Exhibit 13

                      SELECTED CONSOLIDATED FINANCIAL DATA

     We are providing the following selected consolidated financial information
about us to assist you in your review of the Company. This information is
derived from our audited financial statements for each of the fiscal years shown
below. The following information is only a summary and you should read it
together with our consolidated financial statements and notes included in this
Annual Report.

<TABLE>
<CAPTION>
                                                                               AT DECEMBER 31,
                                                   ------------------------------------------------------------------------
                                                      1999          1998          1997             1996             1995
                                                   ----------    ----------    ----------       ----------       ----------
                                                                            (DOLLARS IN THOUSANDS)
<S>                                                <C>           <C>           <C>              <C>              <C>
FINANCIAL CONDITION AND OTHER DATA:
Total assets....................................   $2,284,800    $2,147,332    $1,561,650       $1,474,617       $1,521,699
Net loans.......................................    1,667,192     1,477,226     1,202,095        1,054,686        1,011,909
Securities(1)...................................      512,361       587,557       270,103          343,739          429,005
Deposits........................................    1,676,148     1,633,895     1,468,987        1,393,125        1,311,604
Guaranteed preferred beneficial interests in
  junior subordinated debentures................       30,000        30,000            --               --               --
Borrowings......................................      449,612       368,000            --               --          128,600
Long-term debt to affiliates....................           --            --        20,060           16,736           13,000
Stockholders' equity............................      110,107       103,638        62,552           54,344           55,457
Nonperforming assets............................        5,354         6,880        10,266           21,096           22,287
Ratio of equity to assets.......................         4.82%         4.83%         4.01%            3.69%            3.64%
</TABLE>

<TABLE>
<CAPTION>
                                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                   ------------------------------------------------------------------------
                                                      1999          1998          1997             1996             1995
                                                   ----------    ----------    ----------       ----------       ----------
                                                              (DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S>                                                <C>           <C>           <C>              <C>              <C>
OPERATING DATA:
Interest income.................................   $  158,683    $  130,831    $  107,591       $  102,964       $   99,034
Interest expense................................       87,969        78,393        64,252           63,955           70,196
                                                   ----------    ----------    ----------       ----------       ----------
Net interest income.............................       70,714        52,438        43,339           39,009           28,838
Provision for loan losses.......................        5,645         3,412         1,154            1,476            8,777
                                                   ----------    ----------    ----------       ----------       ----------
  Net interest income after provision for loan
    losses......................................       65,069        49,026        42,185           37,533           20,061
Noninterest income..............................        4,075         3,402         3,094            3,397            3,767
SAIF recapitalization assessment................           --            --            --            7,716(2)            --
Noninterest expense.............................       37,198        33,685        32,190           33,697           30,142
                                                   ----------    ----------    ----------       ----------       ----------
Income (loss) before taxes......................       31,946        18,743        13,089             (483)          (6,314)
Income tax expense (benefit)....................       12,878         7,855         5,790             (177)          (3,406)
                                                   ----------    ----------    ----------       ----------       ----------
Net income (loss)...............................   $   19,068    $   10,888    $    7,299       $     (306)(2)   $   (2,908)
                                                   ----------    ----------    ----------       ----------       ----------
                                                   ----------    ----------    ----------       ----------       ----------
OPERATING RATIOS AND OTHER DATA:
Return (loss) on average assets.................         0.87%         0.60%         0.47%           (0.02)%          (0.19)%
Return (loss) on average equity.................        18.00         12.52         12.33            (0.48)           (4.89)
Interest rate spread............................         3.04          2.72          2.71             2.58             1.85
Net interest margin.............................         3.29          2.95          2.89             2.68             1.96
Efficiency ratio(3)(4)..........................        49.74         60.32         69.33            79.46            92.45
Noninterest expense to average assets(4)........         1.69          1.84          2.08             2.23             1.98

ASSET QUALITY DATA:
Nonperforming assets to total assets............         0.23%         0.32%         0.66%            1.43%            1.46%
Nonperforming loans to total gross loans........         0.27          0.41          0.81             1.83             2.00
Allowance for loan losses to total gross
  loans.........................................         1.16          1.00          1.00             1.10             1.34
Allowance for loan losses to nonperforming
  loans.........................................       421.05        244.30        123.22            59.98            66.88
Net charge-offs to average gross loans..........         0.07          0.05          0.06             0.34             0.26

BANK REGULATORY CAPITAL RATIOS:
Tier 1 risk-based capital.......................        10.04%        10.42%         9.90%            9.41%            9.21%
Total risk-based capital........................        11.29         11.61         11.15            10.67            10.47
Leverage ratio (Tier 1 capital to total average
  assets).......................................         6.58          6.25          5.37             4.90             4.50

EARNINGS PER SHARE:
Basic earnings (loss) per share.................   $     2.04    $     1.30    $     1.22       $    (0.05)      $    (0.48)
Diluted earnings (loss) per share...............   $     2.01    $     1.26    $     1.05       $    (0.05)      $    (0.48)
</TABLE>

------------------
(1) Includes available for sale securities and held to maturity securities.
(2) During 1996, our net income was adversely affected by the one-time SAIF
    recapitalization assessment which we recognized during the third quarter of
    the year. Without the SAIF recapitalization assessment, our net income would
    have been $4.3 million for 1996.
(3) Represents noninterest expense divided by the total of our net interest
    income before provision for loan losses and our noninterest income.
(4) During the year ended December 31, 1996, such ratios exclude the one-time
    SAIF recapitalization assessment. Including the SAIF recapitalization
    assessment, our efficiency ratio would have been 97.66% and our noninterest
    expense to average assets would have been 2.74%.

                                        1
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains statements about the future that may or may
not materialize. When we use words like 'anticipate,' 'believe,' 'estimate,'
'may,' 'intend,' or 'expect,' we are speculating about what will happen in the
future. The outcome may be materially different from our speculations. We
believe that certain factors identified elsewhere in this Annual Report could
cause a different outcome. There may also be other factors that could cause a
different outcome.

     The following discussion and analysis is intended to assist in an
understanding of the significant factors that influence our financial condition
at December 31, 1999 as compared to December 31, 1998. It also analyzes our
results of operations for the year ended December 31, 1999 as compared to the
year ended December 31, 1998, and for the year ended December 31, 1998 as
compared to December 31, 1997. You should read the discussion and analysis
together with our financial statements and corresponding notes included in this
Annual Report.

RESULTS OF OPERATIONS

     General. Our main source of income is net interest income, which is the
difference between our interest income (generally interest paid to us by
borrowers and paid on our investments) and our interest expense (generally the
interest we paid depositors as well as interest we paid on other borrowings,
such as loans from the Federal Home Loan Bank). Changes in the average amount of
interest-earning assets (generally loans and investments) we hold as well as in
interest-bearing liabilities (generally deposits and other borrowings) we incur
during a period affect the amount of net interest income we earn. Changes in the
interest rates earned on loans and securities and paid on deposits and other
borrowings also affect our net interest income.

     We also earn income through noninterest income, which is generally made up
of commercial banking fees and other fees paid by our customers. In addition to
interest expense, our income is impacted by noninterest expenses (primarily our
compensation, occupancy and furniture and equipment expenses) and our provision
for loan losses. Other factors beyond our control, such as general economic
conditions, competition from other financial services companies, changes in
interest rates, government and regulatory action and policies, may also
significantly affect our results of operations.

     The Bank operates commercial and consumer lending business segments.
Through its Commercial Banking Division, the Bank offers commercial deposit
facilities and commercial loans. Included in the loans offered are
nonresidential real estate loans, commercial business loans, multifamily real
estate loans, construction loans, and Small Business Administration ('SBA')
loans. Through the consumer business segment, the Bank offers consumer deposit
products including savings accounts, checking accounts and time deposits. The
consumer segment also originates residential mortgage (one to four family) loans
and home equity lines of credit.

     Through the Commercial Banking Division, the Bank originates commercial
real estate loans for primary users as well as investors. The Bank also
originates multifamily mortgages which are generally secured by five to 50 unit
residential buildings within its primary market areas. Loans secured by
residential buildings in excess of 50 units are underwritten pursuant to the
Bank's underwriting standards for commercial nonresidential real estate loans.
Both types of commercial real estate loans are generally fixed rate for an
initial period of time and then become adjustable-rate loans. They are generally
amortized over 25 years or less and have balloon payments in ten years or less.

     Construction loans are originated primarily for the construction of
entry-level and first-time move-up housing within California. We also lend for
the construction of commercial and mix-used properties. The Bank focuses on
mid-tier builders. Construction loans are generally prime based and are written
for a one-year term and may have up to a one-year renewal option.

     The Bank provides commercial business loans to customers for working
capital purposes for accounts receivable and inventory and loans to finance
equipment, accounts receivable and inventory. SBA loans are generally secured
and have personal guarantees from the borrower.

                                        2
<PAGE>
     The Bank originates fixed-rate and adjustable-rate residential mortgage
(one to four family) loans within its primary market area. These loans are
originated through the retail branches. Such mortgage loans are originated
primarily for owner-occupants. In addition to these residential mortgage loans,
the Bank offers home equity loans.

     Net Income. We earned $19.1 million in net income for 1999 as compared to
$10.9 million in net income in 1998. Our annualized return on average assets was
0.87% in 1999 as compared to 0.60% for 1998, and our return on average equity
was 18.00% in 1999 as compared to 12.52% in 1998.

     We earned $10.9 million in net income for 1998 as compared to $7.3 million
for 1997. Our annualized return on average assets was 0.60% for 1998 as compared
to 0.47% for 1997, and our annualized return on average equity was 12.52% for
1998 as compared to 12.33% for 1997.

     From 1997 to the year-end 1999, we have experienced steady growth in net
income. The increase in our net income in 1999 as compared to 1998 was primarily
the result of an increase in net interest income from $52.4 million to $70.7
million. The reasons for the change in the interest income are discussed below.

     Partially offsetting this increase in interest income was an increase in
the provision for loan losses from $3.4 million in 1998 to $5.6 million in 1999.
We provided more allowance for loan losses as a result of the increase in the
loan portfolio and as a result of the increase in the concentration of
commercial loans and the reduction in the concentration of consumer loans,
primarily residential mortgage (one to four family) loans which increase the
loan portfolio's risk profile. Also partially offsetting the increase in net
interest income was the increase in noninterest expenses from $33.7 million in
1998 to $37.2 million in 1999. The increase in our noninterest expenses, as
discussed below, resulted primarily from increases in personnel expenses
incurred as a result of the continued expansion of our Commercial Banking
Division.

     The increase in our net income in 1998 as compared to 1997 was mainly the
result of an increase in net interest income from $43.3 million to $52.4 million
as discussed below and was also due to a reduction in deposit insurance expense
from $1.8 million to $889,000 in 1998.

     Net Interest Income and Net Interest Margin. Our net interest margin,
calculated on a fully tax equivalent basis (representing net interest income as
a percentage of average interest-earning assets), improved to 3.34% for 1999
from 2.98% for 1998. Our net interest income for 1999 was $70.7 million, an
increase of $18.3 million, or 34.9%, from our net interest income of $52.4
million for 1998 primarily as a result of the following factors:

     o We increased the average balance of loans in our portfolio from $1.30
       billion to $1.57 billion.

     o We increased the average balance of securities in our portfolio from
       $459.7 million in 1998 to $573.7 million in 1999.

     o We increased our average yield on loans from 7.79% to 7.86% as a result
       of originating more higher-yielding commercial loans than residential
       mortgage (one to four family) loans.

