004. The increase in net
interest income was principally due to a $998.2 million
increase in average interest-earning assets, which resulted
primarily from organic loan growth. The average cost of deposits
increased 83 basis points from 1.39% for the year ended
December 31, 2004, to 2.22% for the year ended
December 31, 2005, as a result of an increase in market
interest rates during the past twelve months, the change in the
composition of deposits and the procurement of certificates of
deposit from brokers. These factors were partially offset by a
92 basis point increase in average loan yields from 5.55% for
the year ended December 31, 2004, to 6.47% for the year
ended December 31, 2005. The increase in loan yield
reflects repricing of adjustable-rate loans resulting from
higher market interest rate indices. The taxable securities
yield decreased from 4.51% for the year ended December 31,
2004, to 4.39% for the year ended December 31, 2005. The
nontaxable securities yields decreased from 4.79% for the year
ended December 31, 2004, to 4.78% for the year ended
December 31, 2005. The decrease in the taxable securities
yields is attributable to lower-yielding securities.

14



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##### Table of Contents



The following table reflects the distribution of
average assets and liabilities, and stockholders equity,
as well as the total dollar amounts of interest income from
average interest-earning assets, and the resultant yields and
dollar amounts of interest expense of average interest-bearing
liabilities, expressed both in dollars and rates for the years
ended December 31, 2005 and 2004 (dollars in thousands):

|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |      |      |  
|-------------------------------------------------------------------- | ------------------------------- | --------------------------------------- | --------- | --------- | --------- | ---------- | ------- | ------- | ------ | -------- | ---- | ---------- | ---- | - | --------- | --------- | --------- | - | ------- | ------ | ------ |  | ---- | ---- | ---- | -
|                                                                     |                                 |                                         |           |          
|                                                                     |                                 | 2005                                    |           | 2004     
|                                                                     |                                 |                                         |           |          
|                                                                     |                                 |                                         |           | Interest  |           |            |         |         |        | Interest |      |           
|                                                                     |                                 | Average                                 |           | Income/   |           | Average    |         | Average |        | Income/  |      | Average   
|                                                                     |                                 | Balance                                 |           | Expense   |           | Yield/Cost |         | Balance |        | Expense  |      | Yield/Cost
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |           
|Interest-Earning Assets:                                             |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Loans(1)(2)                                                          |                                 | $                                       | 5,148,952 |           |           | $          | 333,159 |         |        |          | 6.47 | %          |      | $ | 4,077,799 |           |           | $ | 226,292 |        |        |  | 5.55 | %   
|                                                                     | Taxable securities(3)           |                                         |           | 1,288,508 |           |            |         | 56,503  |        |          |      | 4.39       |      |   |           | 1,411,155 |           |   |         | 63,646 |        |  |      | 4.51 |     
|                                                                     | Nontaxable securities(3)        |                                         |           | 222,196   |           |            |         | 10,617  |        |          |      | 4.78       |      |   |           | 197,885   |           |   |         | 9,477  |        |  |      | 4.79 |     
|                                                                     | Other                           |                                         |           | 56,179    |           |            |         | 2,121   |        |          |      | 3.78       |      |   |           | 30,770    |           |   |         | 649    |        |  |      | 2.11 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total interest-earning assets                                        |                                 |                                         | 6,715,835 |           |           |            | 402,400 |         |        |          | 5.99 |            |      |   | 5,717,609 |           |           |   | 300,064 |        |        |  | 5.25 |     
|Noninterest-earning assets                                           |                                 |                                         | 259,142   |           |           |            |        |         |        |          |      |            |      |   | 222,289   |           |           |   |        |        |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total assets                                                         |                                 | $                                       | 6,974,977 |           |           | $          | 402,400 |         |        |          | 5.77 | %          |      | $ | 5,939,898 |           |           | $ | 300,064 |        |        |  | 5.05 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Interest-bearing liabilities:                                        |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|                                                                     | Deposits:                       |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |      |     
|                                                                     |                                 | NOW, checking and money market accounts |           | $         | 1,095,964 |            |         | $       | 20,572 |          |      |            | 1.88 | % |           | $         | 827,861   |   |         | $      | 9,295  |  |      |      | 1.12 | %
|                                                                     |                                 | Savings accounts                        |           |           | 841,271   |            |         |         | 9,336  |          |      |            | 1.11 |   |           |           | 921,106   |   |         |        | 8,451  |  |      |      | 0.92 |  
|                                                                     |                                 | Time deposits                           |           |           | 3,169,956 |            |         |         | 93,409 |          |      |            | 2.95 |   |           |           | 2,699,287 |   |         |        | 49,521 |  |      |      | 1.83 |  
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|                                                                     | Total interest-bearing deposits |                                         |           | 5,107,191 |           |            |         | 123,317 |        |          |      | 2.41       |      |   |           | 4,448,254 |           |   |         | 67,267 |        |  |      | 1.51 |     
|                                                                     | Short-term borrowings           |                                         |           | 304,251   |           |            |         | 10,605  |        |          |      | 3.49       |      |   |           | 172,225   |           |   |         | 2,165  |        |  |      | 1.26 |     
|                                                                     | Long-term borrowings            |                                         |           | 361,411   |           |            |         | 18,635  |        |          |      | 5.16       |      |   |           | 299,252   |           |   |         | 14,966 |        |  |      | 5.00 |     
|                                                                     | Subordinated debentures         |                                         |           | 131,901   |           |            |         | 9,353   |        |          |      | 7.09       |      |   |           | 136,000   |           |   |         | 8,185  |        |  |      | 6.02 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total interest-bearing liabilities                                   |                                 |                                         | 5,904,754 |           |           |            | 161,910 |         |        |          | 2.74 |            |      |   | 5,055,731 |           |           |   | 92,583  |        |        |  | 1.83 |     
|Noninterest-bearing deposits                                         |                                 |                                         | 448,301   |           |           |            |        |         |        |          |      |            |      |   | 374,269   |           |           |   |        |        |        |  |      |     
|Other noninterest-bearing liabilities                                |                                 |                                         | 90,800    |           |           |            |        |         |        |          |      |            |      |   | 57,445    |           |           |   |        |        |        |  |      |     
|Stockholders equity                                                 |                                 |                                         | 531,122   |           |           |            |        |         |        |          |      |            |      |   | 452,453   |           |           |   |        |        |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total liabilities and stockholders equity                           |                                 | $                                       | 6,974,977 |           |           | $          | 161,910 |         |        |          | 2.32 | %          |      | $ | 5,939,898 |           |           | $ | 92,583  |        |        |  | 1.56 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Net interest income/net interest rate spread(4)(5)                   |                                 |                                         |           |           |           | $          | 240,490 |         |        |          | 3.25 | %          |      |   |           |           |           | $ | 207,481 |        |        |  | 3.42 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Net interest-earning assets/net interest
    margin(5)(6)            |                                 | $                                       | 811,081   |           |           |            |         |         |        |          | 3.58 | %          |      | $ | 661,878   |           |           |   |         |        |        |  | 3.63 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Ratio of interest-earning assets to
    interest-bearing liabilities |                                 |                                         | 1.14      | x         |           |            |         |         |        |          |      |            |      |   | 1.13      | x         |           |   |         |        |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     



---



|    |                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Nonaccrual loans are included in the table for
    computation purposes; however, interest for such loans is
    recognized on a cash basis.                                                                                 
|   
|(2) | Average loans include loans held for sale.                                                                                                                                                                                   
|   
|(3) | Average yield on investment securities is
    computed using historical cost balances; the yield information
    does not give effect to changes in fair value that are reflected
    as a component of stockholders equity.
|   
|(4) | Interest rate spread represents the difference
    between the average yield on interest-earning assets and the
    average cost of interest-bearing liabilities.                                                            
|   
|(5) | Net interest rate spread and net interest margin
    are calculated on a nontax equivalent basis.                                                                                                                            
|   
|(6) | Net interest margin represents net interest
    income divided by average interest-earning assets.                                                                                                                           

The net interest margin, calculated on a tax
equivalent basis, was 3.66% for the year ended December 31,
2005, as compared to 3.72% for 2004. Certain interest-earning
assets of the Company qualify for federal tax exemptions or
credits. The net interest margin, calculated on a tax equivalent
basis, considers the tax benefit

15



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##### Table of Contents



derived from these assets. The net interest
margin decline reflects the impact of increased costs of money
market accounts and certificates of deposit resulting from
higher market interest rates, the change in the composition of
deposits and the procurement of costlier certificates of deposit
from brokers partially offset by higher loan yields.


Average interest-earning assets for the year
ended December 31, 2005, increased 17.5% compared to the
year ended December 31, 2004, primarily as a result of
organic commercial loan growth. Average outstanding loans
increased by $1.07 billion for the year ended
December 31, 2005, from the year ended December 31,
2004, principally as a result of UCBs continued focus on
commercial lending activities. Average commercial loan balances
increased 24.9% compared to the corresponding period of 2004,
primarily due to UCBs past emphasis on commercial real
estate and continued emphasis on commercial business loans, and
expansion of its Hong Kong branch. Average consumer loans for
the year ended December 31, 2005, increased
$157.1 million, or 38.9%, compared to the same period in
2004. As of December 31, 2005, total loans represented
75.3% of total assets. New loan commitments of
$3.91 billion for the year ended December 31, 2005,
were comprised of $3.68 billion in commercial loan
commitments and $229.0 million in consumer loan commitments.

Average securities for the year ended
December 31, 2005, were down $98.3 million, or 6.1%,
from the year ended December 31, 2004. One of the
Companys long-term goals is to reduce the securities
portfolio to a range of 10% to 15% of the balance sheet. The
current level is 17.9%.

Average total deposits increased
$733.0 million, or 15.2%, for the year ended
December 31, 2005, from the year ended December 31,
2004, reflecting UCBs ongoing focus on the generation of
commercial and consumer demand deposits. Also, for the first
time, UCB accepted $156.8 million in brokered deposits.
Average interest-bearing deposits increased to
$5.11 billion for the year ended December 31, 2005, up
14.8% from the year ended December 31, 2004, and average
noninterest-bearing deposits increased to $448.3 million,
or 19.8%, for the year ended December 31, 2005, compared to
the year ended December 31, 2004.

The changes in interest income and interest
expense for the major categories of interest-earning assets and
interest-bearing liabilities, and the amount of change that is
attributable to volume and rate changes by comparing the years
ended December 31, 2005 to 2004, are as follows (dollars in
thousands):

|                                           |                                                            |                                          |        |        |        |       |        |        |        |   |        |         |        | 
|------------------------------------------ | ---------------------------------------------------------- | ---------------------------------------- | ------ | ------ | ------ | ----- | ------ | ------ | ------ | - | ------ | ------- | ------ | 
|                                           |                                                            |                                         
|                                           |                                                            | Year Ended December 31, 2005            
|                                           |                                                            | Compared to 2004                        
|                                           |                                                            |                                         
|                                           |                                                            |                                          |        |       
|                                           |                                                            | Changes due to                           |        |       
|                                           |                                                            |                                          |        |       
|                                           |                                                            | Volume                                   |        | Rate   |        | Total
|                                           |                                                            |                                          |        |        |        |      
|Interest income:                           |                                                            |                                          |        |        |        |       |        |        |        |   |        |        
|                                           | Loans                                                      |                                          | $      | 69,308 |        |       | $      | 37,559 |        |   | $      | 106,867 |       
|                                           | Taxable securities                                         |                                          |        | (5,378 | )      |       |        | (1,765 | )      |   |        | (7,143  | )     
|                                           | Nontaxable securities                                      |                                          |        | 1,162  |        |       |        | (22    | )      |   |        | 1,140   |       
|                                           | Other                                                      |                                          |        | 959    |        |       |        | 513    |        |   |        | 1,472   |       
|                                           |                                                            |                                          |        |        |        |       |        |        |        |   |        |        
|                                           | Total interest income on interest-earning assets           |                                          |        | 66,051 |        |       |        | 36,285 |        |   |        | 102,336 |       
|                                           |                                                            |                                          |        |        |        |       |        |        |        |   |        |        
|Interest expense:                          |                                                            |                                          |        |        |        |       |        |        |        |   |        |        
|                                           | Deposits:                                                  |                                          |        |        |        |       |        |        |        |   |        |         |       
|                                           |                                                            | NOW, checking, and money market accounts |        |        | 5,032  |       |        |        | 6,245  |   |        |         | 11,277 | 
|                                           |                                                            | Savings accounts                         |        |        | (886   | )     |        |        | 1,771  |   |        |         | 885    | 
|                                           |                                                            | Time deposits                            |        |        | 13,869 |       |        |        | 30,019 |   |        |         | 43,888 | 
|                                           | Short-term borrowings                                      |                                          |        | 4,602  |        |       |        | 3,838  |        |   |        | 8,440   |       
|                                           | Long-term borrowings                                       |                                          |        | 3,205  |        |       |        | 464    |        |   |        | 3,669   |       
|                                           | Subordinated debentures                                    |                                          |        | (291   | )      |       |        | 1,459  |        |   |        | 1,168   |       
|                                           |                                                            |                                          |        |        |        |       |        |        |        |   |        |        
|                                           | Total interest expense on interest-bearing
    liabilities |                                          |        | 25,531 |        |       |        | 43,796 |        |   |        | 69,327  |       
|                                           |                                                            |                                          |        |        |        |       |        |        |        |   |        |        
|Increase (decrease) in net interest income |                                                            | $                                        | 40,520 |        |        | $     | (7,511 | )      |        | $ | 33,009 |        
|                                           |                                                            |                                          |        |        |        |       |        |        |        |   |        |        

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Changes not solely attributable to rate or volume
have been allocated to volume and rate changes in proportion to
the relationship of the absolute dollar amounts of the changes
in each.

Provision for Loan
Losses.The provision for loan losses
is the amount of expense that, based on our judgment, is
required to maintain the allowance for loan losses at an
adequate level. The provision for unfunded lending commitments
is used to maintain the allowance for unfunded lending
commitments at an adequate level. In determining adequate levels
of the allowances, we perform periodic evaluations of UCBs
various portfolios, and considering the levels of actual loan
losses and statistical trends and other economic factors. See
Credit Risk Management for more information on how
we determine the appropriate level for the allowances for loan
and lease losses and unfunded lending commitments.

For the year ended December 31, 2005, the
provision for loan losses was $6.1 million, compared to
$4.2 million for 2004. The higher provision for 2005
reflects the growth in the loan portfolio partially offset by
improvements in certain loss factors used in determining the
appropriate level of the allowance for loan losses.

Noninterest Income.Noninterest income decreased by $4.2 million, or 13.6%, for
the year ended December 31, 2005, compared to the year
ended December 31, 2004. The decrease was primarily
attributable to a decrease in gains from the sale of securities.
UCB incurred a $5,000 loss on sale of securities for the year
ended December 31, 2005, as compared to a
$12.7 million gain on sale of securities for 2004. In
addition, UCB incurred a $1.2 million in unrealized losses
resulting from lower of cost or market adjustments on the
multifamily and commercial real estate loans in the loans held
for sale portfolio during the year ended December 31, 2005.
These factors were partially offset by an increase in gains on
sale of multifamily real estate and other loans of
$12.2 million for the year ended December 31, 2005,
compared to $7.7 million for the same period in 2004. In
addition, there was an increase in commercial banking fees to
$10.6 million for the year ended December 31, 2005,
compared to $8.3 million for the same period in 2004.
Included in the loss on sale of securities for the year ended
December 31, 2005, was a gain of $614,000 resulting from
the sale of $29.7 million of securities classified as
available for sale to provide funding for executing the
Companys plan required by the American Jobs Creation Act
of 2004 (AJCA).

Noninterest Expense.Noninterest expense increased $17.8 million, or 17.91%, for
the year ended December 31, 2005, compared to the year
ended December 31, 2004. The increase resulted principally
from increases in personnel expenses, occupancy expenses,
professional fees and contracted services, and loss on
extinguishment of junior subordinated debentures. For the year
ended December 31, 2005, personnel expenses increased
18.1%, from the year ended December 31, 2004, due to
additional staffing required to support the growth of UCBs
commercial banking business, the expansion of the Hong Kong
branch, the opening of new branches in California and New York,
and the expansion of UCBs infrastructure to support a
larger and growing organization. These increases were partially
offset by a reduction in discretionary and incentive bonuses.
Occupancy expenses increased by 20.41% for the year ended
December 31, 2005, compared to the year ended
December 31, 2004, as a result of a write-off of leasehold
improvements, the opening of new branches in California and New
York, completion of the relocation of the San Francisco
headquarters and the expansion of the Hong Kong branch. Also,
for the year ended December 31, 2005, occupancy expenses
reflect a full year of occupancy expenses related to branches
and representative offices, which had been opened during the
latter part of 2004. Professional fees and contracted services
increased by 43.6% for the year ended December 31, 2005,
compared to the year ended December 31, 2004, as a result
of higher consulting fees resulting from continued
self-assessment and compliance related to the requirements of
the Sarbanes-Oxley Act of 2002. The Company also incurred a loss
on extinguishment of the 9.375% junior subordinated debentures
due May 1, 2028, of $1.2 million from the write-off of
the unamortized subordinated debenture issuance costs for the
year ended December 31, 2005.

Income Tax Expense.Income tax expense was $46.3 million on income before taxes
of $144.2 million for the year ended December 31,
2005, compared to $49.4 million on income before taxes of
$135.0 million for the same period in 2004. The effective
tax rate for the year ended December 31, 2005, was 32.1%,
compared with 36.6% for the year ended December 31, 2004.
These rates are generally 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, the true-up
of tax estimates for the enterprise zone credits and the
reversal of the deferred tax liability related to unremitted
earnings of its foreign subsidiary more fully described below.

17



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During the three months ended June 30, 2005,
the Company elected to repatriate approximately
$26.7 million in previously unremitted foreign earnings.
During the three months ended December 31, 2005, the
Company repatriated $26.7 million in previously unremitted
foreign earnings. As a result, the Company has recorded current
taxes payable on such previously unremitted foreign earnings of
approximately $703,000. In addition, the Company has recorded a
reduction to deferred tax liabilities of approximately
$4.6 million as a result of the reversal of the deferred
tax liability related to unremitted earnings of its foreign
subsidiary. This results in a net tax benefit of approximately
$3.9 million.



| |                                                                           
| | --------------------------------------------------------------------------
| | Year Ended December 31, 2004, Compared
    to Year Ended December 31, 2003

The consolidated net income of the Company during
the year ended December 31, 2004, increased by
$21.0 million, or 32.4%, to $85.6 million, compared to
$64.6 million for the preceding year, primarily as a result
of the increase in interest-earning assets. The return on
average assets (ROA) and the return on average
equity (ROE) for the year ended December 31,
2004, improved primarily due to higher net interest income. The
slight decrease in the efficiency ratio from December 31,
2004 compared to December 31, 2003 was primarily due to
higher interest income and a $7.7 million gain in
multifamily loan sales.

Net Interest Income and Net Interest
Margin.Net interest income before
provision for loan losses increased $38.9 million for the
year ended December 31, 2004 compared to the 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 23 basis point improvement in the net
interest margin. The average cost of deposits decreased 22 basis
points from 2003 to 2004. This savings was partially offset by a
12 basis point decrease in average loan yields from 2003 to
2004. The decreases in loan yields and the deposit costs reflect
the decline in the overall market interest rate environment from
the prior year. The decrease in loan yields also 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 low
market interest rates.

The average yield on taxable securities increased
15 basis points in the year ended December 31, 2004, from
the year ended December 31, 2003. The average yield on
nontaxable securities decreased 6 basis points in the year ended
December 31, 2004, from the year ended December 31,
2003. Premiums on securities purchased as a percentage of the
outstanding balance on the securities portfolio declined
substantially between December 31, 2003, and
December 31, 2004. In the second quarter of 2003, the
Company began to sell securities with purchased premiums and
replace them with bonds that were discounted or close to par.
This restructuring of the securities portfolio was completed in
the second quarter of 2004. Additionally, in the third quarter
of 2003, amortization of the investments premium increased as a
result of accelerated prepayments caused by the sharp decline in
the general level of market interest rates. The effect of these
factors was partially offset by the higher average yield on
securities in the first quarter of 2003 compared with the same
period in 2004, reflecting the decline in market interest rates
subsequent to the first quarter of 2003.

The net interest margin, calculated on a tax
equivalent basis, was 3.72% for the year ended December 31,
2004, as compared to 3.49% for the prior year. 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 and
related yields while decreasing the cost of deposits.

The increase of $776.8 million on average
interest-earning assets for the year ended December 31,
2004, resulted primarily from organic commercial loan growth.
Average outstanding loans increased by $697.7 million for
the year ended December 31, 2004, from the same period last
year as a result of UCBs continued focus on commercial
lending activities. Average commercial loan balances increased
$655.5 million for the year ended December 31, 2004.
This increase was primarily due to UCBs continued emphasis
on commercial real estate and commercial business loans. Average
consumer loans for the years ended December 31, 2004 and
2003, were at $404.0 million and $361.5 million,
respectively. As of December 31, 2004, the loan pipeline
approximated $1.35 billion, which was comprised of
$1.32 billion for commercial loans and $29.4 million
of consumer loans.

18



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Average securities increased $58.2 million
for the year ended December 31, 2004. Securities
prepayments, which accelerated with the low market interest rate
environment, were substantially replaced with new securities
purchases. During 2004, the Company also sold securities with an
aggregate principal balance of $809.1 million. Securities
were sold in 2004 to protect the Company from accelerating
prepayments of securities with purchase premiums in a time of
increasing 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
$561.3 million for the year ended December 31, 2004,
compared to the prior year. This increase is a result of the
Companys ongoing focus on the generation of commercial and
consumer demand deposits. Average interest-bearing and average
noninterest-bearing deposits increased $483.4 million and
$78.0 million, respectively, for the year ended
December 31, 2004, compared to the prior year.

The following is the distribution of average
assets and liabilities, and stockholders equity, as well
as the total dollar amounts of interest income from average
interest-earning assets, and the resultant yields and dollar

19



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amounts of interest expense of average
interest-bearing liabilities, expressed both in dollars and
rates for the years ended December 31, 2004 and 2003
(dollars in thousands):


|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |      |      | 
|-------------------------------------------------------------------- | ------------------------------- | --------------------------------------- | --------- | --------- | --------- | ---------- | ------- | ------- | ------ | -------- | ---- | ---------- | ---- | - | --------- | --------- | --------- | - | ------- | ------ | ------ |  | ---- | ---- | ---- | 
|                                                                     |                                 |                                         |           |          
|                                                                     |                                 | 2004                                    |           | 2003     
|                                                                     |                                 |                                         |           |          
|                                                                     |                                 |                                         |           | Interest  |           |            |         |         |        | Interest |      |           
|                                                                     |                                 | Average                                 |           | Income/   |           | Average    |         | Average |        | Income/  |      | Average   
|                                                                     |                                 | Balance                                 |           | Expense   |           | Yield/Cost |         | Balance |        | Expense  |      | Yield/Cost
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |           
|Interest-Earning Assets:                                             |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Loans(1)(2)                                                          |                                 | $                                       | 4,077,799 |           |           | $          | 226,292 |         |        |          | 5.55 | %          |      | $ | 3,380,121 |           |           | $ | 191,754 |        |        |  | 5.67 | %   
|                                                                     | Taxable securities(3)           |                                         |           | 1,411,155 |           |            |         | 63,646  |        |          |      | 4.51       |      |   |           | 1,395,621 |           |   |         | 60,915 |        |  |      | 4.36 |     
|                                                                     | Nontaxable securities(3)        |                                         |           | 197,885   |           |            |         | 9,477   |        |          |      | 4.79       |      |   |           | 155,220   |           |   |         | 7,532  |        |  |      | 4.85 |     
|                                                                     | Other                           |                                         |           | 30,770    |           |            |         | 649     |        |          |      | 2.11       |      |   |           | 9,826     |           |   |         | 61     |        |  |      | 0.62 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total interest-earning assets                                        |                                 |                                         | 5,717,609 |           |           |            | 300,064 |         |        |          | 5.25 |            |      |   | 4,940,788 |           |           |   | 260,262 |        |        |  | 5.27 |     
|Noninterest-earning assets                                           |                                 |                                         | 222,289   |           |           |            |        |         |        |          |      |            |      |   | 209,442   |           |           |   |        |        |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total assets                                                         |                                 | $                                       | 5,939,898 |           |           | $          | 300,064 |         |        |          | 5.05 |            |      | $ | 5,150,230 |           |           | $ | 260,262 |        |        |  | 5.05 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Interest-bearing liabilities:                                        |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|                                                                     | Deposits:                       |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |      |     
|                                                                     |                                 | NOW, checking and money market accounts |           | $         | 827,861   |            |         | $       | 9,295  |          |      |            | 1.12 |   |           | $         | 624,330   |   |         | $      | 6,774  |  |      |      | 1.09 | 
|                                                                     |                                 | Savings accounts                        |           |           | 921,106   |            |         |         | 8,451  |          |      |            | 0.92 |   |           |           | 787,796   |   |         |        | 7,191  |  |      |      | 0.91 | 
|                                                                     |                                 | Time deposits                           |           |           | 2,699,287 |            |         |         | 49,521 |          |      |            | 1.83 |   |           |           | 2,552,769 |   |         |        | 54,759 |  |      |      | 2.15 | 
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|                                                                     | Total interest-bearing deposits |                                         |           | 4,448,254 |           |            |         | 67,267  |        |          |      | 1.51       |      |   |           | 3,964,895 |           |   |         | 68,724 |        |  |      | 1.73 |     
|                                                                     | Short-term borrowings           |                                         |           | 172,225   |           |            |         | 2,165   |        |          |      | 1.26       |      |   |           | 76,827    |           |   |         | 1,084  |        |  |      | 1.41 |     
|                                                                     | Long- term borrowings           |                                         |           | 299,252   |           |            |         | 14,966  |        |          |      | 5.00       |      |   |           | 272,147   |           |   |         | 13,984 |        |  |      | 5.14 |     
|                                                                     | Subordinated debentures         |                                         |           | 136,000   |           |            |         | 8,185   |        |          |      | 6.02       |      |   |           | 136,000   |           |   |         | 7,922  |        |  |      | 5.83 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total interest-bearing liabilities                                   |                                 |                                         | 5,055,731 |           |           |            | 92,583  |         |        |          | 1.83 |            |      |   | 4,449,869 |           |           |   | 91,714  |        |        |  | 2.06 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Noninterest-bearing deposits                                         |                                 |                                         | 374,269   |           |           |            |        |         |        |          |      |            |      |   | 296,306   |           |           |   |        |        |        |  |      |     
|Other noninterest-bearing liabilities                                |                                 |                                         | 57,445    |           |           |            |        |         |        |          |      |            |      |   | 61,046    |           |           |   |        |        |        |  |      |     
|Stockholders equity                                                 |                                 |                                         | 452,453   |           |           |            |        |         |        |          |      |            |      |   | 343,009   |           |           |   |        |        |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Total liabilities and stockholders equity                           |                                 | $                                       | 5,939,898 |           |           | $          | 92,583  |         |        |          | 1.56 | %          |      | $ | 5,150,230 |           |           | $ | 91,714  |        |        |  | 1.78 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Net interest income/net interest rate spread(4)(5)                   |                                 |                                         |           |           |           | $          | 207,481 |         |        |          | 3.42 | %          |      |   |           |           |           | $ | 168,548 |        |        |  | 3.21 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Net interest-earning assets/net interest
    margin(5)(6)            |                                 | $                                       | 661,878   |           |           |            |         |         |        |          | 3.63 | %          |      | $ | 490,919   |           |           |   |         |        |        |  | 3.41 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     
|Ratio of interest-earning assets to
    interest-bearing liabilities |                                 |                                         | 1.13      | x         |           |            |         |         |        |          |      |            |      |   | 1.11      | x         |           |   |         |        |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |          |      |            |      |   |           |           |           |   |         |        |        |  |      |     



---



|    |                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Nonaccrual loans are included in the table for
    computation purposes; however, interest for such loans is
    recognized on a cash basis.                                                                                 
|   
|(2) | Average loans include loans held for sale.                                                                                                                                                                                   
|   
|(3) | Average yield on investment securities is
    computed using historical cost balances; the yield information
    does not give effect to changes in fair value that are reflected
    as a component of stockholders equity.
|   
|(4) | Interest rate spread represents the difference
    between the average yield on interest-earning assets and the
    average cost of interest-bearing liabilities.                                                            
|   
|(5) | Net interest rate spread and net interest margin
    are calculated on a nontax equivalent basis.                                                                                                                            
|   
|(6) | Net interest margin represents net interest
    income divided by average interest-earning assets.                                                                                                                           

Our net interest income is affected by changes in
the amount and mix of our interest-earning assets and
interest-bearing liabilities, referred to as volume
changes. It is also affected by changes in the yields that
we earn on interest-earning assets and rates that we pay on
interest-bearing deposits and other borrowed funds, referred to
as rate changes.

20



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##### Table of Contents



The changes in interest income and interest
expense for the major categories of interest-earning assets and
interest-bearing liabilities, and the amount of change that is
attributable to volume and rate changes by comparing the years
ended December 31, 2004 to 2003, are as follows (dollars in
thousands):

|                                           |                         |                                                            |        |        |        |       |       |        |        |   |        |        |        |  
|------------------------------------------ | ----------------------- | ---------------------------------------------------------- | ------ | ------ | ------ | ----- | ----- | ------ | ------ | - | ------ | ------ | ------ | -
|                                           |                         |                                                           
|                                           |                         | Year Ended December 31, 2004                              
|                                           |                         | Compared to 2003                                          
|                                           |                         |                                                           
|                                           |                         |                                                            |        |       
|                                           |                         | Changes due to                                             |        |       
|                                           |                         |                                                            |        |       
|                                           |                         | Volume                                                     |        | Rate   |        | Total
|                                           |                         |                                                            |        |        |        |      
|Interest income:                           |                         |                                                            |        |        |        |       |       |        |        |   |        |       
|                                           | Loans                   |                                                            | $      | 38,717 |        |       | $     | (4,179 | )      |   | $      | 34,538 |       
|                                           | Taxable securities      |                                                            |        | 701    |        |       |       | 2,030  |        |   |        | 2,731  |       
|                                           | Nontaxable securities   |                                                            |        | 2,043  |        |       |       | (98    | )      |   |        | 1,945  |       
|                                           | Other                   |                                                            |        | 442    |        |       |       | 146    |        |   |        | 588    |       
|                                           |                         |                                                            |        |        |        |       |       |        |        |   |        |       
|                                           |                         | Total interest income on interest-earning assets           |        |        | 41,903 |       |       |        | (2,101 | ) |        |        | 39,802 |  
|                                           |                         |                                                            |        |        |        |       |       |        |        |   |        |       
|Interest expense:                          |                         |                                                            |        |        |        |       |       |        |        |   |        |       
|                                           | Deposits:               |                                                            |        |        |        |       |       |        |        |   |        |        |       
|                                           |                         | NOW, checking, and money market accounts                   |        |        | 2,285  |       |       |        | 236    |   |        |        | 2,521  |  
|                                           |                         | Savings accounts                                           |        |        | 1,223  |       |       |        | 37     |   |        |        | 1,260  |  
|                                           |                         | Time deposits                                              |        |        | 2,688  |       |       |        | (7,926 | ) |        |        | (5,238 | )
|                                           | Short-term borrowings   |                                                            |        | 1,199  |        |       |       | (118   | )      |   |        | 1,081  |       
|                                           | Long-term borrowings    |                                                            |        | 1,356  |        |       |       | (374   | )      |   |        | 982    |       
|                                           | Subordinated debentures |                                                            |        |       |        |       |       | 263    |        |   |        | 263    |       
|                                           |                         |                                                            |        |        |        |       |       |        |        |   |        |       
|                                           |                         | Total interest expense on interest-bearing
    liabilities |        |        | 8,751  |       |       |        | (7,882 | ) |        |        | 869    |  
|                                           |                         |                                                            |        |        |        |       |       |        |        |   |        |       
|Increase (decrease) in net interest income |                         | $                                                          | 33,152 |        |        | $     | 5,781 |        |        | $ | 38,933 |       
|                                           |                         |                                                            |        |        |        |       |       |        |        |   |        |       

Changes not solely attributable to rate or volume
have been allocated to volume and rate changes in proportion to
the relationship of the absolute dollar amounts of the changes
in each.