     Our net interest margin, calculated on a fully tax equivalent basis,
improved to 2.98% for 1998 from 2.89% for 1997. Net interest income for 1998 was
$52.4 million, an increase of $9.1 million, or 18.0%, from our net interest
income of $43.3 million for 1997. Net interest income increased in 1998
primarily as a result of the following factors:

     o We increased the average balance of loans in our portfolio from $1.12
       billion to $1.30 billion.

     o We increased the average balance of securities in our portfolio from
       $326.7 million in 1997 to $459.7 million in 1998.

     o We increased our average yield on securities from 5.72% to 6.21% as a
       result of purchasing new securities which had higher yields and the
       prepayment of lower-yielding COFI securities.

     o We increased our average yield on loans from 7.67% to 7.79% as a result
       of originating more higher-yielding commercial loans than residential
       mortgage (one to four family) loans.

                                       3
<PAGE>

     The following table presents, for the periods indicated, the distribution
of our average assets, liabilities and stockholders' equity, as well as the
total dollar amounts of interest income from average interest-earning assets and
the resultant yields and the dollar amounts of interest expense of average
interest-bearing liabilities, expressed both in dollars and rates:
<TABLE>
<CAPTION>
                                                                                   FOR THE YEARS ENDED DECEMBER 31,
                                                                          ---------------------------------------------------
                                                               AT                         1999                        1998
                                                          DECEMBER 31,    -------------------------------------    ----------
                                                              1999                      INTEREST
                                                          ------------     AVERAGE      INCOME OR     AVERAGE       AVERAGE
                                                           YIELD/COST      BALANCE       EXPENSE     YIELD/COST     BALANCE
                                                          ------------    ----------    ---------    ----------    ----------
                                                                                (DOLLARS IN THOUSANDS)
<S>                                                       <C>             <C>           <C>          <C>           <C>
Interest-earning assets:
  Loans(1).............................................       8.18%       $1,573,071    $ 123,705        7.86%     $1,306,496
  Securities...........................................       6.28           573,737       34,955        6.09         459,700
  Other................................................       4.25               472           23        4.82           8,631
                                                                          ----------    ---------                  ----------
Total interest-earning assets..........................       7.72         2,147,280      158,683        7.39       1,774,827
Noninterest-earning assets.............................         --            55,607           --          --          53,892
                                                                          ----------    ---------                  ----------
Total assets...........................................       7.45        $2,202,887    $ 158,683        7.20      $1,828,719
                                                               ---        ----------    ---------       -----      ----------
                                                                          ----------                               ----------
Interest-bearing liabilities:
  Deposits:
    NOW, checking and money market accounts............       1.66        $  136,832    $   2,498        1.83      $  106,075
    Savings accounts...................................       1.92           247,585        5,047        2.04         216,273
    Time deposits......................................       4.64         1,189,798       54,410        4.57       1,148,010
                                                                          ----------    ---------                  ----------
  Total deposits.......................................       3.95         1,574,215       61,955        3.94       1,470,358
                                                                          ----------    ---------                  ----------
  Borrowings...........................................       5.55           420,119       23,201        5.52         186,615
  Guaranteed preferred beneficial interests in junior
    subordinated debentures............................       9.38            30,000        2,812        9.38          21,080
  Long-term debt to affiliates.........................         --                --           --          --           5,985
                                                                          ----------    ---------                  ----------
Total interest-bearing liabilities.....................       4.37         2,024,334       87,968        4.35       1,684,038
                                                               ---        ----------    ---------       -----      ----------
Noninterest-bearing deposits...........................                       54,639                                   40,804
Other noninterest-bearing liabilities..................                       17,999                                   16,929
Stockholders' equity...................................                      105,915                                   86,948
                                                                          ----------                               ----------
Total liabilities and stockholders' equity.............                   $2,202,887                               $1,828,719
                                                                          ----------                               ----------
                                                                          ----------                               ----------
Net interest income/net interest rate spread(2)........       3.35%                     $  70,714        3.04%
                                                               ---                      ---------       -----
                                                               ---                      ---------       -----
Net interest-earning assets/net interest margin(3).....       3.57%       $  122,947                     3.29%     $   90,789
                                                               ---        ----------                    -----      ----------
                                                               ---        ----------                    -----      ----------
Ratio of interest-earning assets to interest-bearing
  liabilities..........................................       1.05x             1.06x                                    1.05x
                                                               ---               ---                                      ---
                                                               ---               ---                                      ---

<CAPTION>

                                                                                                    1997
                                                                                    -------------------------------------
                                                         INTEREST                                 INTEREST
                                                         INCOME OR     AVERAGE       AVERAGE      INCOME OR     AVERAGE
                                                          EXPENSE     YIELD/COST     BALANCE       EXPENSE     YIELD/COST
                                                         ---------    ----------    ----------    ---------    ----------

<S>                                                       <C>         <C>           <C>           <C>          <C>
Interest-earning assets:
  Loans(1).............................................  $ 101,823        7.79%     $1,123,356    $  86,141        7.67%
  Securities...........................................     28,525        6.21         326,728       18,690        5.72
  Other................................................        483        5.60          48,944        2,760        5.64
                                                         ---------                  ----------    ---------
Total interest-earning assets..........................    130,831        7.37       1,499,028      107,591        7.18
Noninterest-earning assets.............................         --          --          45,664           --          --
                                                         ---------                  ----------    ---------
Total assets...........................................  $ 130,831        7.15      $1,544,692    $ 107,591        6.97
                                                         ---------       -----      ----------    ---------       -----
                                                                                    ----------
Interest-bearing liabilities:
  Deposits:
    NOW, checking and money market accounts............  $   1,640        1.55      $  100,134    $   1,392        1.39
    Savings accounts...................................      4,918        2.27         212,943        4,834        2.27
    Time deposits......................................     58,332        5.08       1,090,320       55,287        5.07
                                                         ---------                  ----------    ---------
  Total deposits.......................................     64,890        4.41       1,403,397       61,513        4.38
                                                         ---------                  ----------    ---------
  Borrowings...........................................     10,919        5.85          16,551          914        5.52
  Guaranteed preferred beneficial interests in junior
    subordinated debentures............................      1,985        9.38              --           --          --
  Long-term debt to affiliates.........................        599       10.01          18,398        1,825        9.92
                                                         ---------                  ----------    ---------
Total interest-bearing liabilities.....................     78,393        4.65       1,438,346       64,252        4.47
                                                         ---------       -----      ----------    ---------       -----
Noninterest-bearing deposits...........................                                 33,780
Other noninterest-bearing liabilities..................                                 13,358
Stockholders' equity...................................                                 59,208
                                                                                    ----------
Total liabilities and stockholders' equity.............                             $1,544,692
                                                                                    ----------
                                                                                    ----------
Net interest income/net interest rate spread(2)........  $  52,438        2.72%                   $  43,339        2.71%
                                                         ---------       -----                    ---------       -----
                                                         ---------       -----                    ---------       -----
Net interest-earning assets/net interest margin(3).....                   2.95%     $   60,682                     2.89%
                                                                         -----      ----------                    -----
                                                                         -----      ----------                    -----
Ratio of interest-earning assets to interest-bearing
  liabilities..........................................                                   1.04x
                                                                                           ---
                                                                                           ---
</TABLE>

------------------
(1) Nonaccrual loans are included in the table for computation purposes, but the
    foregone interest on such loans is excluded.
(2) Interest rate spread represents the difference between the average yield on
    interest-earning assets and the average cost of interest-bearing
    liabilities.
(3) Net interest margin represents net interest income divided by average
    interest-earning assets.

                                       4
<PAGE>

     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 we earn on
interest-earning assets and rates we pay on interest-bearing deposits and other
borrowed funds, referred to as 'rate changes.'

     The following table sets forth the changes in interest income and interest
expense for the major categories of our interest-earning assets and
interest-bearing liabilities, and the amount of change that is attributable to
volume changes and rate changes for the years indicated. 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.

<TABLE>
<CAPTION>
                                                  FOR THE YEAR ENDED                  FOR THE YEAR ENDED
                                             DECEMBER 31, 1999 COMPARED TO      DECEMBER 31, 1998 COMPARED TO
                                              THE YEAR ENDED DECEMBER 31,        THE YEAR ENDED DECEMBER 31,
                                                         1998                                1997
                                            -------------------------------     ------------------------------
                                            VOLUME       RATE         NET       VOLUME       RATE        NET
                                            -------     -------     -------     -------     ------     -------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                         <C>         <C>         <C>         <C>         <C>        <C>
Interest income:
  Loans..................................   $20,955     $   927     $21,882     $14,252     $1,430     $15,682
  Securities.............................     6,937        (507)      6,430       8,140      1,695       9,835
  Other..................................      (401)        (59)       (460)     (2,255)       (22)     (2,277)
                                            -------     -------     -------     -------     ------     -------
Total interest income on interest-earning
  assets.................................    27,491         361      27,852      20,137      3,103      23,240
                                            -------     -------     -------     -------     ------     -------
Interest expense:
  Deposits:
     NOW, checking, and money market
       accounts..........................       531         327         858         108        140         248
     Savings accounts....................       453        (324)        129          76          8          84
     Time deposits.......................     2,246      (6,168)     (3,922)      2,931        114       3,045
  Borrowings.............................    12,860        (577)     12,283       9,947         58      10,005
  Guaranteed preferred beneficial
     interests in junior subordinated
     debentures..........................       827          --         827       1,985         --       1,985
  Long-term debt to affiliates...........      (599)         --        (599)     (1,241)        15      (1,226)
                                            -------     -------     -------     -------     ------     -------
Total interest expense on interest-
  bearing liabilities....................    16,318      (6,742)      9,576      13,806        335      14,141
                                            -------     -------     -------     -------     ------     -------
Increase in net interest income..........   $11,173     $ 7,103     $18,276     $ 6,331     $2,768     $ 9,099
                                            -------     -------     -------     -------     ------     -------
                                            -------     -------     -------     -------     ------     -------
</TABLE>

     Provision for Loan Losses.  We make provisions for loan losses to bring our
allowance for loan losses to a level that we believe is appropriate. We base our
determination of the appropriate level on such factors as our historical loss
experience, the volume and type of loans we are making, the amount and trends
relating to our delinquent and nonperforming loans, regulatory policies, general
economic conditions and other factors relating to the collectibility of loans in
our portfolio. The amount we provide for loan losses is charged to earnings.

     For the year ended December 31, 1999, our provision for loan losses was
$5.6 million, an increase of $2.2 million from our provision of $3.4 million for
the previous year. The provision for loan losses increased in 1999 as a result
of the Bank originating more commercial real estate, commercial business and
construction loans and a resulting increase in the risk profile inherent within
the loan portfolio, and reducing the relative level of residential mortgage (one
to four family) loans and as a result of increasing the overall size of the loan
portfolio.

     For the year ended December 31, 1998, our provision for loan losses was
$3.4 million, an increase of $2.3 million from our provision of $1.2 million for
the previous year as a result of increasing the loan portfolio balance and
originating more commercial real estate, commercial business, construction and
multifamily loans with an increased inherent risk.

                                       5
<PAGE>

     Noninterest Income.  Below we set forth the makeup of our noninterest
income for the periods indicated:

<TABLE>
<CAPTION>
                                                                                   FOR THE YEARS ENDED
                                                                                      DECEMBER 31,
                                                                             -------------------------------
                                                                               1999       1998       1997
                                                                             ---------  ---------  ---------
                                                                                 (DOLLARS IN THOUSANDS)
<S>                                                                          <C>        <C>        <C>
Commercial banking fees....................................................  $   2,071  $   1,499  $   1,104
Service charges on deposit accounts........................................        840        813        761
Gain on sale of servicing rights...........................................         --        235      1,165
Gain (loss) on loan sales..................................................        784        308       (204)
Gain (loss) on sale of securities..........................................         --          6       (806)
Loan servicing income......................................................        379        400        601
Miscellaneous income.......................................................          1        141        473
                                                                             ---------  ---------  ---------
Total noninterest income...................................................  $   4,075  $   3,402  $   3,094
                                                                             ---------  ---------  ---------
                                                                             ---------  ---------  ---------
</TABLE>

     Our noninterest income increased by $673,000, or 19.8%, to $4.1 million for
the year ended December 31, 1999, from $3.4 million for the preceding year. The
increase is primarily the result of collecting more commercial banking fees
during 1999 due to the continued growth of our Commercial Banking Division. We
also increased our gain on sale of loans from $308,000 in 1998 to $784,000 in
1999 primarily as a result of the sale of SBA loans and the disposition of one
problem asset.

     Our noninterest income increased by $308,000, or 10.0%, to $3.4 million for
the year ended December 31, 1998, from $3.1 million for the preceding year. The
increase is primarily the result of collecting more fees on checking accounts
and collecting more commercial banking fees during 1998 as a result of the
continued growth of our Commercial Banking Division. We also increased our gain
on sale of loans from a loss of $204,000 in 1997 to a gain of $308,000 in 1998.

     Noninterest Expense.  Below is a table outlining the components of our
noninterest expense for the periods indicated:

<TABLE>
<CAPTION>
                                                                               FOR THE YEARS ENDED
                                                                                  DECEMBER 31,
                                                                         -------------------------------
                                                                           1999       1998       1997
                                                                         ---------  ---------  ---------
                                                                             (DOLLARS IN THOUSANDS)
<S>                                                                      <C>        <C>        <C>
Personnel..............................................................  $  18,427  $  15,720  $  14,087
Occupancy..............................................................      4,885      4,975      4,811
Data processing........................................................      2,084      2,064      2,059
Furniture and equipment................................................      2,119      2,316      1,902
Deposit insurance......................................................        938        889      1,798
Communication..........................................................        425        414        400
Professional fees and contracted services..............................      2,240      1,870      2,242
Foreclosed assets expense..............................................         80         62        671
Miscellaneous expense..................................................      6,000      5,375      4,220
                                                                         ---------  ---------  ---------
Total noninterest expense..............................................  $  37,198  $  33,685  $  32,190
                                                                         ---------  ---------  ---------
                                                                         ---------  ---------  ---------
Efficiency ratio.......................................................      49.74%     60.32%     69.33%
Noninterest expenses to average assets.................................       1.69       1.84       2.08
</TABLE>

     Our noninterest expense increased to $37.2 million for 1999 from $33.7
million for 1998, an increase of 10.4%. The higher expenses in 1999 primarily
resulted from a $2.7 million increase in personnel expenses as a result of
hiring additional employees for the Commercial Banking Division. Miscellaneous
expenses increased from $5.4 million in 1998 to $6.0 million in 1999 largely as
a result of increased advertising expenses.

                                       6
<PAGE>

     Our noninterest expense increased to $33.7 million for 1998 from $32.2
million for 1997, an increase of 4.7%. The higher expenses in 1998 primarily
resulted from a $1.6 million increase in personnel expenses as a result of
hiring more employees for the Commercial Banking Division. We hired the
additional employees to carry out our strategic plan of transforming the Bank
from a thrift to a commercial bank. Miscellaneous expenses increased from $4.2
million for 1997 to $5.4 million for 1998, primarily as a result of increases in
advertising and printing expenses in conjunction with our charter change to a
commercial bank and our name change to United Commercial Bank (formerly United
Savings Bank, F.S.B.).

     Provision for Income Taxes.  During 1999, we recorded a $12.9 million
provision for income taxes which resulted in an effective tax rate of 40.3%.
This effective tax rate is lower than the expected combined federal and state
statutory rates of 42.1% primarily due to the effect of municipal securities
which are not fully taxable being held for a full year in 1999 in contrast to a
partial year for 1998. During 1998, we recorded a $7.9 million provision for
income taxes, which resulted in an effective tax rate of 43.8%.

FINANCIAL CONDITION

     We increased the size of our balance sheet from $2.15 billion at December
31, 1998, to $2.28 billion at December 31, 1999. This increase of $137.5
million, or 6.4%, resulted from the increase in the size of our loan portfolio.
Our loan portfolio increased from $1.49 billion at December 31, 1998, to $1.69
billion at December 31, 1999. This increase of $194.5 million, or 13.0%,
resulted from the growth in commercial loans. The loan originations and year-end
balances are discussed in detail below. Our securities portfolio decreased from
$587.6 million at December 31, 1998, to $512.4 million at December 31, 1999, a
decrease of $75.2 million, or 12.8%, due primarily to the maturities of existing
securities.

     We funded the $137.5 million of new assets by increasing our deposits and
borrowings. Our deposits grew by $42.3 million, or 2.6%, to $1.68 billion at
December 31, 1999. This deposit growth is discussed in more detail below. We
also increased our borrowings by $81.6 million during 1999 to fund the asset
growth. The new borrowings were primarily advances from the Federal Home Loan
Bank.

     Loan Portfolio.  We originated commercial real estate loans of $255.5
million in 1999 as compared to $129.8 million in 1998. We increased multifamily
originations to $135.4 million in 1999 from $54.5 million in 1998. Additionally,
we made commitments for commercial loans of $91.4 million in 1999 as compared to
$63.8 million in 1998, of which $18.1 million were SBA loans as compared to
$11.6 million in 1998. As a result of the decreased emphasis on consumer
lending, primarily residential (one to four family), we originated residential
mortgage (one to four family) loans of $59.6 million during 1999 as compared
with $303.8 million in 1998.

     As a result of the shrinking profit margins and declining value of loan
servicing rights, due to increased competition, we decided in 1996 to increase
the emphasis of commercial real estate and commercial business loans and to
reduce the origination volume of residential mortgage (one to four family)
loans. We closed our mortgage banking division and sold the loan servicing
portfolio. We also stopped originating mortgage loans for sale in the secondary
market and now only originate residential mortgage (one to four family) loans
for portfolio retention. The majority of our residential mortgage (one to four
family) loans originated have been limited documentation which requires a higher
down payment and less written documentation from the borrower.

                                       7
<PAGE>

     The table below shows the makeup of our loan portfolio by amount and
percentage of total gross loans in each major loan category at the dates
indicated:
<TABLE>
<CAPTION>
                                                                     AT DECEMBER 31,
                             -----------------------------------------------------------------------------------------------
                                     1999                     1998                     1997                     1996
                             --------------------     --------------------     --------------------     --------------------
                               AMOUNT        %          AMOUNT        %          AMOUNT        %          AMOUNT        %
                             ----------    ------     ----------    ------     ----------    ------     ----------    ------
                                                                 (DOLLARS IN THOUSANDS)
<S>                          <C>           <C>        <C>           <C>        <C>           <C>        <C>           <C>
Commercial:
 Secured by real estate-
   nonresidential.........   $  435,061     25.77%    $  229,693     15.39%    $  115,366      9.51%    $  123,003     11.54%
 Secured by real estate-
   multifamily............      423,838     25.11        346,967     23.26        339,257     27.97        361,591     33.93
 Construction.............       89,710      5.31         61,486      4.12         26,603      2.19         19,892      1.87
 Commercial business......       59,332      3.52         46,240      3.10         21,146      1.74          6,595      0.62
                             ----------    ------     ----------    ------     ----------    ------     ----------    ------
   Total commercial.......    1,007,941     59.71        684,386     45.87        502,372     41.41        511,081     47.96
                             ----------    ------     ----------    ------     ----------    ------     ----------    ------
Consumer:
 Residential mortgage
   (one to four family)...      665,923     39.45        790,789     53.01        691,167     56.98        541,156     50.79
 Other....................       14,248      0.84         16,711      1.12         19,475      1.61         13,315      1.25
                             ----------    ------     ----------    ------     ----------    ------     ----------    ------
   Total consumer.........      680,171     40.29        807,500     54.13        710,642     58.59        554,471     52.04
                             ----------    ------     ----------    ------     ----------    ------     ----------    ------
Total gross loans.........    1,688,112    100.00%     1,491,886    100.00%     1,213,014    100.00%     1,065,552    100.00%
                                           ------                   ------                   ------                   ------
                                           ------                   ------                   ------                   ------
Net deferred loan
 origination (fees)
 costs....................       (1,417)                     262                    1,223                      816
                             ----------               ----------               ----------               ----------
Loans.....................    1,686,695                1,492,148                1,214,237                1,066,368
Allowance for loan
 losses...................      (19,503)                 (14,922)                 (12,142)                 (11,682)
                             ----------               ----------               ----------               ----------
Total net loans...........   $1,667,192               $1,477,226               $1,202,095               $1,054,686
                             ----------               ----------               ----------               ----------
                             ----------               ----------               ----------               ----------

<CAPTION>

                                    1995
                            --------------------
                              AMOUNT        %
                            ----------    ------

<S>                          <C>          <C>
Commercial:
 Secured by real estate-
   nonresidential.........  $  131,259     12.80%
 Secured by real estate-
   multifamily............     376,398     36.70
 Construction.............       6,612      0.64
 Commercial business......          --        --
                            ----------    ------
   Total commercial.......     514,269     50.14
                            ----------    ------
Consumer:
 Residential mortgage
   (one to four family)...     507,121     49.45
 Other....................       4,174      0.41
                            ----------    ------
   Total consumer.........     511,295     49.86
                            ----------    ------
Total gross loans.........   1,025,564    100.00%
                                          ------
                                          ------
Net deferred loan
 origination (fees)
 costs....................          44
                            ----------
Loans.....................   1,025,608
Allowance for loan
 losses...................     (13,699)
                            ----------
Total net loans...........  $1,011,909
                            ----------
                            ----------
</TABLE>

     The table below shows new loan commitments during the years indicated:

<TABLE>
<CAPTION>
                                                                                      1999        1998        1997
                                                                                    --------    --------    --------
                                                                                         (DOLLARS IN THOUSANDS)
<S>                                                                                 <C>         <C>         <C>
Commercial:
  Secured by real estate-nonresidential(1).......................................   $255,456    $129,790    $ 23,743
  Secured by real estate-multifamily (1).........................................    135,375      54,500       7,461
  Construction...................................................................    179,489     127,329      59,569
  Commercial business............................................................     73,233      52,269      28,568
  Small Business Administration..................................................     18,141      11,550       3,365
                                                                                    --------    --------    --------
    Total commercial loans.......................................................    661,694     375,438     122,706
                                                                                    --------    --------    --------
Consumer:
  Residential mortgage (one to four family)(1)...................................     59,553     303,804     274,824
  Other..........................................................................      9,943       8,550      13,552
                                                                                    --------    --------    --------
    Total consumer loans.........................................................     69,496     312,354     288,376
                                                                                    --------    --------    --------
Total commitments................................................................   $731,190    $687,792    $411,082
                                                                                    --------    --------    --------
                                                                                    --------    --------    --------
</TABLE>

------------------

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

                                       8
<PAGE>

     Our total loans increased in 1999 to $1.69 billion at December 31, 1999, an
increase of 13.0% as compared to the $1.49 billion of gross loans at December
31, 1998. Our gross loans increased during this period as a result of our
increased production of commercial business loans. Gross loans increased 22.9%
during 1998 from $1.21 billion at December 31, 1997 as a result of increased
production of residential mortgages for retention in our portfolio and
commercial business loans by the then newly created Commercial Banking Division.