Provision for Loan Losses.For the year 2004, the provision for
loan losses was $4.2 million and $10.0 million for
2003. The decline from 2003 is a result of improvements in the
overall credit quality in the loan portfolio.

Noninterest Income.Our noninterest income increased by $7.7 million, or 33.1%,
for the year ended December 31, 2004, compared to the
preceding year. The increase was primarily due to increases in
commercial banking fees and gains on sales of loans and
securities. During 2004, UCB sold $362.4 million of
multifamily loans for a gain of $7.7 million. There were no
multifamily loans sales in prior years. Commercial banking fees
increased 24.1% to $8.3 million for the year ended
December 31, 2004, as compared to $6.7 million for the
corresponding period of 2003, as a result of increased
commercial banking activities, primarily our trade finance
business.

The Company recognized $2.2 million of
equity losses from its CRA-related investments during the year
ended December 31, 2004. As disclosed in Note 1 to the
Consolidated Financial Statements, the Company invests in CRA
qualified investments. Such investments have increased to assist
UCB in fulfilling its requirements under the Community
Reinvestment Act. The $2.2 million was our share of the
underlying investment equity losses exclusive of tax benefits
and credits. The tax savings on such equity losses was
$2.2 million, which includes $929,000 of a reduction of
income taxes and $1.2 million resulting from CRA-related
tax credits.

Noninterest Expense.Our noninterest expense increased $18.9 million, or 23.6%,
compared to 2003. Personnel expenses increased by
$8.6 million from 2003 to 2004 due to the additional
staffing required to support the growth of UCBs commercial
banking business, the expansion of the Hong Kong and California
branches, the expansion of UCBs infrastructure to support
a larger and growing organization, and the FCB acquisition,
which closed in July 2003. Professional fees and contracted
services increased by 29.2% to

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$7.5 million in 2004 compared to
$5.8 million in 2003, predominately as a result of
preparation costs related to Sarbanes-Oxley compliance.
Furniture and equipment increased 44.9% and occupancy expenses
increased 73.2% for 2004 compared to 2003, reflecting primarily
the opening of the Foster City, Torrance, Westminster and Van
Nuys branches in California, the Bowery Branch in New York, the
expansion of the Hong Kong branch and the Companys
corporate headquarters office relocation. The increase in other
general and administrative expenses of $1.4 million for
2004, compared with 2003 was primarily related to the
Companys continued expansion, corporate headquarters
office relocation and higher advertising costs.


Income Tax Expense.During 2004, we recorded a $49.4 million provision for
income taxes, which resulted in an effective tax rate of 36.6%,
compared with an effective tax rate of 36.4% for the year ended
December 31, 2003. The effective tax rates for 2004 and
2003 reflect the realization of tax benefits from UCBs
lending and hiring activities in Enterprise Zones areas in
California, the federal and state tax benefits from qualified
investments pursuant to the Community Reinvestment Act and the
Federal tax benefit from UCBs municipal bond portfolio.

BUSINESS SEGMENT RESULTS

Currently, UCB comprises substantially all of the
Companys operations. In addition, no portion of UCB meets
the thresholds designated by generally accepted accounting
principles for separate segment disclosures. As a result, the
previous discussion of the results of operations and the
subsequent balance sheet analyses are applicable to UCB as well
as to the Company. See Note 26 to the Consolidated Financial
Statements for additional information on the Companys
segments.

BALANCE SHEET ANALYSIS

Investment Securities

UCB maintains an investment and mortgage-backed
securities portfolio (Portfolio) to provide both
liquidity and to enhance the income of the organization. The
Portfolio is comprised of two segments: Available for Sale
(AFS) and Held to Maturity (HTM).
UCBs AFS Portfolio is recorded at fair value, with
unrealized changes in the fair value of the securities reflected
as accumulated other comprehensive income (loss). At the end of
each month, UCB 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, UCB classifies the security either as AFS or HTM.
The securities are classified as HTM if UCB has the positive
intent and ability to hold such securities to maturity.

UCBs Portfolio investments are governed by
an Asset/ Liability Policy (A/ L Policy), which is
approved by UCBs Board of Directors. The A/ L Policy sets
exposure limits for selected investments, as a function of total
assets, total securities and Tier 1 capital, as well as the
maximum maturity and duration limits. The A/ L Policy also
limits the concentration in a particular investment as a
function of the total issue. Finally, the A/ L Policy sets goals
for each type of investment with respect to ROA, ROE and total
risk-based capital ratio and also sets limits for interest rate
sensitivity for each type of investment.

Investments permitted by the A/ L Policy include
United States 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. UCBs Board of Directors has directed
management to invest in securities with the objective of
optimizing the yield on investments that appropriately balances
the risk-based capital utilization and interest rate
sensitivity. The A/ L Policy requires that all securities be of
investment grade at the time of purchase.

The AFS and HTM balance decreased by
$68.0 million from December 31, 2004, to
December 31, 2005. With respect to the AFS portfolio, this
was primarily the result of sales of $108.2 million,
principal payments and securities calls of $193.4 million,
and maturities and payoffs of $273.2 million, partially
offset by purchases of $507.8 million. UCBs HTM
Portfolio declined from $325.2 million at December 31,
2004, to $308.6 million at December 31, 2005. This
decrease resulted from the receipt of principal payments of
$26.3 million. UCB plans from time to time to continue to
purchase securities for its HTM Portfolio. However, for the
foreseeable future, UCB expects that the majority of its
Portfolio will be classified as AFS.

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UCB intends to continue restructure its balance
sheet by accelerating the organic growth of its loan portfolio
and decreasing its securities concentration.


The amortized cost and market value of the
Portfolio at December 31, 2005, 2004 and 2003, were as
follows (dollars in thousands):

|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |         | 
|---------------------------------------------------------------------- | -------------------------- | --------- | --------- | ------- |  | --------- | --------- | ------- |  | --------- | --------- | ------- |  | - | --------- | ------- |  | - | --------- | ------- |  | - | --------- | ------- | 
|                                                                       |                            |           |           |         |  |          
|                                                                       |                            | 2005      |           | 2004    |  | 2003     
|                                                                       |                            |           |           |         |  |          
|                                                                       |                            | Amortized |           | Market  |  | Amortized |           | Market  |  | Amortized |           | Market 
|                                                                       |                            | Cost      |           | Value   |  | Cost      |           | Value   |  | Cost      |           | Value  
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |        
|Investment securities available for sale:                              |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|                                                                       | Trust preferred securities |           | $         | 33,443  |  |           | $         | 32,946  |  |           | $         | 18,441  |  |   | $         | 18,219  |  |   | $         | 13,189  |  |   | $         | 12,795  | 
|                                                                       | Federal agency notes       |           |           | 159,655 |  |           |           | 155,185 |  |           |           | 232,594 |  |   |           | 230,046 |  |   |           | 222,309 |  |   |           | 218,753 | 
|                                                                       | Asset-backed securities    |           |           |        |  |           |           |        |  |           |           |        |  |   |           |        |  |   |           | 16,426  |  |   |           | 16,285  | 
|                                                                       | Municipals                 |           |           |        |  |           |           |        |  |           |           |        |  |   |           |        |  |   |           | 90      |  |   |           | 90      | 
|                                                                       | Domestic corporate bonds   |           |           |        |  |           |           |        |  |           |           |        |  |   |           |        |  |   |           | 5,153   |  |   |           | 5,148   | 
|                                                                       | Commercial paper           |           |           |        |  |           |           |        |  |           |           |        |  |   |           |        |  |   |           | 9,991   |  |   |           | 9,991   | 
|                                                                       | Other                      |           |           | 11,012  |  |           |           | 10,911  |  |           |           |        |  |   |           |        |  |   |           |        |  |   |           |        | 
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Total investment securities available for sale                         |                            |           | 204,110   |         |  |           | 199,042   |         |  |           | 251,035   |         |  |   | 248,265   |         |  |   | 267,158   |         |  |   | 263,062   |        
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Mortgage-backed securities available for sale:                         |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|                                                                       | FNMA                       |           |           | 355,135 |  |           |           | 344,190 |  |           |           | 366,307 |  |   |           | 363,097 |  |   |           | 440,835 |  |   |           | 440,453 | 
|                                                                       | GNMA                       |           |           | 88,184  |  |           |           | 85,033  |  |           |           | 106,501 |  |   |           | 105,072 |  |   |           | 79,103  |  |   |           | 78,842  | 
|                                                                       | FHLMC                      |           |           | 302,540 |  |           |           | 292,316 |  |           |           | 288,789 |  |   |           | 285,965 |  |   |           | 275,882 |  |   |           | 273,940 | 
|                                                                       | Other                      |           |           | 202,264 |  |           |           | 197,143 |  |           |           | 167,719 |  |   |           | 166,741 |  |   |           | 163,687 |  |   |           | 164,773 | 
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Total mortgage-backed securities available for
    sale                |                            |           | 948,123   |         |  |           | 918,682   |         |  |           | 929,316   |         |  |   | 920,875   |         |  |   | 959,507   |         |  |   | 958,008   |        
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Total investment and mortgage-backed securities
    available for sale |                            |           | 1,152,233 |         |  |           | 1,117,724 |         |  |           | 1,180,351 |         |  |   | 1,169,140 |         |  |   | 1,226,665 |         |  |   | 1,221,070 |        
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Investment securities held to maturity:                                |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|                                                                       | Municipals                 |           |           | 225,573 |  |           |           | 232,279 |  |           |           | 215,594 |  |   |           | 222,297 |  |   |           | 184,264 |  |   |           | 187,735 | 
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Mortgage-backed securities held to maturity:                           |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|                                                                       | FNMA                       |           |           | 5,112   |  |           |           | 4,923   |  |           |           | 5,765   |  |   |           | 5,689   |  |   |           |        |  |   |           |        | 
|                                                                       | GNMA                       |           |           | 77,261  |  |           |           | 76,133  |  |           |           | 102,439 |  |   |           | 102,595 |  |   |           | 99,524  |  |   |           | 98,713  | 
|                                                                       | FHLMC                      |           |           | 662     |  |           |           | 639     |  |           |           | 1,404   |  |   |           | 1,388   |  |   |           |        |  |   |           |        | 
|                                                                       | Other                      |           |           |        |  |           |           |        |  |           |           |        |  |   |           |        |  |   |           | 924     |  |   |           | 924     | 
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Total mortgage-backed securities held to maturity                      |                            |           | 83,035    |         |  |           | 81,695    |         |  |           | 109,608   |         |  |   | 109,672   |         |  |   | 100,448   |         |  |   | 99,637    |        
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Total investment and mortgage-backed securities
    held to maturity   |                            |           | 308,608   |         |  |           | 313,974   |         |  |           | 325,202   |         |  |   | 331,969   |         |  |   | 284,712   |         |  |   | 287,372   |        
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        
|Total investment and mortgage-backed securities                        |                            | $         | 1,460,841 |         |  | $         | 1,431,698 |         |  | $         | 1,505,553 |         |  | $ | 1,501,109 |         |  | $ | 1,511,377 |         |  | $ | 1,508,442 |        
|                                                                       |                            |           |           |         |  |           |           |         |  |           |           |         |  |   |           |         |  |   |           |         |  |   |           |        

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As of December 31, 2005, the carrying value
and the market value of the AFS Portfolio were
$1.15 billion and $1.12 billion, respectively. The
total net unrealized loss on these securities was
$34.5 million. Such unrealized losses are
$20.0 million net of tax and are reflected as accumulated
other comprehensive loss in stockholders equity. The
difference between the carrying value and market value of
securities that are held to maturity, aggregating a gain of
$5.4 million, has not been recognized in the financial
statements as of December 31, 2005. The unrealized net
gains are the result of movements in market interest rates.
Additionally, certain securities that UCB holds have unrealized
losses that extend for periods in excess of twelve months.
However, since the unrealized losses are solely attributable to
movement in market interest rates and UCB has the intent and
ability to hold these securities until recovery of such
unrealized loss, UCB has concluded that the impairment on these
securities is temporary.

Notes 1 and 5 to the Consolidated Financial
Statements discusses the recognition of the unrealized gains and
losses on investment securities and the factors considered by
UCB in assessing whether an unrealized loss is temporary or
other-than-temporary. When an unrealized loss is
determined to be other-than-temporary, the difference between
amortized cost and market value is recorded as a charge against
earnings.

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The carrying value, weighted average yields and
contractual maturities of the Portfolio at December 31,
2005, were as follows (dollars in thousands):

|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|---------------------------------------------------------------------- |  | --------------- | ------ | ------------------ |  | ----------------- | ---- | --------------- |  | -------- | ------ | -------- |  | -------- | ---- | -------- |  | -------- | ------- | -------- |  |  | ---- | - |  | - | --------- |  |  |  | ---- | - |  | - | --------- |  |  |  | ---- | -
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |         
|                                                                       |  |                 |        | After One Year     |  | After Five Years  |      |                 |  |         
|                                                                       |  | Within One Year |        | Through Five Years |  | Through Ten Years |      | After Ten Years |  | Total   
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |         
|                                                                       |  |                 |        | Weighted           |  |                   |      | Weighted        |  |          |        | Weighted |  |          |      | Weighted |  |          |         | Weighted
|                                                                       |  | Carrying        |        | Average            |  | Carrying          |      | Average         |  | Carrying |        | Average  |  | Carrying |      | Average  |  | Carrying |         | Average 
|                                                                       |  | Value           |        | Yield              |  | Value             |      | Yield           |  | Value    |        | Yield    |  | Value    |      | Yield    |  | Value    |         | Yield   
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |         
|Investment securities available for sale:                              |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Trust preferred securities                                             |  | $               |       |                    |  |                   |     | %               |  | $        |       |          |  |          |     | %        |  | $        |        |          |  |  |     | % |  | $ | 32,946    |  |  |  | 5.74 | % |  | $ | 32,946    |  |  |  | 5.74 | %
|Federal agency notes                                                   |  |                 | 9,929  |                    |  |                   | 3.74 |                 |  |          | 56,108 |          |  |          | 4.54 |          |  |          | 89,148  |          |  |  | 4.60 |   |  |   |          |  |  |  |     |   |  |   | 155,185   |  |  |  | 4.52 |  
|Other                                                                  |  |                 | 1,011  |                    |  |                   | 4.62 |                 |  |          |       |          |  |          |     |          |  |          |        |          |  |  |     |   |  |   | 9,900     |  |  |  | 5.17 |   |  |   | 10,911    |  |  |  | 5.17 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Total investment securities available for sale                         |  |                 | 10,940 |                    |  |                   | 3.82 |                 |  |          | 56,108 |          |  |          | 4.54 |          |  |          | 89,148  |          |  |  | 4.60 |   |  |   | 42,846    |  |  |  | 5.61 |   |  |   | 199,042   |  |  |  | 4.76 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Mortgage-backed securities available for sale:                         |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|FNMA                                                                   |  |                 |       |                    |  |                   |     |                 |  |          | 6,836  |          |  |          | 4.18 |          |  |          | 29,676  |          |  |  | 4.76 |   |  |   | 307,678   |  |  |  | 4.68 |   |  |   | 344,190   |  |  |  | 4.68 |  
|GNMA                                                                   |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          |        |          |  |  |     |   |  |   | 85,033    |  |  |  | 4.41 |   |  |   | 85,033    |  |  |  | 4.41 |  
|FHLMC                                                                  |  |                 |       |                    |  |                   |     |                 |  |          | 7,771  |          |  |          | 3.88 |          |  |          | 34,774  |          |  |  | 4.79 |   |  |   | 249,771   |  |  |  | 4.56 |   |  |   | 292,316   |  |  |  | 4.57 |  
|Other                                                                  |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          |        |          |  |  |     |   |  |   | 197,143   |  |  |  | 4.88 |   |  |   | 197,143   |  |  |  | 4.88 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Total mortgage-backed securities available for
    sale                |  |                 |       |                    |  |                   |     |                 |  |          | 14,607 |          |  |          | 4.02 |          |  |          | 64,450  |          |  |  | 4.78 |   |  |   | 839,625   |  |  |  | 4.67 |   |  |   | 918,682   |  |  |  | 4.66 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Total investment and mortgage-backed securities
    available for sale |  |                 | 10,940 |                    |  |                   | 3.82 |                 |  |          | 70,715 |          |  |          | 4.43 |          |  |          | 153,598 |          |  |  | 4.67 |   |  |   | 882,471   |  |  |  | 4.71 |   |  |   | 1,117,724 |  |  |  | 4.68 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Investment securities held to maturity:                                |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Municipals (1)                                                         |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          | 1,323   |          |  |  | 4.85 |   |  |   | 224,250   |  |  |  | 4.77 |   |  |   | 225,573   |  |  |  | 4.77 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Mortgage-backed securities held to maturity:                           |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|FNMA                                                                   |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          |        |          |  |  |     |   |  |   | 5,112     |  |  |  | 4.67 |   |  |   | 5,112     |  |  |  | 4.67 |  
|GNMA                                                                   |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          |        |          |  |  |     |   |  |   | 77,261    |  |  |  | 4.92 |   |  |   | 77,261    |  |  |  | 4.92 |  
|FHLMC                                                                  |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          |        |          |  |  |     |   |  |   | 662       |  |  |  | 4.10 |   |  |   | 662       |  |  |  | 4.10 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Total mortgage-backed securities held to maturity                      |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          |        |          |  |  |     |   |  |   | 83,035    |  |  |  | 4.90 |   |  |   | 83,035    |  |  |  | 4.90 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Total investment and mortgage-backed securities
    held to maturity   |  |                 |       |                    |  |                   |     |                 |  |          |       |          |  |          |     |          |  |          | 1,323   |          |  |  | 4.85 |   |  |   | 307,285   |  |  |  | 4.80 |   |  |   | 308,608   |  |  |  | 4.80 |  
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  
|Total investment and mortgage-backed securities                        |  | $               | 10,940 |                    |  |                   | 3.82 | %               |  | $        | 70,715 |          |  |          | 4.43 | %        |  | $        | 154,921 |          |  |  | 4.68 | % |  | $ | 1,189,756 |  |  |  | 4.73 | % |  | $ | 1,426,332 |  |  |  | 4.71 | %
|                                                                       |  |                 |        |                    |  |                   |      |                 |  |          |        |          |  |          |      |          |  |          |         |          |  |  |      |   |  |   |           |  |  |  |      |   |  |   |           |  |  |  |      |  



---



|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | Weighted average yield is calculated on a nontax
    equivalent basis.

25



---



##### Table of Contents



Loans

The components of UCBs loans held in
portfolio by amount and percentage of gross loans held in
portfolio for each major loan category at December 31,
2005, 2004, 2003, 2002 and 2001, were as follows (dollars in
thousands):

|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |       | 
|----------------------------------------- | ---------------- | ------ | --------- | --------- |  | ------ | ------ | ----- |  | ------ | --------- | --------- |  | ------ | ------ | ----- |  | ------ | --------- | --------- |  |  | ------ | ----- |  | - | --------- | --------- |  |  | ------ | ----- |  | - | --------- | --------- |  |  | ------ | ----- | 
|                                          |                  |        |           |           |  |        |        |       |  |       
|                                          |                  | 2005   |           | 2004      |  | 2003   |        | 2002  |  | 2001  
|                                          |                  |        |           |           |  |        |        |       |  |       
|                                          |                  | Amount |           | %         |  | Amount |        | %     |  | Amount |           | %         |  | Amount |        | %     |  | Amount |           | %        
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |          
|Commercial:                               |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|Secured by real estate  nonresidential   |                  | $      | 2,307,381 |           |  |        | 39.52  | %     |  | $      | 1,943,868 |           |  |        | 47.99  | %     |  | $      | 1,704,138 |           |  |  | 45.18  | %     |  | $ | 1,276,862 |           |  |  | 42.17  | %     |  | $ | 797,310   |           |  |  | 35.21  | %    
|Secured by real estate  multifamily      |                  |        | 1,506,848 |           |  |        | 25.81  |       |  |        | 866,079   |           |  |        | 21.38  |       |  |        | 1,161,512 |           |  |  | 30.80  |       |  |   | 913,882   |           |  |  | 30.18  |       |  |   | 676,771   |           |  |  | 29.89  |      
|Construction                              |                  |        | 494,841   |           |  |        | 8.47   |       |  |        | 289,936   |           |  |        | 7.16   |       |  |        | 292,563   |           |  |  | 7.76   |       |  |   | 214,788   |           |  |  | 7.09   |       |  |   | 181,235   |           |  |  | 8.00   |      
|Business                                  |                  |        | 863,935   |           |  |        | 14.80  |       |  |        | 468,128   |           |  |        | 11.56  |       |  |        | 296,026   |           |  |  | 7.85   |       |  |   | 261,775   |           |  |  | 8.65   |       |  |   | 163,673   |           |  |  | 7.23   |      
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|                                          | Total commercial |        |           | 5,173,005 |  |        |        | 88.60 |  |        |           | 3,568,011 |  |        |        | 88.09 |  |        |           | 3,454,239 |  |  |        | 91.59 |  |   |           | 2,667,307 |  |  |        | 88.09 |  |   |           | 1,818,989 |  |  |        | 80.33 | 
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|Consumer:                                 |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|Residential mortgage (one-to-four family) |                  |        | 613,988   |           |  |        | 10.52  |       |  |        | 434,423   |           |  |        | 10.72  |       |  |        | 273,431   |           |  |  | 7.25   |       |  |   | 309,653   |           |  |  | 10.23  |       |  |   | 429,311   |           |  |  | 18.96  |      
|Other                                     |                  |        | 51,667    |           |  |        | 0.88   |       |  |        | 48,307    |           |  |        | 1.19   |       |  |        | 43,711    |           |  |  | 1.16   |       |  |   | 50,850    |           |  |  | 1.68   |       |  |   | 16,003    |           |  |  | 0.71   |      
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|                                          | Total consumer   |        |           | 665,655   |  |        |        | 11.40 |  |        |           | 482,730   |  |        |        | 11.91 |  |        |           | 317,142   |  |  |        | 8.41  |  |   |           | 360,503   |  |  |        | 11.91 |  |   |           | 445,314   |  |  |        | 19.67 | 
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|Loans held in portfolio(1)                |                  |        | 5,838,660 |           |  |        | 100.00 | %     |  |        | 4,050,741 |           |  |        | 100.00 | %     |  |        | 3,771,381 |           |  |  | 100.00 | %     |  |   | 3,027,810 |           |  |  | 100.00 | %     |  |   | 2,264,303 |           |  |  | 100.00 | %    
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|Allowance for loan losses                 |                  |        | 64,542    |           |  |        |        |       |  |        | (56,472   | )         |  |        |        |       |  |        | (58,126   | )         |  |  |        |       |  |   | (48,865   | )         |  |  |        |       |  |   | (34,550   | )         |  |  |        |      
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      
|Net loans held in portfolio               |                  | $      | 5,774,118 |           |  |        |        |       |  | $      | 3,994,269 |           |  |        |        |       |  | $      | 3,713,255 |           |  |  |        |       |  | $ | 2,978,945 |           |  |  |        |       |  | $ | 2,229,753 |           |  |  |        |      
|                                          |                  |        |           |           |  |        |        |       |  |        |           |           |  |        |        |       |  |        |           |           |  |  |        |       |  |   |           |           |  |  |        |       |  |   |           |           |  |  |        |      



---



|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes net unamortized deferred loan fees of
    $7.4 million and $7.3 million at December 31,
    2005 and 2004, respectively.

During the year ended December 31, 2005,
total loans held in portfolio increased by $1.79 billion.
This growth resulted primarily from an organic increase in
commercial loans from UCBs continued focus on originating
such loans, but also included $225.9 million that came in
with the Pacifica and AABT acquisitions. Total commercial loans
grew by $1.60 billion at December 31, 2005, from
$3.57 billion at December 31, 2004, as a result of
continued loan generation efforts, partially offset by principal
repayments and loan sales. Consumer loans increased to
$665.7 million at December 31, 2005, from
$482.2 million at December 31, 2004, primarily due to
organic growth. Additionally, in 2005 UCB transferred
$235.9 million of multifamily real estate loans from loans
held for sale to loans held in portfolio, as a result of the
reduced market premiums on sales of multifamily real estate
loans. UCB believes that it is currently more beneficial to
retain the multifamily real estate loans in loans held in
portfolio and realize the longer term spread income as opposed
to making a current sale of such loans. During the three months
ended September 30, 2005, UCB also determined that the
level of its commercial real estate loans was reaching its
internally set informal guidelines for these loans, which is
calculated as a percentage of risk-based capital. In addition,
with the impending integrations of Pacifica and AABT, UCB
determined that a reduction of its commercial real estate
concentration would be beneficial. As a result,
$265.1 million of commercial real estate loans (with
underlying collateral located in California) were transferred
from held in portfolio to held for sale. The sale of these loans
contributed to UCBs goal of product and geographic
diversification. Consistent with UCBs stated long-term
objectives for the next five years, UCB will be systematically
reducing its concentration in commercial real estate loans,
while increasing its concentration in commercial business loans.

26



---



##### Table of Contents



UCB has identified certain loans that it intends
to sell; and as a result, such loans are classified as held for
sale. The components of the loans held for sale by amount and
percentage of gross loans held for sale for each major loan
category at December 31, 2005, 2004 and 2003, are as
follows (dollars in thousands):

|                       |                                         |        |         |         |  |        |         |        |  |        |         |         |  |  |        |       |   |   |        |        |  |  |        |       |  
|---------------------- | --------------------------------------- | ------ | ------- | ------- |  | ------ | ------- | ------ |  | ------ | ------- | ------- |  |  | ------ | ----- | - | - | ------ | ------ |  |  | ------ | ----- | -
|                       |                                         |        |         |         |  |       
|                       |                                         | 2005   |         | 2004    |  | 2003  
|                       |                                         |        |         |         |  |       
|                       |                                         | Amount |         | %       |  | Amount |         | %      |  | Amount |         | %      
|                       |                                         |        |         |         |  |        |         |        |  |        |         |        
|Commercial:            |                                         |        |         |         |  |        |         |        |  |        |         |         |  |  |        |       |   |   |        |        |  |  |        |      
|                       | Secured by real estate  nonresidential |        | $       | 154,087 |  |        |         | 98.31% |  |        | $       | 26,882  |  |  |        | 8.25  | % |   | $      | 14,203 |  |  |        | 70.10 | %
|                       | Secured by real estate  multifamily    |        |         |        |  |        |         |       |  |        |         | 295,788 |  |  |        | 90.73 |   |   |        |       |  |  |        |      |  
|                       | Business                                |        |         | 2,653   |  |        |         | 1.69   |  |        |         | 3,337   |  |  |        | 1.02  |   |   |        | 6,059  |  |  |        | 29.90 |  
|                       |                                         |        |         |         |  |        |         |        |  |        |         |         |  |  |        |       |   |   |        |        |  |  |        |      
|Loans held for sale(1) |                                         | $      | 156,740 |         |  |        | 100.00% |        |  | $      | 326,007 |         |  |  | 100.00 | %     |   | $ | 20,262 |        |  |  | 100.00 | %    
|                       |                                         |        |         |         |  |        |         |        |  |        |         |         |  |  |        |       |   |   |        |        |  |  |        |      



---



|    |                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes net unamortized deferred loan fees of
    $372,000 at December 31, 2005, and net unamortized deferred
    loan costs of $535,000 at December 31, 2004.

As a result of changing the loan origination
focus to commercial business loans, UCB is originating more
loans that reprice in shorter time periods than the traditional
repricing terms of residential mortgage (one-to-four family)
loans. Construction loans, commercial business loans and SBA
loans generally have monthly repricing terms. Commercial real
estate loans generally reprice monthly or are intermediate
fixed, meaning that the loans have interest rates that are fixed
for a period, typically five years, after which the loans
generally reprice monthly or become due and payable. Multifamily
real estate loans are generally intermediate fixed. Residential
mortgage (one-to-four family) loans may be adjustable rate that
reprice semiannually or annually; fixed rate, meaning that the
loans have interest rates that are fixed over the term of the
loans, typically 15 or 30 years; or have interest rates
that are fixed for a period, typically five years, and then
generally reprice semiannually or annually, thereafter.

The components of gross loans held in portfolio
by interest rate type and percentage of gross loans held in
portfolio at December 31, 2005, 2004, 2003, 2002 and 2001,
were as follows (dollars in thousands):

|                                 |  |        |           |      |  |        |        |      |  |        |           |   |  |        |        |   |  |        |           |   |  |  |        |   |  |   |           |  |  |  |        |   |  |   |           |  |  |  |        |  
|-------------------------------- |  | ------ | --------- | ---- |  | ------ | ------ | ---- |  | ------ | --------- | - |  | ------ | ------ | - |  | ------ | --------- | - |  |  | ------ | - |  | - | --------- |  |  |  | ------ | - |  | - | --------- |  |  |  | ------ | -
|                                 |  |        |           |      |  |        |        |      |  |       
|                                 |  | 2005   |           | 2004 |  | 2003   |        | 2002 |  | 2001  
|                                 |  |        |           |      |  |        |        |      |  |       
|                                 |  | Amount |           | %    |  | Amount |        | %    |  | Amount |           | % |  | Amount |        | % |  | Amount |           | %
|                                 |  |        |           |      |  |        |        |      |  |        |           |   |  |        |        |   |  |        |           |  
|Adjustable-rate loans            |  | $      | 2,951,945 |      |  |        | 50.50  | %    |  | $      | 2,603,889 |   |  |        | 64.17  | % |  | $      | 2,679,428 |   |  |  | 70.88  | % |  | $ | 2,304,837 |  |  |  | 75.99  | % |  | $ | 1,481,955 |  |  |  | 65.33  | %
|Intermediate fixed-rate loans    |  |        | 1,711,915 |      |  |        | 29.28  |      |  |        | 881,774   |   |  |        | 21.73  |   |  |        | 563,570   |   |  |  | 14.91  |   |  |   | 205,587   |  |  |  | 6.78   |   |  |   | 221,561   |  |  |  | 9.77   |  
|Fixed-rate loans                 |  |        | 1,182,198 |      |  |        | 20.22  |      |  |        | 572,419   |   |  |        | 14.10  |   |  |        | 537,027   |   |  |  | 14.21  |   |  |   | 522,459   |  |  |  | 17.23  |   |  |   | 564,883   |  |  |  | 24.90  |  
|                                 |  |        |           |      |  |        |        |      |  |        |           |   |  |        |        |   |  |        |           |   |  |  |        |   |  |   |           |  |  |  |        |   |  |   |           |  |  |  |        |  
|Gross loans held in portfolio(1) |  | $      | 5,846,058 |      |  |        | 100.00 | %    |  | $      | 4,058,052 |   |  |        | 100.00 | % |  | $      | 3,780,025 |   |  |  | 100.00 | % |  | $ | 3,032,883 |  |  |  | 100.00 | % |  | $ | 2,268,399 |  |  |  | 100.00 | %
|                                 |  |        |           |      |  |        |        |      |  |        |           |   |  |        |        |   |  |        |           |   |  |  |        |   |  |   |           |  |  |  |        |   |  |   |           |  |  |  |        |  



---



|    |                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes net deferred loan fees of
    $7.4 million, $7.3 million, $8.6 million,
    $5.1 million and $4.1 million at December 31,
    2005, 2004, 2003, 2002 and 2001, respectively.