     As a result of changing the loan origination focus to commercial loans, we
are originating more loans which reprice in shorter time periods than the
traditional repricing terms of residential mortgage (one to four family) loans.
Construction, commercial business loans and SBA loans generally have monthly
repricing terms. Commercial real estate loans generally reprice each month or
are intermediate fixed, meaning that the loans have interest rates which are
fixed for a period, typically five years, and then generally reprice monthly or
become due and payable.

     As a result of the change in the type of loan originations, the loans which
reprice monthly increased to $765.4 million at December 31, 1999 from $704.6
million at December 31, 1998. Also, the loans repricing within five to ten years
have increased to $245.6 million at December 31, 1999 from $120.1 million at
December 31, 1998.

     The loans which reprice monthly increased to $704.6 million at December 31,
1998 from $685.0 million at December 31, 1997. The loans which reprice within
five to ten years increased to $120.1 million at December 31, 1998 from $12.3
million at December 31, 1997.

     The table below sets forth the estimated maturity of our loan portfolio at
December 31, 1999. Adjustable-rate mortgages are shown in the period in which
they reprice rather than when 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.

<TABLE>
<CAPTION>
                                                                      AT DECEMBER 31, 1999
                                  --------------------------------------------------------------------------------------------
                                                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
                                  --------   -----------   -----------   ----------   ------------   ------------   ----------
                                                                     (DOLLARS IN THOUSANDS)
<S>                               <C>        <C>           <C>           <C>          <C>            <C>            <C>
Commercial:
  Secured by real estate-
    nonresidential..............  $207,325     $13,015      $ 105,201     $  88,140     $ 21,380       $     --     $  435,061
  Secured by real estate-
    multifamily.................   259,694       9,860          5,001       117,783       31,500             --        423,838
  Construction..................    89,710          --             --            --           --             --         89,710
  Commercial business...........    58,946         256             --            --           --            130         59,332
                                  --------   -----------   -----------   ----------   ------------   ------------   ----------
    Total commercial............   615,675      23,131        110,202       205,923       52,880            130      1,007,941
                                  --------   -----------   -----------   ----------   ------------   ------------   ----------

Consumer:
  Residential mortgage (one to
    four family)................   135,452      76,760         90,947        39,708      156,178        166,878        665,923
  Other.........................    14,248          --             --            --           --             --         14,248
                                  --------   -----------   -----------   ----------   ------------   ------------   ----------
    Total consumer..............   149,700      76,760         90,947        39,708      156,178        166,878        680,171
                                  --------   -----------   -----------   ----------   ------------   ------------   ----------
    Total gross loans...........  $765,375     $99,891      $ 201,149     $ 245,631     $209,058       $167,008     $1,688,112
                                  --------   -----------   -----------   ----------   ------------   ------------   ----------
                                  --------   -----------   -----------   ----------   ------------   ------------   ----------
Net deferred origination fees...                                                                                        (1,417)
                                                                                                                    ----------
Loans...........................                                                                                     1,686,695
Allowance for loan losses.......                                                                                       (19,503)
                                                                                                                    ----------
Net loans.......................                                                                                    $1,667,192
                                                                                                                    ----------
                                                                                                                    ----------
</TABLE>

                                       9
<PAGE>

     The following table sets forth the dollar amount of all loans and
mortgage-backed securities for which final payment is not due or repricing will
not occur until after December 31, 2000. The table also shows the amount of
loans and mortgage-backed securities which have fixed rates of interest and
those which have adjustable rates of interest.

<TABLE>
<CAPTION>
                                                                 DUE OR REPRICING AFTER DECEMBER 31,
                                                                                2000
                                                               ---------------------------------------
                                                                 FIXED       ADJUSTABLE       TOTAL
                                                               ----------    ----------     ----------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                                            <C>           <C>            <C>
Commercial:
  Secured by real estate-nonresidential......................  $  103,038     $ 124,698     $  227,736
  Secured by real estate-multifamily.........................     158,280         5,864        164,144
  Construction...............................................          --            --             --
  Commercial business........................................         386            --            386
                                                               ----------    ----------     ----------
     Total commercial........................................     261,704       130,562        392,266
                                                               ----------    ----------     ----------

Consumer:
  Residential mortgage (one to four family)..................     362,763       167,708        530,471
  Other......................................................          --            --             --
                                                               ----------    ----------     ----------
     Total consumer..........................................     362,763       167,708        530,471
                                                               ----------    ----------     ----------
Total loans..................................................     624,467       298,270        922,737
Mortgage-backed securities...................................     168,118            --        168,118
                                                               ----------    ----------     ----------
Total loans and mortgage-backed securities...................  $  792,585     $ 298,270     $1,090,855
                                                               ----------    ----------     ----------
                                                               ----------    ----------     ----------
</TABLE>

     Nonperforming Assets and Other Real Estate Owned.  We generally place loans
on nonaccrual status when they become 90 days past due, unless the loan is both
well secured and in the process of collection. Loans may be placed on nonaccrual
status earlier if, in management's opinion, the full and timely collection of
principal or interest becomes uncertain. When a loan is placed on nonaccrual
status, unpaid accrued interest is charged against interest income. We charge
off loans when we determine that collection has become unlikely. Other real
estate owned ('OREO') consists of real estate acquired by us through
foreclosure.

                                       10
<PAGE>

     The following table sets forth information regarding our nonperforming
assets at the dates indicated.

<TABLE>
<CAPTION>
                                                                         AT DECEMBER 31,
                                                 ---------------------------------------------------------------
                                                    1999         1998         1997         1996         1995
                                                 -----------  -----------  -----------  -----------  -----------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                              <C>          <C>          <C>          <C>          <C>
Nonaccrual loans:
  Commercial:
    Secured by real estate-nonresidential......  $     3,806  $     2,663  $     2,804  $     8,896  $     5,445
    Secured by real estate-
      multifamily..............................           --           --          904        3,496        5,673
    Construction...............................          104          104           --           --           --
    Commercial business........................           --           --           --           --           --
                                                 -----------  -----------  -----------  -----------  -----------
      Total commercial.........................        3,910        2,767        3,708       12,392       11,118
                                                 -----------  -----------  -----------  -----------  -----------
  Consumer:
    Residential mortgage (one to four family)..          722        3,341        6,131        7,085        9,366
    Other......................................           --           --           15           --           --
                                                 -----------  -----------  -----------  -----------  -----------
      Total consumer...........................          722        3,341        6,146        7,085        9,366
                                                 -----------  -----------  -----------  -----------  -----------
Total nonaccrual loans.........................        4,632        6,108        9,854       19,477       20,484
Other real estate owned (OREO).................          722          772          412        1,619        1,803
                                                 -----------  -----------  -----------  -----------  -----------
Total nonperforming assets.....................  $     5,354  $     6,880  $    10,266  $    21,096  $    22,287
                                                 -----------  -----------  -----------  -----------  -----------
                                                 -----------  -----------  -----------  -----------  -----------
Nonperforming assets to total assets...........         0.23%        0.32%        0.66%        1.43%        1.46%
Nonaccrual loans to total loans................         0.27         0.41         0.81         1.83         2.00
Nonperforming assets to total loans and OREO...         0.32         0.46         0.85         1.98         2.17
Total gross loans..............................  $ 1,686,695  $ 1,492,148  $ 1,214,237  $ 1,066,368  $ 1,025,608
                                                 -----------  -----------  -----------  -----------  -----------
                                                 -----------  -----------  -----------  -----------  -----------
Gross income not recognized on nonaccrual
  loans........................................         $201         $135          $64         $172         $487
Accruing loans contractually past due 90 days
  or more......................................           --           --           --           --           --
Loans classified as troubled debt
  restructurings but not included above........           --        1,251        1,251           --           --
</TABLE>

                                       11
<PAGE>

     When we acquire OREO, we record it at the lower of its carrying value or
its fair value less estimated disposal costs. Any write-down of OREO is charged
to earnings. During 1999, we reduced the total nonperforming assets to $5.4
million at December 31, 1999 from $6.9 million at December 31, 1998. This
reduction of $1.5 million, or 22.2%, resulted from returning loans that had
previously been nonperforming to accrual status after a period of sustained
performance. During 1998, we reduced total nonperforming assets to $6.9 million
as of December 31, 1998 from $10.3 million as of December 31, 1997, a reduction
of $3.4 million, or 33.0%. This resulted from loan repayments on loans that were
restored to accrual status.

     During 1999, the number of OREO properties was reduced from two in 1998 to
one at December 31, 1999 with a carrying value of $722,000. During 1998, we
reduced the number of OREO properties from six at December 31, 1997 to two at
December 31, 1998 by selling the foreclosed assets.

     We have a risk rating process to which all loans in the portfolio are
subjected. Criticized loans are classified in the following categories:

          o 'Special Mention':  loans that should not yet be adversely
            classified, but have credit deficiencies or potential weaknesses
            that warrant our attention

          o 'Substandard':  loans with one or more well-defined weaknesses which
            have the distinct possibility that we will sustain some loss if the
            weaknesses are not corrected

          o '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

          o 'Loss':  loans considered uncollectible

     The following table sets forth our criticized loans at the dates indicated:

<TABLE>
<CAPTION>
                                                                                  AT DECEMBER 31,
                                                               -----------------------------------------------------
                                                                 1999       1998       1997       1996       1995
                                                               ---------  ---------  ---------  ---------  ---------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                            <C>        <C>        <C>        <C>        <C>
Special mention loans........................................  $     833  $   8,084  $   7,182  $  15,902  $   3,066
Substandard and doubtful loans...............................     10,889      9,638     16,822     19,235     28,462
                                                               ---------  ---------  ---------  ---------  ---------

  Total criticized loans.....................................  $  11,722  $  17,722  $  24,004  $  35,137  $  31,528
                                                               ---------  ---------  ---------  ---------  ---------
                                                               ---------  ---------  ---------  ---------  ---------
Total allowance for loan losses..............................  $  19,503  $  14,922  $  12,142  $  11,682  $  13,699
                                                               ---------  ---------  ---------  ---------  ---------
                                                               ---------  ---------  ---------  ---------  ---------

Special mention loans to total loans.........................       0.05%      0.54%      0.59%      1.49%      0.30%
Substandard and doubtful loans to total loans................       0.65       0.65       1.39       1.80       2.78
Criticized loans to total loans..............................       0.69       1.19       1.98       3.30       3.07
Allowance for loan losses to substandard and doubtful
  loans......................................................     179.11     154.82      72.18      60.73      48.13
Allowance for loan losses to criticized loans................     166.38      84.20      50.58      33.25      43.45
</TABLE>

     With the exception of the loans described above, we are not aware of any
other loans as of December 31, 1999 where the known credit problems of the
borrower lead us to believe they will not comply with their repayment schedule,
or that would result in the loan being included in the criticized loan table
above at a future date. During 1999 and 1998, we engaged an independent loan
review firm to examine the classification of our commercial loan portfolio. This
firm is comprised of former bank regulators and former bankers. They made no
material recommendation for changes to our classifications as a result of their
review.

     Despite our efforts, it is impossible for us to accurately predict the
extent to which economic conditions in our market area may worsen or estimate
the full impact that such changes may have on our loan portfolio. We cannot
assure you that no other loans will become 90 days or more past due, be placed
on nonaccrual status, or become impaired, restructured or OREO in the future.

                                       12
<PAGE>

     The following table sets forth delinquencies in our loan portfolio at the
dates indicated:
<TABLE>
<CAPTION>
                                     AT DECEMBER 31, 1999                          AT DECEMBER 31, 1998
                          ------------------------------------------    ------------------------------------------

                              60-89 DAYS           90 DAYS OR MORE          60-89 DAYS           90 DAYS OR MORE
                          -------------------    -------------------    -------------------    -------------------
                                    PRINCIPAL              PRINCIPAL              PRINCIPAL              PRINCIPAL
                          NUMBER     BALANCE     NUMBER     BALANCE     NUMBER     BALANCE     NUMBER     BALANCE
                          ------    ---------    ------    ---------    ------    ---------    ------    ---------
                                                                (DOLLARS IN THOUSANDS)
<S>                       <C>       <C>          <C>       <C>          <C>       <C>          <C>       <C>
Commercial:
 Secured by real
   estate-
   nonresidential......     --       $    --        2       $ 3,669       --       $    --        2       $ 2,663
 Secured by real
   estate-
   multifamily.........     --            --       --            --       --            --       --            --
 Construction..........      2         3,523        1           104        1           104       --            --
 Commercial business...     --            --       --            --        2           280       --            --
                          ----      --------     ----      --------     ----      --------     ----      --------
   Total commercial....      2         3,523        3         3,773        3           384        2         2,663
                          ----      --------     ----      --------     ----      --------     ----      --------
Consumer:
 Residential mortgage
   (one to four
   family).............      7           833        6           798        4           637       12         1,450
 Other.................     11            17        6             8        8            14       13           113
                          ----      --------     ----      --------     ----      --------     ----      --------
   Total consumer......     18           850       12           806       12           651       25         1,563
                          ----      --------     ----      --------     ----      --------     ----      --------
Total loans............     20       $ 4,373       15       $ 4,579       15       $ 1,035       27       $ 4,226
                          ----      --------     ----      --------     ----      --------     ----      --------
                          ----      --------     ----      --------     ----      --------     ----      --------

<CAPTION>
                            AT
                         DECEMBER
                         31, 1997
                         --------

                          60-89
                           DAYS                   90 DAYS OR MORE
                          ------                -------------------
                                   PRINCIPAL              PRINCIPAL
                          NUMBER    BALANCE     NUMBER     BALANCE
                          ------   ---------    ------    ---------
<S>                       <C>       <C>         <C>       <C>
Commercial:
 Secured by real
   estate-
   nonresidential......     --      $    --        2       $  2,418
 Secured by real
   estate-
   multifamily.........     --           --       --             --
 Construction..........     --           --       --             --
 Commercial business...     --           --       --             --
                          ----      -------     ----       --------
   Total commercial....     --           --        2          2,418
                          ----      -------     ----       --------
Consumer:
 Residential mortgage
   (one to four
   family).............      6          717       16          3,547
 Other.................     29           84       23             59
                          ----      -------     ----       --------
   Total consumer......     35          801       39          3,606
                          ----      -------     ----       --------
Total loans............     35      $   801       41       $  6,024
                          ----      -------     ----       --------
                          ----      -------     ----       --------
</TABLE>
     At December 31, 1999, delinquent loans were $18.9 million, or 1.12%, of
total loans. This compares with delinquent loans of $11.6 million, or 0.78%, of
total loans at December 31, 1998.

     The delinquency ratio on nonresidential mortgage loans decreased during
1999 from 1.44% at December 31, 1998 to 1.20% at December 31, 1999. However, as
a result of the growth in the nonresidential mortgage loan portfolio, the
delinquent nonresidential mortgage loans increased slightly during 1999 from
$2.7 million at December 31, 1998 to $3.7 million at December 31, 1999.

     At December 31, 1999, and at December 31, 1998 none of the loans included
in the $423.8 million portfolio of multifamily real estate loans were
delinquent.

     We reduced the delinquent residential mortgage (one to four family) loans
from $2.1 million at December 31, 1998 to $1.6 million at December 31, 1999. We
attribute this decrease to a continuing strong California economy as well as our
overall credit processes. During 1998, delinquent residential mortgages
decreased to $2.1 million from $4.3 million at December 31, 1997.

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

     We use the unallocated portion of the allowance to compensate for the
subjective nature of estimating an adequate allowance for loan losses, economic
uncertainties, and other factors. In addition to the assessment performed by us,
our loan portfolio also undergoes an internal asset review, and is examined by
our government regulators. We incorporate the results of these examinations into
our assessments.

     Our allowance for loan losses is increased by provisions for loan losses,
which are charged against earnings, and is reduced by charge-offs, net of any
recoveries. Loans are charged off when they are classified as loss either
internally or by our regulators. For any loan which is past due more than 90
days, we will generally charge off the amount by which the recorded loan amount
exceeds the value of the property securing the loan, unless the loan is both
well secured and in the process of collection. We generally record recoveries of
amounts that have been previously charged off only to the extent that we receive
cash.

                                       13
<PAGE>

     While we use all available evidence in determining whether we believe our
allowance for loan losses is adequate, future additions to the allowance will be
subject to our continuing evaluation of the inherent risks in our portfolio. We
may need to make additional provisions for loan losses if the economy declines
or asset quality deteriorates. Also, our regulators review our allowance as part
of their examinations. They can require us to increase our provision as a result
of such examinations. However, we believe that our allowance for loan losses is
adequate to provide for estimated losses inherent in our loan portfolio.

     The following table sets forth information concerning our allowance for
loan losses for the dates indicated:

<TABLE>
<CAPTION>
                                                                         FOR THE YEARS ENDED DECEMBER 31,
                                                                ---------------------------------------------------
                                                                 1999       1998       1997       1996       1995
                                                                -------    -------    -------    -------    -------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                             <C>        <C>        <C>        <C>        <C>
Allowance for loan losses:
Balance beginning of period..................................   $14,922    $12,142    $11,682    $13,699    $ 7,550
                                                                -------    -------    -------    -------    -------
Provision for loan losses....................................     5,645      3,412      1,154      1,476      8,777
Charge-offs:
  Commercial:
    Secured by real estate-nonresidential....................       380        359        246      2,604        930
    Secured by real estate-multifamily.......................        --         --         13        783        737
    Construction.............................................        --         --         --         --         --
    Commercial business......................................       689         --         --         --         --
                                                                -------    -------    -------    -------    -------
      Total commercial.......................................     1,069        359        259      3,387      1,667
                                                                -------    -------    -------    -------    -------
  Consumer:
    Residential mortgage (one to four family)................         9        135        616        949      1,000
    Other....................................................       120        187        194        227         29
                                                                -------    -------    -------    -------    -------
    Total consumer...........................................       129        322        810      1,176      1,029
                                                                -------    -------    -------    -------    -------
Total charge-offs............................................     1,198        681      1,069      4,563      2,696
                                                                -------    -------    -------    -------    -------
Recoveries:
  Commercial:
    Secured by real estate-nonresidential....................        --         --        279        670         --
    Secured by real estate-multifamily.......................       114         --         10        367         --
    Construction.............................................        --         --         --         --         --
    Commercial business......................................        --         --         --         --          1
                                                                -------    -------    -------    -------    -------
      Total commercial.......................................       114         --        289      1,037          1
                                                                -------    -------    -------    -------    -------
  Consumer:
    Residential mortgage (one to four family)................        --         25         52         --         60
    Other....................................................        20         24         34         33          7
                                                                -------    -------    -------    -------    -------
      Total consumer.........................................        20         49         86         33         67
                                                                -------    -------    -------    -------    -------
Total recoveries.............................................       134         49        375      1,070         68
                                                                -------    -------    -------    -------    -------
Balance at end of period.....................................   $19,503    $14,922    $12,142    $11,682    $13,699
                                                                -------    -------    -------    -------    -------
                                                                -------    -------    -------    -------    -------
Allowance for loan losses to ending loans....................      1.16%      1.00%      1.00%      1.10%      1.34%
Net charge-offs to average loans outstanding.................      0.07       0.05       0.06       0.34       0.26
</TABLE>

     During 1999, we increased the allowance for loan losses to $19.5 million
from $14.9 million at December 31, 1998, an increase of $4.6 million, or 30.7%.
This increase was due primarily to the continued growth of the commercial loan
portfolio and the resulting increase in the risk profile inherent in the loan
portfolio. This increased allowance resulted from a loan loss provision of $5.6
million and net charge-offs of $1.1 million during the year.

     During 1998, we increased the allowance for loan losses to $14.9 million
from $12.1 million at December 31, 1997, an increase of $2.8 million, or 22.9%.
This increase was due primarily to the growth in the commercial loan portfolio
as a result of our conversion to a commercial bank. This increase resulted from
a loan loss provision of $3.4 million and net charge-offs of $632,000 during the
year.

                                       14
<PAGE>

     The following table presents an analysis of the allocation of our allowance
for loan losses at the dates indicated. 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.
<TABLE>
<CAPTION>
                                                                        AT DECEMBER 31,
                               ---------------------------------------------------------------------------------------
                                       1999                  1998                  1997                  1996
                               --------------------  --------------------  --------------------  --------------------
                                AMOUNT        %       AMOUNT        %       AMOUNT        %       AMOUNT        %
                               ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                                    (DOLLARS IN THOUSANDS)
<S>                            <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Allocated:
  Commercial:
    Secured by real estate-
      nonresidential.........  $   5,823      25.77% $   2,847      15.39% $   1,919       9.51% $   2,811      11.54%
    Secured by real estate-
      multifamily............      2,919      25.11      2,237      23.26      2,130      27.97      2,533      33.93
    Construction.............      2,903       5.31      1,547       4.12        508       2.19        252       1.87
    Commercial business......      1,259       3.52        837       3.10        572       1.74        117       0.62
                               ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
      Total commercial.......     12,904      59.71      7,468      45.87      5,129      41.41      5,713      47.96
                               ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
  Consumer:
    Residential mortgage (one
      to four family)........      1,709      39.45      2,184      53.01      1,982      56.98      1,697      50.79
    Other....................        192       0.84        276       1.12        493       1.61        304       1.25
                               ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
      Total consumer.........      1,901      40.29      2,460      54.13      2,475      58.59      2,001      52.04
                               ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Total allocated..............     14,805     100.00%     9,928     100.00%     7,604     100.00%     7,714     100.00%
                                          ---------             ---------             ---------             ---------
                                          ---------             ---------             ---------             ---------
Unallocated..................      4,698                 4,994                 4,538                 3,968
                               ---------             ---------             ---------             ---------
Total allowance for loan
  losses.....................  $  19,503             $  14,922             $  12,142             $  11,682
                               ---------             ---------             ---------             ---------
                               ---------             ---------             ---------             ---------

<CAPTION>
                                   AT DECEMBER 31,
                               ---------------------
                                       1995
                               ---------------------
                                AMOUNT         %
                               ---------   ---------
<S>                            <C>         <C>
Allocated:
  Commercial:
    Secured by real estate-
      nonresidential.........  $   3,323       12.80%
    Secured by real estate-
      multifamily............      2,384       36.70
    Construction.............         98        0.64
    Commercial business......         --          --
                               ---------   ---------
      Total commercial.......      5,805       50.14
                               ---------   ---------
  Consumer:
    Residential mortgage (one
      to four family)........      2,691       49.45
    Other....................         89        0.41
                               ---------   ---------
      Total consumer.........      2,780       49.86
                               ---------   ---------
Total allocated..............      8,585      100.00%
                                           ---------
                                           ---------
Unallocated..................      5,114
                               ---------
Total allowance for loan
  losses.....................  $  13,699
                               ---------
                               ---------
</TABLE>