27



---



##### Table of Contents



The components of gross loans held in portfolio
by interest type for each major loan category at
December 31, 2005, were as follows (dollars in thousands):

|                                 |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |           |           | 
|-------------------------------- | ----------------------------------------- | ---------------- | --------- | ------------ | --------- | ----- | --------- | --------- | --------- | - | --------- | ------- | ------- | - | --------- | --------- | --------- | 
|                                 |                                           |                  |           | Intermediate |           |       |           |          
|                                 |                                           | Adjustable       |           | Fixed        |           | Fixed |           | Total    
|                                 |                                           |                  |           |              |           |       |           |          
|Commercial:                      |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |          
|                                 | Secured by real estate  nonresidential   |                  | $         | 1,292,872    |           |       | $         | 426,985   |           |   | $         | 593,169 |         |   | $         | 2,313,026 |          
|                                 | Secured by real estate  multifamily      |                  |           | 320,137      |           |       |           | 1,051,677 |           |   |           | 131,200 |         |   |           | 1,503,014 |          
|                                 | Construction                              |                  |           | 468,272      |           |       |           |          |           |   |           | 29,905  |         |   |           | 498,177   |          
|                                 | Business                                  |                  |           | 783,410      |           |       |           | 1,821     |           |   |           | 78,932  |         |   |           | 864,163   |          
|                                 |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |          
|                                 |                                           | Total commercial |           |              | 2,864,691 |       |           |           | 1,481,483 |   |           |         | 833,206 |   |           |           | 5,178,380 | 
|                                 |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |          
|Consumer:                        |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |          
|                                 | Residential mortgage (one-to-four family) |                  |           | 44,913       |           |       |           | 228,737   |           |   |           | 339,898 |         |   |           | 613,548   |          
|                                 | Other                                     |                  |           | 42,341       |           |       |           | 2,695     |           |   |           | 9,094   |         |   |           | 54,130    |          
|                                 |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |          
|                                 |                                           | Total consumer   |           |              | 87,254    |       |           |           | 231,432   |   |           |         | 348,992 |   |           |           | 667,678   | 
|                                 |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |          
|Gross loans held in portfolio(1) |                                           | $                | 2,951,945 |              |           | $     | 1,711,915 |           |           | $ | 1,182,198 |         |         | $ | 5,846,058 |          
|                                 |                                           |                  |           |              |           |       |           |           |           |   |           |         |         |   |           |          



---



|    |                                                                          
|--- | -------------------------------------------------------------------------
|(1) | Excludes net deferred loan fees of
    $7.4 million at December 31, 2005.

Adjustable-rate loans increased
$371.1 million from December 31, 2004, to
December 31, 2005. Adjustable-rate loans represented 50.6%
of gross loans at December 31, 2005, compared with 64.2% of
gross loans at December 31, 2004. The increase of
$837.3 million in intermediate fixed-rate loans from
December 31, 2004, to December 31, 2005, is a result
of increased market demand for that loan product. Fixed-rate
loans increased $613.3 million from December 31, 2004,
to December 31, 2005.

The estimated impact of repricing of loans held
in portfolio at December 31, 2005, are as follows (dollars
in thousands):

|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |           |           | 
|----------------------------- | ----------------------------------------- | ---------------- | --------- | ----------- | --------- | ----------- | ------- | ---------- | ------- | ------------ | ------- | ------------ | ------- | ----- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | - | --------- | --------- | --------- | 
|                              |                                           |                  |           | After       |           | After       |         | After      |         | After        |         |              |         |      
|                              |                                           |                  |           | One Year    |           | Three Years |         | Five Years |         | Ten Years    |         |              |         |      
|                              |                                           | Within           |           | Through     |           | Through     |         | Through    |         | Through      |         | After        |         |      
|                              |                                           | One Year         |           | Three Years |           | Five Years  |         | Ten Years  |         | Twenty Years |         | Twenty Years |         | Total
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |      
|Commercial:                   |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|                              | Secured by real estate  nonresidential   |                  | $         | 1,268,895   |           |             | $       | 184,169    |         |              | $       | 269,066      |         |       | $       | 572,796 |         |   | $       | 16,193  |         |   | $       | 1,907   |         |   | $         | 2,313,026 |          
|                              | Secured by real estate  multifamily      |                  |           | 320,137     |           |             |         | 515,248    |         |              |         | 505,638      |         |       |         | 111,552 |         |   |         | 50,439  |         |   |         |        |         |   |           | 1,503,014 |          
|                              | Construction                              |                  |           | 488,150     |           |             |         | 4,009      |         |              |         | 6,018        |         |       |         |        |         |   |         |        |         |   |         |        |         |   |           | 498,177   |          
|                              | Business                                  |                  |           | 812,482     |           |             |         | 37,688     |         |              |         | 5,215        |         |       |         | 7,816   |         |   |         | 962     |         |   |         |        |         |   |           | 864,163   |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|                              |                                           | Total commercial |           |             | 2,889,664 |             |         |            | 741,114 |              |         |              | 785,937 |       |         |         | 692,164 |   |         |         | 67,594  |   |         |         | 1,907   |   |           |           | 5,178,380 | 
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|Consumer:                     |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|                              | Residential mortgage (one-to-four family) |                  |           | 43,299      |           |             |         | 62,561     |         |              |         | 97,766       |         |       |         | 75,652  |         |   |         | 233,945 |         |   |         | 100,325 |         |   |           | 613,548   |          
|                              | Other                                     |                  |           | 43,533      |           |             |         | 127        |         |              |         | 79           |         |       |         |        |         |   |         | 2,695   |         |   |         | 7,696   |         |   |           | 54,130    |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|                              |                                           | Total consumer   |           |             | 86,832    |             |         |            | 62,688  |              |         |              | 97,845  |       |         |         | 75,652  |   |         |         | 236,640 |   |         |         | 108,021 |   |           |           | 667,678   | 
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|Gross loans held in portfolio |                                           | $                | 2,976,496 |             |           | $           | 803,802 |            |         | $            | 883,782 |              |         | $     | 767,816 |         |         | $ | 304,234 |         |         | $ | 109,928 |         |         | $ | 5,846,058 |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|Net deferred origination fees |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   | (7,398    | )        
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|Loans held in portfolio       |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   | 5,838,660 |          
|Allowance for loan losses     |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   | (64,542   | )        
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          
|Net loans held in portfolio   |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         | $ | 5,774,118 |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |         |         |         |   |         |         |         |   |         |         |         |   |           |          

28



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##### Table of Contents



Adjustable-rate mortgages are shown in the period
in which they reprice, rather than when they become due, with
the exception of adjustable-rate loans that have reached a
contractual floor. Loans that are at the floor level are shown
in the period they become due. The table does not include the
effects of possible prepayments. The rate of loan prepayment
varies from time to time, depending upon various factors,
including market interest rates.

The contractual maturity of loans held in
portfolio at December 31, 2005, are as follows (dollars in
thousands):

|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |           |           | 
|----------------------------- | ----------------------------------------- | ---------------- | --------- | ----------- | --------- | ----------- | ------- | ---------- | ------- | ------------ | ------- | ------------ | ------- | ----- | --------- | --------- | --------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | - | --------- | --------- | --------- | 
|                              |                                           |                  |           | After       |           | After       |         | After      |         | After        |         |              |         |      
|                              |                                           |                  |           | One Year    |           | Three Years |         | Five Years |         | Ten Years    |         |              |         |      
|                              |                                           | Within           |           | Through     |           | Through     |         | Through    |         | Through      |         | After        |         |      
|                              |                                           | One Year         |           | Three Years |           | Five Years  |         | Ten Years  |         | Twenty Years |         | Twenty Years |         | Total
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |      
|Commercial:                   |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|                              | Secured by real estate  nonresidential   |                  | $         | 105,240     |           |             | $       | 272,344    |         |              | $       | 461,860      |         |       | $         | 1,411,677 |           |   | $       | 35,573  |         |   | $       | 26,332  |         |   | $         | 2,313,026 |          
|                              | Secured by real estate  multifamily      |                  |           | 532         |           |             |         | 15,875     |         |              |         | 16,280       |         |       |           | 1,147,793 |           |   |         | 238,765 |         |   |         | 83,769  |         |   |           | 1,503,014 |          
|                              | Construction                              |                  |           | 381,208     |           |             |         | 107,285    |         |              |         | 9,684        |         |       |           |          |           |   |         |        |         |   |         |        |         |   |           | 498,177   |          
|                              | Business                                  |                  |           | 677,708     |           |             |         | 97,805     |         |              |         | 50,425       |         |       |           | 27,833    |           |   |         | 7,270   |         |   |         | 3,122   |         |   |           | 864,163   |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|                              |                                           | Total commercial |           |             | 1,164,688 |             |         |            | 493,309 |              |         |              | 538,249 |       |           |           | 2,587,303 |   |         |         | 281,608 |   |         |         | 113,223 |   |           |           | 5,178,380 | 
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|Consumer:                     |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|                              | Residential mortgage (one-to-four family) |                  |           | 4,156       |           |             |         | 3,522      |         |              |         | 2,254        |         |       |           | 7,963     |           |   |         | 244,676 |         |   |         | 350,977 |         |   |           | 613,548   |          
|                              | Other                                     |                  |           | 4,294       |           |             |         | 999        |         |              |         | 101          |         |       |           |          |           |   |         | 7,305   |         |   |         | 41,431  |         |   |           | 54,130    |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|                              |                                           | Total consumer   |           |             | 8,450     |             |         |            | 4,521   |              |         |              | 2,355   |       |           |           | 7,963     |   |         |         | 251,981 |   |         |         | 392,408 |   |           |           | 667,678   | 
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|Gross loans held in portfolio |                                           | $                | 1,173,138 |             |           | $           | 497,830 |            |         | $            | 540,604 |              |         | $     | 2,595,266 |           |           | $ | 533,589 |         |         | $ | 505,631 |         |         | $ | 5,846,058 |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|Net deferred origination fees |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   | (7,398    | )        
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|Loans held in portfolio       |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   | 5,838,660 |          
|Allowance for loan losses     |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   | (64,542   | )        
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          
|Net loans held in portfolio   |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         | $ | 5,774,118 |          
|                              |                                           |                  |           |             |           |             |         |            |         |              |         |              |         |       |           |           |           |   |         |         |         |   |         |         |         |   |           |          

The table does not include the effects of
possible prepayments. The rate of loan prepayment varies from
time to time, depending upon various factors, including market
interest rates.

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Loan commitments related to loans held for sale
and held in portfolio for years ended December 31, 2005,
2004 and 2003, were as follows (dollars in thousands):

|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |         |           | 
|------------------------ | ----------------------------------------- | ------------------------------------------- | - | --------- | --------- | ---- | - | ------- | --------- |  | - | ------- | --------- | 
|                         |                                           | 2005                                        |   | 2004      |           | 2003
|                         |                                           |                                             |   |           |           |     
|Loans held for sale:     |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|Commercial:              |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         | Secured by real estate  nonresidential   |                                             | $ | 62,027    |           |      | $ | 17,399  |           |  | $ | 9,463   |          
|                         | Secured by real estate  multifamily      |                                             |   | 489,968   |           |      |   | 169,645 |           |  |   |        |          
|                         | Business                                  |                                             |   |          |           |      |   |        |           |  |   | 2,398   |          
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         |                                           | Total commercial loans                      |   |           | 551,995   |      |   |         | 187,044   |  |   |         | 11,861    | 
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|Consumer:                |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         | Residential mortgage (one-to-four family) |                                             |   | 325       |           |      |   |        |           |  |   |        |          
|                         | Other                                     |                                             |   |          |           |      |   |        |           |  |   |        |          
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         |                                           | Total consumer loans                        |   |           | 325       |      |   |         |          |  |   |         |          | 
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         |                                           | Total loans held for sale commitments(1)    |   |           | 552,320   |      |   |         | 187,044   |  |   |         | 11,861    | 
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|Loans held in portfolio: |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|Commercial:              |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         | Secured by real estate  nonresidential   |                                             |   | 1,080,502 |           |      |   | 748,506 |           |  |   | 625,038 |          
|                         | Secured by real estate  multifamily      |                                             |   | 591,449   |           |      |   | 575,421 |           |  |   | 612,603 |          
|                         | Construction                              |                                             |   | 694,472   |           |      |   | 421,924 |           |  |   | 344,352 |          
|                         | Business                                  |                                             |   | 763,701   |           |      |   | 460,290 |           |  |   | 232,609 |          
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         |                                           | Total commercial loans                      |   |           | 3,130,124 |      |   |         | 2,206,141 |  |   |         | 1,814,602 | 
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|Consumer:                |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         | Residential mortgage (one-to-four family) |                                             |   | 188,309   |           |      |   | 234,522 |           |  |   | 199,169 |          
|                         | Other                                     |                                             |   | 40,376    |           |      |   | 39,677  |           |  |   | 34,605  |          
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         |                                           | Total consumer loans                        |   |           | 228,685   |      |   |         | 274,199   |  |   |         | 233,774   | 
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         |                                           | Total loan held in portfolio commitments(1) |   |           | 3,358,809 |      |   |         | 2,480,340 |  |   |         | 2,048,376 | 
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        
|                         |                                           | Total loan commitments(1)                   |   | $         | 3,911,129 |      |   | $       | 2,667,384 |  |   | $       | 2,060,237 | 
|                         |                                           |                                             |   |           |           |      |   |         |           |  |   |        



---



|    |                                                         
|--- | --------------------------------------------------------
|(1) | Excludes commitments related to loan
    participations.

Deposits

Deposits have traditionally been UCBs
primary source of funds to use in its lending and investment
activities. At December 31, 2005, 56.4% of UCBs
deposits were time deposits, 28.5% were negotiable order of
withdrawal accounts (NOW), demand deposits and money
market accounts, and 15.1% were savings accounts. By comparison,
at December 31, 2004, 53.4% of UCBs deposits were
time deposits, 27.4% were NOW, demand deposits and money market
accounts, and 19.2% were savings accounts.

UCB obtains its deposits primarily from the
communities that it serves. With the exception of state and
federal government entities (Public
Fund Sector) contributing 6.6% to total deposits, no
other material portion of UCBs deposits were from or were
dependent upon any one customer, source or industry. Included in
time deposits at December 31, 2005, is $2.33 billion
of deposits of $100,000 or greater, compared to
$1.87 billion at December 31, 2004. Such deposits made
up 37.2% of total deposits at December 31, 2005, compared
to 35.8% at December 31, 2004. Also included in time
deposits is $156.8 million of brokered deposits, which UCB
began accepting during the fourth quarter of 2005.

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The balances and rates paid for categories of
deposits at December 31, 2005, 2004 and 2003, were as
follows (dollars in thousands):

|                                        |                     |                     |           |           |           |        |      |          |      |        |           |           |           |  |      |      |      |   |           |           |           |  |      |      |      |  
|--------------------------------------- | ------------------- | ------------------- | --------- | --------- | --------- | ------ | ---- | -------- | ---- | ------ | --------- | --------- | --------- |  | ---- | ---- | ---- | - | --------- | --------- | --------- |  | ---- | ---- | ---- | -
|                                        |                     |                     |           |           |           |       
|                                        |                     | 2005                |           | 2004      |           | 2003  
|                                        |                     |                     |           |           |           |       
|                                        |                     |                     |           | Weighted  |           |        |      | Weighted |      |        |           | Weighted 
|                                        |                     |                     |           | Average   |           |        |      | Average  |      |        |           | Average  
|                                        |                     | Amount              |           | Rate      |           | Amount |      | Rate     |      | Amount |           | Rate     
|                                        |                     |                     |           |           |           |        |      |          |      |        |           |          
|NOW, checking and money market accounts |                     | $                   | 1,784,065 |           |           |        | 1.65 | %        |      | $      | 1,427,366 |           |           |  | 0.96 | %    |      | $ | 1,026,047 |           |           |  | 0.65 | %   
|Savings accounts                        |                     |                     | 946,714   |           |           |        | 1.85 |          |      |        | 1,000,489 |           |           |  | 1.03 |      |      |   | 884,064   |           |           |  | 0.77 |     
|Time deposits:                          |                     |                     |           |           |           |        |      |          |      |        |           |           |           |  |      |      |      |   |           |           |           |  |      |     
|                                        | Less than $100,000  |                     |           | 1,203,001 |           |        |      | 2.69     |      |        |           | 918,650   |           |  |      | 1.79 |      |   |           | 1,042,843 |           |  |      | 1.73 |     
|                                        | $100,000 or greater |                     |           | 2,330,389 |           |        |      | 3.98     |      |        |           | 1,869,357 |           |  |      | 2.26 |      |   |           | 1,530,567 |           |  |      | 1.82 |     
|                                        |                     |                     |           |           |           |        |      |          |      |        |           |           |           |  |      |      |      |   |           |           |           |  |      |     
|                                        |                     | Total time deposits |           |           | 3,533,390 |        |      |          | 3.54 |        |           |           | 2,788,007 |  |      |      | 2.11 |   |           |           | 2,573,410 |  |      |      | 1.79 |  
|                                        |                     |                     |           |           |           |        |      |          |      |        |           |           |           |  |      |      |      |   |           |           |           |  |      |     
|                                        |                     | Total deposits      |           | $         | 6,264,169 |        |      |          | 2.75 | %      |           | $         | 5,215,862 |  |      |      | 1.59 | % |           | $         | 4,483,521 |  |      |      | 1.33 | %
|                                        |                     |                     |           |           |           |        |      |          |      |        |           |           |           |  |      |      |      |   |           |           |           |  |      |     

Our average cost of deposits for the year ended
December 31, 2005, was 2.22% as compared to 1.39% for 2004
and 1.61% for 2003. Our average interest rate paid on deposits
was 2.75%, 1.59% and 1.33% at December 31, 2005, 2004 and
2003, respectively.

Core deposits increased 12.5% to
$2.73 billion at December 31, 2005, compared to
$2.43 billion at December 31, 2004. Core deposits
include NOW accounts, demand deposit and money market accounts,
and savings accounts. This growth in core deposits resulted
primarily from the acquisition of Pacifica and AABT, which added
a total of $260.9 million in deposits, and also from
UCBs continued focus on developing new commercial
relationships in the ethnic Chinese community and further
expansion into UCBs retail niche market. Time deposits
increased 26.7% to $3.53 billion at December 31, 2005,
from $2.79 billion at December 31, 2004, primarily as
a result of the further expansion that UCB has made in its niche
markets.

Core deposits increased 27.1% to
$2.43 billion at December 31, 2004, compared to
$1.91 billion at December 31, 2003. This growth in
core deposits resulted primarily from UCBs continued focus
on developing new commercial relationships in the ethnic Chinese
community and further expansion into UCBs retail niche
market. Time deposits increased 8.3% to $2.79 billion at
December 31, 2004, from $2.57 billion at
December 31, 2003, primarily as a result of the further
expansion that UCB has made in its niche markets.

The remaining maturities on time deposits of
$100,000 or greater as of December 31, 2005, are as follows
(dollars in thousands):



|                                     |  |   |           | 
|------------------------------------ |  | - | --------- | 
|Three months or less                 |  | $ | 997,077   | 
|Over three months through six months |  |   | 685,428   | 
|Over six months through twelve years |  |   | 607,057   | 
|Over twelve months                   |  |   | 40,827    | 
|                                     |  |   |           | 
|Total                                |  | $ | 2,330,389 | 
|                                     |  |   |           | 

31



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Borrowings

Short-term and long-term borrowings for the years
ended December 31, 2005, 2004 and 2003, were as follows
(dollars in thousands):

|                                                                    |                                                                             |      |   |         |   |      |   |         |   |  |   |         |  
|------------------------------------------------------------------- | --------------------------------------------------------------------------- | ---- | - | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                                                    |                                                                             | 2005 |   | 2004    |   | 2003
|                                                                    |                                                                             |      |   |         |   |     
|Short-term borrowings:                                              |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|FHLB of San Francisco advances and other
    short-term borrowings: |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|                                                                    | Average balance outstanding                                                 |      | $ | 301,400 |   |      | $ | 164,964 |   |  | $ | 76,827  |  
|                                                                    | Maximum amount outstanding at any month end period                          |      |   | 566,169 |   |      |   | 300,695 |   |  |   | 234,134 |  
|                                                                    | Balance outstanding at end of period                                        |      |   | 279,425 |   |      |   | 72,310  |   |  |   | 234,134 |  
|                                                                    | Weighted average interest rate during the period                            |      |   | 3.51    | % |      |   | 1.30    | % |  |   | 1.41    | %
|                                                                    | Weighted average interest rate at end of period                             |      |   | 4.09    | % |      |   | 1.22    | % |  |   | 1.00    | %
|                                                                    | Weighted average remaining term to maturity at
    end of period (in years) |      |   |        |   |      |   |        |   |  |   |        |  
|Long-term borrowings:                                               |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|FHLB of San Francisco advances:                                     |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|                                                                    | Average balance outstanding                                                 |      | $ | 361,677 |   |      | $ | 299,253 |   |  | $ | 271,688 |  
|                                                                    | Maximum amount outstanding at any month end period                          |      |   | 562,033 |   |      |   | 335,104 |   |  |   | 274,000 |  
|                                                                    | Balance outstanding at end of period                                        |      |   | 562,033 |   |      |   | 334,952 |   |  |   | 271,408 |  
|                                                                    | Weighted average interest rate during the period                            |      |   | 5.15    | % |      |   | 5.00    | % |  |   | 5.15    | %
|                                                                    | Weighted average interest rate at end of period                             |      |   | 4.76    | % |      |   | 4.89    | % |  |   | 5.12    | %
|                                                                    | Weighted average remaining term to maturity at
    end of period (in years) |      |   | 5.0     |   |      |   | 2.9     |   |  |   | 4.0     |  

UCB recorded certain loan sale transactions as
secured borrowings as of December 31, 2005, since these
transactions did not qualify for sales treatment under
SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities. The short-term secured borrowings amounted to
$19.1 million at December 31, 2005. Additionally, UCB
recorded certain loan sale transactions as secured borrowings as
of June 30, 2005, since these transactions did not qualify
for sales treatment under SFAS No. 140. The short-term
and long-term secured borrowings amounted to $5.4 million
and $45.1 million, respectively, at June 30, 2005.
Subsequently in August 2005, a portion of the loan sales
agreements were amended to permit loan sale transactions related
to $29.6 million of secured borrowings to qualify for sales
treatment resulting in a gain on sale of loans of $233,000.
Additionally in September 2005, UCB exercised its option to
repurchase the remaining $20.8 million of loans related to
the secured borrowings from the loan participants, which
resulted in a loss on extinguishment from secured borrowings of
$89,000. Short-term borrowings with the FHLB totaled $226.0
million at December 31, 2005.



| |                        
| | -----------------------
| | Subordinated Debentures

UCBH established special purpose trusts in 1997,
2001, 2002 and 2005 for the sole purpose of issuing guaranteed
preferred beneficial interests in its junior subordinated
debentures (the Capital Securities) and investing
the proceeds thereof in the junior subordinated debentures
issued by UCBH. Payment of distributions out of the monies held
by the trusts and payments on liquidation of the trusts or the
redemption of the Capital Securities are guaranteed by UCBH to
the extent the trusts have funds available. The obligations of
UCBH under the guarantees and the junior subordinated debentures
are subordinate and junior in right of payment to all
indebtedness of UCBH and will be structurally subordinated to
all liabilities and obligations of UCBHs subsidiaries.
UCBH had $146.0 million and $136.0 million of
subordinated debentures outstanding at December 31, 2005
and 2004, respectively.

Pursuant to an indenture dated as of
April 17, 1998 (the Indenture), between UCBH
and Wilmington Trust Company (Wilmington), as
Trustee, UCBH on June 27, 2005, redeemed the entire
$30,928,000 aggregate principal amount of the 9.375% junior
subordinated debentures due May 1, 2028 (the

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Debentures), issued by UCBH under the
Indenture. The redemption price consisted of the $30,928,000
aggregate principal amount plus aggregate unpaid interest of
$451,000. The redemption of the Debentures resulted in a loss of
$1.2 million in 2005 from the write-off of the unamortized
Debentures issuance costs and other legal costs.


On September 22, 2005, UCBH issued
$41.2 million in junior subordinated debentures to a newly
formed Delaware trust subsidiary, UCBH Capital Trust V. The
junior subordinated debentures bear interest at a fixed rate of
5.82% until November 23, 2010, after which date the rate
will automatically convert to a floating rate equal to the
three-month London Interbank Offered Rate (LIBOR)
plus 1.38% and will adjust quarterly until maturity. The junior
subordinated debentures will mature on November 23, 2035,
but may be redeemed by UCBH at its option in whole or in part at
anytime on or after November 23, 2010. Additionally, UCBH
may redeem the junior subordinated debentures at its option in
whole at anytime upon certain events.

OFF-BALANCE SHEET ARRANGEMENTS

As previously discussed, the Company has
established special purpose trusts for the sole purpose of
issuing guaranteed preferred beneficial interests and investing
in the junior subordinated debentures issued by the Company. The
Companys consolidated results exclude these special
purpose trusts pursuant to Financial Accounting Standards Board
(the FASB) Interpretation (FIN) No. 46R,
Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51, since UCBH is not deemed to be
the primary beneficiary of these trusts.

RISK ELEMENTS

Since risk is inherent in substantially all of
the Companys operations, management of risk is integral to
its successful operations and is also a key determinant of its
overall performance. We manage all major aspects of our business
through an integrated risk infrastructure that includes planning
and review processes. We evaluate our risk and returns to
produce sustainable revenue, to reduce earnings volatility and
increase shareholder value. As part of this evaluation, we apply
various strategies to identify, manage and reduce the risks to
which the Companys operations are exposed, namely credit,
operational, interest rate and market, and liquidity risks.

We evaluate risk through various management
committees with the oversight of the Board of Directors. The key
risk management committees of the Company are:



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

Management has established control processes and
procedures to align risk-taking and risk management throughout
our organization. Each of our business groups is responsible for
identifying, quantifying, mitigating and managing all risks
associated with their operations. In addition, each business
unit prepares and executes business plans, which must address
the changing nature of these risks making them best able to take
actions to manage and mitigate those risks.

The Enterprise Risk Division is responsible for
translating the group business plans into approved limits,
approving any requests for changes to those limits, authorizing
transactions as appropriate and working closely with the
business groups to establish and monitor risk parameters. Our
internal audit function provides an independent assessment of
our management systems and internal controls. Internal audit
activities are designed to provide reasonable assurance that
resources are adequately protected; significant financial,
managerial and operating information is complete and accurate,
and that employees actions are in compliance

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with corporate policies, standards, procedures,
and applicable laws and regulations. In 2005, internal audit
also assisted in the management testing phase of the
Sarbanes-Oxley Section 404 project.


UCB also has an internal risk rating process to
which all loans in the portfolio are subjected. Criticized loans
are classified in the following categories:



| |   |                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Special Mention: loans that should
    not yet be adversely classified, but have credit deficiencies or
    potential weaknesses that warrant UCBs attention.                                                           
|
| |  | Substandard: loans with one or more
    well-defined weaknesses, which have the distinct possibility
    that UCB will sustain some loss if the weaknesses are not
    corrected.                                        
|
| |  | Doubtful: loans with the weaknesses
    of a substandard loan plus such weaknesses, which make
    collection or liquidation in full questionable, based on current
    information, and have a high probability of loss.
|
| |  | Loss: loans considered uncollectible.                                                                                                                                                                                    

Credit Risk Management

Credit risk is the possibility of loss from the
failure of a borrower or contractual counterparty to fully
perform under the terms of a credit-related contract. Credit
risk arises primarily from UCBs lending activities, as
well as from other on- and off-balance-sheet credit instruments.

Effective management of credit risk is essential
in maintaining a safe and sound financial institution. We have
in place a set of formal loan policies and procedures, which
provide UCB with a framework for consistent loan underwriting
and a basis for sound credit decisions. In addition, UCB has a
well-defined set of standards for evaluating its loan portfolio
and management utilizes a comprehensive loan grading system to
identify the risk potential in the portfolio. Loans are
periodically reviewed with regard to the borrowers ability
to repay the loan during which a risk grade is assigned to the
loan. The reviews include evaluations of various factors
including, the borrowers debt capacity and financial
flexibility, the borrowers earnings, the sources of
repayment, the level and nature of any contingencies, the
quality of any collateral, and the industry in which the
borrower operates. The reviews also address an evaluation of
historical information as well as subjective assessments and
interpretations. Further, an independent internal credit review
function periodically conducts reviews of UCBs lending
operations and loan portfolios. These reviews are designed to
place an emphasis on the early detection of problem credits so
that action plans can be developed and implemented on a timely
basis to mitigate any potential losses.

We also assign a loss rating to each credit
facility. These loss ratings are determined by borrower and by
type of collateral, based principally upon our own historical
loss experience or on independent verifiable data that help to
estimate these ratings. The ratings are used as a tool to
monitor a loans performance and also in estimating any
potential loss associated with it.

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Another aspect of UCBs credit risk
management strategy is to maintain diversification in the loan
portfolio. The concentration of the loans held in portfolio for
each major loan category at December 31, 2005 and 2004, is
as follows (dollars in thousands):

|                           |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |       |  
|-------------------------- | ----------------------------------------- | ------ | --------- | ---------- |  | ------ | ------ | ---------- | - | - | --------- | --------- |  |  | ------ | ----- | -
|                           |                                           |        |           |           
|                           |                                           | 2005   |           | 2004      
|                           |                                           |        |           |           
|                           |                                           |        |           | % of Total |  |        |        | % of Total
|                           |                                           | Amount |           | Loans      |  | Amount |        | Loans     
|                           |                                           |        |           |            |  |        |        |           
|Commercial:                |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |      
|                           | Secured by real estate  nonresidential   |        | $         | 2,307,381  |  |        |        | 39.52      | % |   | $         | 1,943,868 |  |  |        | 47.99 | %
|                           | Secured by real estate  multifamily      |        |           | 1,506,848  |  |        |        | 25.81      |   |   |           | 866,079   |  |  |        | 21.38 |  
|                           | Construction                              |        |           | 494,841    |  |        |        | 8.47       |   |   |           | 289,936   |  |  |        | 7.16  |  
|                           | Business                                  |        |           | 863,935    |  |        |        | 14.80      |   |   |           | 468,128   |  |  |        | 11.56 |  
|                           |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |      
|Total commercial           |                                           |        | 5,173,005 |            |  |        | 88.60  |            |   |   | 3,568,011 |           |  |  | 88.09  |      
|                           |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |      
|Consumer:                  |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |      
|                           | Residential mortgage (one-to-four family) |        |           | 613,988    |  |        |        | 10.52      |   |   |           | 434,423   |  |  |        | 10.72 |  
|                           | Other                                     |        |           | 51,667     |  |        |        | 0.88       |   |   |           | 48,307    |  |  |        | 1.19  |  
|                           |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |      
|Total consumer             |                                           |        | 665,655   |            |  |        | 11.40  |            |   |   | 482,730   |           |  |  | 11.91  |      
|                           |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |      
|Loans held in portfolio(1) |                                           | $      | 5,838,660 |            |  |        | 100.00 | %          |   | $ | 4,050,741 |           |  |  | 100.00 | %    
|                           |                                           |        |           |            |  |        |        |            |   |   |           |           |  |  |        |      



---



|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes net unamortized deferred loan fees of
    $7.4 million and $7.3 million at December 31,
    2005 and 2004, respectively.

UCB actively monitors the levels of commercial
real estate loans as a percentage of risk-based capital. In
addition, UCB periodically reviews the geographic concentration
of such loans. During the three months ended December 31,
2005, as a result of the geographic concentration review,
coupled with the acquisitions of Pacifica and AABT, UCB
management determined that UCB needed to reduce the level of its
commercial real estate loans located in Northern and Southern
California. As a result, approximately $265.1 million in
commercial real estate loans were transferred from held in
portfolio to held for sale. Approximately $151.2 million
were sold in November and December 2005.