                                       15
<PAGE>

     Securities.  Until 1998, we had primarily invested in Freddie Mac and
Fannie Mae securities tied to the 11th District Cost of Funds Index, which
reprice monthly. In 1998, we used the proceeds from our stock and capital
securities private placements to purchase U.S. Government agency mortgage-backed
securities, investment grade securities, investment grade municipal bonds and
investment grade residential mortgage-backed securities. The following table
presents our securities portfolio at the dates indicated:

<TABLE>
<CAPTION>
                                                                                   AT DECEMBER 31,
                                                                    ----------------------------------------------
                                                                            1999                     1998
                                                                    ---------------------    ---------------------
                                                                    AMORTIZED     MARKET     AMORTIZED     MARKET
                                                                      COST        VALUE        COST        VALUE
                                                                    ---------    --------    ---------    --------
                                                                                (DOLLARS IN THOUSANDS)
<S>                                                                 <C>          <C>         <C>          <C>
Investment securities available for sale:
  Trust preferred securities.....................................   $ 103,182    $ 91,270    $  99,436    $ 97,711
  Municipals.....................................................          --          --       43,617      44,464
  Other..........................................................          --          --        1,500       1,500
                                                                    ---------    --------    ---------    --------
     Total.......................................................   $ 103,182    $ 91,270    $ 143,553    $143,675
                                                                    ---------    --------    ---------    --------
                                                                    ---------    --------    ---------    --------
Mortgage-backed securities available for sale:
  GNMA...........................................................   $ 102,417    $ 97,399    $ 114,403    $115,555
  FNMA...........................................................      72,698      69,067       80,660      78,370
  Other..........................................................      73,295      70,719       91,071      91,747
                                                                    ---------    --------    ---------    --------
     Total.......................................................   $ 248,410    $237,185    $ 286,134    $285,672
                                                                    ---------    --------    ---------    --------
                                                                    ---------    --------    ---------    --------
Investment securities held to maturity:
  Municipals.....................................................   $  43,633    $ 39,250    $      --    $     --
                                                                    ---------    --------    ---------    --------
                                                                    ---------    --------    ---------    --------
Mortgage-backed securities held to maturity:
  FNMA...........................................................   $  91,307    $ 86,395    $ 103,961    $100,645
  FHLMC..........................................................      41,848      39,560       44,218      42,714
  Other..........................................................       7,118       6,790       10,031       9,713
                                                                    ---------    --------    ---------    --------
     Total.......................................................   $ 140,273    $132,745    $ 158,210    $153,072
                                                                    ---------    --------    ---------    --------
                                                                    ---------    --------    ---------    --------
</TABLE>

     At December 31, 1999, the carrying value of the securities was $535.5
million and the market value was $500.5 million. The total unrealized loss on
these securities was $35.0 million. Of this total, $23.1 million relates to
securities which are available for sale. The unrealized $23.1 million loss, net
of tax of $9.7 million, is included as a reduction of stockholders' equity. The
difference between the carrying value and market value aggregating $11.9 million
of securities which are held to maturity has not been recognized in the
financial statements as of December 31, 1999. The unrealized losses are the
result of movements in market interest rates.

                                       16
<PAGE>
     The following table presents the carrying value, weighted average yields
and contractual maturities of our securities at December 31, 1999:
<TABLE>
<CAPTION>
                                                                  AT DECEMBER 31, 1999
                              --------------------------------------------------------------------------------------------
                                                             AFTER                   AFTER
                                                            ONE YEAR               FIVE YEARS
                                                            THROUGH                 THROUGH
                                WITHIN ONE YEAR            FIVE YEARS              TEN YEARS            AFTER TEN YEARS
                              --------------------    --------------------    --------------------    --------------------
                                BOOK      WEIGHTED      BOOK      WEIGHTED      BOOK      WEIGHTED      BOOK      WEIGHTED
                              CARRYING    AVERAGE     CARRYING    AVERAGE     CARRYING    AVERAGE     CARRYING    AVERAGE
                               VALUE       YIELD       VALUE       YIELD       VALUE       YIELD       VALUE       YIELD
                              --------    --------    --------    --------    --------    --------    --------    --------
                                                                 (DOLLARS IN THOUSANDS)
<S>                           <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Investment securities
 available for sale:
 Trust preferred
   securities..............   $   --          --%     $    --         --%     $   --          --%     $ 91,270      8.34%
                              ------                  -------                 ------                  --------

Mortgage-backed securities
 available for sale:
 GNMA......................       --          --           --         --          --          --        97,399      7.05
 FNMA......................       --          --           --         --          --          --        69,067      5.81
 Other.....................       --          --           --         --          --          --        70,719      6.77
                              ------                  -------                 ------                  --------
   Total...................       --          --           --         --          --          --       237,185      6.61
                              ------                  -------                 ------                  --------

Investment securities held
 to maturity:
 Municipals................       --          --           --         --          --          --        43,633      5.03
                              ------                  -------                 ------                  --------

Mortgage-backed securities
 held to maturity:
 FNMA......................       --          --        1,524       4.82          --          --        89,783      5.27
 FHLMC.....................       --          --           --         --          --          --        41,848      4.38
 Other mortgage-backed
   securities..............       30        6.50           46       7.79          35        7.38         7,007      6.21
                              ------                  -------                 ------                  --------
   Total...................       30        6.50        1,570       4.91          35        7.38       138,638      5.05
                              ------                  -------                 ------                  --------
Total securities...........     $ 30        6.50       $1,570       4.91        $ 35        7.38      $510,726      6.36
                              ======                  =======                 ======                  ========

<CAPTION>
                                    TOTAL
                             --------------------
                               BOOK      WEIGHTED
                             CARRYING    AVERAGE
                              VALUE       YIELD
                             --------    --------
<S>                           <C>        <C>
Investment securities
 available for sale:
 Trust preferred
   securities..............   $ 91,270     8.34%
                              --------
Mortgage-backed securities
 available for sale:
 GNMA......................     97,399     7.05
 FNMA......................     69,067     5.81
 Other.....................     70,719     6.77
                              --------
   Total...................    237,185     6.61
                              --------
Investment securities held
 to maturity:
 Municipals................     43,633     5.03
                              --------
Mortgage-backed securities
 held to maturity:
 FNMA......................     91,307     5.26
 FHLMC.....................     41,848     4.38
 Other mortgage-backed
   securities..............      7,118     6.23
                              --------
   Total...................    140,273     5.05
                              --------
Total securities...........   $512,361     6.35
                              --------
                              --------
</TABLE>
                                       17
<PAGE>

     Deposits.  Deposits have traditionally been our primary source of funds to
use in lending and investment activities. At December 31, 1999, 72.7% of our
deposits were time deposits, 15.7% were savings accounts, and 11.6% were NOW,
demand deposit and money market accounts. By comparison, at December 31, 1998,
75.7% of our deposits were time deposits, 14.2% were savings accounts, and 10.1%
were NOW, demand deposits and money market accounts.

     We obtain our deposits primarily from the communities we serve. No material
portion of our deposits are from or are dependent upon any one person or
industry. At December 31, 1999, less than 2% of our deposits were held by
customers located outside of the United States. Additionally, at that date the
100 depositors with the largest aggregate average deposit balances made up less
than 15% of our total deposits. Our business is not seasonal in nature. We
accept deposits over $100,000 from customers. Included in the figure for time
deposits below at December 31, 1999 is $396.7 million of deposits of $100,000 or
greater. Such deposits make up 23.7% of total deposits. At December 31, 1999, we
did not have any brokered deposits.

     Our average cost of deposits during 1999 was 3.80% as compared to 4.29% for
1998 and 4.28% for 1997. At December 31, 1999, our average interest rate paid on
deposits was 3.80%.

     The following table presents, by categories, the amount of time deposit
accounts as of December 31, 1999 and the time to maturity of the time deposit
accounts at December 31, 1999:

<TABLE>
<CAPTION>
                                                 PERIOD TO MATURITY FROM DECEMBER 31, 1999
                                                 -----------------------------------------
                                                   WITHIN       ONE THROUGH
CERTIFICATE ACCOUNTS                              ONE YEAR      THREE YEARS     THEREAFTER    AT DECEMBER 31, 1999
--------------------                             ----------     -----------     ----------    --------------------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                              <C>            <C>             <C>           <C>
3.99% or less................................    $  175,973       $    --          $ --            $  175,973
4.00% to 4.99%...............................       646,883         4,770           291               651,944
5.00% to 5.99%...............................       375,259        12,172           298               387,729
6.00% to 6.99%...............................         2,264           100            --                 2,364
7.00% to 7.99%...............................            --            --            --                    --
Over 8.00%...................................            --            --             5                     5
                                                 ----------     -----------     ----------    --------------------
                                                 $1,200,379       $17,042          $594            $1,218,015
                                                 ----------     -----------     ----------    --------------------
                                                 ----------     -----------     ----------    --------------------
</TABLE>

     At December 31, 1999, the Bank had $396.7 million in certificate accounts
in amounts of $100,000 or more maturing as follows:

<TABLE>
<CAPTION>
MATURITY PERIOD
---------------                                                          AMOUNT
                                                                 ----------------------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                                              <C>
Three months or less..........................................          $166,712
Over 3 through 6 months.......................................           133,798
Over 6 through 12 months......................................            94,282
Over 12 months................................................             1,868
                                                                     -----------
  Total.......................................................          $396,660
                                                                     -----------
                                                                     -----------
</TABLE>

     Other Borrowings.  Advances may be obtained from the FHLB of San Francisco
to supplement our supply of lendable funds. Advances from the FHLB of San
Francisco are typically secured by a pledge of our stock in the FHLB of San
Francisco, mortgage loans and securities, with a market value at least equal to
outstanding advances. At December 31, 1999, we had $421.5 million of advances
outstanding and $368.0 million outstanding at December 31, 1998. At December 31,
1999, we had $253.1 million of additional FHLB borrowings we could incur.

     Included in the $421.5 million of FHLB advances as of December 31, 1999
were $17.0 million of fixed-rate advances for ten years. An additional $216.0
million of the advances had ten-year terms but contained provisions that the
FHLB could, at their option, terminate the advances at quarterly intervals at
specified periods ranging from three to five years beyond the original advance
dates.

                                       18
<PAGE>

     In December of 1998, the Bank entered into the Treasury Investment Program
with the Federal Reserve Bank of San Francisco ('FRB'). This borrowing line
allows the Bank to utilize deposits made to the U.S. Treasury for federal tax
payments until the Treasury needs the funds. This borrowing line must be fully
collateralized at all times and at December 31, 1999 the maximum borrowings
allowed based on collateral placed with the FRB was approximately $31.5 million.
Borrowings outstanding at December 31, 1999 were $28.1 million.

     Liquidity and Capital Resources.  As a financial institution, we must
maintain sufficient levels of liquid assets at all times to meet the cash flow
needs of our Company. These liquid assets ensure that we have the cash available
to pay out deposit withdrawals, meet the credit needs of our customers and be
able to take advantage of investment opportunities as they arise. In addition to
liquid assets, certain liabilities can provide liquidity as well. Liquid assets
can include cash and deposits we have with other banks, federal funds sold and
other short-term investments, maturing loans and investments, payments by
borrowers of principal and interest on loans, payments of principal and interest
on investments and loans sales. Additional sources of liquidity can include
increased deposits, lines of credit and other borrowings.

     At December 31, 1999, we had no outstanding commitments to make and/or
purchase mortgage and non-mortgage loans and securities. We also had at that
date $1.2 billion of certificates of deposit scheduled to mature within one
year. We believe that our liquidity will provide us with sufficient amounts of
cash necessary to meet these commitments.