Consistent with our planned long-term objectives,
UCB will be systematically reducing the concentration in
commercial and multifamily real estate loans while increasing
the portfolio of commercial business loans. Finally, UCB
attempts to avoid the risk of undue concentration of credits in
a particular industry, trade group or property type. UCB also
has no significant exposure to highly-leveraged transactions or
to any individual customer or counterparty.

Internal Loan Securitizations.UCB may also use internal loan
securitizations to reduce its exposure to credit risk. In such
securitizations, UCB has exchanged either multifamily or
residential (one-to-four family) mortgage loans for securities
issued by the Federal National Mortgage Association
(FNMA), thus transferring the credit risk on the
loans to FNMA. The average yield that UCB earns on the
securities is lower than the yield on the underlying loans. This
difference is the guarantee fee that is retained by FNMA as
compensation for assuming the credit risk. Since we retain all
of the securities that FNMA issues in the exchange, no gain or
loss is recognized on the transaction. UCB continues to service
the securitized loans. Residential mortgage (one-to-four family)
loans are generally included in the 50% risk weight for
risk-based capital purposes, whereas multifamily real estate
loans may fall either into the 50% or 100% risk weight depending
on the specific criteria of each individual loan. FNMA
securities are classified as a 20% risk weight.

These internal securitizations do not have a cash
impact to UCB, since selected loans from its loans held in
portfolio are exchanged for FNMA securities. Such securities are
represented by exactly the same loans previously held in
UCBs loans held in portfolio. The FNMA securities are
generally held as available for sale (AFS)
securities in UCBs investment and mortgage-backed
securities portfolio.

Through these securitization transactions, UCB
also reduces its credit risk. In these securitizations, UCB
fully transfers credit risk on the related loans to FNMA.
UCBs yield on the FNMA securities is reduced by the
guarantee fee that is retained by FNMA, but, since UCB retains
all of the securities issued by FNMA in

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the securitization, no gain or loss is recognized
on the exchange transaction. UCB also continues to service the
loans included in these securitizations. In addition, these
securitization transactions improve UCBs liquidity, since
FNMA securities receive more favorable treatment as a collateral
base for borrowings than do loans.


UCB internally securitized $147.1 million of
multifamily real estate loans for the year ended
December 31, 2004, and $91.9 million of residential
mortgage (one-to four-family) loans and $194.2 million of
multifamily real estate loans for the year ended
December 31, 2003. There were no securitizations for the
year ended December 31, 2005.

Nonperforming Assets

Nonperforming assets include nonaccrual and
restructured loans from loans held in portfolio and other real estate owned
(OREO), but exclude any loans held for sale. Loans are generally placed on nonaccrual
status when a loan becomes 90 days past due as to principal
and interest, unless the loan is both well secured and in the
process of collection. Loans may be placed on nonaccrual earlier
if in managements opinion, the full and timely collection
of principal or interest becomes uncertain. When a loan is
placed on nonaccrual status, any accrued but unpaid interest is
reversed and charged against interest income. UCB charges off
loans when it determines that collection becomes unlikely. OREO,
of which UCB had none at year-end 2005, is acquired primarily
through or in lieu of foreclosure on loans secured by real
estate.

The level of the UCBs nonperforming assets
increased in 2005 compared to 2004. Total nonperforming loans
increased $6.5 million or 52.2% compared to year-end 2004.
The increase was a result of one commercial real estate loan and
four commercial business loans being added to nonaccrual loans
partially offset by the removal of three construction loans from
nonaccrual loans.

UCBs nonperforming assets from loans held in
portfolio and OREO as of
December 31, 2005, 2004, 2003, 2002 and 2001, were as
follows (dollars in thousands):

|                                                                            |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |     | 
|--------------------------------------------------------------------------- | ----------------------------------------- | ---- | --------- | ------ |  | ---- | --------- | ----- |  | ---- | --------- | ----- |  | - | --------- | ----- |  | - | --------- | --- | 
|                                                                            |                                           | 2005 |           | 2004   |  | 2003 |           | 2002  |  | 2001
|                                                                            |                                           |      |           |        |  |      |           |       |  |     
|Commercial loans:                                                           |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|                                                                            | Secured by real estate  nonresidential   |      | $         | 12,792 |  |      | $         | 8,085 |  |      | $         |      |  |   | $         |      |  |   | $         |    | 
|                                                                            | Secured by real estate  multifamily      |      |           |       |  |      |           |      |  |      |           |      |  |   |           |      |  |   |           | 210 | 
|                                                                            | Construction                              |      |           |       |  |      |           | 4,353 |  |      |           | 5,102 |  |   |           | 4,533 |  |   |           |    | 
|                                                                            | Business                                  |      |           | 5,903  |  |      |           | 136   |  |      |           | 631   |  |   |           | 68    |  |   |           |    | 
|                                                                            |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|Total commercial loans                                                      |                                           |      | 18,695    |        |  |      | 12,574    |       |  |      | 5,733     |       |  |   | 4,601     |       |  |   | 210       |    
|                                                                            |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|Consumer loans:                                                             |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|                                                                            | Residential mortgage (one-to-four family) |      |           | 388    |  |      |           |      |  |      |           | 124   |  |   |           |      |  |   |           | 781 | 
|                                                                            | Other                                     |      |           | 50     |  |      |           |      |  |      |           |      |  |   |           | 53    |  |   |           |    | 
|                                                                            |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|Total consumer loans                                                        |                                           |      | 438       |        |  |      |          |       |  |      | 124       |       |  |   | 53        |       |  |   | 781       |    
|                                                                            |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|Total nonaccrual loans from loans held in portfolio                         |                                           |      | 19,133    |        |  |      | 12,574    |       |  |      | 5,857     |       |  |   | 4,654     |       |  |   | 991       |    
|Other real estate owned (OREO)                                              |                                           |      |          |        |  |      |          |       |  |      |          |       |  |   |          |       |  |   |          |    
|                                                                            |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|Total nonperforming assets                                                  |                                           | $    | 19,133    |        |  | $    | 12,574    |       |  | $    | 5,857     |       |  | $ | 4,654     |       |  | $ | 991       |    
|                                                                            |                                           |      |           |        |  |      |           |       |  |      |           |       |  |   |           |       |  |   |           |    
|Nonperforming assets to total assets                                        |                                           |      | 0.24      | %      |  |      | 0.20      | %     |  |      | 0.10      | %     |  |   | 0.10      | %     |  |   | 0.03      | %  
|Nonaccrual loans to total loans including loans
held for sale               |                                           |      | 0.32      |        |  |      | 0.29      |       |  |      | 0.16      | %     |  |   | 0.15      |       |  |   | 0.04      |    
|Nonperforming assets to total loans and OREO                                |                                           |      | 0.32      |        |  |      | 0.29      |       |  |      | 0.16      |       |  |   | 0.15      |       |  |   | 0.04      |    
|Total loans including loans held for sale                                   |                                           | $    | 5,995,400 |        |  | $    | 4,376,748 |       |  | $    | 3,771,381 |       |  | $ | 3,027,810 |       |  | $ | 2,264,303 |    
|Gross income not recognized on nonaccrual loans                             |                                           |      | 790       |        |  |      | 699       |       |  |      | 363       |       |  |   | 211       |       |  |   | 24        |    
|Accruing loans contractually past due
    90 days or more                   |                                           |      | 5,374     |        |  |      | 3,101     |       |  |      | 1,469     |       |  |   | 4,302     |       |  |   | 1,269     |    
|Loans classified as troubled debt restructurings
    and not included above |                                           |      | 10,827    |        |  |      | 11,329    |       |  |      | 9,094     |       |  |   |          |       |  |   |          |    

The $10.8 million of performing restructured
loans reflected in the table above represents one commercial
real estate loan and one commercial loan. The first loan is a
nonresidential loan secured by real estate for

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$8.8 million. This loan has been classified
as a performing restructured loan as a result of UCB making
interest rate concessions on a separate loan for
$1.5 million to the same obligor and is secured by the same
property. The separate loan of $1.5 million is included in
the nonaccrual commercial real estate in the table above. The
other loan is a commercial business loan of $2.0 million on
which UCB provided an interest rate concession.


With the exception of the loans described in the
above paragraph, the classified loans and two impaired loans
that were well secured and in process of collection, UCB is not
aware of any other loans as of December 31, 2005, where
known credit problems of the borrower lead UCB to believe that
they will not comply with their repayment schedule, or that
would result in the loan being included in the nonperforming
loan table at a future date.

Included in nonaccrual loans are loans that we
have determined to be impaired. Loans, other than those included
in large groups of smaller-balance homogeneous loans, are
considered to be impaired when, based on current information and
events, it is probable that UCB will be unable to collect all
amounts due in accordance with the contractual terms of the loan
agreement, included scheduled interest payments. The amount of a
loans impairment is measured based on either the present
value of expected cash flows, the observable market price of the
loan, or the fair value of the collateral securing the loan.

At December 31, 2005 and 2004, UCBs
investment in loans that were considered to be impaired was
$24.5 million and $14.9 million, respectively.
Estimated losses on impaired loans are added to the allowance
for loan losses through the provision for loan losses. At
December 31, 2005, the allowance for loan losses included
$3.2 million for impaired loans with a $16.3 million
recorded investment. At December 31, 2004, the allowance
included $3.6 million for impaired loans with a recorded
investment of $14.8 million. See Notes 1 and 8 to the
Consolidated Financial Statements for additional information on
impaired loans.

Management cannot predict the extent to which
economic conditions in UCBs market areas may change or the
full impact that such changes may have on UCBs loan
portfolio. Accordingly, there can be no assurance that
additional 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.

Allowances for Credit Losses

Allowance for Loan
Losses.The allowance for loan losses
is established to provide for probable losses inherent in
UCBs credit portfolio, exclusive of loans held for sale. The determination of the
appropriate level of the allowance is based on quarterly
evaluations of the loan portfolios along with other relevant
factors. UCBs methodology for determining the appropriate
level of the allowance includes the evaluation of two distinct
allowance components: an allowance applied to the portfolio as a
whole and a specific allowance for loans deemed to be impaired
or otherwise exhibiting problem characteristics. Loans that are
determined to be impaired or otherwise exhibit specific problems
are excluded from the allowance analysis and assessed
individually.

In assessing the adequacy of the allowance, UCB
utilizes the application of an internal risk rating system and
an evaluation of various internal and external conditions. The
evaluation takes into account the loan portfolio mix, the credit
quality of the portfolio, growth in the portfolio, trends
relating to delinquent and classified loans, general economic
conditions and any other characteristics that directly relate to
the collectibility of the loans in the portfolio.

UCB then divides the loan portfolio into major
segments based primarily on loan type, after which loss factors
are applied to the portfolio segments. These loss factors have
been developed from historic charge-off experience, reviews of
regional trends in collateral values, portfolio segment
delinquency and classification trends, portfolio concentrations,
macro-economic conditions, as well as other qualitative aspects.
Additionally, for our heterogeneous loan portfolio, we perform
comparative analyses, utilizing both a peer data benchmarking
approach and an expected loss approach.

During 2005, UCB continued its ongoing process of
evaluating the loss factors in light of current economic
conditions, UCBs historical loss experience, loan
delinquency trends and the changes in classified and other
problem loans. As part of this evaluation, the portion of the
allowance previously presented as non-loan category
specific was allocated to specific loan portfolio in 2004
and 2005, to address potential

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imprecision arising from the accuracy of the risk
rating process and general business and economic conditions
affecting our key lending areas. Upon completion of these
evaluations, the loss factors applicable to the construction and
commercial loan portfolios were revised and lowered, since the
evaluations determined that the inherent risk in the portfolio
had been decreased due to stronger identification,
administration and action plan implementation on credits in
these portfolios. In addition, UCB decided to segregate its
commercial real estate and commercial loans that are secured by
cash and reduce the associated loss factors to better reflect
the inherent risk in this loan segment.


In assessing the adequacy of the specific
allowance, UCB applies the expected loss factors used by the
banking regulators for classified and criticized loans. These
factors are 10.0% for loans classified special
mention, 20.0% to 30.0% for substandard, 50.0%
for doubtful and 100% for loss.

UCB also estimates a reserve related to unfunded
commitments. In assessing the adequacy of this reserve, UCB uses
a process similar to the one it uses in estimating the allowance
for loan losses including comparative analysis using an expected
loss approach. The reserve for unfunded commitments is included
in other liabilities on the statement of financial position.
During 2005, UCB updated the loss factors associated with these
commitments. The loss factors were lowered as a result of these
evaluation, reflecting continued improvement in the loss
experience associated with these exposures.

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The components of the allowance for loan losses
and allowance for losses related to unfunded commitments for
each of the five years ended December 31, 2005, were as
follows (dollars in thousands):

|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |     |     | 
|-------------------------------------------------------- | ----------------- | ----------------------------------------- | ------ | ----- | --- | ---- | ------ | ----- | ----- | ---- | ------ | ----- | ----- | - | ------ | ----- | ----- | - | ------ | --- | --- | 
|                                                         |                   | 2005                                      |        | 2004  |     | 2003 |        | 2002  |       | 2001
|                                                         |                   |                                           |        |       |     |      |        |       |       |     
|Balance at beginning of year:                            |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|Allowance for loan losses                                |                   | $                                         | 56,472 |       |     | $    | 58,126 |       |       | $    | 48,865 |       |       | $ | 34,550 |       |       | $ | 28,901 |    
|Allowance for losses  unfunded
    commitments          |                   |                                           | 3,940  |       |     |      | 2,737  |       |       |      |       |       |       |   |       |       |       |   |       |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|Total allowance for losses at beginning of year          |                   | $                                         | 60,412 |       |     |      | 60,863 |       |       |      | 48,865 |       |       |   | 34,550 |       |       |   | 28,901 |    
|Acquired allowance for loan losses                       |                   |                                           | 2,932  |       |     |      |       |       |       |      | 4,028  |       |       |   | 10,162 |       |       |   |       |    
|Provision for loan losses                                |                   |                                           | 6,091  |       |     |      | 4,202  |       |       |      | 9,967  |       |       |   | 9,673  |       |       |   | 5,620  |    
|Charge-offs:                                             |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Commercial:       |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |     |    
|                                                         |                   | Secured by real estate  nonresidential   |        |       | 838 |      |        |       | 1,577 |      |        |       | 87    |   |        |       |      |   |        |     |    | 
|                                                         |                   | Secured by real estate  multifamily      |        |       |    |      |        |       | 127   |      |        |       |      |   |        |       |      |   |        |     |    | 
|                                                         |                   | Construction                              |        |       |    |      |        |       |      |      |        |       | 170   |   |        |       | 2,172 |   |        |     |    | 
|                                                         |                   | Business                                  |        |       | 750 |      |        |       | 2,985 |      |        |       | 2,713 |   |        |       | 3,337 |   |        |     | 121 | 
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Total commercial  |                                           |        | 1,588 |     |      |        | 4,689 |       |      |        | 2,970 |       |   |        | 5,509 |       |   |        | 121 |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Consumer:         |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |     |    
|                                                         |                   | Residential mortgage (one-to-four family) |        |       |    |      |        |       |      |      |        |       |      |   |        |       |      |   |        |     |    | 
|                                                         |                   | Other                                     |        |       | 26  |      |        |       | 109   |      |        |       | 379   |   |        |       | 54    |   |        |     |    | 
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Total consumer    |                                           |        | 26    |     |      |        | 109   |       |      |        | 379   |       |   |        | 54    |       |   |        |    |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Total charge-offs |                                           |        | 1,614 |     |      |        | 4,798 |       |      |        | 3,349 |       |   |        | 5,563 |       |   |        | 121 |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|Recoveries:                                              |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Commercial:       |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |     |    
|                                                         |                   | Secured by real estate  nonresidential   |        |       |    |      |        |       |      |      |        |       | 30    |   |        |       |      |   |        |     |    | 
|                                                         |                   | Secured by real estate  multifamily      |        |       |    |      |        |       |      |      |        |       |      |   |        |       |      |   |        |     |    | 
|                                                         |                   | Construction                              |        |       |    |      |        |       |      |      |        |       | 300   |   |        |       |      |   |        |     |    | 
|                                                         |                   | Business                                  |        |       | 63  |      |        |       | 119   |      |        |       | 952   |   |        |       | 13    |   |        |     | 68  | 
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Total commercial  |                                           |        | 63    |     |      |        | 119   |       |      |        | 1,282 |       |   |        | 13    |       |   |        | 68  |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Consumer:         |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |     |    
|                                                         |                   | Residential mortgage (one-to-four family) |        |       | 34  |      |        |       |      |      |        |       |      |   |        |       |      |   |        |     |    | 
|                                                         |                   | Other                                     |        |       | 26  |      |        |       | 26    |      |        |       | 70    |   |        |       | 30    |   |        |     | 82  | 
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Total consumer    |                                           |        | 60    |     |      |        | 26    |       |      |        | 70    |       |   |        | 30    |       |   |        | 82  |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|                                                         | Total recoveries  |                                           |        | 123   |     |      |        | 145   |       |      |        | 1,352 |       |   |        | 43    |       |   |        | 150 |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|Total allowance for losses at end of year                |                   | $                                         | 67,944 |       |     | $    | 60,412 |       |       | $    | 60,863 |       |       | $ | 48,865 |       |       | $ | 34,550 |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|Allowance for loan losses                                |                   | $                                         | 64,542 |       |     | $    | 56,472 |       |       | $    | 58,126 |       |       | $ | 48,865 |       |       | $ | 34,550 |    
|Allowance for losses  unfunded
    commitments          |                   |                                           | 3,402  |       |     |      | 3,940  |       |       |      | 2,737  |       |       |   |       |       |       |   |       |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|Total allowance for losses at end of year                |                   | $                                         | 67,944 |       |     | $    | 60,412 |       |       | $    | 60,863 |       |       | $ | 48,865 |       |       | $ | 34,550 |    
|                                                         |                   |                                           |        |       |     |      |        |       |       |      |        |       |       |   |        |       |       |   |        |    
|Allowance for loan losses to loans held in
    portfolio |                   |                                           | 1.11   | %     |     |      | 1.39   | %     |       |      | 1.54   | %     |       |   | 1.61   | %     |       |   | 1.53   | %  
|Net charge-offs to average loans outstanding(1)          |                   |                                           | 0.03   |       |     |      | 0.11   |       |       |      | 0.06   |       |       |   | 0.23   |       |       |   |       |    



---

|    |                                                        
|--- | -------------------------------------------------------
|(1) | Average loans balance includes loans held for
    sale.

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The allocation of the allowance for loan losses
analysis and the percentage of gross loans held in portfolio at
December 31, 2005, 2004, 2003, 2002 and 2001, were as
follows (dollars in thousands):

|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|--------------------------------------------------- |  | ------ | ------ | ---- |  | ------ | ------ | ---- |  | ------ | ------ | - |  | ------ | ------ | - |  | ------ | ------ | - |  |  | ------ | - |  | - | ------ |  |  |  | ------ | - |  | - | ------ |  |  |  | ------ | -
|                                                    |  |        |        |      |  |        |        |      |  |       
|                                                    |  | 2005   |        | 2004 |  | 2003   |        | 2002 |  | 2001  
|                                                    |  |        |        |      |  |        |        |      |  |       
|                                                    |  | Amount |        | %    |  | Amount |        | %    |  | Amount |        | % |  | Amount |        | % |  | Amount |        | %
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |  
|Allocated:                                          |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Commercial:                                         |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Secured by real estate  nonresidential             |  | $      | 30,778 |      |  |        | 39.52  |      |  | $      | 30,885 |   |  |        | 47.99  |   |  | $      | 26,702 |   |  |  | 45.18  |   |  | $ | 18,647 |  |  |  | 42.17  |   |  | $ | 11,435 |  |  |  | 35.21  |  
|Secured by real estate  multifamily                |  |        | 1,075  |      |  |        | 25.81  |      |  |        | 629    |   |  |        | 21.38  |   |  |        | 5,263  |   |  |  | 30.80  |   |  |   | 8,977  |  |  |  | 30.18  |   |  |   | 6,087  |  |  |  | 29.89  |  
|Construction                                        |  |        | 9,412  |      |  |        | 8.47   |      |  |        | 8,929  |   |  |        | 7.16   |   |  |        | 9,274  |   |  |  | 7.76   |   |  |   | 9,275  |  |  |  | 7.09   |   |  |   | 4,654  |  |  |  | 8.00   |  
|Business                                            |  |        | 22,406 |      |  |        | 14.80  |      |  |        | 14,971 |   |  |        | 11.56  |   |  |        | 6,011  |   |  |  | 7.85   |   |  |   | 7,017  |  |  |  | 8.65   |   |  |   | 4,401  |  |  |  | 7.23   |  
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Total commercial                                    |  |        | 63,671 |      |  |        | 88.60  |      |  |        | 55,414 |   |  |        | 88.09  |   |  |        | 47,250 |   |  |  | 91.59  |   |  |   | 43,916 |  |  |  | 88.09  |   |  |   | 26,577 |  |  |  | 80.33  |  
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Consumer:                                           |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Residential mortgage (one-to-four family)           |  |        | 697    |      |  |        | 10.52  |      |  |        | 728    |   |  |        | 10.72  |   |  |        | 292    |   |  |  | 7.25   |   |  |   | 1,555  |  |  |  | 10.23  |   |  |   | 2,187  |  |  |  | 18.96  |  
|Other                                               |  |        | 174    |      |  |        | 0.88   |      |  |        | 330    |   |  |        | 1.19   |   |  |        | 465    |   |  |  | 1.16   |   |  |   | 635    |  |  |  | 1.68   |   |  |   | 183    |  |  |  | 0.71   |  
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Total consumer                                      |  |        | 871    |      |  |        | 11.40  |      |  |        | 1,058  |   |  |        | 11.91  |   |  |        | 757    |   |  |  | 8.41   |   |  |   | 2,190  |  |  |  | 11.91  |   |  |   | 2,370  |  |  |  | 19.67  |  
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Total allocated                                     |  |        | 64,452 |      |  |        | 100.00 | %    |  |        | 56,472 |   |  |        | 100.00 | % |  |        | 48,007 |   |  |  | 100.00 | % |  |   | 46,106 |  |  |  | 100.00 | % |  |   | 28,947 |  |  |  | 100.00 | %
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Non-loan category specific(2)                       |  |        |       |      |  |        |        |      |  |        |       |   |  |        |        |   |  |        | 10,122 |   |  |  |        |   |  |   | 2,759  |  |  |  |        |   |  |   | 5,603  |  |  |  |        |  
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Allowance for loan losses                           |  | $      | 64,542 |      |  |        |        |      |  | $      | 56,472 |   |  |        |        |   |  | $      | 58,129 |   |  |  |        |   |  | $ | 48,865 |  |  |  |        |   |  | $ | 34,550 |  |  |  |        |  
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  
|Allowance for losses  unfunded
    commitments (1) |  | $      | 3,402  |      |  |        |        |      |  | $      | 3,940  |   |  |        |        |   |  | $      | 2,737  |   |  |  |        |   |  | $ |       |  |  |  |        |   |  | $ |       |  |  |  |        |  
|                                                    |  |        |        |      |  |        |        |      |  |        |        |   |  |        |        |   |  |        |        |   |  |  |        |   |  |   |        |  |  |  |        |   |  |   |        |  |  |  |        |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included in allowance for loan losses in 2002 and
    2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(2) | During the course of 2004 and 2005, UCB continued
    its ongoing evaluation of the loss factors used to determine the
    allowance. As part of this evaluation, the portion of the
    allowance previously presented as non loan category
    specific was allocated to specific loan portfolios, to
    align the potential imprecision arising from the accuracy of the
    risk rating process and general economic and business conditions
    affecting our key lending areas with the underlying loan
    portfolio. The presentation for 2004 and 2005 reflects this
    modification.

The allocation of the allowance to each category
is not necessarily indicative of future loss in any particular
category and does not restrict our use of the allowance to
absorb losses in other categories.

The ratio of allowance for loan losses to total
loans held in portfolio was 1.11% at December 31, 2005,
compared with 1.39% at December 31, 2004. The allowance for
loan losses was $64.5 million at December 31, 2005,
compared with $56.5 million at December 31, 2004. The
increase in the allowance for loan losses primarily reflects the
growth in the loan portfolio and the increase in commercial
loans for the year ended December 31, 2005, and the
allowance for loan losses of $2.1 million and $788,000 from
the acquisitions of Pacifica and AABT. For the year ended
December 31, 2005, UCB continued its ongoing process of
reviewing its loan portfolio by evaluating the loss factors and
current economic conditions in light of its own historical loss
experience, loan delinquency and classification in determining
the adequate level of allowance for loan losses. Accordingly,
UCB provided for $6.1 million of loan losses for the year
ended December 31, 2005, compared with $4.2 million
provided for the year ended December 31, 2004. In addition,
UCB experienced lower net loan charge-offs for the year ended
December 31, 2005, when compared with the net loan
charge-offs for the year ended December 31, 2004. The net
charge-offs were $1.6 million and $4.8 million for the
year ended December 31, 2005 and 2004, respectively. The
Federal Reserve has consistently raised interest rates during
2005 and has communicated its intention to continue this into
2006. As interest rates rise, additional pressure may be place
on our borrowers abilities to meet their contractual loan
obligations, which may result in future increases to the
allowance for loan losses and, in turn, higher provisions for
loan losses.

Allowance for Unfunded
Commitments.We also estimate a
reserve related to unfunded commitments. The allowance is
included in other liabilities on the Companys consolidated
balance sheet with any related increases or decreases in the
allowance included in noninterest expense in the Companys
consolidated income statement.

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In assessing the adequacy of this reserve, we use
a process similar to the one used in estimating the allowance
for loan losses. Loss factors have been developed based upon
historical experience with regard to the portions of these
commitments that eventually become funded. During 2005, we
updated the loss factors associated with these commitments based
upon current experience. The factors were lowered as a result of
these evaluations, reflecting continued improvement in the
losses associated with these exposures. This resulted in a
reduction in the allowance of $538,000, net of increase in
commitments.

Commitments to extend credit upon, which the
above allowances were calculated on December 31, 2005 and
2004, were $1.30 billion and $787.9 million,
respectively.

Operational Risk Management

Operational risk is the potential for unexpected
losses attributable to human error, systems failures, fraud, or
inadequate internal controls and procedures. Successful
operational risk management is particularly important to a
diversified financial services company like ours because of the
nature, volume and complexity of our various businesses.

The Enterprise Risk Management Committee provides
oversight to accelerate and facilitate consistency of effective
policies, best practices, controls and monitoring tools for
managing and assessing all types of operational risks across the
Company. Such risks are managed through corporate wide or
business division specific policies and procedures, controls and
monitoring tools. Examples of these include personnel management
practices, data reconciliation processes, transaction processing
monitoring and analysis, systems interruptions and new product
introduction processes. In addition, we have an Operational Risk
Management group in place, whose responsibility is to help
Company management identify and monitor the key controls and
processes that the Company has in place to mitigate operational
risk.

We classify operational risk into two major
categories: business specific and corporate-wide affecting all
business lines. Management of operational risk requires a
different strategy for each category. For business specific
risks, the Operational Risk Management Group works with the
divisions to ensure consistency in policies, processes, and
assessments. With respect to corporate-wide risks, such as
information security, business recovery, legal and compliance,
the Operational Risk Management Group assesses the risks,
develops a consolidated corporate view and communicates that
view to the business groups.

In addition, to help manage company-wide risks,
we have specialized support groups, such as the Legal
Department, Information Security, Business Recovery, Corporate
Finance, Corporate Compliance, and Technology and Operations.
These groups assist the lines of business in the development and
implementation of risk management practices specific to the
needs of the individual businesses.

Interest Rate and Market Risk
Management

Interest rate risk is the potential for loss
resulting from adverse changes in the level of interest rates on
UCBs net interest income. Market risk is the potential for
loss arising from adverse changes in the prices of UCBs
financial instruments as a result of changes in interest rates
or other factors. As a financial institution that engages in
transactions involving an array of financial products, UCB is
constantly exposed to both interest rate risk and market risk.

UCBs Board of Directors is responsible for
approving the overall policies relating to the management of
financial risk of UCB. In addition, UCBs Board of
Directors must understand the key strategies set by management
for managing risk, establish and periodically revise the policy
limits, and review all reported limit exceptions. The UCBs
Board of Directors has appointed a Market Risk Management
Committee (MRMC) that is responsible for working
with UCBs Board of Directors to establish strategies to
manage interest rate risk and to evaluate the effectiveness of
these strategies. MRMC also estimates the effect of changes in
interest rate on our net portfolio value (NPV) and
whether such effects are within the limits set by UCBs
Board of Directors.

Interest Rate Risk.Interest rate risk is one of the most significant risks to which
UCB is regularly exposed and is managed centrally in the
Corporate Treasury function. A sudden and substantial change in

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interest rates could negatively affect our
earnings if the rates of interest UCB earns on its loans and
investments do not change at the same speed, to the same extent,
or on the same basis as the interest rates UCB pays on its
deposits and borrowings.


One of UCBs highest priorities is to
actively monitor and manage its exposure to interest rate risk.
UCB accomplishes this by first evaluating the interest rate risk
that is inherent in the makeup of its assets and liabilities.
UCB then determines an appropriate level of risk that it is
willing to assume considering its business strategy, current
operating environment, capital and liquidity requirements, as
well as our current performance objectives.

Interest rate risk is managed in a number of
ways. UCB actively manages the rates on the various types of
loans and deposits that it offers its customers. These offering
rates are a primary tool for encouraging or discouraging the
production of loans with specific characteristics such as
repricing frequency, amortization term and maturity;
certificates of deposits with longer or shorter terms; and the
mix of deposits. Nevertheless, banking is a competitive industry
and although we endeavor to influence the types of loans and
deposits that we produce, market conditions ultimately govern
the outcome of those efforts.

UCB also manages the composition of its assets by
selling loans with specific repricing characteristics, adjusting
the relative size of its investment securities portfolio, which
predominately fixed-rate, and replenishing the investment
securities portfolio with securities of specific durations and
final maturities. UCB also manages the composition of its
liabilities by choosing borrowings with longer or shorter
expected maturities.

UCB monitors its interest rate sensitivity
through the use of a model, which estimates the change in our
NPV and net interest income in the event of a range of assumed
changes in market interest rates. Net portfolio value is defined
as the current market value of our assets, less the current
market value of our liabilities, plus or minus the current value
of off-balance-sheet items. As market interest rates decline,
the average expected lives of our fixed-rate loans and
investment securities shorten due to quicker prepayments,
causing a relatively moderate increase in their value. The value
of our deposit portfolio exhibits only relatively minor
movements in a declining interest rate environment, since they
are primarily short term in nature. This results in the value of
deposits decreasing more quickly than the value of assets
increasing. As market interest rates rise, the average expected
life of our fixed-rate loans and securities lengthens as
prepayments decrease, causing a decline in value. The value of
our deposits increases slowly in a rising rate environment, due
to the concentration of time deposits in our deposit base, which
have terms of one year or less.

UCB may use certain derivative financial
instruments for hedging purposes, such as interest rate swaps,
caps, and floors as part of our hedging program, to help
mitigate our interest rate risk. Such instruments involve, to
varying degrees, elements of credit and interest rate risk in
excess of the amount that is presented on our balance sheet. See
the Contractual Obligation and Off-Balance-Sheet Arrangements
section for additional information.

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The percentage change in UCBs NPV and net
interest income, assuming an immediate change in interest rates
of plus or minus 100 and 200 basis points, from the levels at
December 31, 2005 and 2004, and sustained through the
projected forward rates are as follows (dollars in thousands):

|                                          |       |                     |   |                     |  |          |   |          |   |          |  |          |    |  |   |         |  |  |   |         |   |  |  |       |   
|----------------------------------------- | ----- | ------------------- | - | ------------------- |  | -------- | - | -------- | - | -------- |  | -------- | -- |  | - | ------- |  |  | - | ------- | - |  |  | ----- | --
|                                          |       |                     |   |                    
|                                          |       | Net Portfolio Value |   | Net Interest Income
|                                          |       |                     |   |                    
|Change in Interest Rates in Basis Points: |       | Amount              |   | $ Change            |  | % Change |   | Amount   |   | $ Change |  | % Change
|                                          |       |                     |   |                     |  |          |   |          |   |          |  |         
|December 31, 2005:                        |       |                     |   |                     |  |          |   |          |   |          |  |          |    |  |   |         |  |  |   |         |   |  |  |      
|                                          | 200   |                     | $ | 738,174             |  |          | $ | (178,904 | ) |          |  | (19.51   | )% |  | $ | 267,431 |  |  | $ | (5,840  | ) |  |  | (2.14 | )%
|                                          | 100   |                     |   | 832,947             |  |          |   | (84,131  | ) |          |  | (9.17    | )  |  |   | 271,580 |  |  |   | (1,691  | ) |  |  | (0.62 | ) 
|                                          | 0     |                     |   | 917,078             |  |          |   |         |   |          |  |         |    |  |   | 273,271 |  |  |   |        |   |  |  |      |   
|                                          | (100) |                     |   | 955,972             |  |          |   | 38,893   |   |          |  | 4.24     |    |  |   | 273,605 |  |  |   | 334     |   |  |  | 0.12  |   
|                                          | (200) |                     |   | 945,275             |  |          |   | 28,197   |   |          |  | 3.07     |    |  |   | 262,226 |  |  |   | (11,045 | ) |  |  | (4.04 | ) 
|December 31, 2004:                        |       |                     |   |                     |  |          |   |          |   |          |  |          |    |  |   |         |  |  |   |         |   |  |  |      
|                                          | 200   |                     | $ | 662,958             |  |          | $ | (97,361  | ) |          |  | (12.81   | )% |  | $ | 218,052 |  |  |   | 18,888  |   |  |  | 9.48  | % 
|                                          | 100   |                     |   | 716,363             |  |          |   | (43,956  | ) |          |  | (5.78    | )  |  |   | 210,045 |  |  |   | 10,881  |   |  |  | 5.46  |   
|                                          | 0     |                     |   | 760,319             |  |          |   |         |   |          |  |         |    |  |   | 199,164 |  |  |   |        |   |  |  |      |   
|                                          | (100) |                     |   | 783,618             |  |          |   | 23,298   |   |          |  | 3.06     |    |  |   | 188,212 |  |  |   | (10,952 | ) |  |  | (5.50 | ) 
|                                          | (200) |                     |   | 744,158             |  |          |   | (16,162  | ) |          |  | (2.13    | )  |  |   | 179,299 |  |  |   | (19,865 | ) |  |  | (9.97 | ) 

All loans and investments presented in the above
table are classified as held to maturity or available for sale.
We had no trading securities at those dates.

Like all models that are dependent upon future
interest rate movements and other variables, the interest rate
risk model that we use has certain shortcomings. We are required
to make certain assumptions, such as estimated prepayment rates,
which may or may not actually reflect how actual yields and
costs will react to market interest rates. For example, the
interest rate risk model assumes that the makeup of our interest
rate-sensitive assets and liabilities will remain constant over
the period being measured. Thus, although using such a model can
be instructive in providing an indication of UCBs exposure
to interest rate risk, we cannot precisely forecast the effects
of a change in market interest rates and the results indicated
by the model are likely to differ from actual results.

Liquidity Risk

Overview.Liquidity
risk is the possibility that UCBs cash flows may not be
adequate to fund its ongoing operations and meet its commitments
in a timely cost-effective manner. Since liquidity risk is
closely tied to both credit risk and market risk, many of the
previously discussed risk control mechanisms also apply to the
monitoring and management of liquidity risk. UCB manages its
liquidity to provide adequate funds to meet its anticipated
financial and contractual obligations, including withdrawals by
depositors, debt service requirements and lease obligations, as
well as to fund customers needs for credit. In addition,
UCBs liquidity may be adversely affected by unexpected
withdrawals of deposits, excessive interest rates paid by our
competitors and other factors. However, UCB continuously reviews
its liquidity positions in light of its actual and expected
growth in loans and deposits to ensure that its liquidity needs
are met.

Maintaining liquidity is the responsibility of
the Market Risk Management Committee, which has established
corporate liquidity guidelines by which liquidity and funding
are managed. These guidelines address maintaining liquidity
needs, diversifying funding positions, monitoring liquidity
needs at both the Company and UCB levels, and anticipating
future funding needs. Liquidity and funding are managed by
UCBs Treasury Department under the direction of the
Treasurer.

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Contractual
Obligations.The Companys
contractual obligations at December 31, 2005, were as
follows (dollars in thousands):

|                                           |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |           |  
|------------------------------------------ | ----------------------------------------- | ---------- | --------- | ------------ | - | ------------- | ------- | --------- |  | ----- | ------ | ------ |  |  | ------- | ------- |  |  | --------- | --------- | -
|                                           |                                           |            |           | After One    |   | After Three   |         | More      |  |      
|                                           |                                           | Within One |           | Year Through |   | Years Through |         | Than Five |  |      
|                                           |                                           | Year       |           | Three Years  |   | Five Years    |         | Years     |  | Total
|                                           |                                           |            |           |              |   |               |         |           |  |      
|Deposits:                                  |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           | Demand and savings accounts(1)            |            | $         | 2,730,779    |   |               | $       |          |  |       | $      |       |  |  | $       |        |  |  | $         | 2,730,779 |  
|                                           | Time deposits                             |            |           | 3,446,384    |   |               |         | 81,742    |  |       |        | 5,263  |  |  |         | 1       |  |  |           | 3,533,390 |  
|                                           |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           |                                           |            | 6,177,163 |              |   |               | 81,742  |           |  |       | 5,263  |        |  |  | 1       |         |  |  | 6,264,169 |          
|Long-term debt:                            |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           | Borrowings                                |            |           | 280,596      |   |               |         | 313,836   |  |       |        | 40,380 |  |  |         | 206,646 |  |  |           | 841,458   |  
|                                           | Subordinated debentures                   |            |           |             |   |               |         |          |  |       |        |       |  |  |         | 146,000 |  |  |           | 146,000   |  
|                                           |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           |                                           |            | 280,596   |              |   |               | 313,836 |           |  |       | 40,380 |        |  |  | 352,646 |         |  |  | 987,458   |          
|Unfunded CRA investment commitments        |                                           |            | 5,365     |              |   |               |        |           |  |       |       |        |  |  |        |         |  |  | 5,365     |          
|Derivatives:                               |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           | Foreign exchange contracts receivable     |            |           | (217,827     | ) |               |         |          |  |       |        |       |  |  |         |        |  |  |           | (217,827  | )
|                                           | Foreign exchange contracts payable        |            |           | 216,892      |   |               |         |          |  |       |        |       |  |  |         |        |  |  |           | 216,892   |  
|                                           | Put option to buy                         |            |           | 11,269       |   |               |         |          |  |       |        |       |  |  |         |        |  |  |           | 11,269    |  
|                                           | Put option to sell                        |            |           | (11,269      | ) |               |         |          |  |       |        |       |  |  |         |        |  |  |           | (11,269   | )
|                                           |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           |                                           |            | (935      | )            |   |               |        |           |  |       |       |        |  |  |        |         |  |  | (935      | )        
|Off-balance-sheet arrangements:            |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|Letters of credit                          |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           | Commercial                                |            |           | 32,910       |   |               |         | 4,031     |  |       |        |       |  |  |         |        |  |  |           | 36,941    |  
|                                           | Standby                                   |            |           | 52,574       |   |               |         | 1,080     |  |       |        |       |  |  |         |        |  |  |           | 53,654    |  
|                                           |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           |                                           |            | 85,484    |              |   |               | 5,111   |           |  |       |       |        |  |  |        |         |  |  | 90,595    |          
|Commitments to extend credit:              |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           | Consumer (including residential mortgage) |            |           | 88,407       |   |               |         |          |  |       |        |       |  |  |         |        |  |  |           | 88,407    |  
|                                           | Commercial (excluding construction)       |            |           | 672,662      |   |               |         |          |  |       |        |       |  |  |         |        |  |  |           | 672,662   |  
|                                           | Construction                              |            |           | 539,955      |   |               |         |          |  |       |        |       |  |  |         |        |  |  |           | 539,955   |  
|                                           |                                           |            |           |              |   |               |         |           |  |       |        |        |  |  |         |         |  |  |           |          
|                                           |                                           |            | 1,301,024 |              |   |               |        |           |  |       |       |        |  |  |        |         |  |  | 1,301,024 |          
|Unfunded CRA investment commitments        |                                           |            | 4,760     |              |   |               |        |           |  |       |       |        |  |  |        |         |  |  | 4,760     |          
|Noncancellable operating lease obligations |                                           |            | 8,744     |              |   |               | 14,806  |           |  |       | 9,572  |        |  |  | 15,607  |         |  |  | 48,729    |          



---



|    |                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------
|(1) | Accounts with indeterminate maturities, such as
    savings and checking, are included in one year or less category.

In addition to the commitments specifically noted
in the previous table, the Company enters into a number of
contractual commitments in the ordinary course of business.
These include systems licensing and maintenance,
telecommunications services, facilities maintenance and
management, equipment servicing, supplies purchasing, and other
goods and services used in the operation of our business.
Generally, these contracts are renewable or cancelable at least
annually, although in some cases to secure favorable pricing
concessions, the Company has committed to contracts that may
extend to several years. The Company has no pension or other
post-employment benefit obligations.

Liquidity
Management.Liquidity is managed
centrally for both UCBH and UCB. UCBHs cash requirements
consist primarily of debt service, operating expenses, income
taxes, and dividends to stockholders. UCBHs cash needs are
routinely met through dividends from UCB, investment income and
debt issuances. UCBs primary source of funding is its core
deposits. Operational cash flows, while constituting a funding
source for the Company, are not large enough to provide funding
in the amounts that fulfill the

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needs of UCBH and UCB. For 2005, operations
used $127.6 million of cash. As a result,
the Company utilizes other sources at its disposal to manage its
liquidity needs.


During 2005, UCBH received $30.0 million in
dividends from UCB. At December 31, 2005,
$244.9 million of dividend capacity was available for UCB
to pay UCBH without obtaining regulatory approval. The dividend
capacity is dependent upon the continued profitability of UCB
and no significant changes in the current regulatory
environment. While we have no current expectation that these two
conditions will change, should a change take place to either in
the future, the source of funding to UCBH may become more
limited or even unavailable. See Note 16 to the
Consolidated Financial Statements for the details related to
dividend capacities and limitations.

As mentioned earlier, UCBs primary source
of funding is its core deposits consisting of demand, savings
and money market deposits and time deposits under $100,000. At
December 31, 2005, these deposits, in aggregate,
constituted 62.8% of total deposits compared with 64.2% at
year-end 2004. For the year 2005, deposit increases resulted in
net cash inflows of $787.5 million. Our liquidity may be
adversely affected by unexpected withdrawals of deposits, which
would require us to seek alternative funding sources, such as
Federal Funds and other borrowings.

UCB maintains borrowing lines with numerous
correspondent banks and brokers and with the Federal Home Loan
Bank of San Francisco (the FHLB) to supplement its
supply of lendable funds and to manage liquidity. Such
borrowings are generally secured with mortgage loans and/or
securities with a market value at least equal to outstanding
balances. In addition to loans and securities, advances from the
FHLB are typically secured by a pledge of UCBs stock in
the FHLB. UCB had $788.0 million and $407.3 million of
FHLB advances outstanding at December 31, 2005 and 2004,
respectively. At December 31, 2005, UCB had
$1.85 billion of additional FHLB borrowings available for
future borrowing capacity.

Included in the $788.0 million of FHLB
advances outstanding as of December 31, 2005, were
$226.0 million of short-term, fixed-rate advances that
mature within one year. The remaining $562.0 million in
long-term advances mature between 2007 and 2015. As of
December 31, 2005, $436.5 million of these advances
may be terminated at the option of the FHLB. The FHLB may
terminate the advances at quarterly intervals at specified
periods ranging from three to five years beyond the original
advance dates. In December, the FHLB terminated one advance
totaling $5.0 million. In the event the FHLB decides to
exercise this option, UCB would need to repay the advances using
other funding sources.

The FHLB is also a source of liquidity for UCB.
The FHLB allows member banks to borrow against their eligible
loans to meet liquidity requirements. For 2005, the activity in
short-term FHLB borrowings resulted in a net cash outflow of
$10.9 million, while activity in long-term borrowings
resulted in net cash inflows of $248.6 million. At
December 31, 2005, amounts of unused lines of credit
available for additional FHLB advances totaled
$1.85 billion. Borrowings from the FHLB may increase in the
future depending on availability of funds from other sources.
However, UCB must maintain its FHLB membership to continue to
access this source of funding.

For the year 2005, UCBH issued $41.2 million
of subordinated debentures. This issuance was primarily to
provide the cash required to consummate the two acquisitions,
which closed in 2005. In addition, the Company has a
$20.0 million unsecured borrowing line with Wells Fargo
Bank. As of December 31, 2005, no advances had been drawn
against this line.

During 2004 and continuing through the first
three quarters of 2005, UCB originated multi-family real estate
loans that were earmarked for sale to the secondary markets. As
such, these loans were classified as held for sale at the point
of loan origination. During the third quarter of 2005, however,
UCB management made a decision to discontinue the practice of
originating these multi-family loans solely with the intent to
sell. This decision was primarily the result of changes in
market conditions for multi-family loans in the secondary
markets. As a result of this decision, at September 30,
2005, approximately $235.9 million of multi-family
commercial real estate loans were transferred from held for sale
to the held in portfolio. The Company had previously recognized
a charge of $773,000 to reflect a decline in market value of the
loans. During 2005, this multi-family loan sale activity
resulted in net cash inflows of approximately
$538.1 million.

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In addition, during the fourth quarter of 2005,
UCB sold commercial real estate loans from its portfolio that
were not originated with the intent to sell. These loan sales
provided an additional $141.7 million in net cash inflows
during 2005. We expect that loan sales will continue to be a
tool that we use for liquidity and credit risk management
purposes. Finally, the previously discussed internal loan
securitization transactions also help to improve the
Companys liquidity, since FNMA securities receive more
favorable treatment as a collateral base for borrowings than do
whole loans. During 2005, the Company did not securitize any
loans since loan sales provided more efficient and effective
execution.

While not considered a primary source of funding,
the Companys investment activities can also provide or use
cash, depending on the investment strategy being used for the
portfolio. During 2005, investment securities activities
resulted in a decrease in investment holdings and a net inflow
of cash in the amount of $85.6 million.

Maturing balances in the various loan portfolios
also provide additional flexibility in managing cash flows. In
most situations, however, loan growth has resulted in cash
outflows from a funding standpoint. For 2005, loan growth
resulted in a net cash outflow of $1.37 billion. With the
loan growth that we have experienced over the past year, we
expect that our lending operations will continue to be a use of
funds rather than a source.

CAPITAL MANAGEMENT

The Board of Directors is responsible for
approving the policies associated with capital management. The
ultimate goal of our capital management program is to maintain
the Company and UCB (on a consolidated basis) at the well
capitalized level as defined by the federal banking
regulators. As of December 31, 2005, both the Company and
UCB exceeded the minimum risk-based capital ratios to be
considered well capitalized.

UCBs also manages its risk-based capital
levels through internal loan securitizations. In such
securitizations, UCB will exchange either multifamily or
residential (one-to-four family) mortgage loans for securities
issued by the Federal National Mortgage Association
(FNMA). Residential (one-to-four family) mortgages
are generally included in the 50% risk weighted category for
risk-based capital purposes. Multifamily loans may receive
either a 50% or 100% risk weighting depending on specific loan
criteria. FNMA securities, however, are classified at a 20% risk
weight.

These internal securitizations do not have a cash
flow impact on UCB, since selected loans from its loan portfolio
are exchanged for FNMA securities. Such securities are supported
by exactly the same loans that were held in UCBs
portfolio. The securities are generally included in the
available for sale investment securities portfolio.

Total stockholders equity at
December 31, 2005, was $603.5 million, an increase of
24.7% over the $484.0 million at December 31, 2004.
The increase reflects the retention of earnings and the
issuances of new shares of stock in connection with the
Companys recent acquisitions. UCBs risk-based
capital ratios for the past five years were as follows:

|                          |  |                         |       |      |  |      |       |      |  |      |       |   |  |  |       |   |  |  |       |  
|------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - |  |  | ----- | -
|                          |  |                        
|                          |  | Year Ended December 31,
|                          |  |                        
|                          |  | 2005                    |       | 2004 |  | 2003 |       | 2002 |  | 2001
|                          |  |                         |       |      |  |      |       |      |  |     
|Tier 1 leverage           |  |                         | 8.26  | %    |  |      | 8.49  | %    |  |      | 7.86  | % |  |  | 7.57  | % |  |  | 7.26  | %
|Tier 1 risk-based capital |  |                         | 9.91  |      |  |      | 11.42 |      |  |      | 10.92 |   |  |  | 10.26 |   |  |  | 9.65  |  
|Total risk-based capital  |  |                         | 10.98 |      |  |      | 12.67 |      |  |      | 12.18 |   |  |  | 11.52 |   |  |  | 10.91 |  

The risk-based capital ratios for the Company are
at levels slightly higher than those of UCB. See Note 16 to
the Consolidated Financial Statements for additional information
on risk-based capital.

UCBH has continuously paid quarterly dividends on
its common stock since 2000. UCBH paid out dividends of $0.10
per share for a total payment of $8.7 million in 2005,
compared to $0.08 per share or $6.8 million in 2004. The
per share dividend amount for 2004 has been adjusted for the
two-for-one stock split that took effect in 2005. The payment of
dividends during 2005 had the effect of reducing the
Companys Tier 1 leverage ratio by 12 basis points and the
total risk-based capital ratio by 15 basis points. During the January 26, 2006, meeting, UCBHs Board
of Directors declared a quarterly dividend of $0.03 per share
payable on April 12, 2006 to the stockholders of record as
of March 31, 2006.

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##### Table of Contents



Item 8. Financial Statements and Supplemental Data
 UCBH HOLDINGS, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    48Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    50Consolidated Statements of Operations for each of the three years ended December 31, 2005
    
    
    51Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income for
each of the three years ended December 31, 2005
    
    
    52Consolidated Statements of Cash Flows for each of the three years ended December 31, 2005
    
    
    53Notes to Consolidated Financial Statements
    
    
    54
 47




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Consolidated financial statements
   Internal control over financial reporting
 Internal
Control  Integrated Framework Internal
Control  Integrated Framework
   48




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49




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
 December 31,2005
    
    
    2004ASSETSCash and due from banks
    
    $
    200,072
    
    
    $
    73,864Federal funds sold
    
    
    2,993
    
    
    
    134,500Investment and mortgage-backed securities available for sale, at fair value
    
    
    1,117,724
    
    
    
    1,169,140Investment and mortgage-backed securities held to maturity, at cost (fair
value of $313,974 and $331,969 at December 31, 2005 and 2004,
respectively)
    
    
    308,608
    
    
    
    325,202Federal Home Loan Bank stock and other equity investments
    
    
    75,445
    
    
    
    56,867Loans held for sale
    
    
    156,740
    
    
    
    326,007Loans held in portfolio
    
    
    5,838,660
    
    
    
    4,050,741Allowance for loan losses
    
    
    (64,542
    )
    
    
    (56,472
    )Net loans held in portfolio
    
    
    5,774,118
    
    
    
    3,994,269Accrued interest receivable
    
    
    37,750
    
    
    
    24,507Premises and equipment, net
    
    
    98,289
    
    
    
    92,643Goodwill
    
    
    106,648
    
    
    
    68,301Core deposit intangibles, net
    
    
    14,981
    
    
    
    9,829Mortgage servicing rights, net
    
    
    10,642
    
    
    
    7,747Other assets
    
    
    57,107
    
    
    
    32,805Total assets
    
    $
    7,961,117
    
    
    $
    6,315,681LIABILITIES AND STOCKHOLDERS EQUITYNoninterest-bearing deposits
    
    $
    558,649
    
    
    $
    428,602Interest-bearing deposits
    
    
    5,705,520
    
    
    
    4,787,260Total deposits
    
    
    6,264,169
    
    
    
    5,215,862Short-term borrowings
    
    
    279,425
    
    
    
    72,310Subordinated debentures
    
    
    146,000
    
    
    
    136,000Accrued interest payable
    
    
    12,582
    
    
    
    6,110Long-term borrowings
    
    
    562,033
    
    
    
    334,952Other liabilities
    
    
    93,394
    
    
    
    66,435Total liabilities
    
    
    7,357,603
    
    
    
    5,831,669Commitments and contingencies (Notes 22 and 23)Preferred stock, $0.01 par value, 10,000,000 shares authorized, none
issued and outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 180,000,000 shares authorized at December
31, 2005 and 2004; 94,037,878 and 91,131,824 shares issued and outstanding
at December 31, 2005 and 2004, respectively
    
    
    940
    
    
    
    456Additional paid-in capital
    
    
    247,340
    
    
    
    203,432Retained earnings
    
    
    375,220
    
    
    
    286,622Accumulated other comprehensive loss
    
    
    (19,986
    )
    
    
    (6,498
    )Total stockholders equity
    
    
    603,514
    
    
    
    484,012Total liabilities and stockholders equity
    
    $
    7,961,117
    
    
    $
    6,315,681
  50




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
 Year Ended December 31,2005
    
    
    2004
    
    
    2003Interest and dividend income:Loans
    
    $
    333,159
    
    
    $
    226,292
    
    
    $
    191,754Funds sold and due from banks
    
    
    2,121
    
    
    
    649
    
    
    
    106Investment and mortgage-backed securities:Taxable
    
    
    56,503
    
    
    
    63,646
    
    
    
    60,870Non-taxable
    
    
    10,617
    
    
    
    9,477
    
    
    
    7,532Total interest and dividend income
    
    
    402,400
    
    
    
    300,064
    
    
    
    260,262Interest expense:Deposits
    
    
    123,317
    
    
    
    67,267
    
    
    
    68,724Short-term borrowings
    
    
    10,605
    
    
    
    2,165
    
    
    
    1,084Subordinated debentures
    
    
    9,353
    
    
    
    8,185
    
    
    
    7,922Long-term borrowings
    
    
    18,635
    
    
    
    14,966
    
    
    
    13,984Total interest expense
    
    
    161,910
    
    
    
    92,583
    
    
    
    91,714Net interest income
    
    
    240,490
    
    
    
    207,481
    
    
    
    168,548Provision for loan losses
    
    
    6,091
    
    
    
    4,201
    
    
    
    9,967Net interest income after provision for loan losses
    
    
    234,399
    
    
    
    203,280
    
    
    
    158,581Noninterest income:Commercial banking fees
    
    
    10,607
    
    
    
    8,254
    
    
    
    6,650Service charges on deposits
    
    
    3,038
    
    
    
    2,654
    
    
    
    2,249Gain (loss) on sale of securities, net
    
    
    (5
    )
    
    
    12,713
    
    
    
    11,013Gain on sale of SBA loans, net
    
    
    3,356
    
    
    
    1,463
    
    
    
    3,030Gain on sale of multifamily and commercial real estate loans, net
    
    
    12,207
    
    
    
    7,732
    
    
    
    Unrealized loss on loans held for sale
    
    
    (1,152
    )
    
    
    
    
    
    
    Equity loss in other equity investments
    
    
    (2,296
    )
    
    
    (2,210
    )
    
    
    (152
    )Other fees
    
    
    929
    
    
    
    271
    
    
    
    413Total noninterest income
    
    
    26,684
    
    
    
    30,877
    
    
    
    23,203Noninterest expense:Personnel
    
    
    60,152
    
    
    
    50,931
    
    
    
    42,310Occupancy
    
    
    12,238
    
    
    
    10,164
    
    
    
    5,869Data processing
    
    
    6,847
    
    
    
    5,896
    
    
    
    4,826Furniture and equipment
    
    
    6,534
    
    
    
    6,458
    
    
    
    4,456Professional fees and contracted services
    
    
    10,763
    
    
    
    7,496
    
    
    
    5,802Deposit insurance
    
    
    742
    
    
    
    774
    
    
    
    695Communication
    
    
    955
    
    
    
    1,287
    
    
    
    1,066Core deposit intangible amortization
    
    
    1,345
    
    
    
    1,282
    
    
    
    1,762Loss on extinguishment of subordinated debentures and secured
borrowings
    
    
    1,246
    
    
    
    
    
    
    
    Other general and administrative
    
    
    16,091
    
    
    
    14,865
    
    
    
    13,422Total noninterest expense
    
    
    116,913
    
    
    
    99,153
    
    
    
    80,208Income before income tax expense
    
    
    144,170
    
    
    
    135,004
    
    
    
    101,576Income tax expense
    
    
    46,344
    
    
    
    49,401
    
    
    
    36,938Net income
    
    $
    97,826
    
    
    $
    85,603
    
    
    $
    64,638Earnings per share:Basic
    
    $
    1.06
    
    
    $
    0.95
    
    
    $
    0.74Diluted
    
    $
    1.02
    
    
    $
    0.90
    
    
    $
    0.71
  51




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income
 Additional
    
    
    
    
    
    
    Accumulated Other
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Stockholders'
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)(1)
    
    
    Equity
    
    
    IncomeBalance at
December 31, 2002
    
    
    84,037,456
    
    
    $
    210
    
    
    $
    124,440
    
    
    $
    148,664
    
    
    $
    9,053
    
    
    $
    282,367Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,638
    
    
    
    
    
    
    
    64,638
    
    
    $
    64,638Other comprehensive
loss, net of tax
benefit of $8,905
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,298
    )
    
    
    (12,298
    )
    
    
    (12,298
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,340Stock options
exercised, including
related tax benefit
    
    
    1,458,286
    
    
    
    7
    
    
    
    14,785
    
    
    
    
    
    
    
    
    
    
    
    14,792Cash dividend of
$0.06 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,031
    )
    
    
    
    
    
    
    (5,031
    )Shares issued in
connection with
acquisition of First
Continental Bank
    
    
    4,581,014
    
    
    
    23
    
    
    
    69,975
    
    
    
    
    
    
    
    
    
    
    
    69,998Stock split
    
    
    
    
    
    
    210
    
    
    
    (210
    )
    
    
    
    
    
    
    
    
    
    
    Balance at December
31, 2003
    
    
    90,076,756
    
    
    
    450
    
    
    
    208,990
    
    
    
    208,271
    
    
    
    (3,245
    )
    
    
    414,466Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,603
    
    
    
    
    
    
    
    85,603
    
    
    $
    85,603Other comprehensive
loss, net of tax
benefit of $2,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,253
    )
    
    
    (3,253
    )
    
    
    (3,253
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    82,350Stock options
exercised, including
related tax benefit
    
    
    1,055,068
    
    
    
    6
    
    
    
    11,233
    
    
    
    
    
    
    
    
    
    
    
    11,239Cash dividend of
$0.08 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,252
    )
    
    
    
    
    
    
    (7,252
    )Adjustment to
purchase
consideration in
connection with
acquisition of First
Continental Bank
(Note 10)
    
    
    
    
    
    
    
    
    
    
    (16,791
    )
    
    
    
    
    
    
    
    
    
    
    (16,791
    )Balance at December
31, 2004
    
    
    91,131,824
    
    
    $
    456
    
    
    $
    203,432
    
    
    $
    286,622
    
    
    $
    (6,498
    )
    
    $
    484,012Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,826
    
    
    
    
    
    
    
    97,826
    
    
    $
    97,826Other comprehensive
income, net of tax
benefit of $9,899
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,488
    )
    
    
    (13,488
    )
    
    
    (13,488
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    84,338Stock options
exercised, including
related tax benefit
    
    
    786,614
    
    
    
    6
    
    
    
    7,670
    
    
    
    
    
    
    
    
    
    
    
    7,676Cash dividend of
$0.10 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,228
    )
    
    
    
    
    
    
    (9,228
    )Shares issued in
connection with
acquisition of:Pacifica Bancorp, Inc.
    
    
    1,241,194
    
    
    
    12
    
    
    
    21,080
    
    
    
    
    
    
    
    
    
    
    
    21,092Asian American Bank &
Trust Company
    
    
    878,246
    
    
    
    9
    
    
    
    15,615
    
    
    
    
    
    
    
    
    
    
    
    15,624Stock split
    
    
    
    
    
    
    457
    
    
    
    (457
    )
    
    
    
    
    
    
    
    
    
    
    Balance at December
31, 2005
    
    
    94,037,878
    
    
    $
    940
    
    
    $
    247,340
    
    
    $
    375,220
    
    
    $
    (19,986
    )
    
    $
    603,514
 
 (1)
    
    Accumulated Other Comprehensive Income (Loss) arises solely from net unrealized
gains (losses) on investment and mortgage-backed securities available for sale, presented net
of tax.  52




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
 Year Ended December 31,2005(Restated)
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    97,826
    
    
    $
    85,603
    
    
    $
    64,638Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    6,091
    
    
    
    4,201
    
    
    
    9,967Amortization of net deferred loan fees
    
    
    (6,262
    )
    
    
    (5,285
    )
    
    
    (4,169
    )Amortization of net securities premiums and discounts
    
    
    103
    
    
    
    1,688
    
    
    
    9,259Federal Home Loan Bank stock dividend
    
    
    (1,351
    )
    
    
    (1,009
    )
    
    
    (1,161
    )First Continental Bank acquisition purchase price adjustment
    
    
    
    
    
    
    2,345
    
    
    
    Bank of Canton of California acquisition purchase price adjustment
    
    
    
    
    
    
    
    
    
    
    2,863Amortization of intangibles
    
    
    3,642
    
    
    
    2,670
    
    
    
    2,191Depreciation and amortization of premises and equipment
    
    
    8,543
    
    
    
    6,851
    
    
    
    5,753Gain on sale of loans originated in held in portfolio, securities, and other assets, net
    
    
    (9,987
    )
    
    
    (21,519
    )
    
    
    (14,002
    )Unrealized loss on loans held for sale
    
    
    1,152
    
    
    
    
    
    
    
    Equity loss in other equity investments
    
    
    2,296
    
    
    
    2,210
    
    
    
    152Loss on extinguishment of subordinated debentures and secured borrowings
    
    
    1,246
    
    
    
    
    
    
    
    Other, net
    
    
    (2,037
    )
    
    
    (203
    )
    
    
    (181
    )Changes in operating assets and liabilities:Increase in loans originated in held for sale
    
    
    (240,721
    )
    
    
    
    
    
    
    Decrease (increase) in accrued interest receivable
    
    
    (11,971
    )
    
    
    (2,751
    )
    
    
    1,939Decrease (increase) in other assets
    
    
    (11,146
    )
    
    
    (11,618
    )
    
    
    3,212Increase (decrease) in accrued interest payable
    
    
    5,065
    
    
    
    (2,236
    )
    
    
    (3,509
    )Increase (decrease) in other liabilities
    
    
    29,901
    
    
    
    20,023
    
    
    
    (10,174
    )Net cash provided by (used in) operating activities
    
    
    (127,610
    )
    
    
    80,970
    
    
    
    66,778Cash flows from investing activities:Payment for purchase of Pacifica Bancorp, Inc., net of cash acquired
    
    
    (2,312
    )
    
    
    
    
    
    
    Payment for purchase of Asian American Bank & Trust Company, net of cash acquired
    
    
    (4,993
    )
    
    
    
    
    
    
    Cash acquired from purchase of First Continental Bank, net of cash paid
    
    
    
    
    
    
    
    
    
    
    45,594Investment and mortgage-backed securities, available for sale:Principal payments and maturities
    
    
    418,294
    
    
    
    756,762
    
    
    
    599,316Purchases
    
    
    (486,062
    )
    
    
    (1,442,128
    )
    
    
    (1,079,454
    )Sales
    
    
    114,991
    
    
    
    821,821
    
    
    
    953,143Called
    
    
    22,000
    
    
    
    68,136
    
    
    
    98,932Investment and mortgage-backed securities, held to maturity:Principal payments and maturities
    
    
    26,296
    
    
    
    28,278
    
    
    
    11,807Purchases
    
    
    (9,892
    )
    
    
    (69,074
    )
    
    
    (184,691
    )Proceeds from redemption of Federal Home Loan Bank stock
    
    
    9,725
    
    
    
    
    
    
    
    10,206Purchase of Federal Home Loan Bank stock
    
    
    (20,623
    )
    
    
    
    
    
    
    (2,793
    )Funding of other equity investments
    
    
    (12,529
    )
    
    
    (6,388
    )
    
    
    (6,235
    )Proceeds from the sale of loans originated in held in portfolio
    
    
    447,968
    
    
    
    479,660
    
    
    
    136,222Loans originated in held in portfolio funded and purchased, net of principal collections
    
    
    (1,566,134
    )
    
    
    (1,202,029
    )
    
    
    (935,211
    )Purchases of premises and other equipment
    
    
    (6,915
    )
    
    
    (12,444
    )
    
    
    (9,459
    )Capitalization of loan servicing rights
    
    
    (5,192
    )
    
    
    (5,209
    )
    
    
    (1,963
    )Other investing activities, net
    
    
    201
    
    
    
    (74
    )
    
    
    1,380Net cash used in investing activities
    
    
    (1,075,177
    )
    
    
    (582,689
    )
    
    
    (363,206
    )Cash flows from financing activities:Net increase in demand deposits, NOW, money market and savings accounts
    
    
    155,806
    
    
    
    517,744
    
    
    
    318,135Net increase (decrease) in time deposits
    
    
    631,701
    
    
    
    214,597
    
    
    
    (157,211
    )Net increase (decrease) in short-term borrowings
    
    
    156,214
    
    
    
    (167,824
    )
    
    
    152,634Proceeds from long-term borrowings
    
    
    266,520
    
    
    
    70,000
    
    
    
    Principal payments of long-term borrowings
    
    
    (17,916
    )
    
    
    
    
    
    
    Proceeds from issuance of subordinated debentures
    
    
    40,000
    
    
    
    
    
    
    
    Redemption of subordinated debentures
    
    
    (30,000
    )
    
    
    
    
    
    
    Proceeds from stock option exercises
    
    
    3,863
    
    
    
    5,560
    
    
    
    5,433Payment of cash dividend on common stock
    
    
    (8,700
    )
    
    
    (6,780
    )
    
    
    (4,731
    )Net cash provided by financing activities
    
    
    1,197,488
    
    
    
    633,297
    
    
    
    314,260Net increase (decrease) in cash and cash equivalents
    
    
    (5,299
    )
    
    
    131,578
    
    
    
    17,832Cash and cash equivalents at beginning of year
    
    
    208,364
    
    
    
    76,786
    
    
    
    58,954Cash and cash equivalents at end of year
    
    $
    203,065
    
    
    $
    208,364
    
    
    $
    76,786
  53




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 1.
    