     Our liquidity may be adversely affected by unexpected withdrawals of
deposits, excessive interest rates paid by competitors and other factors. We
review our liquidity position regularly in light of our expected growth in loans
and deposits. We believe that we are maintaining adequate sources of liquidity
to meet our needs.

     At December 31, 1999, both the Company and the Bank met all of their
regulatory capital requirements with a risk-based capital ratio of 11.55% and
11.29%, respectively.

     Market Risk and Net Portfolio Value.  Market risk is the risk of loss of
income from adverse changes in prices and rates that are set by the market. We
are at risk of changes in interest rates that affect the income we receive on
lending and investment activities, as well as the costs associated with our
deposits and borrowings. A sudden and substantial change in interest rates may
affect our earnings if the rates of interest we earn on our loans and
investments do not change at the same speed, to the same extent or on the same
basis as the interest rates we pay on our deposits and borrowings. We make it a
high priority to actively monitor and manage our exposure to interest rate risk.

     We accomplish this by first evaluating the interest rate risk that is
inherent in the makeup of our assets and liabilities. Then we consider our
business strategy, current operating environment, capital and liquidity
requirements, as well as our current performance objectives, and determine an
appropriate level of risk. Our Board of Directors has adopted guidelines within
which we attempt to manage our interest rate risk, trying to minimize to the
extent practical our vulnerability to changes in interest rates.

     Our Board of Directors reviews our interest rate risk exposure quarterly.
Our Board of Directors has appointed an Asset/Liability Committee made up of
senior management that is responsible for working with the Board of Directors to
establish strategies to manage interest rate risk and to evaluate the
effectiveness of these strategies. The Committee also attempts to determine the
effect that changes in interest rates will have on our portfolio and whether
such effects are within the limits set by the Board.

     We use certain derivative financial instruments, such as interest rate
caps, 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.

                                       19
<PAGE>

     We also monitor our interest rate sensitivity through the use of a model
which estimates the change in our net portfolio value ('NPV') 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.
We estimate current market values through analysis of cash flows. The change in
NPV measures our vulnerability to changes in interest rates by estimating the
change in the market value of our assets, liabilities and off-balance-sheet
items as a result of an instantaneous change in the general level of interest
rates.

     As market interest rates decrease, the average maturities of our loans and
investment securities shorten due to quicker prepayments, causing a relatively
moderate increase in their value. Our deposit accounts have only relatively
minor movements in a declining interest rate environment, since they are
primarily short term in nature, resulting in the value of deposits decreasing
more quickly than the value of assets increase.

     The following table lists the percentage change in our net portfolio value
assuming an immediate change in interest rates of plus or minus up to 400 basis
points from the level at December 31, 1999. All loans and investments presented
in this table are classified as held to maturity or available for sale. We had
no trading securities at that date.

<TABLE>
<CAPTION>
                          CHANGE IN INTEREST                                     NET PORTFOLIO VALUE
                         RATES IN BASIS POINTS                            ---------------------------------
                             (RATE SHOCK)                                  AMOUNT     $ CHANGE     % CHANGE
-----------------------------------------------------------------------   --------    ---------    --------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                                       <C>         <C>          <C>
     400...............................................................   $ 98,115    $(133,929)      -58%
     300...............................................................    131,631     (100,413)      -43
     200**.............................................................    167,442      (64,602)      -28
     100...............................................................    194,481      (37,563)      -16
     0.................................................................    232,044           --        --
     (100).............................................................    238,658        6,614         3
     (200).............................................................    223,468       (8,576)       -4
     (300).............................................................    194,090      (37,954)      -16
     (400).............................................................    159,776      (72,268)      -31
</TABLE>

------------------
** Denotes rate shock used to compute the NPV capital ratios.

     As market interest rates rise, the average maturities of our loans and
securities lengthen as prepayments decrease. As we have a concentration of loans
and securities with interest rates tied to changes in the 11th District Cost of
Funds Index, which adjusts to changes in interest rates less frequently than
other indexes, the value of these loans and securities decrease when market
rates rise. Decreases in the value of these loans and securities occur at a more
rapid rate in our NPV model than increases in the value of our deposits. The
slow increase in the value of our deposits in a rising interest rate environment
is due to the high concentration of time deposits in our deposit base which have
terms of one year or less.

     The NPV model we use has some shortcomings. We have to make certain
assumptions that may or may not actually reflect how actual yields and costs
will react to market interest rates. For example, the NPV 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 the Bank'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.

                                       20
<PAGE>

YEAR 2000 COMPLIANCE

     The Year 2000 issue is the result of certain computer programs being
written using two digits rather than four to define the applicable year. As a
result, date-sensitive software and/or hardware may recognize a date using '00'
as the year 1900 rather than the year 2000. This could result in a system
failure or other disruption of operations and impede normal business activities.
The Federal Financial Institutions Examination Council ('FFIEC'), through the
bank regulatory agencies, has issued compliance guidelines that require
financial institutions to develop and implement plans for addressing the Year
2000 problem. In accordance with the FFIEC guidelines, we developed a
comprehensive plan which resulted in timely and adequate modifications of our
systems and technology to address our Year 2000 issues. Also included in this
Year 2000 plan was a detailed review of the readiness of our service providers,
vendors, major fund providers, major borrowers and companies with which we have
material investments.

     As of January 2000, all Y2K sensitive systems were functioning within
normal operating parameters. Total expenditures on the project were less than
$500,000. Although the Company has not encountered any significant problems nor
incurred significant additional expense in conjunction with the Y2K issue, there
can be no assurance that the Company and the Bank will not encounter significant
Y2K-related problems and/or cost during the course of 2000 or beyond.

TRADING PRICE OF COMMON STOCK AND DIVIDENDS

     On November 5, 1998, the Company's stock began trading on The Nasdaq Stock
Market under the ticker symbol 'UCBH'. On December 31, 1999, the stock closed at
$20.56. The common stock's high and low bid price for each of the four quarters
ended December 31, 1999 and the period November 5, 1998, the date the Company's
stock began trading on Nasdaq, and December 31, 1998 were as follows:

<TABLE>
<CAPTION>
                                               1999       1999       1999       1999             1998
                                              FOURTH      THIRD     SECOND      FIRST     NOVEMBER 5, 1998 TO
                                              QUARTER    QUARTER    QUARTER    QUARTER     DECEMBER 31,1998
                                              -------    -------    -------    -------    -------------------
<S>                                           <C>        <C>        <C>        <C>        <C>
High bid price during quarter..............   $22.63     $20.50     $18.00     $14.38           $ 15.00
Low bid price during quarter...............   $17.63     $17.63     $13.19     $13.13           $ 13.13
</TABLE>

     As of December 31, 1999, there were approximately 1,276 holders of the
Company's common stock, which includes the approximate number of holders in
street name.

     The Company did not pay any dividends during 1999. In January 2000, the
Board adopted a dividend policy and plans to start declaring dividends in 2000.
It is the intention of the Board to continue to pay quarterly dividends on an
ongoing basis dependent upon the income and capital levels of the Company and
the Bank. However, we cannot assure you that dividends will be paid, or that the
dividend amount per share will not decrease.

RECENT ACCOUNTING PRONOUNCEMENTS

     SFAS No. 133, 'Accounting for Derivative Instruments and Hedging
Activities,' as amended by SFAS No. 137, will become effective for fiscal years
beginning after June 15, 2000. SFAS No. 133 defines derivative instruments and
requires that they be recognized as assets or liabilities in the statement of
financial position, measured at fair value. It further specifies the nature of
changes in the fair value of the derivatives which are included in the current
period results of operations and those which are included in other comprehensive
income. Management has assessed the impact of SFAS No. 133 and determined that
adoption will not have a material impact on the financial statements of the
Company based on the hedges currently in place.

                                       21
<PAGE>

                                 [LOGO Omitted]

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of UCBH Holdings, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and changes in stockholders' equity and of the
cash flows present fairly, in all material respects, the financial position of
UCBH Holdings, Inc. and its subsidiaries at December 31, 1999 and 1998, and the
results of their operations and their cash flows for the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PricewaterhouseCoopers LLP
------------------------------
San Francisco, California
February 10, 2000

                                       22
<PAGE>

                              UCBH HOLDINGS, INC.
                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                         ------------------------
                                                                                            1999          1998
                                                                                         ----------    ----------

<S>                                                                                      <C>           <C>
                                        ASSETS

Cash and due from banks...............................................................   $   23,789    $   15,109
Federal funds sold....................................................................          500            --
Investment and mortgage-backed securities available for sale, at fair value...........      328,455       429,347
Investment and mortgage-backed securities at cost (fair value $171,995 at December 31,
  1999 and $153,072 at December 31, 1998).............................................      183,906       158,210
Federal Home Loan Bank stock..........................................................       27,024        20,415
Loans.................................................................................    1,686,695     1,492,148
Allowance for loan losses.............................................................      (19,503)      (14,922)
                                                                                         ----------    ----------
Net loans.............................................................................    1,667,192     1,477,226
                                                                                         ----------    ----------
Accrued interest receivable...........................................................       14,628        13,542
Premises and equipment, net...........................................................       21,064        23,462
Other assets..........................................................................       18,242        10,021
                                                                                         ----------    ----------
     Total assets.....................................................................   $2,284,800    $2,147,332
                                                                                         ----------    ----------
                                                                                         ----------    ----------

                                     LIABILITIES
Deposits..............................................................................   $1,676,148    $1,633,895

Borrowings............................................................................      449,612       368,000
Guaranteed preferred beneficial interests in junior subordinated debentures...........       30,000        30,000
Accrued interest payable..............................................................        3,631         2,440
Other liabilities.....................................................................       15,302         9,359
                                                                                         ----------    ----------
     Total liabilities................................................................    2,174,693     2,043,694
                                                                                         ----------    ----------
Commitments and contingencies

                                 STOCKHOLDERS' EQUITY

Common stock, $.01 par value, authorized 25,000,000 shares, 9,333,333 shares issued
  and outstanding at December 31, 1999 and December 31, 1998..........................           93            93
Additional paid-in capital............................................................       59,485        59,443
Accumulated other comprehensive income................................................      (13,419)         (778)
Retained earnings - substantially restricted..........................................       63,948        44,880
                                                                                         ----------    ----------
Total stockholders' equity............................................................      110,107       103,638
                                                                                         ----------    ----------
     Total liabilities and stockholders' equity.......................................   $2,284,800    $2,147,332
                                                                                         ----------    ----------
                                                                                         ----------    ----------
</TABLE>

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

                                       23
<PAGE>

                              UCBH HOLDINGS, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
               (DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                      FOR THE YEARS ENDED
                                                                                          DECEMBER 31,
                                                                               ----------------------------------
                                                                                  1999        1998        1997
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
Interest income:
  Loans......................................................................  $  123,705  $  101,823  $   86,141
  Funds sold and securities purchased under agreements to resell.............          23         483       2,760
  Investment and mortgage-backed securities..................................      34,955      28,525      18,690
                                                                               ----------  ----------  ----------
     Total interest income...................................................     158,683     130,831     107,591
                                                                               ----------  ----------  ----------
Interest expense:
  Deposits...................................................................      61,955      64,890      61,513
  Short-term borrowings......................................................      10,390       3,313         914
  Guaranteed preferred beneficial interests in junior subordinated
     debentures..............................................................       2,812       1,985          --
  Long-term borrowings.......................................................      12,812       7,606          --
  Long-term debt to affiliates...............................................          --         599       1,825
                                                                               ----------  ----------  ----------
     Total interest expense..................................................      87,969      78,393      64,252
                                                                               ----------  ----------  ----------