    Basis of Presentation and Summary of Significant Accounting and Reporting Policies
 Organization
  Principles of Consolidation
 Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51
 Reclassifications
   Use of Estimates in Preparation of Financial Statements
  54




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Cash and Cash Equivalents
  Federal Funds Sold and Securities Purchased Under Agreements to Resell
   Investment and Mortgage-Backed Securities
     Loans Held for Sale
  Loans Held in Portfolio
  55




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Nonaccrual Loans
   Impaired and Restructured Loans
    Allowance for Loan Losses
     56




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
       Premises and Equipment
  Other Real Estate Owned (OREO)
  57




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Other Equity Investments
 .
 Accounting for Acquisitions of Certain Financial Institutions
  Goodwill and Core Deposit Intangibles
  Securities Sold Under Agreements to Repurchase
  Derivative Instruments and Hedging Activities
    58




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Accounting for Loan Sales
   Accounting for Income Taxes
 Accounting for Income Taxes
 Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Job Creations Act of 2004
 Accounting for Stock-Based Compensation
 Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for
Stock-Based Compensation-Transition and Disclosure
 59




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  2005
    
    
    2004
    
    
    2003Net income:As reported
    
    $
    97,826
    
    
    $
    85,603
    
    
    $
    64,638Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
of all awards, net of
related tax effects
    
    
    (25,917
    )
    
    
    (6,367
    )
    
    
    (4,452
    )Pro forma net income
    
    $
    71,909
    
    
    $
    79,236
    
    
    $
    60,186Basic earnings per share:As reported
    
    $
    1.06
    
    
    $
    0.95
    
    
    $
    0.74Pro forma
    
    $
    0.78
    
    
    $
    0.88
    
    
    $
    0.69Diluted earnings per share:As reported
    
    $
    1.02
    
    
    $
    0.90
    
    
    $
    0.71Pro forma
    
    $
    0.75
    
    
    $
    0.83
    
    
    $
    0.66
    2005
    
    
    2004
    
    
    2003Dividend yield
    
    
    0.60
    %
    
    
    0.44
    %
    
    
    0.60
    %Volatility
    
    
    29.03
    %
    
    
    21.99
    %
    
    
    21.18
    %Risk-free interest rate
    
    
    4.22
    %
    
    
    4.24
    %
    
    
    3.45
    %Expected lives (years).
    
    
    7.50
    
    
    
    7.56
    
    
    
    7.36
 60




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Earnings per Share
  Transfers of Financial Assets and Mortgage Servicing Rights
 Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities
      Translation of Foreign Currencies
  61




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Restatement of the Consolidated Statements of Cash Flows
  Statement of Cash
FlowsExemption of Certain Enterprises and Classification of Cash Flows from Certain Securities
Acquired for Resale.
 62




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  As PreviouslyReported
    
    
    RestatedCash flows from operating activities:Net income
    
    $
    97,826
    
    
    $
    97,826Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    6,091
    
    
    
    6,091Amortization of net deferred loan fees
    
    
    (6,262
    )
    
    
    (6,262
    )Amortization of net securities premiums and discounts
    
    
    103
    
    
    
    103Federal Home Loan Bank stock dividend
    
    
    (1,351
    )
    
    
    (1,351
    )First Continental Bank acquisition purchase price adjustment
    
    
    
    
    
    
    Bank of Canton of California acquisition purchase price adjustment
    
    
    
    
    
    
    Amortization of intangibles
    
    
    3,642
    
    
    
    3,642Depreciation and amortization of premises and equipment
    
    
    8,543
    
    
    
    8,543Gain on sale of loans originated in held in portfolio, securities, and other assets, net
    
    
    (5,640
    )
    
    
    (9,987
    )Unrealized loss on loans held for sale
    
    
    1,152
    
    
    
    1,152Equity loss in other equity investments
    
    
    2,296
    
    
    
    2,296Loss on extinguishment of subordinated debentures and secured borrowings
    
    
    1,246
    
    
    
    1,246Other, net
    
    
    (2,037
    )
    
    
    (2,037
    )Changes in operating assets and liabilities:Decrease (increase) in loans originated in held for sale
    
    
    44,173
    
    
    
    (240,721
    )Decrease (increase) in accrued interest receivable
    
    
    (11,971
    )
    
    
    (11,971
    )Decrease (increase) in other assets
    
    
    (11,146
    )
    
    
    (11,146
    )Increase (decrease) in accrued interest payable
    
    
    5,065
    
    
    
    5,065Increase (decrease) in other liabilities
    
    
    29,901
    
    
    
    29,901Net cash provided by (used in) operating activities
    
    
    161,631
    
    
    
    (127,610
    )Cash flows from investing activities:Payment for purchase of Pacifica Bancorp, Inc., net of cash acquired
    
    
    (2,312
    )
    
    
    (2,312
    )Payment for purchase of Asian American Bank & Trust Company, net of cash acquired
    
    
    (4,993
    )
    
    
    (4,993
    )Cash acquired from purchase of First Continental Bank, net of cash paid
    
    
    
    
    
    
    Investment and mortgage-backed securities, available for sale:Principal payments and maturities
    
    
    418,294
    
    
    
    418,294Purchases
    
    
    (486,062
    )
    
    
    (486,062
    )Sales
    
    
    114,991
    
    
    
    114,991Called
    
    
    22,000
    
    
    
    22,000Investment and mortgage-backed securities, held to maturity:Principal payments and maturities
    
    
    26,296
    
    
    
    26,296Purchases
    
    
    (9,892
    )
    
    
    (9,892
    )Proceeds from redemption of Federal Home Loan Bank stock
    
    
    9,725
    
    
    
    9,725Purchase of Federal Home Loan Bank stock
    
    
    (20,623
    )
    
    
    (20,623
    )Funding of other equity investments
    
    
    (12,529
    )
    
    
    (12,529
    )Proceeds from the sale of loans originated in held in portfolio
    
    
    206,615
    
    
    
    447,968Loans originated in held in portfolio funded and purchased, net of principal collections
    
    
    (1,614,022
    )
    
    
    (1,566,134
    )Purchases of premises and other equipment
    
    
    (6,915
    )
    
    
    (6,915
    )Capitalization of loan servicing rights
    
    
    (5,192
    )
    
    
    (5,192
    )Other investing activities, net
    
    
    201
    
    
    
    201Net cash used in investing activities
    
    
    (1,364,418
    )
    
    
    (1,075,177
    )Cash flows from financing activities:Net increase in demand deposits, NOW, money market and savings accounts
    
    
    155,806
    
    
    
    155,806Net increase (decrease) in time deposits
    
    
    631,701
    
    
    
    631,701Net increase (decrease) in short-term borrowings
    
    
    156,214
    
    
    
    156,214Proceeds from long-term borrowings
    
    
    266,520
    
    
    
    266,520Principal payments of long-term borrowings
    
    
    (17,916
    )
    
    
    (17,916
    )Proceeds from issuance of subordinated debentures
    
    
    40,000
    
    
    
    40,000Redemption of subordinated debentures
    
    
    (30,000
    )
    
    
    (30,000
    )Proceeds from stock option exercises
    
    
    3,863
    
    
    
    3,863Payment of cash dividend on common stock
    
    
    (8,700
    )
    
    
    (8,700
    )Net cash provided by financing activities
    
    
    1,197,488
    
    
    
    1,197,488Net increase (decrease) in cash and cash equivalents
    
    
    (5,299
    )
    
    
    (5,299
    )Cash and cash equivalents at beginning of year
    
    
    208,364
    
    
    
    208,364Cash and cash equivalents at end of year
    
    $
    203,065
    
    
    $
    203,065
 63




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 2.
    
    Recent Accounting Pronouncements
 Accounting for Certain Hybrid Financial Instruments
 Accounting for Certain Hybrid Financial
Instruments, an amendment of FASB Statements No. 133 and 140
 The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments
 The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments Accounting for Certain Investments in Debt and Equity Securities The Equity Method of Accounting for Investments in Common Stock
 Determining Whether to Aggregate Operating Segments
 Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds Disclosures about Segments of an Enterprise and
Related Information
 Determining the Amortization Period for Leasehold Improvements Purchased After Lease Inception or
Acquired in a Business Combination
 Determining the Amortization Period
for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination
 64




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Accounting Changes and Error Correction
 Accounting Changes and Error Corrections  a
replacement of APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes
in Interim Financial Statements
 Accounting for Stock-Based Compensation
 Share-Based Payment
   Accounting for Certain Loans or Debt Securities Acquired in a Transfer
   65




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 3.
    
    Business Combinations
 Pacifica Bancorp, Inc.
   Cash and due from banks
    
    $
    17,949Investment and mortgage-backed securities available for sale
    
    
    13,522Investment and mortgage-backed securities held to maturity
    
    
    256FHLB stock
    
    
    635Loans held in portfolio, net
    
    
    136,968Accrued interest receivable
    
    
    691Premises and equipment
    
    
    1,093Goodwill
    
    
    23,277Core deposit intangibles
    
    
    3,800Other assets
    
    
    3,854Total assets acquired
    
    
    202,045Deposits
    
    
    148,733Accrued interest payable
    
    
    836Short-term borrowings
    
    
    163Long-term borrowings
    
    
    8,698Other liabilities
    
    
    2,006Total liabilities assumed
    
    
    160,436Total allocation of purchase price
    
    $
    41,609
 Asian American Bank & Trust Company
   66




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Cash and due from banks
    
    $
    13,982Investment and mortgage-backed securities available for sale
    
    
    27,590FHLB stock
    
    
    346Loans held in portfolio, net
    
    
    86,010Accrued interest receivable
    
    
    581Premises and equipment
    
    
    6,307Goodwill
    
    
    15,070Core deposit intangibles
    
    
    2,900Other assets
    
    
    766Total assets acquired
    
    
    153,552Deposits
    
    
    112,067Accrued interest payable
    
    
    571Long-term borrowings
    
    
    2,441Other liabilities
    
    
    3,874Total liabilities assumed
    
    
    118,953Total allocation of purchase price
    
    $
    34,599
 Great Eastern Bank
   4.
    
    Cash and Due from Banks
  2005
    
    
    2004Interest-bearing
    
    $
    99,070
    
    
    $
    16,556Noninterest-bearing
    
    
    101,002
    
    
    
    57,308Cash and due from banks
    
    $
    200,072
    
    
    $
    73,864
  67




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 5.
    
    Investment and Mortgage-Backed Securities
  Gross
    
    
    Gross
    
    
    
    
    
    
    Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Market
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesInvestment securities
available for sale:Trust preferred securities
    
    $
    33,443
    
    
    $
    
    
    
    $
    (497
    )
    
    $
    32,946
    
    
    $
    18,671
    
    
    $
    (272
    )
    
    $
    4,275
    
    
    $
    (225
    )
    
    $
    22,946
    
    
    $
    (497
    )Federal agency notes
    
    
    159,655
    
    
    
    2
    
    
    
    (4,472
    )
    
    
    155,185
    
    
    
    55,428
    
    
    
    (381
    )
    
    
    96,850
    
    
    
    (4,091
    )
    
    
    152,278
    
    
    
    (4,472
    )Other
    
    
    11,012
    
    
    
    
    
    
    
    (101
    )
    
    
    10,911
    
    
    
    10,911
    
    
    
    (101
    )
    
    
    
    
    
    
    
    
    
    
    10,911
    
    
    
    (101
    )Total investment securities
available for sale
    
    
    204,110
    
    
    
    2
    
    
    
    (5,070
    )
    
    
    199,042
    
    
    
    85,010
    
    
    
    (754
    )
    
    
    101,125
    
    
    
    (4,316
    )
    
    
    186,135
    
    
    
    (5,070
    )Mortgage-backed securities
available for sale:FNMA
    
    
    355,135
    
    
    
    2
    
    
    
    (10,947
    )
    
    
    344,190
    
    
    
    162,309
    
    
    
    (3,373
    )
    
    
    180,746
    
    
    
    (7,574
    )
    
    
    343,055
    
    
    
    (10,947
    )GNMA
    
    
    88,184
    
    
    
    
    
    
    
    (3,151
    )
    
    
    85,033
    
    
    
    17,553
    
    
    
    (487
    )
    
    
    67,480
    
    
    
    (2,664
    )
    
    
    85,033
    
    
    
    (3,151
    )FHLMC
    
    
    302,540
    
    
    
    5
    
    
    
    (10,229
    )
    
    
    292,316
    
    
    
    157,234
    
    
    
    (4,007
    )
    
    
    133,184
    
    
    
    (6,222
    )
    
    
    290,418
    
    
    
    (10,229
    )Other
    
    
    202,264
    
    
    
    
    
    
    
    (5,121
    )
    
    
    197,143
    
    
    
    76,747
    
    
    
    (1,253
    )
    
    
    120,396
    
    
    
    (3,868
    )
    
    
    197,143
    
    
    
    (5,121
    )Total mortgage-backed
securities available for
sale
    
    
    948,123
    
    
    
    7
    
    
    
    (29,448
    )
    
    
    918,682
    
    
    
    413,843
    
    
    
    (9,120
    )
    
    
    501,806
    
    
    
    (20,328
    )
    
    
    915,649
    
    
    
    (29,448
    )Total investment and
mortgage-backed securities
available for sale
    
    
    1,152,233
    
    
    
    9
    
    
    
    (34,518
    )
    
    
    1,117,724
    
    
    
    498,853
    
    
    
    (9,874
    )
    
    
    602,931
    
    
    
    (24,644
    )
    
    
    1,101,784
    
    
    
    (34,518
    )Investment securities held
to maturity:Municipal securities
    
    
    225,573
    
    
    
    6,943
    
    
    
    (237
    )
    
    
    232,279
    
    
    
    18,379
    
    
    
    (144
    )
    
    
    3,342
    
    
    
    (93
    )
    
    
    21,721
    
    
    
    (237
    )Mortgage-backed securities
held to maturity:FNMA
    
    
    5,112
    
    
    
    
    
    
    
    (189
    )
    
    
    4,923
    
    
    
    
    
    
    
    
    
    
    
    4,923
    
    
    
    (189
    )
    
    
    4,923
    
    
    
    (189
    )GNMA
    
    
    77,261
    
    
    
    
    
    
    
    (1,128
    )
    
    
    76,133
    
    
    
    66,867
    
    
    
    (729
    )
    
    
    9,266
    
    
    
    (399
    )
    
    
    76,133
    
    
    
    (1,128
    )FHLMC
    
    
    662
    
    
    
    
    
    
    
    (23
    )
    
    
    639
    
    
    
    
    
    
    
    
    
    
    
    639
    
    
    
    (23
    )
    
    
    639
    
    
    
    (23
    )Total mortgage-backed
securities held to maturity
    
    
    83,035
    
    
    
    
    
    
    
    (1,340
    )
    
    
    81,695
    
    
    
    66,867
    
    
    
    (729
    )
    
    
    14,828
    
    
    
    (611
    )
    
    
    81,695
    
    
    
    (1,340
    )Total investment and
mortgage-backed securities
held to maturity
    
    
    308,608
    
    
    
    6,943
    
    
    
    (1,577
    )
    
    
    313,974
    
    
    
    85,246
    
    
    
    (873
    )
    
    
    18,170
    
    
    
    (704
    )
    
    
    103,416
    
    
    
    (1,577
    )Total securities
    
    $
    1,460,841
    
    
    $
    6,952
    
    
    $
    (36,095
    )
    
    $
    1,431,698
    
    
    $
    584,099
    
    
    $
    (10,747
    )
    
    $
    621,101
    
    
    $
    (25,348
    )
    
    $
    1,205,200
    
    
    $
    (36,095
    )
   68




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Gross
    
    
    Gross
    
    
    
    
    
    
    Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Market
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesInvestment securities
available for sale:Trust preferred securities
    
    $
    18,441
    
    
    $
    28
    
    
    $
    (250
    )
    
    $
    18,219
    
    
    $
    3,960
    
    
    $
    (40
    )
    
    $
    9,290
    
    
    $
    (210
    )
    
    $
    13,250
    
    
    $
    (250
    )Federal agency notes
    
    
    232,594
    
    
    
    87
    
    
    
    (2,635
    )
    
    
    230,046
    
    
    
    152,451
    
    
    
    (478
    )
    
    
    64,818
    
    
    
    (2,157
    )
    
    
    217,269
    
    
    
    (2,635
    )Total investment securities
available for sale
    
    
    251,035
    
    
    
    115
    
    
    
    (2,885
    )
    
    
    248,265
    
    
    
    156,411
    
    
    
    (518
    )
    
    
    74,108
    
    
    
    (2,367
    )
    
    
    230,519
    
    
    
    (2,885
    )Mortgage-backed securities
available for sale:FNMA
    
    
    366,307
    
    
    
    866
    
    
    
    (4,076
    )
    
    
    363,097
    
    
    
    210,437
    
    
    
    (1,957
    )
    
    
    65,572
    
    
    
    (2,119
    )
    
    
    276,009
    
    
    
    (4,076
    )GNMA
    
    
    106,501
    
    
    
    79
    
    
    
    (1,508
    )
    
    
    105,072
    
    
    
    65,670
    
    
    
    (1,173
    )
    
    
    12,971
    
    
    
    (335
    )
    
    
    78,641
    
    
    
    (1,508
    )FHLMC
    
    
    288,789
    
    
    
    495
    
    
    
    (3,319
    )
    
    
    285,965
    
    
    
    108,720
    
    
    
    (1,131
    )
    
    
    68,595
    
    
    
    (2,188
    )
    
    
    177,315
    
    
    
    (3,319
    )Other
    
    
    167,719
    
    
    
    81
    
    
    
    (1,059
    )
    
    
    166,741
    
    
    
    145,856
    
    
    
    (1,059
    )
    
    
    
    
    
    
    
    
    
    
    145,856
    
    
    
    (1,059
    )Total mortgage-backed
securities available for
sale
    
    
    929,316
    
    
    
    1,521
    
    
    
    (9,962
    )
    
    
    920,875
    
    
    
    530,683
    
    
    
    (5,320
    )
    
    
    147,138
    
    
    
    (4,642
    )
    
    
    677,821
    
    
    
    (9,962
    )Total investment and
mortgage-backed securities
available for sale
    
    
    1,180,351
    
    
    
    1,636
    
    
    
    (12,847
    )
    
    
    1,169,140
    
    
    
    687,094
    
    
    
    (5,838
    )
    
    
    221,246
    
    
    
    (7,009
    )
    
    
    908,340
    
    
    
    (12,847
    )Investment securities held
to maturity:Municipal securities
    
    
    215,594
    
    
    
    7,415
    
    
    
    (712
    )
    
    
    222,297
    
    
    
    10,457
    
    
    
    (75
    )
    
    
    19,765
    
    
    
    (637
    )
    
    
    30,222
    
    
    
    (712
    )Mortgage-backed securities
held to maturity:FNMA
    
    
    5,765
    
    
    
    
    
    
    
    (76
    )
    
    
    5,689
    
    
    
    5,689
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    5,689
    
    
    
    (76
    )GNMA
    
    
    102,439
    
    
    
    489
    
    
    
    (333
    )
    
    
    102,595
    
    
    
    8,396
    
    
    
    (18
    )
    
    
    12,075
    
    
    
    (315
    )
    
    
    20,471
    
    
    
    (333
    )FHLMC
    
    
    1,404
    
    
    
    
    
    
    
    (16
    )
    
    
    1,388
    
    
    
    1,388
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    1,388
    
    
    
    (16
    )Total mortgage-backed
securities held to maturity
    
    
    109,608
    
    
    
    489
    
    
    
    (425
    )
    
    
    109,672
    
    
    
    15,473
    
    
    
    (110
    )
    
    
    12,075
    
    
    
    (315
    )
    
    
    27,548
    
    
    
    (425
    )Total investment and
mortgage-backed securities
held to maturity
    
    
    325,202
    
    
    
    7,904
    
    
    
    (1,137
    )
    
    
    331,969
    
    
    
    25,930
    
    
    
    (185
    )
    
    
    31,840
    
    
    
    (952
    )
    
    
    57,770
    
    
    
    (1,137
    )Total securities
    
    $
    1,505,553
    
    
    $
    9,540
    
    
    $
    (13,984
    )
    
    $
    1,501,109
    
    
    $
    713,024
    
    
    $
    (6,023
    )
    
    $
    253,086
    
    
    $
    (7,961
    )
    
    $
    966,110
    
    
    $
    (13,984
    )
  69




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  Amortized Cost
    
    
    Market ValueAfter 1
    
    
    After 5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After 1
    
    
    After 5Year
    
    
    Years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year
    
    
    YearsWithin
    
    
    Through
    
    
    Through
    
    
    After
    
    
    
    
    
    
    Within
    
    
    Through
    
    
    Through
    
    
    AfterDescription
    
    1 Year
    
    
    5 Years
    
    
    10 Years
    
    
    10 Years
    
    
    Total
    
    
    1 Year
    
    
    5 Years
    
    
    10 Years
    
    
    10 Years
    
    
    TotalInvestment securities
available for sale:Trust preferred securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    33,443
    
    
    $
    33,443
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    32,946
    
    
    $
    32,946Federal agency notes
    
    
    10,000
    
    
    
    56,718
    
    
    
    92,937
    
    
    
    
    
    
    
    159,655
    
    
    
    9,929
    
    
    
    56,108
    
    
    
    89,148
    
    
    
    
    
    
    
    155,185Other
    
    
    1,012
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    11,012
    
    
    
    1,011
    
    
    
    
    
    
    
    
    
    
    
    9,900
    
    
    
    10,911Total investment securities
available for sale
    
    
    11,012
    
    
    
    56,718
    
    
    
    92,937
    
    
    
    43,443
    
    
    
    204,110
    
    
    
    10,940
    
    
    
    56,108
    
    
    
    89,148
    
    
    
    42,846
    
    
    
    199,042Mortgage-backed securities
available for sale:FNMA
    
    
    
    
    
    
    7,081
    
    
    
    30,426
    
    
    
    317,628
    
    
    
    355,135
    
    
    
    
    
    
    
    6,836
    
    
    
    29,676
    
    
    
    307,678
    
    
    
    344,190GNMA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,184
    
    
    
    88,184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,033
    
    
    
    85,033FHLMC
    
    
    
    
    
    
    8,082
    
    
    
    35,419
    
    
    
    259,039
    
    
    
    302,540
    
    
    
    
    
    
    
    7,771
    
    
    
    34,774
    
    
    
    249,771
    
    
    
    292,316Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    202,264
    
    
    
    202,264
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    197,143
    
    
    
    197,143Total mortgage-backed
securities available for
sale
    
    
    
    
    
    
    15,163
    
    
    
    65,845
    
    
    
    867,115
    
    
    
    948,123
    
    
    
    
    
    
    
    14,607
    
    
    
    64,450
    
    
    
    839,625
    
    
    
    918,682Total investment and
mortgage-backed securities
available for sale
    
    
    11,012
    
    
    
    71,881
    
    
    
    158,782
    
    
    
    910,558
    
    
    
    1,152,233
    
    
    
    10,940
    
    
    
    70,715
    
    
    
    153,598
    
    
    
    882,471
    
    
    
    1,117,724Investment securities held
to maturity:Municipal securities
    
    
    
    
    
    
    
    
    
    
    1,323
    
    
    
    224,250
    
    
    
    225,573
    
    
    
    
    
    
    
    
    
    
    
    1,395
    
    
    
    230,884
    
    
    
    232,279Mortgage-backed securities
held to maturity:FNMA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,112
    
    
    
    5,112
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,923
    
    
    
    4,923GNMA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,261
    
    
    
    77,261
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,133
    
    
    
    76,133FHLMC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    662
    
    
    
    662
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    639
    
    
    
    639Total mortgage-backed
securities held to maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,035
    
    
    
    83,035
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,695
    
    
    
    81,695Total investment and
mortgage-backed securities
held to maturity
    
    
    
    
    
    
    
    
    
    
    1,323
    
    
    
    307,285
    
    
    
    308,608
    
    
    
    
    
    
    
    
    
    
    
    1,395
    
    
    
    312,579
    
    
    
    313,974Total securities
    
    $
    11,012
    
    
    $
    71,881
    
    
    $
    160,105
    
    
    $
    1,217,843
    
    
    $
    1,460,841
    
    
    $
    10,940
    
    
    $
    70,715
    
    
    $
    154,993
    
    
    $
    1,195,050
    
    
    $
    1,431,698
     70




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 6.
    
    Federal Home Loan Bank Stock and Other Equity Investments
   2005
    
    
    2004FHLB stock
    
    $
    39,070
    
    
    $
    25,940Other equity investments
    
    
    36,375
    
    
    
    30,927FHLB stock and other equity investments
    
    $
    75,445
    
    
    $
    56,867
  7.
    
    Loans Held for Sale
  2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    154,087
    
    
    $
    26,882Secured by real estate  multifamily
    
    
    
    
    
    
    295,788Business
    
    
    2,653
    
    
    
    3,337Loans held for sale (1)
    
    $
    156,740
    
    
    $
    326,007
 
 (1)
    
    Includes net unamortized deferred loan fees of $372,000 at
December 31, 2005, and net unamortized deferred loan costs of $535,000 at
December 31, 2004.
   71




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 8.
    
    Loans Held in Portfolio and Allowance for Loan Losses
  2005
    
    
    2004Commercial:Secured by real estate  nonresidential
    
    $
    2,307,381
    
    
    $
    1,943,868Secured by real estate  multifamily
    
    
    1,506,848
    
    
    
    866,079Construction
    
    
    494,841
    
    
    
    289,936Business
    
    
    863,935
    
    
    
    468,128Total commercial loans
    
    
    5,173,005
    
    
    
    3,568,011Consumer:Residential mortgage (one-to-four family)
    
    
    613,988
    
    
    
    434,423Other
    
    
    51,667
    
    
    
    48,307Total consumer loans
    
    
    665,655
    
    
    
    482,730Loans held in portfolio (1)
    
    
    5,838,660
    
    
    
    4,050,741Allowance for loan losses
    
    
    (64,542
    )
    
    
    (56,472
    )Net loans held in portfolio
    
    $
    5,774,118
    
    
    $
    3,994,269
 
 (1)
    
    Includes net unamortized deferred loan fees of $7.4 million and
$7.3 million at December 31, 2005 and 2004, respectively.
  2005
    
    
    2004Adjustable-rate loans
    
    $
    2,951,945
    
    
    $
    2,603,889Intermediate fixed-rated loans
    
    
    1,711,915
    
    
    
    881,744Fixed-rate loans
    
    
    1,182,198
    
    
    
    572,419Loans held in portfolio (1)
    
    $
    5,846,058
    
    
    $
    4,058,052
 
 (1)
    
    Excludes net unamortized deferred loan fees of $7.4 million and
$7.3 million at December 31, 2005 and 2004, respectively.
   2005
    
    
    2004
    
    
    2003Impaired loans with a valuation allowance
    
    $
    16,267
    
    
    $
    14,808
    
    
    $
    4,965Impaired loans without a valuation allowance
    
    
    8,273
    
    
    
    136
    
    
    
    Total impaired loans
    
    $
    24,540
    
    
    $
    14,944
    
    
    $
    4,965Allowance for impaired loans under SFAS No. 114
    
    $
    3,221
    
    
    $
    3,592
    
    
    $
    2,128Interest income recognized on impaired loans during the year
    
    $
    183
    
    
    $
    
    
    
    $
    
 72




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
    2005
    
    
    2004
    
    
    2003Balance at beginning of year:Allowance for loan losses
    
    $
    56,472
    
    
    $
    58,126
    
    
    $
    48,865Allowance for losses  unfunded commitments
    
    
    3,940
    
    
    
    2,737
    
    
    
    Total allowance for losses at beginning of the year
    
    
    60,412
    
    
    
    60,863
    
    
    
    48,865Provision for losses
    
    
    6,091
    
    
    
    4,202
    
    
    
    9,967Loans charged off
    
    
    (1,614
    )
    
    
    (4,798
    )
    
    
    (3,349
    )Recoveries of loans previously charged off
    
    
    123
    
    
    
    145
    
    
    
    1,352Adjustment  acquired through business combinations
    
    
    2,932
    
    
    
    
    
    
    
    4,028Total allowance for losses at end of year
    
    $
    67,944
    
    
    $
    60,412
    
    
    $
    60,863Allowance for loan losses
    
    $
    64,542
    
    
    $
    56,472
    
    
    $
    58,126Allowance for losses  unfunded commitments
    
    
    3,402
    
    
    
    3,940
    
    
    
    2,737Total allowance for losses at end of year
    
    $
    67,944
    
    
    $
    60,412
    
    
    $
    60,863
 9.
    
    Premises and Equipment
  2005
    
    
    2004Land
    
    $
    9,566
    
    
    $
    9,126Buildings
    
    
    103,591
    
    
    
    94,254Leasehold improvements
    
    
    25,685
    
    
    
    25,656Computer software
    
    
    8,231
    
    
    
    7,803Equipment, furniture and fixtures
    
    
    30,968
    
    
    
    28,251Gross premises and equipment
    
    
    178,041
    
    
    
    165,090Accumulated depreciation and amortization
    
    
    (79,752
    )
    
    
    (72,447
    )Premises and equipment, net
    
    $
    98,289
    
    
    $
    92,643
  73




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  2006
    
    $
    3,9302007
    
    
    2,7332008
    
    
    2,1302009
    
    
    1,5242010
    
    
    3442011 and thereafter
    
    
    454Total
    
    $
    11,115
 10.
    
    Goodwill
  2005
    
    
    2004
    
    
    2003Balance at beginning of year
    
    $
    68,301
    
    
    $
    87,437
    
    
    $
    46,052Pacifica Bancorp, Inc. acquisition
    
    
    23,277
    
    
    
    
    
    
    
    Asian American Bank & Trust Company acquisition
    
    
    15,070
    
    
    
    
    
    
    
    First Continental Bank acquisition
    
    
    
    
    
    
    
    
    
    
    44,248First
Continental Bank acquisition purchase price correction
    
    
    
    
    
    
    (16,791
    )
    
    
    First Continental Bank acquisition purchase price adjustment
    
    
    
    
    
    
    (2,345
    )
    
    
    Bank of Canton of California acquisition purchase price adjustment
    
    
    
    
    
    
    
    
    
    
    (2,863
    )Balance at end of year
    
    $
    106,648
    
    
    $
    68,301
    
    
    $
    87,437
   11.
    
    Core Deposit Intangibles
  2005
    
    
    2004Core deposit intangibles, gross
    
    $
    19,597
    
    
    $
    13,100Accumulated amortization
    
    
    (4,616
    )
    
    
    (3,271
    )Core deposit intangibles, net
    
    $
    14,981
    
    
    $
    9,829
  74




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  2005
    
    
    2004
    
    
    2003Balance at beginning of period
    
    $
    9,829
    
    
    $
    11,111
    
    
    $
    10,734Pacifica Bancorp, Inc. acquisition
    
    
    3,800
    
    
    
    
    
    
    
    Asian American Bank & Trust Company acquisition
    
    
    2,900
    
    
    
    
    
    
    
    First Continental Bank acquisition
    
    
    
    
    
    
    
    
    
    
    2,225Broadway National Bank branch acquisition adjustment
    
    
    
    
    
    
    
    
    
    
    (86
    )Amortization
    
    
    (1,345
    )
    
    
    (1,282
    )
    
    
    (1,762
    )Impairment write-downs
    
    
    (203
    )
    
    
    
    
    
    
    Balance at end of period
    
    $
    14,981
    
    
    $
    9,829
    
    
    $
    11,111
  2006
    
    $
    2,2592007
    
    
    2,2592008
    
    
    2,2592009
    
    
    2,1552010
    
    
    1,6352011 and thereafter
    
    
    4,414Total
    
    $
    14,981
 12.
    
    Mortgage Servicing Rights
  2005
    
    
    2004Mortgage servicing rights, gross
    
    $
    14,341
    
    
    $
    9,149Accumulated amortization
    
    
    (3,699
    )
    
    
    (1,402
    )Mortgage servicing rights, net
    
    $
    10,642
    
    
    $
    7,747
  75




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 2005
    
    
    2004
    
    
    2003Balance at beginning of period
    
    $
    7,747
    
    
    $
    4,006
    
    
    $
    1,631Addition/Capitalization
    
    
    5,192
    
    
    
    5,209
    
    
    
    1,983Purchases
    
    
    
    
    
    
    
    
    
    
    841Amortization
    
    
    (2,297
    )
    
    
    (1,388
    )
    
    
    (449
    )Write-downs
    
    
    
    
    
    
    (80
    )
    
    
    Balance at end of period
    
    $
    10,642
    
    
    $
    7,747
    
    
    $
    4,006
   2005
    
    
    2004Fair value of mortgage servicing rights
    
    $
    14,036
    
    
    $
    10,288Expected weighted-average life (in years)
    
    
    4.97
    
    
    
    3.90Range of prepayment speed assumptions (annual CPR)
    
    
    10%-20
    %
    
    
    12%-26
    %Discount rate assumption
    
    
    12.85
    %
    
    
    14.21
    %Decrease in fair value from 10% adverse CPR change
    
    $
    (617
    )
    
    $
    (735
    )Decrease in fair value from 20% adverse CPR change
    
    $
    (1,161
    )
    
    $
    (1,244
    )Decrease in fair value from 100 basis point adverse discount rate change
    
    $
    (355
    )
    
    $
    (237
    )Decrease in fair value from 200 basis point adverse discount rate change
    
    $
    (693
    )
    
    $
    (464
    )
  13.
    
    Deposits
  2005
    
    
    2004NOW, checking and money market accounts
    
    $
    1,784,065
    
    
    $
    1,427,366Savings accounts
    
    
    946,714
    
    
    
    1,000,489Time deposits:Less than $100,000
    
    
    1,203,001
    
    
    
    918,650$100,000 or greater
    
    
    2,330,389
    
    
    
    1,869,357Total time deposits
    
    
    3,533,390
    
    
    
    2,788,007Total deposits
    
    $
    6,264,169
    
    
    $
    5,215,862
  76




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  2006
    
    $
    3,446,3842007
    
    
    76,4122008
    
    
    5,3302009
    
    
    3,4932010
    
    
    1,7702011 and thereafter
    
    
    1Total
    
    $
    3,533,390
  2005
    
    
    2004
    
    
    2003NOW, checking and money market accounts
    
    $
    20,572
    
    
    $
    9,295
    
    
    $
    6,774Savings accounts
    
    
    9,336
    
    
    
    8,451
    
    
    
    7,191Time deposits
    
    
    93,983
    
    
    
    49,979
    
    
    
    55,153Less penalties for early withdrawal
    
    
    (574
    )
    
    
    (458
    )
    
    
    (394
    )Total
    
    $
    123,317
    
    
    $
    67,267
    
    
    $
    68,724
 14.
    
    Borrowings
  2005
    
    
    2004
    
    
    2003Short-term borrowings:FHLB of San Francisco advances and other short-term borrowings:Average balance outstanding
    
    $
    301,400
    
    
    $
    164,964
    
    
    $
    76,827Maximum amount outstanding at any month end period
    
    
    566,169
    
    
    
    300,695
    
    
    
    234,134Balance outstanding at end of period
    
    
    279,425
    
    
    
    72,310
    
    
    
    234,134Weighted average interest rate during the period
    
    
    3.51
    %
    
    
    1.30
    %
    
    
    1.41
    %Weighted average interest rate at end of period
    
    
    4.09
    %
    
    
    1.22
    %
    
    
    1.00
    %Weighted average remaining term to maturity at end of period
(in years)
    
    
    
    
    
    
    
    
    
    
    Long-term borrowings:FHLB of San Francisco advances:Average balance outstanding
    
    $
    361,677
    
    
    $
    299,253
    
    
    $
    271,688Maximum amount outstanding at any month end period
    
    
    562,033
    
    
    
    335,104
    
    
    
    274,000Balance outstanding at end of period
    
    
    562,033
    
    
    
    334,952
    
    
    
    271,408Weighted average interest rate during the period
    
    
    5.15
    %
    
    
    5.00
    %
    
    
    5.15
    %Weighted average interest rate at end of period
    
    
    4.76
    %
    
    
    4.89
    %
    
    
    5.12
    %Weighted average remaining term to maturity at end of period
(in years)
    
    
    5.0
    
    
    
    2.9
    
    
    
    4.0
  77




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities
  2006
    
    $
    280,5962007
    
    
    70,4112008
    
    
    243,4252009
    
    
    2452010
    
    
    40,1352011 and thereafter
    
    
    206,646Total
    
    $
    841,458
  15.
    
    Subordinated Debentures
    78




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
    2005
    
    
    2004Capital
    
    
    Debenture
    
    
    Capital
    
    
    Debenture
    
    
    Earliest
    
    
    Stated
    
    
    Annualized
    
    
    Current
    
    Rate
    
    PayableIssuance
    
    
    Securities
    
    
    Principal
    
    
    Securities
    
    
    Principal
    
    
    Redemption
    
    
    Maturity
    
    
    Coupon
    
    
    Interest
    
    Change
    
    DistributionTrust Name
    
    Date
    
    
    Amount
    
    
    Balance
    
    
    Amount
    
    
    Balance
    
    
    Date
    
    
    Date
    
    
    Rate
    
    
    Rate
    
    Date
    
    DatesUCBH Trust Co.
    
    
    4/17/1998
    
    
    $
    
    
    
    $
    
    
    
    $
    30,000
    
    
    $
    30,928
    
    
    
    5/1/2005
    
    
    
    5/1/2028
    
    
    9.38%
    
    N/A
    
    N/A
    
    
    5/1, 11/1UCBH Capital Trust I
    
    
    11/28/2001
    
    
    
    6,000
    
    
    
    6,186
    
    
    
    6,000
    
    
    
    6,186
    
    
    
    12/8/2006
    
    
    
    12/8/2031
    
    
    6-monthLIBOR
+3.80%
    
    8.42%
    
    12/6/2005
    
    
    6/8, 12/8UCBH Holdings
Statutory Trust I
    
    
    3/26/2002
    
    
    
    10,000
    
    
    
    10,310
    
    
    
    10,000
    
    
    
    10,310
    
    
    
    3/26/2007
    
    
    
    3/26/2032
    
    
    3-monthLIBOR
+3.60%
    
    8.12%
    
    12/24/2005
    
    
    3/26, 6/26, 9/26, 12/26UCBH
Holdings
Statutory Trust II
    
    
    9/26/2002
    
    
    
    25,000
    
    
    
    25,774
    
    
    
    25,000
    
    
    
    25,774
    
    
    
    9/26/2007
    
    
    
    9/26/2032
    
    
    3-month
LIBOR +
3.40%
    
    7.92%
    
    12/24/2005
    
    
    3/26, 6/26, 9/26, 12/26UCBH Capital
Trust II
    
    
    10/15/2002
    
    
    
    20,000
    
    
    
    20,619
    
    
    
    20,000
    
    
    
    20,619
    
    
    
    11/7/2007
    
    
    
    11/7/2032
    
    
    3-month
LIBOR +3.45%
    
    7.74%
    
    11/5/2005
    
    
    2/7, 5/7, 8/7, 11/7UCBH Capital Trust
III
    
    
    10/15/2002
    
    
    
    18,000
    
    
    
    18,557
    
    
    
    18,000
    
    
    
    18,557
    
    
    
    11/7/2007
    
    
    
    11/7/2032
    
    
    3-month
LIBOR +3.66%
    
    7.95%
    
    11/5/2005
    
    
    2/7, 5/7, 8/7, 11/7UCBH Capital Trust
IV
    
    
    10/29/2002
    
    
    
    27,000
    
    
    
    27,836
    
    
    
    27,000
    
    
    
    27,836
    
    
    
    11/7/2007
    
    
    
    11/7/2032
    
    
    3-monthLIBOR
+3.45%
    
    7.74%
    
    11/5/2005
    
    
    2/7, 5/7, 8/7, 11/7UCBH Capital Trust V
    
    
    9/22/2005
    
    
    
    40,000
    
    
    
    41,238
    
    
    
    
    
    
    
    
    
    
    
    11/23/2010
    
    
    
    11/23/2035
    
    
    5.82% until
11/23/2010,3-month
LIBOR +1.38%
thereafter
    
    5.82%
    
    N/A
    
    
    2/23, 5/23, 8/23, 11/23Total Balance
    
    
    146,000
    
    
    
    150,520
    
    
    
    136,000
    
    
    
    140,210Less: UCBH
Holdings, Inc.
investment in
trusts
    
    
    
    
    
    
    (4,520
    )
    
    
    
    
    
    
    (4,210
    )ownedNet Balance
    
    $
    146,000
    
    
    $
    146,000
    
    
    $
    136,000
    
    
    $
    136,000
 16.
    
    Minimum Regulatory Capital Requirements
   79




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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
   To Be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2005(1)Total capital to risk-weighted assets:UCBH Holdings, Inc. and subsidiaries
    
    $
    715,666
    
    
    
    11.33
    %
    
    $
    505,223
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AUnited Commercial Bank
    
    
    692,770
    
    
    
    10.98
    
    
    
    504,717
    
    
    
    8.00
    
    
    $
    630,897
    
    
    
    10.00
    %Tier 1 capital to risk-weighted assets:UCBH Holdings, Inc. and subsidiaries
    
    $
    647,871
    
    
    
    10.26
    %
    
    $
    252,612
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AUnited Commercial Bank
    
    
    624,975
    
    
    
    9.91
    
    
    
    252,359
    
    
    
    4.00
    
    
    $
    378,538
    
    
    
    6.00
    %Tier 1 capital to average assets:UCBH Holdings, Inc. and subsidiaries
    
    $
    647,871
    
    
    
    8.56
    %
    
    $
    302,825
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AUnited Commercial Bank
    
    
    624,975
    
    
    
    8.26
    
    
    
    302,643
    
    
    
    4.00
    
    
    $
    378,304
    
    
    
    5.00
    %As of December 31, 2004Total capital to risk-weighted assets:UCBH Holdings, Inc. and subsidiaries
    
    $
    604,805
    
    
    
    13.23
    %
    
    $
    365,825
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AUnited Commercial Bank
    
    
    578,529
    
    
    
    12.67
    
    
    
    365,406
    
    
    
    8.00
    
    
    $
    456,758
    
    
    
    10.00
    %Tier 1 capital to risk-weighted assets:UCBH Holdings, Inc. and subsidiaries
    
    $
    547,605
    
    
    
    11.98
    %
    
    $
    182,912
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AUnited Commercial Bank
    
    
    521,393
    
    
    
    11.42
    
    
    
    182,703
    
    
    
    4.00
    
    
    $
    274,055
    
    
    
    6.00
    %Tier 1 capital to average assets:UCBH Holdings, Inc. and subsidiaries
    
    $
    547,605
    
    
    
    8.92
    %
    
    $
    245,672
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AUnited Commercial Bank
    
    
    521,393
    
    
    
    8.49
    
    
    
    245,518
    
    
    
    4.00
    
    
    $
    306,897
    
    
    
    5.00
    %
 
 (1)
    
    Includes the effects of the acquisitions of Pacifica Bancorp, Inc. and Asian
American Bank & Trust Company during 2005.
  80




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Tier 1 Capital
    
    
    Risk-Based CapitalUCBH
    
    
    
    
    
    
    UCBHHoldings, Inc.
    
    
    United
    
    
    Holdings, Inc.
    
    
    Unitedand
    
    
    Commercial
    
    
    and
    
    
    CommercialSubsidiaries
    
    
    Bank
    
    
    Subsidiaries
    
    
    BankAs of December 31, 2005:GAAP Capital
    
    $
    603,514
    
    
    $
    726,618
    
    
    $
    603,514
    
    
    $
    726,618Nonallowable components:Unrealized losses on securities available for sale
    
    
    19,986
    
    
    
    19,986
    
    
    
    19,986
    
    
    
    19,986Goodwill and other disallowed intangibles
    
    
    (121,629
    )
    
    
    (121,629
    )
    
    
    (121,629
    )
    
    
    (121,629
    )Mortgage servicing rights  excess
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional capital components:Subordinated debentures
    
    
    146,000
    
    
    
    
    
    
    
    146,000
    
    
    
    Allowance for loan losses  limited to 1.25% of
risk-based assets
    
    
    
    
    
    
    
    
    
    
    67,795
    
    
    
    67,795Regulatory capital
    
    $
    647,871
    
    
    $
    624,975
    
    
    $
    715,666
    
    
    $
    692,770As of December 31, 2004:GAAP Capital
    
    $
    484,012
    
    
    $
    593,800
    
    
    $
    484,012
    
    
    $
    593,800Nonallowable components:Unrealized losses on securities available for sale
    
    
    6,498
    
    
    
    6,498
    
    
    
    6,498
    
    
    
    6,498Goodwill and other disallowed intangibles
    
    
    (78,130
    )
    
    
    (78,130
    )
    
    
    (78,130
    )
    
    
    (78,130
    )Mortgage servicing rights  excess
    
    
    (775
    )
    
    
    (775
    )
    
    
    (775
    )
    
    
    (775
    )Additional capital components:Subordinated debentures
    
    
    136,000
    
    
    
    
    
    
    
    136,000
    
    
    
    Allowance for loan losses  limited to 1.25% of
risk-based assets
    
    
    
    
    
    
    
    
    
    
    57,200
    
    
    
    57,136Regulatory capital
    
    $
    547,605
    
    
    $
    521,393
    
    
    $
    604,805
    
    
    $
    578,529
  17.
    
    Earnings Per Share
   81




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    AmountYear ended December 31, 2005:Net income  basic
    
    $
    97,826
    
    
    
    91,934,570
    
    
    $
    1.06Effect of stock options
    
    
    
    
    
    
    3,765,241Net income  diluted
    
    $
    97,826
    
    
    
    95,699,811
    
    
    $
    1.02Year ended December 31, 2004:Net income  basic
    
    $
    85,603
    
    
    
    90,522,594
    
    
    $
    0.95Effect of stock options
    
    
    
    
    
    
    4,720,028Net income  diluted
    
    $
    85,603
    
    
    
    95,242,622
    
    
    $
    0.90Year ended December 31, 2003:Net income  basic
    
    $
    64,638
    
    
    
    87,170,432
    
    
    $
    0.74Effect of stock options
    
    
    
    
    
    
    4,292,110Net income  diluted
    
    $
    64,638
    
    
    
    91,462,542
    
    
    $
    0.71
 18.
    
    Employee Benefit PlansStock Option PlanIn May 1998, UCBH adopted a Stock Option Plan (the Plan), which provides for the granting of
stock options to eligible officers, employees and directors of the Company. Pursuant to amendments
under the Plan, as of December 31, 2005, UCBH had 23,657,648 shares reserved for issuance. At the
time of grant, the stock options are exercisable for ten years following the option grant date and
vest ratably over a three-year period.The stock option activity for the years ended December 31, 2005, 2004 and 2003, was as follows:
 2005
    
    
    2004
    
    
    2003Weighted Average
    
    
    
    
    
    
    Weighted Average
    
    
    
    
    
    
    Weighted AverageNumber of
    
    
    Exercise
    
    
    Number of
    
    
    Exercise
    
    
    Number of
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions outstanding, beginning of year
    
    
    14,042,318
    
    
    $
    11.23
    
    
    
    9,910,372
    
    
    $
    6.54
    
    
    
    9,976,412
    
    
    $
    5.02Granted
    
    
    1,552,300
    
    
    
    19.09
    
    
    
    5,504,100
    
    
    
    18.93
    
    
    
    1,596,900
    
    
    
    13.81Exercised
    
    
    (786,614
    )
    
    
    4.91
    
    
    
    (1,055,068
    )
    
    
    5.57
    
    
    
    (1,458,286
    )
    
    
    3.73Canceled
    
    
    (347,878
    )
    
    
    18.31
    
    
    
    (317,086
    )
    
    
    17.35
    
    
    
    (204,654
    )
    
    
    9.47Expired
    
    
    (24,106
    )
    
    
    17.94
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options outstanding, end of year
    
    
    14,436,020
    
    
    $
    12.23
    
    
    
    14,042,318
    
    
    $
    11.22
    
    
    
    9,910,372
    
    
    $
    6.54Shares exercisable end of year
    
    
    14,284,020
    
    
    $
    12.18
    
    
    
    7,549,084
    
    
    $
    5.68
    
    
    
    5,955,606
    
    
    $
    4.62Weighted average fair value of
options granted during the year
    
    
    
    
    
    
    7.59
    
    
    
    
    
    
    
    6.62
    
    
    
    
    
    
    
    3.85Market value of stock at end of year
    
    
    
    
    
    $
    17.88
    
    
    
    
    
    
    $
    22.91
    
    
    
    
    
    
    $
    19.49
 82




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 The range of exercise prices for options outstanding at December 31, 2005, is as follows:
 Weighted Average
    
    
    Weighted Average
    
    
    
    
    
    
    Weighted AverageOptions
    
    
    Exercise
    
    
    Remaining
    
    
    Options
    
    
    ExerciseExercise Price
    
    Outstanding
    
    
    Price
    
    
    Life
    
    
    Exercisable
    
    
    Price$1.88-$2.25
    
    
    1,562,066
    
    
    $
    1.88
    
    
    
    2.89
    
    
    
    1,562,066
    
    
    $
    1.88$2.26-$4.51
    
    
    244,156
    
    
    
    3.36
    
    
    
    2.95
    
    
    
    244,156
    
    
    
    3.36$4.52-$6.77
    
    
    3,992,984
    
    
    
    6.15
    
    
    
    5.30
    
    
    
    3,992,984
    
    
    
    6.15$6.78-$9.03
    
    
    380,076
    
    
    
    7.22
    
    
    
    4.40
    
    
    
    380,076
    
    
    
    7.22$9.04-$11.29
    
    
    717,201
    
    
    
    10.00
    
    
    
    6.55
    
    
    
    717,201
    
    
    
    10.00$11.30-$13.55
    
    
    356,154
    
    
    
    12.38
    
    
    
    7.06
    
    
    
    356,154
    
    
    
    12.38$13.56-$15.81
    
    
    410,831
    
    
    
    14.82
    
    
    
    7.49
    
    
    
    410,831
    
    
    
    14.82$15.82-$18.07
    
    
    750,203
    
    
    
    17.00
    
    
    
    8.70
    
    
    
    653,203
    
    
    
    16.96$18.08-$20.33
    
    
    5,282,549
    
    
    
    18.81
    
    
    
    8.47
    
    
    
    5,227,549
    
    
    
    18.82$20.33-$22.59
    
    
    739,800
    
    
    
    21.25
    
    
    
    9.04
    
    
    
    739,800
    
    
    
    21.25Total/Average
    
    
    14,436,020
    
    
    $
    12.23
    
    
    
    6.67
    
    
    
    14,284,020
    
    
    $
    12.18
 United Commercial Bank Savings Plus PlanUCB has a 401(k) tax deferred savings plus plan (the 401(k) Plan) under which eligible employees
may elect to defer a portion of their salary (up to 15%) as a contribution to the 401(k) Plan. UCB
matches the employees contributions at a rate set by UCBs Board of Directors. The 401(k) Plan
provides for employer contributions of 50 percent of employee contributions for all employees for
the years ended December 31, 2005, 2004 and 2003, with a maximum contribution limit of $2,000 per
participant. The matching contribution vests ratably over the first five years of service. For
the years ended December 31, 2005, 2004 and 2003, UCB contributed $1.3 million, $1.0 million and
$899,000, respectively, to the 401(k) Plan.In connection with the First Continental Bank and Bank of Canton of California acquisitions, former
First Continental Bank and Bank of Canton of California employees, who were eligible to
participate, were able to enroll in the 401(k) Plan as of July 12, 2003 and January 1, 2003,
respectively. In connection with the Pacifica and AABT acquisitions, former Pacifica and AABT
employees, who are eligible to participate, will be able to enroll in the 401(k) Plan on July 1,
2006.
 19.
    
    Federal and State Taxes on IncomeThe components of income tax expense by jurisdiction for the years ended December 31, 2005, 2004
and 2003, were as follows (dollars in thousands):
 2005
    
    
    2004
    
    
    2003Current tax expense:Federal
    
    $
    40,227
    
    
    $
    38,115
    
    
    $
    21,685State
    
    
    10,817
    
    
    
    8,001
    
    
    
    4,238Total current tax expense
    
    
    51,044
    
    
    
    46,116
    
    
    
    25,923Deferred tax (benefit) expense:Federal
    
    
    (4,374
    )
    
    
    2,806
    
    
    
    10,542State
    
    
    (326
    )
    
    
    479
    
    
    
    473Total deferred tax (benefit) expense
    
    
    (4,700
    )
    
    
    3,285
    
    
    
    11,015Income tax expense
    
    $
    46,344
    
    
    $
    49,401
    
    
    $
    36,938
 83




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 The components of deferred tax liabilities (assets) at December 31, 2005 and 2004, were as follows
(dollars in thousands):
 2005
    
    
    2004Deferred tax liabilities:Fixed asset basis differences
    
    $
    1,731
    
    
    $
    1,582Deferred loan fees
    
    
    8,246
    
    
    
    7,248FHLB dividends
    
    
    3,554
    
    
    
    3,149Purchase accounting adjustments
    
    
    27,378
    
    
    
    24,692Unremitted earnings
    
    
    
    
    
    
    4,586Other
    
    
    3,733
    
    
    
    3,743Total deferred tax liabilities
    
    
    44,642
    
    
    
    45,000Deferred tax assets:Loan and OREO loss allowances
    
    
    (21,909
    )
    
    
    (21,429
    )Market value adjustments on certain securities
    
    
    (904
    )
    
    
    (2,378
    )Unrealized losses on available for sale securities
    
    
    (10,846
    )
    
    
    (3,499
    )State taxes
    
    
    (3,705
    )
    
    
    (953
    )Compensation and benefits
    
    
    (2,398
    )
    
    
    (1,204
    )Other
    
    
    (486
    )
    
    
    (379
    )Total deferred tax assets
    
    
    (40,248
    )
    
    
    (29,842
    )Net deferred tax liabilities
    
    $
    4,394
    
    
    $
    15,158
 The components for deferred tax liabilities (assets) by jurisdiction at December 31, 2005 and 2004,
were as follows (dollars in thousands):
 2005
    
    
    2004Net deferred liabilities (assets):Federal income tax
    
    $
    4,159
    
    
    $
    13,035State franchise tax
    
    
    235
    
    
    
    2,123Net deferred tax liabilities
    
    $
    4,394
    
    
    $
    15,158
 The reconciliation of the statutory income tax rate to the consolidated effective income tax rate
for the years ended December 31, 2005, 2004 and 2003, was as follows:
 2005
    
    
    2004
    
    
    2003Federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State franchise tax rate, net of federal income
tax effects
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0Statutory income tax rate
    
    
    42.0
    
    
    
    42.0
    
    
    
    42.0Increase (reduction) in tax rate resulting from:California and federal tax credits and incentives
    
    
    (3.2
    )
    
    
    (3.2
    )
    
    
    (3.8
    )Tax exempt income
    
    
    (2.3
    )
    
    
    (2.3
    )
    
    
    (2.4
    )Section 965 repatriation
    
    
    (2.7
    )
    
    
    
    
    
    
    Other, net
    
    
    (1.7
    )
    
    
    0.1
    
    
    
    0.6Effective income tax rate
    
    
    32.1
    %
    
    
    36.6
    %
    
    
    36.4
    %
 The years 2002 through 2004 remain open for Internal Revenue Service audit purposes and the years
2001 through 2004 remain open for California Franchise Tax Board purposes. The 2005 Federal and
State tax returns have not yet been filed.
 84




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 On October 22, 2004, the President of the United States of America signed into law AJCA. The AJCA
allows companies to repatriate foreign earnings at an effective tax rate of 5.25% upon satisfaction
of certain conditions. Such repatriations must occur in either an enterprises last year that
began before the enactment date, or the first tax year that begins during the one-year period
beginning on the date of enactment.During the three months ended June 30, 2005, the Company elected to repatriate approximately $26.7
million in previously unremitted foreign earnings. During the three months ended December 31,
2005, the Company repatriated $26.7 million in previously unremitted foreign earnings. As a
result, the Company recorded a current taxes payable on such previously unremitted foreign earnings
of approximately $703,000. In addition, the Company has recorded a reduction to deferred tax
liabilities of approximately $4.6 million as a result of the reversal of the deferred tax liability
related to unremitted earnings of its foreign subsidiary. This results in a net tax benefit of
approximately $3.9 million.The Company believes it has adequately provided for income tax issues not yet resolved with
federal, foreign, state and local tax authorities. Although not probable, the most adverse
resolution of these federal, foreign, state and local issues could result in additional charges to
earnings in future periods in addition to the amount currently provided. Based upon a
consideration of all relevant facts and circumstances, the Company does not believe the ultimate
resolution of tax issues for all open periods will have a material effect upon results of
operations or financial condition.20.
    
    Concentration of Credit RiskFinancial instruments that potentially subject the Company to concentrations of credit risk consist
primarily of loans, investments and certain other derivative and off balance sheet contracts. At
December 31, 2005, UCB had 91.0% of its loans held in portfolio located in California.
Additionally, UCB had 65.3% of its loans held in portfolio in commercial nonresidential and
multifamily real estate loans. No borrower or obligor accounted for more than 2.0% of loans. At
December 31, 2005, mortgage-backed securities were 70.2% of UCBs investment portfolio. At
December 31, 2005, UCB had 51.6% and 34.5% of its customer deposits located in Northern and
Southern California, respectively. One state government entity contributed 6.64% of total deposits
at December 31, 2005. No other customer accounted for more than 2.0% of deposits.21.
    
    Related Party TransactionsSeveral members of the Board of Directors and executive officers of the Company have deposits with
UCB that are made in the ordinary course of business with the same terms and conditions, including
interest rates, as those prevailing at the same time for comparable transactions with other
customers. The total deposits for these related parties were $7.2 million and $38.1 million at
December 31, 2005 and 2004, respectively. Additionally, UCB has adopted a policy that prohibits
loans or extensions of credit to Directors and affiliated persons of the Company, and their related
interests.22.
    
    Derivative Financial Instruments and Financial Instruments with Off-Balance-Sheet RiskUCB is a party to derivative financial instruments and financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its customers and to reduce
its own exposure to fluctuations in interest rates. UCB does not hold or issue financial
instruments for trading purposes. Financial instruments in the normal course of business include
commitments to extend and purchase credit, forward commitments to sell loans, letters of credit,
foreign exchange contracts, and interest-rate caps. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in the statement of
financial position. The contract or notional amounts of those instruments reflect the extent of
involvement UCB has in particular classes of financial instruments.UCB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. UCB uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments. For interest-rate swap and cap
transactions and forward commitments to sell loans, the contract or
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 notional amounts do not represent exposure to credit loss. UCB manages the credit risk of its
interest-rate swap and cap agreements, foreign exchange contracts, and forward commitments to sell
loans through credit approvals, limits, and monitoring procedures. UCB does not require collateral
or other security to support interest-rate swap transactions with credit risk.The contractual or notional amounts of derivative financial instruments and financial instruments
with off-balance-sheet risk as of December 31, 2005 and 2004, were as follows (dollars in
thousands):
 2005
    
    
    2004Financial instruments whose contract
amounts represent credit risk:Commitments to extend credit:Consumer (including residential mortgage)
    
    $
    88,407
    
    
    $
    75,558Commercial (excluding construction)
    
    
    672,662
    
    
    
    451,946Construction
    
    
    539,955
    
    
    
    260,441Letters of credit
    
    
    90,595
    
    
    
    44,752Foreign exchange contracts receivable
    
    
    (217,827
    )
    
    
    (176,644
    )Foreign exchange contracts payable
    
    
    216,892
    
    
    
    175,954Put options to buy
    
    
    11,269
    
    
    
    18,683Put options to sell
    
    
    (11,269
    )
    
    
    (18,683
    )Unfunded CRA investment commitments
    
    
    4,760
    
    
    
    8,331
 CommitmentsCommitments to extend credit are agreements to lend to a customer provided there are no violations
of any conditions established in the contract. Commitments generally have fixed expiration dates
or other termination clauses. UCB evaluates each customers credit worthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by UCB upon extension of credit, is
based on managements credit evaluation of the customer. Collateral held generally includes
residential or commercial real estate, accounts receivable, or other assets.Letters of credit are conditional commitments issued by UCB to guarantee the performance of a
customer to a third party. The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loan facilities to customers. These letters of credit are
usually secured by the customers inventories or by deposits held at UCB.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 counterparties and their ability to
meet the terms of the contracts. UCB purchases or sells foreign exchange contracts in order to
hedge a balance sheet or off-balance-sheet foreign exchange position. Additionally, UCB purchases
and sells foreign exchange contracts for customers, as long as the foreign exchange risk is fully
hedged with an offsetting position.Interest-rate caps are interest rate protection instruments that involve the payment from the
seller to the buyer of an interest differential. This differential represents the difference
between current interest rates and an agreed upon rate applied to a notional principal amount.
Entering into interest-rate cap agreements involves the risk of dealing with counterparties and
their ability to meet the terms of the contracts. Notional principal amounts often are used to
express the volume of these transactions, but the amounts potentially subject to credit risk are
much smaller. UCB may be a purchaser of interest-rate caps and swaps. At December 31, 2005 and
2004, no interest-rate caps or swaps were outstanding. For the years ended December 31, 2005 and
2004, interest-rate caps and swaps impact to interest income was negligible.Put options to buy are part of currency-linked deposits with other financial institutions. At the
option of these third parties, UCB is required to buy a currency at a predefined exchange rate with
another currency. Put options to sell are part of currency-linked deposits that customers have
placed with UCB. At the option of UCB, the customer is
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 obligated to buy a currency at a predefined exchange rate with another currency. The put options
to buy and put options to sell, along with the related currency-linked deposits, offset each other.UCB has CRA investments that may have unfunded commitments that UCB is obligated to make. Fundings
are made upon request by the underlying investee companies based on original contractual commitment
amounts.23.
    
    Commitments and Contingent LiabilitiesLease CommitmentsThe Company leases various premises and equipment under noncancellable operating leases, many of
which contain renewal options and some of which contain escalation clauses. Future minimum rental
payments due each year under operating leases that have initial or remaining noncancellable lease
terms in excess of one year as of December 31, 2005, are as follows (dollars in thousands):
 2006
    
    $
    8,7442007
    
    
    8,1332008
    
    
    6,6732009
    
    
    5,0352010
    
    
    4,5372011 and thereafter
    
    
    15,607Total
    
    $
    48,729
 The Company determined that recognition of rent expense for leases with rent holidays or leases
with rent escalation clauses was not recognized on a straight-line basis. Accordingly, during the
three months ended December 31, 2004, the Company recorded a cumulative adjustment to increase
occupancy expense and deferred rent by $1.2 million and the recognition of a tax benefit of
$490,000. Rent expense was approximately $10.4 million, $9.1 million and $6.5 million for the
years ended December 31, 2005, 2004 and 2003, respectively.Contingent LiabilitiesThe Company is subject to pending or threatened actions and proceedings arising in the normal
course of business. In the opinion of management, the ultimate disposition of all pending or
threatened actions and proceedings will not have a material adverse effect on the Companys results
of operations or financial condition.24.
    
    Fair Value of Financial InstrumentsSFAS No. 107, Disclosures about Fair Value of Financial Instrument, requires all entities to
estimate the fair value of all financial instrument assets, liabilities, and off-balance-sheet
transactions. Fair values are point-in-time estimates that can change significantly based on
numerous factors. Accordingly, management cannot provide any assurance that the estimated fair
values presented below could actually be realized. The fair value estimates for financial
instruments were determined as of December 31, 2005 and 2004, by application of the described
methods and significant assumptions.
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 The carrying value and estimated fair value of principal financial instruments at December 31, 2005
and 2004, were as follows (dollars in thousands):
 2005
    
    
    2004Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assets:Cash and due from banks
    
    $
    200,072
    
    
    $
    200,072
    
    
    $
    73,864
    
    
    $
    73,864Federal funds sold
    
    
    2,993
    
    
    
    2,993
    
    
    
    134,500
    
    
    
    134,500Investments and mortgage-backed securities
available for sale
    
    
    1,117,724
    
    
    
    1,117,724
    
    
    
    1,169,140
    
    
    
    1,169,140Investments and mortgage-backed securities
held to maturity
    
    
    308,608
    
    
    
    313,974
    
    
    
    325,202
    
    
    
    331,969Federal Home Loan Bank stock and other
equity investments
    
    
    75,445
    
    
    
    75,445
    
    
    
    56,867
    
    
    
    56,867Loans held for sale
    
    
    156,740
    
    
    
    156,948
    
    
    
    326,007
    
    
    
    332,072Loans held in portfolio
    
    
    5,838,660
    
    
    
    5,814,038
    
    
    
    4,050,741
    
    
    
    3,976,425Accrued interest receivable
    
    
    37,750
    
    
    
    37,750
    
    
    
    24,507
    
    
    
    24,507Mortgage servicing rights, net
    
    
    10,642
    
    
    
    14,036
    
    
    
    7,747
    
    
    
    10,288Customers liability on acceptances
    
    
    27,133
    
    
    
    27,133
    
    
    
    11,704
    
    
    
    11,704Financial liabilities:Noninterest bearing deposits
    
    
    558,649
    
    
    
    558,649
    
    
    
    428,602
    
    
    
    428,602Interest bearing deposits
    
    
    5,705,520
    
    
    
    5,721,494
    
    
    
    4,787,260
    
    
    
    4,781,989Short-term borrowings
    
    
    279,425
    
    
    
    279,780
    
    
    
    72,310
    
    
    
    72,282Subordinated debentures
    
    
    146,000
    
    
    
    146,000
    
    
    
    136,000
    
    
    
    140,151Long-term borrowings
    
    
    562,033
    
    
    
    570,644
    
    
    
    334,952
    
    
    
    349,245Accrued interest payable
    
    
    12,582
    
    
    
    12,582
    
    
    
    6,110
    
    
    
    6,110Acceptances outstanding
    
    
    27,133
    
    
    
    27,133
    
    
    
    11,704
    
    
    
    11,704Off balance sheet financial instruments:Foreign exchange contracts receivable
    
    
    408
    
    
    
    408
    
    
    
    1,061
    
    
    
    1,061Foreign exchange contracts payable
    
    
    (241
    )
    
    
    (241
    )
    
    
    (477
    )
    
    
    (477
    )Commitments to extend credit:Consumer (including residential mortgage)
    
    
    88,407
    
    
    
    88,407
    
    
    
    75,558
    
    
    
    75,558Commercial (excluding construction)
    
    
    672,662
    
    
    
    672,662
    
    
    
    451,946
    
    
    
    451,946Construction
    
    
    539,955
    
    
    
    539,955
    
    
    
    260,441
    
    
    
    260,441Letters of credit
    
    
    90,595
    
    
    
    90,595
    
    
    
    44,752
    
    
    
    44,752
 Cash and Due from Banks and Federal Funds SoldThe fair value of cash and due from banks and federal funds sold approximates the carrying value.Investment and Mortgage-Backed SecuritiesThe fair value of investments and mortgage-backed securities equals quoted market price, if
available. If a quoted market price is not available, the fair value is estimated using quoted
market prices for similar securities.Federal Home Loan Bank Stock and Other Equity InvestmentsThe fair value of Federal Home Loan Bank stock approximates the carrying value, which is based on
the redemption provisions of the Federal Home Loan Bank. The fair value of other equity
investments is carrying value or reported value.
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Loans Held for SaleThe fair value of commercial real estate loans and multifamily loans held for sale is estimated
based on recent market loan sale pricing of like sales, prevailing market interest rates, as well
as weighted average maturity, weighted average life, and conditional prepayment rates. SBA loans
held for sale fair value is estimated based on recent historical loan sales.Loans Held in PortfolioThe fair value of loans held in portfolio is estimated by discounting the future cash flows using
the current rates at which similar loans would be made to borrowers with similar credit ratings at
the same remaining maturities. In addition, the allowance for loan losses was considered a
reasonable adjustment for credit risk for the entire portfolio.Accrued Interest ReceivableThe fair value of accrued interest receivable approximates the carrying value.Mortgage Servicing RightsThe fair value of mortgage servicing rights are estimated using projected cash flows, adjusted for
the effects of anticipated prepayments, using a market discount rate.DepositsThe fair value of demand deposits, savings accounts, and certain money market deposits is the
amount payable on demand at the reporting date. The fair value of fixed maturity certificates of
deposit is estimated using the rates currently offered for deposits of similar remaining
maturities.Federal Home Loan Bank Advances and Other BorrowingsThe fair value of Federal Home Loan Bank advances and other borrowings is estimated using the rates
currently being offered for advances with similar remaining maturities.Subordinated DebenturesThe fair value of UCBHs junior subordinated debentures is estimated using market interest rates
currently being offered for similar unrated debt instruments.Accrued Interest PayableThe fair value of accrued interest payable approximates the carrying value.Other Assets and LiabilitiesThe fair value of customer liabilities on acceptances and acceptances outstanding approximates the
carrying value.Derivative InstrumentsAs of December 31, 2005 and 2004, UCB had no derivative instruments designed as hedges, according
to the relevant accounting criteria. UCBs derivative instruments are accounted for at fair value
in the financial statements, with any gains or losses reflected in current net income.
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 Commitments to Extend Credit, Commitments to Purchase Loans, Securities Sold but not Owned, and
Options on Interest Rate FuturesThe fair value of commitments is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the present
creditworthiness of the counterparties. For fixed-rate commitments, the fair value also considers
the difference between current levels of interest rates and the committed rates. The fair values
for securities sold but not owned and options on interest rate futures are based on quoted market
prices or dealer quotes. The carrying amounts of such investments are considered to be
substantially equivalent to fair value.25.
    
    Supplemental Cash Flow InformationThe supplemental cash flow information for the years ended December 31, 2005, 2004 and 2003, was as
follows (dollars in thousands):
 2005
    
    
    2004
    
    
    2003Cash paid during the period for:Interest
    
    $
    155,439
    
    
    $
    94,602
    
    
    $
    95,223Income taxes
    
    
    35,234
    
    
    
    36,372
    
    
    
    37,610Noncash investing and financing activities:Loans securitized
    
    $
    
    
    
    $
    146,947
    
    
    $
    286,049Stock warrants acquired with issuance of commercial loans
    
    
    (129
    )
    
    
    
    
    
    
    Income tax benefit from stock options exercised
    
    
    3,813
    
    
    
    5,679
    
    
    
    9,359Common stock issued for:Acquisition of Pacifica Bancorp, Inc.
    
    
    21,092
    
    
    
    
    
    
    
    Acquisition of Asian American Bank & Trust Company
    
    
    15,624
    
    
    
    
    
    
    
    Acquisition of First Continental Bank
    
    
    
    
    
    
    
    
    
    
    53,207Transfer of loans from held for
sale to held in portfolio
    
    
    (252,569
    )
    
    
    
    
    
    
    Transfer of loans to held for
sale from held in portfolio
    
    
    264,819
    
    
    
    
    
    
    
    
 26.
    
    Segment InformationThe Company designates the internal organization that is used by management for making operating
decisions and assessing performance as the source of its reportable segments. The Company has
determined that its reportable segments are those that are based on the Companys method of
internal reporting. The Company has determined that it has two reportable segments, Domestic
Banking and Other. Other segment consists of the Companys Hong Kong operations and UCBIS.
The UCBH Holdings, Inc. column consists of UCBH, which reflects the holding company activities.
The intersegment column consists of the UCBH and UCB elimination units, which reflects the
elimination of intersegment transactions. UCBH and the UCB elimination unit were reclassified from
Domestic Banking as of and for the years ended December 31, 2004 and 2003, to conform to the
December 31, 2005, presentation. The Hong Kong operations commenced business in the last half of
2003 and UCBIS commenced operations during the first quarter of 2004. The following is segment
information as of December 31, 2005 and 2004, and for the years ended December 31, 2005, 2004 and
2003 (dollars in thousands):
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 UCBHDomestic
    
    
    
    
    
    
    Total
    
    
    Holdings,Banking
    
    
    Other
    
    
    Segments
    
    
    Inc.
    
    
    Intersegment
    
    
    ConsolidatedYear ended December 31, 2005:Total interest and dividend income
    
    $
    397,771
    
    
    $
    7,311
    
    
    $
    405,082
    
    
    $
    
    
    
    $
    (2,682
    )
    
    $
    402,400Net interest income
    
    
    244,795
    
    
    
    5,074
    
    
    
    249,869
    
    
    
    (9,379
    )
    
    
    
    
    
    
    240,490Net income
    
    
    110,881
    
    
    
    1,321
    
    
    
    112,202
    
    
    
    97,826
    
    
    
    (112,202
    )
    
    
    97,826As of December 31, 2005:Loans held in portfolio
    
    
    5,554,069
    
    
    
    284,591
    
    
    
    5,838,660
    
    
    
    
    
    
    
    
    
    
    
    5,838,660Total assets
    
    
    7,819,458
    
    
    
    378,792
    
    
    
    8,198,250
    
    
    
    746,398
    
    
    
    (983,531
    )
    
    
    7,961,117Total deposits
    
    
    5,727,843
    
    
    
    555,526
    
    
    
    6,283,369
    
    
    
    
    
    
    
    (19,200
    )
    
    
    6,264,169Year ended December 31, 2004:Total interest and dividend income
    
    
    297,222
    
    
    
    3,034
    
    
    
    300,256
    
    
    
    
    
    
    
    (192
    )
    
    
    300,064Net interest income (expense)
    
    
    214,203
    
    
    
    1,494
    
    
    
    215,697
    
    
    
    (8,216
    )
    
    
    
    
    
    
    207,481Net income (loss)
    
    
    100,706
    
    
    
    (3,820
    )
    
    
    96,886
    
    
    
    85,603
    
    
    
    (96,886
    )
    
    
    85,603As of December 31, 2004:Loans held in portfolio
    
    
    3,939,559
    
    
    
    111,182
    
    
    
    4,050,741
    
    
    
    
    
    
    
    
    
    
    
    4,050,741Total assets
    
    
    6,364,226
    
    
    
    103,442
    
    
    
    6,467,668
    
    
    
    606,108
    
    
    
    (758,095
    )
    
    
    6,315,681Total deposits
    
    
    4,896,903
    
    
    
    328,663
    
    
    
    5,225,566
    
    
    
    
    
    
    
    (9,704
    )
    
    
    5,215,862Year ended December 31, 2003:Total interest and dividend income
    
    
    259,162
    
    
    
    1,168
    
    
    
    260,330
    
    
    
    
    
    
    
    (68
    )
    
    
    260,262Net interest income (expense)
    
    
    175,474
    
    
    
    998
    
    
    
    176,472
    
    
    
    (7,924
    )
    
    
    
    
    
    
    168,548Net income (loss)
    
    
    79,171
    
    
    
    (478
    )
    
    
    78,693
    
    
    
    64,638
    
    
    
    (78,693
    )
    
    
    64,638
 27.
    
    Parent CompanyThe unconsolidated condensed balance sheets of UCBH Holdings, Inc. at December 31, 2005 and 2004,
are as follows (dollars in thousands):
 CONDENSED BALANCE SHEETS
 2005
    
    
    2004ASSETSCash and due from banks
    
    $
    12,542
    
    
    $
    7,075Other equity investments
    
    
    2,753
    
    
    
    Equipment, net
    
    
    111
    
    
    
    70Investment in subsidiary
    
    
    726,888
    
    
    
    593,870Other assets
    
    
    12,065
    
    
    
    23,548Total assets
    
    $
    754,359
    
    
    $
    624,563LIABILITIES AND STOCKHOLDERS EQUITYAccrued interest payable
    
    $
    1,113
    
    
    $
    1,101Subordinated debentures
    
    
    146,000
    
    
    
    136,000Other liabilities
    
    
    3,732
    
    
    
    3,450Total liabilities
    
    
    150,845
    
    
    
    140,551Common stock
    
    
    940
    
    
    
    456Additional paid-in capital
    
    
    247,340
    
    
    
    203,432Retained earnings
    
    
    375,220
    
    
    
    286,622Accumulated other comprehensive loss
    
    
    (19,986
    )
    
    
    (6,498
    )Total stockholders equity
    
    
    603,514
    
    
    
    484,012Total liabilities and stockholders equity
    
    $
    754,359
    
    
    $
    624,563
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  CONDENSED STATEMENTS OF OPERATIONS
 2005
    
    
    2004
    
    
    2003Income:Interest income on investment securities
    
    $
    
    
    
    $
    
    
    
    $
    Dividends from subsidiary
    
    
    30,000
    
    
    
    
    
    
    
    Total income
    
    
    30,000
    
    
    
    
    
    
    
    Expense:Interest expense on junior subordinated debentures
    
    
    9,353
    
    
    
    8,185
    
    
    
    7,924Loss on extinguishment of subordinated debentures
    
    
    1,196
    
    
    
    
    
    
    
    Other general and administrative
    
    
    6,788
    
    
    
    4,985
    
    
    
    3,712Total expense
    
    
    17,337
    
    
    
    13,170
    
    
    
    11,636Income (loss) before income tax benefit and
equity in undistributed net income of subsidiary
    
    
    12,663
    
    
    
    (13,170
    )
    
    
    (11,636
    )Income tax benefit
    
    
    5,573
    
    
    
    4,954
    
    
    
    4,742Equity in undistributed net income of subsidiary
    
    
    79,590
    
    
    
    93,819
    
    
    
    71,532Net income
    
    $
    97,826
    
    
    $
    85,603
    
    
    $
    64,638
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UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
  CONDENSED STATEMENTS OF CASH FLOWS
 2005
    
    
    2004
    
    
    2003Cash flow from operating activities:Net income
    
    $
    97,826
    
    
    $
    85,603
    
    
    $
    64,638Adjustments to reconcile net income to net cash
provided by (used for) operating activities:Equity in undistributed net income of subsidiary
    
    
    (79,590
    )
    
    
    (93,819
    )
    
    
    (71,532
    )Loss on extinguishment of subordinated debenture
    
    
    1,196
    
    
    
    
    
    
    
    Depreciation expense
    
    
    70
    
    
    
    45
    
    
    
    38Amortization of subordinated debenture fees
    
    
    165
    
    
    
    173
    
    
    
    199Changes in operating assets and liabilities:Decrease (increase) in other assets
    
    
    13,935
    
    
    
    9,789
    
    
    
    (2,008
    )Increase (decrease) in accrued interest payable
    
    
    12
    
    
    
    121
    
    
    
    (244
    )Increase (decrease) in other liabilities
    
    
    (246
    )
    
    
    1,214
    
    
    
    8,317Net cash provided by (used in) operating activities.
    
    
    33,368
    
    
    
    3,126
    
    
    
    (592
    )Cash flow from investing activities:Capital contribution to subsidiary
    
    
    (30,200
    )
    
    
    (71
    )
    
    
    (11,000
    )Equity investment purchase
    
    
    (2,753
    )
    
    
    
    
    
    
    Purchases of equipment
    
    
    (111
    )
    
    
    (46
    )
    
    
    Net cash used in investing activities
    
    
    (33,064
    )
    
    
    (117
    )
    
    
    (11,000
    )Cash flow from financing activities:Proceeds from stock option exercises
    
    
    3,863
    
    
    
    5,824
    
    
    
    5,432Proceeds from issuance of subordinated debentures
    
    
    40,000
    
    
    
    
    
    
    
    Redemption of subordinated debenture
    
    
    (30,000
    )
    
    
    
    
    
    
    Payment of cash dividend on common stock
    
    
    (8,700
    )
    
    
    (6,779
    )
    
    
    (4,732
    )Net cash provided by (used in) financing activities
    
    
    5,163
    
    
    
    (955
    )
    
    
    700Net (decrease) increase in cash and cash equivalents
    
    
    5,467
    
    
    
    2,054
    
    
    
    (10,892
    )Cash and cash equivalents beginning of year
    
    
    7,075
    
    
    
    5,021
    
    
    
    15,913Cash and cash equivalents end of year
    
    $
    12,542
    
    
    $
    7,075
    
    
    $
    5,021
 93




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##### Table of Contents



UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements  (Continued)
 28. Unaudited Quarterly Condensed Consolidated Financial Information
  Three Months EndedDecember 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,2005:Total interest and dividend income
    
    $
    117,459
    
    
    $
    104,046
    
    
    $
    96,873
    
    
    $
    84,022Total interest expense
    
    
    (52,097
    )
    
    
    (43,930
    )
    
    
    (37,227
    )
    
    
    (28,656
    )Net interest
income
    
    
    65,362
    
    
    
    60,116
    
    
    
    59,646
    
    
    
    55,366Recovery of (provision for) loan losses
    
    
    (3,231
    )
    
    
    105
    
    
    
    (1,775
    )
    
    
    (1,190
    )Noninterest income
    
    
    8,407
    
    
    
    4,563
    
    
    
    5,668
    
    
    
    8,046Noninterest expense
    
    
    (33,301
    )
    
    
    (25,971
    )
    
    
    (30,428
    )
    
    
    (27,213
    )Income before income tax expense
    
    
    37,237
    
    
    
    38,813
    
    
    
    33,111
    
    
    
    35,009Income tax expense
    
    
    (12,104
    )
    
    
    (13,290
    )
    
    
    (7,747
    )
    
    
    (13,203
    )Net income
    
    $
    25,133
    
    
    $
    25,523
    
    
    $
    25,364
    
    
    $
    21,806Earnings per share:Basic
    
    $
    0.27
    
    
    $
    0.28
    
    
    $
    0.28
    
    
    $
    0.24Diluted
    
    $
    0.26
    
    
    $
    0.27
    
    
    $
    0.27
    
    
    $
    0.232004:Total interest and dividend income
    
    $
    81,564
    
    
    $
    76,550
    
    
    $
    71,634
    
    
    $
    70,316Total interest expense
    
    
    (26,335
    )
    
    
    (23,753
    )
    
    
    (21,719
    )
    
    
    (20,776
    )Net interest income
    
    
    55,229
    
    
    
    52,797
    
    
    
    49,915
    
    
    
    49,540Recovery of (provision for) loan losses
    
    
    (626
    )
    
    
    (1,644
    )
    
    
    (1,009
    )
    
    
    (2,174
    )Noninterest income
    
    
    8,828
    
    
    
    9,808
    
    
    
    5,384
    
    
    
    6,857Noninterest expense
    
    
    (27,406
    )
    
    
    (25,981
    )
    
    
    (22,952
    )
    
    
    (22,814
    )Income before income tax expense
    
    
    37,277
    
    
    
    34,980
    
    
    
    31,338
    
    
    
    31,409Income tax expense
    
    
    (13,534
    )
    
    
    (13,207
    )
    
    
    (11,070
    )
    
    
    (11,590
    )Net income
    
    $
    23,743
    
    
    $
    21,773
    
    
    $
    20,268
    
    
    $
    19,819Earnings per shareBasic
    
    $
    0.26
    
    
    $
    0.24
    
    
    $
    0.22
    
    
    $
    0.22Diluted
    
    $
    0.25
    
    
    $
    0.23
    
    
    $
    0.21
    
    
    $
    0.21
 29. Subsequent Events
   94




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##### Table of Contents



30. Acquisition of Summit Bank Corporation (Unaudited)




95



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##### Table of Contents



Disclosure Controls and Procedures
 Background of the Restatement
  Statement of Cash
Flows-Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities
Acquired for Resale
 Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
  
    
    pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of
the assets of a company;
 
    
    provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and
expenditures of a company are being made only in accordance with
authorizations of management and board of directors of a company; and
 
    
    provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of a companys assets
that could have a material effect on its financial statements.
    96




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
   97




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##### Table of Contents








PART IV





Item 15. Exhibits, Financial Statement Schedules


(a)
    
    The following documents are filed as part of this report.


1.
    
    The following consolidated financial statements of UCBH Holdings, Inc. and subsidiaries are
filed as part of this report under Item 8  Financial Statements and Supplementary Data:


PageReport of Independent Registered Public Accounting Firm
    
    
    48Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    
    50Consolidated Statements of Operations for the years ended December
31, 2005, 2004 and 2003
    
    
    51Consolidated Statements of Changes in Stockholders Equity and
Comprehensive Income (Loss) for each of the years ended December 31,
2005, 2004 and 2003
    
    
    52Consolidated Statements of Cash Flows for each of the years ended
December 31, 2005, 2004 and 2003
    
    
    53Notes to Consolidated Financial Statements
    
    
    54


2.
    
    All other financial schedules are omitted due to the required information is not applicable,
or contained in the Consolidated Financial Statements or the notes thereto.


3.
    
    Exhibits:


Index to Exhibits


Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Agreement and Plan of Merger by and
among UCBH Holdings, Inc. (Buyer),
UCBH Merger Sub, Inc., a wholly owned
subsidiary of Buyer, and Pacifica
Bancorp, Inc. dated May 23, 2005
    
    10-Q
    
    000-24947
    
    
    2.1
    
    August 9, 20052.2
    
    Agreement and Plan of Merger by and
among UCBH Holdings, Inc. (Buyer),
United Commercial Bank, a wholly
owned subsidiary of Buyer, and Asian
American Bank & Trust Company dated
August 2, 2005
    
    10-Q
    
    000-24947
    
    
    2.2
    
    November 9, 20052.3
    
    Agreement and Plan of Merger by and
among UCBH Holdings, Inc. (Buyer),
United Commercial Bank, a wholly
owned subsidiary of Buyer, and Great
Eastern Bank dated October 13, 2005
    
    S-4
    
    000-24947
    
    
    2.1
    
    December 12, 20053.1
    
    Second Amended and Restated
Certificate of Incorporation of UCBH
Holdings, Inc.
    
    10-Q
    
    000-24947
    
    
    3.1
    
    May 10, 20043.2
    
    Amended and Restated Bylaws of UCBH
Holdings, Inc., as amended and
restated
    
    10-Q
    
    000-24947
    
    
    3.2
    
    May 10, 20043.3
    
    Certificate of Designation,
Preferences and Rights of Series A
Participating Preferred Stock (filed
as Exhibit A to Exhibit 4.7 hereto)
    
    8-K
    
    000-24947
    
    
    1
    
    January 29, 2003 98




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith4.0
    
    Form of Stock Certificate of UCBH
Holdings, Inc.
    
    S-1
    
    333-58325
    
    
    4.0
    
    July 1, 19984.1
    
    Indenture of UCBH Holdings, Inc.,
dated April 17, 1998, between UCBH
Holdings, Inc. and Wilmington Trust
Company, as trustee
    
    S-4
    
    333-58335
    
    
    4.1
    
    July 1, 19984.2
    
    Form of Certificate of Series B
Junior Subordinated Debenture
    
    S-4
    
    333-58335
    
    
    4.2
    
    July 1, 19984.3
    
    Certificate of Trust of UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.3
    
    July 1, 19984.4
    
    Amended and Restated Declaration of
Trust of UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.4
    
    July 1, 19984.5
    
    Form of Series B Capital Security
Certificate for UCBH Trust Co.
    
    S-4
    
    333-58335
    
    
    4.5
    
    July 1, 19984.6
    
    Form of Series B Guarantee of the
Company relating to the Series B
Capital Securities
    
    S-4
    
    333-58335
    
    
    4.6
    
    July 1, 19984.7
    
    Rights Agreement dated as of January
28, 2003
    
    8-K
    
    000-24947
    
    
    1
    
    January 29, 20034.8
    
    Indenture of UCBH Holdings, Inc.,
dated September 22, 2005, between
UCBH Holdings, Inc. and Wilmington
Trust Company, as trustee
    
    10-Q
    
    000-24947
    
    
    2.2
    
    November 9, 200510.1
    
    Employment Agreement between UCBH
Holdings, Inc., United Commercial
Bank and Thomas S. Wu
    
    10-Q
    
    000-24947
    
    
    10.1
    
    November 9, 200410.2
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Jonathan H.
Downing
    
    8-K
    
    000-24947
    
    
    10.2
    
    June 13, 200510.3
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Sylvia Loh as
well as certain other Executive Vice
Presidents of UCBH Holdings, Inc. or
United Commercial Bank
    
    10-Q
    
    000-24947
    
    
    10.3
    
    November 9, 200410.4
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Ka Wah (Tony)
Tsui as well as certain other Senior
Vice Presidents of UCBH Holdings,
Inc. or United Commercial Bank
    
    10-Q
    
    000-24947
    
    
    10.4
    
    November 9, 200410.5
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Daniel Gautsch
    
    8-K
    
    000-24947
    
    
    10.1
    
    June 8, 200510.6
    
    Form of Change in Control Agreement
among UCBH Holdings, Inc., United
Commercial Bank and Dennis Wu
    
    8-K
    
    000-24947
    
    
    10.1
    
    June 13, 200510.7
    
    Amended UCBH Holdings, Inc. 1998
Stock Option Plan
    
    8-K
    
    000-24947
    
    
    10.1
    
    May 25, 200510.8
    
    Executive Deferred Compensation Plan,
as amended
    
    8-K
    
    000-24947
    
    
    10.1
    
    December 20, 200510.9
    
    Director Deferred Compensation Plan
    
    10-K
    
    000-24947
    
    
    10.7
    
    March 17, 200510.10
    
    Form of Indemnification Agreement of
UCBH Holdings, Inc.
    
    8-K
    
    000-24947
    
    
    10.3
    
    June 13, 200510.11
    
    Form of Indemnification Agreement of
United Commercial Bank.
    
    8-K
    
    000-24947
    
    
    10.4
    
    June 13, 200514.1
    
    Code of Conduct, as amended on August 14, 2004.
    
    8-K
    
    000-24947
    
    
    14.1
    
    September 1, 200421.0
    
    Subsidiaries of UCBH Holdings, Inc.
    
    10-K
    
    000-24947
    
    
    21.0
    
    March 15, 200623.0
    
    Consent of Independent Registered
Public Accounting Firm
PricewaterhouseCoopers LLP
    
    
    
    
    
    
    
    
    
    
    √31.1
    
    Certificate pursuant to Rule 13a-14(a) of the Securities Exchange
Act, as amended, signed and dated by Thomas S. Wu.
    
    
    
    
    
    
    
    
    
    
    √31.2
    
    Certificate pursuant to Rule 13a-14(a) of the Securities Exchange
Act, as amended, signed and dated by Dennis Wu.
    
    
    
    
    
    
    
    
    
    
    √32.0
    
    Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Thomas S. Wu and Dennis Wu.
    
    
    
    
    
    
    
    
    
    
    (1)


(1) Furnished herewith


99



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##### Table of Contents



SIGNATURES
  UCBH HOLDINGS, INC.Date: November 17, 2006
    
    /s/ Thomas S. WuThomas S. WuChairman, President and Chief Executive Officer(Principal Executive Officer)
 Date: November 17, 2006
    
    /s/ Dennis WuDennis WuDirector, Executive Vice President and Chief
Financial Officer(Principal Financial and Accounting Officer)
  Name
    
    Title
    
    Date/s/ Thomas S. Wu

Thomas S. Wu
    
    Chairman, President and Chief
Executive Officer (Principal
Executive Officer)
    
    November 17, 2006/s/ Dennis Wu

Dennis Wu
    
    Director, Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting
Officer)
    
    November 17, 2006/s/ Anthony Y. Chan

Anthony Y. Chan
    
    Director
    
    November 17, 2006/s/ Joseph J. Jou

Joseph J. Jou
    
    Lead Director
    
    November 17, 2006/s/ Li-Lin Ko

Li-Lin Ko
    
    Director
    
    November 17, 2006/s/ James Kwok

James Kwok
    
    Director
    
    November 17, 2006/s/ David S. Ng

David S. Ng
    
    Director
    
    November 17, 2006/s/ Richard Li-Chung Wang

Richard Li-Chung Wang
    
    Director
    
    November 17, 2006/s/ Dr. Godwin Wong

Dr. Godwin Wong
    
    Director
    
    November 17, 2006
 100