     Net interest income.....................................................      70,714      52,438      43,339
Provision for loan losses....................................................       5,645       3,412       1,154
                                                                               ----------  ----------  ----------
     Net interest income after provision for loan losses.....................      65,069      49,026      42,185
                                                                               ----------  ----------  ----------
Noninterest income:
  Commercial banking fees....................................................       2,071       1,499       1,104
  Service charges on deposits................................................         840         813         761
  Gain on sale of loans, securities and servicing rights.....................         784         549         155
  Loan servicing income......................................................         379         400         601
  Miscellaneous income.......................................................           1         141         473
                                                                               ----------  ----------  ----------
     Total noninterest income................................................       4,075       3,402       3,094
                                                                               ----------  ----------  ----------
Noninterest expense:
  Personnel..................................................................      18,427      15,720      14,087
  Occupancy..................................................................       4,885       4,975       4,811
  Data processing............................................................       2,084       2,064       2,059
  Furniture and equipment....................................................       2,119       2,316       1,902
  Professional fees and contracted services..................................       2,240       1,870       2,242
  Deposit insurance..........................................................         938         889       1,798
  Communication..............................................................         425         414         400
  Foreclosed assets..........................................................          80          62         671
  Miscellaneous expense......................................................       6,000       5,375       4,220
                                                                               ----------  ----------  ----------
     Total noninterest expense...............................................      37,198      33,685      32,190
                                                                               ----------  ----------  ----------
Income before taxes..........................................................      31,946      18,743      13,089
Income tax expense...........................................................      12,878       7,855       5,790
                                                                               ----------  ----------  ----------
     Net income..............................................................  $   19,068  $   10,888  $    7,299
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
Basic earnings per share.....................................................  $     2.04  $     1.30  $     1.22
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
Diluted earnings per share...................................................  $     2.01  $     1.26  $     1.05
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</TABLE>

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

                                       24
<PAGE>

                              UCBH HOLDINGS, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                            ACCUMULATED
                                        COMMON STOCK         ADDITIONAL        OTHER                        TOTAL
                                    ---------------------     PAID-IN      COMPREHENSIVE    RETAINED    STOCKHOLDERS'
                                      SHARES      AMOUNTS     CAPITAL        INCOME(1)      EARNINGS       EQUITY
                                    ----------    -------    ----------    -------------    --------    -------------
<S>                                 <C>           <C>        <C>           <C>              <C>         <C>
Balance at December 31, 1996.....    6,000,000     $  10     $   30,278      $  (2,637)     $ 26,693      $  54,344
  Net income.....................                                                              7,299          7,299
  Other comprehensive income, net
    of tax (1)...................                                                  909                          909
  Comprehensive income...........
                                    ----------    -------    ----------    -------------    --------    -------------
Balance at December 31, 1997.....    6,000,000     $  10     $   30,278         (1,728)       33,992         62,552
  Net income.....................                                                             10,888         10,888
  Other comprehensive income, net
    of tax (1)...................                                                  950                          950
  Comprehensive income...........
  Conversion of long-term debt to
    affiliates to common stock...    1,974,000         3         20,597                                      20,600
  Common stock issued............    9,333,333        93        128,555                                     128,648
  Common stock redeemed..........   (7,974,000)      (13)      (119,987)                                   (120,000)
                                    ----------    -------    ----------    -------------    --------    -------------
Balance at December 31, 1998.....    9,333,333        93         59,443           (778)       44,880        103,638
  Net income.....................                                                             19,068         19,068
  Other comprehensive income, net
    of tax (1)...................                                              (12,641)                     (12,641)
  Comprehensive income...........
  Other contributed capital......                                    42                                          42
                                    ----------    -------    ----------    -------------    --------    -------------
Balance at December 31, 1999.....    9,333,333     $  93     $   59,485      $ (13,419)     $ 63,948      $ 110,107
                                    ----------    -------    ----------    -------------    --------    -------------
                                    ----------    -------    ----------    -------------    --------    -------------

<CAPTION>
                                   COMPREHENSIVE
                                      INCOME
                                   -------------
<S>                                 <C>
Balance at December 31, 1996.....
  Net income.....................     $ 7,299
  Other comprehensive income, net
    of tax (1)...................         909
                                   -------------
  Comprehensive income...........     $ 8,208
                                   -------------
                                   -------------
Balance at December 31, 1997.....
  Net income.....................     $10,888
  Other comprehensive income, net
    of tax (1)...................         950
                                   -------------
  Comprehensive income...........     $11,838
                                   -------------
                                   -------------
  Conversion of long-term debt to
    affiliates to common stock...
  Common stock issued............
  Common stock redeemed..........
Balance at December 31, 1998.....
  Net income.....................     $19,068
  Other comprehensive income, net
    of tax (1)...................     (12,641)
                                   -------------
  Comprehensive income...........     $ 6,427
                                   -------------
                                   -------------
  Other contributed capital......
Balance at December 31, 1999.....
</TABLE>

------------------

(1) Accumulated Other Comprehensive Income includes after tax net unrealized
    gains (losses) on securities available for sale.

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

                                       25
<PAGE>

                              UCBH HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         FOR THE YEARS ENDED
                                                                                            DECEMBER 31,
                                                                                 -----------------------------------
                                                                                   1999         1998         1997
                                                                                 ---------    ---------    ---------
<S>                                                                              <C>          <C>          <C>
Operating activities:
  Net income..................................................................   $  19,068    $  10,888    $   7,299
  Adjustments to reconcile net income to net cash provided by (used for)
    operating activities:
    Provision for loan losses.................................................       5,645        3,412        1,154
    Increase in accrued interest receivable...................................      (1,086)      (4,948)        (592)
    Depreciation and amortization of premises and equipment...................       2,607        2,643        2,254
    Decrease (increase) in other assets.......................................       1,663       (1,826)       2,808
    Increase (decrease) in accrued interest payable...........................       1,191        1,988          (49)
    Gain on sale of loans, securities and other assets........................        (784)        (845)        (556)
    Other, net................................................................       8,674          447         (699)
                                                                                 ---------    ---------    ---------
      Net cash provided by operating activities...............................      36,978       11,759       11,619
                                                                                 ---------    ---------    ---------

Investing activities:
  Investments and mortgage-backed securities, held to maturity:
    Principal payments and maturities.........................................      17,936       27,018       37,980
    Purchases.................................................................      (6,165)      (5,678)        (200)
  Investments and mortgage-backed securities, available for sale:
    Principal payments and maturities.........................................      40,035       21,164       12,124
    Purchases.................................................................      (6,012)    (370,405)          --
    Sales.....................................................................          --        5,476       23,495
  Loans purchased.............................................................        (123)     (36,447)     (44,416)
  Loans originated, net of principal collections..............................    (207,748)    (262,431)    (151,373)
  Proceeds from the sale of loans.............................................      11,258       18,181       43,350
  Purchases of premises and other equipment...................................      (1,031)      (2,414)      (3,453)
  Proceeds from the sale of other assets......................................         187        1,937        8,146
                                                                                 ---------    ---------    ---------
    Net cash used in investment activities....................................    (151,663)    (603,599)     (74,347)
                                                                                 ---------    ---------    ---------

Financing activities:
  Net increase (decrease) in NOW, checking and savings accounts...............      61,544       51,606          (90)
  Net (decrease) increase in time deposits....................................     (19,291)     113,302       75,952
  Increase in long-term borrowings............................................          --      233,000           --
  Net increase in short-term borrowings.......................................      81,612      135,000           --
  Net (decrease) increase in long-term debt to affiliates.....................          --      (20,060)       3,325
  Proceeds from issuance of common stock......................................          --       29,248           --
  Proceeds from issuance of guaranteed preferred beneficial interests in
    junior subordinated debentures............................................          --       30,000           --
                                                                                 ---------    ---------    ---------
    Net cash provided by financing activities.................................     123,865      572,096       79,187
                                                                                 ---------    ---------    ---------
Increase (decrease) in cash and cash equivalents..............................       9,180      (19,744)      16,459
Cash and cash equivalents at the beginning of the year........................      15,109       34,853       18,394
                                                                                 ---------    ---------    ---------
Cash and cash equivalents at the end of the year..............................   $  24,289    $  15,109    $  34,853
                                                                                 ---------    ---------    ---------
                                                                                 ---------    ---------    ---------
</TABLE>

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

                                       26
<PAGE>

                              UCBH HOLDINGS, INC.
               CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                         FOR THE YEARS ENDED
                                                                                            DECEMBER 31,
                                                                                 -----------------------------------
                                                                                   1999         1998         1997
                                                                                 ---------    ---------    ---------
Supplemental disclosure of cash flow information:
<S>                                                                              <C>          <C>          <C>
  Cash paid during the year for interest......................................   $  86,778    $  76,405    $  62,475
  Cash paid during the year for income taxes..................................       6,956        5,748        4,083
Supplemental schedule of noncash investing and financing activities:
  Real estate acquired through foreclosure....................................         115        1,899        4,260
  Securities transferred to held to maturity..................................      43,624           --           --
  Receivable resulting from sale of servicing rights..........................          --           --          371
  Long-term debt resulting from refinancing of long-term debt to affiliates...          --           --       15,048
</TABLE>

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

                                       27
<PAGE>

                              UCBH HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES

  Organization

     UCBH Holdings, Inc. ('the Company'), is a bank holding company that
conducts its business through its principal subsidiary, United Commercial Bank
('United' or 'the Bank'), a California state-chartered commercial bank. United
offers a full range of commercial and consumer banking products through its
retail branches and other banking offices in California.

  Principles of Consolidation and Presentation

     The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. Substantially all loans are originated for
portfolio and held for investment. All significant intercompany balances and
transactions have been eliminated in consolidation. Certain reclassifications
have been made to prior years' consolidated financial statements to conform to
the December 31, 1999 presentation.

     On April 17, 1998, the Company completed a 6,000-for-1 stock split.
Accordingly, the financial statements for all years presented have been restated
to reflect the impact of the stock split. On April 17, 1998, the Company's
long-term debt to affiliates was converted to 1,974,000 shares of common stock,
as adjusted for the aforementioned stock split. Given the occurrence of this
conversion, management has considered this long-term debt to affiliates as
convertible debt for purposes of its calculation of diluted earnings per share.

  Risks and Uncertainties

     In the normal course of its business, the Company encounters two
significant types of risk: economic and regulatory. There are three main
components of economic risk: interest rate risk, credit risk and market risk.
The Company is subject to interest rate risk to the degree that its
interest-bearing liabilities mature or reprice at different speeds, or on a
different basis, than its interest-earning assets. Incorporated into interest
rate risk is prepayment risk. Prepayment risk is the risk associated with the
prepayment of assets, and the write-off of premiums associated with those
assets, should interest rates fall dramatically. Credit risk is the risk of
default, primarily in the Company's loan portfolio that results from the
borrowers' inability or unwillingness to make contractually required payments.
Market risk reflects changes in the value of securities, the value of collateral
underlying loans receivable and the valuation of real estate owned.

     The Company is subject to the regulations of various governmental agencies.
These regulations change significantly from period to period. Such regulations
can also restrict the growth of the Company and United as a result of capital
requirements. The Company also undergoes periodic examinations by the regulatory
agencies which may subject it to further changes with respect to asset
valuations, amounts of required loss allowances and operating restrictions. Such
changes may result from the regulators' judgment based on information available
to them at the time of their examination.

  Use of Estimates in Preparation of Financial Statements

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

  Cash and Cash Equivalents

     Cash and cash equivalents consist of cash and noninterest-bearing deposits,
federal funds sold and securities purchased under agreements to resell. For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with original maturities when purchased of three months
or less to be cash equivalents.

                                       28
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
  Securities Purchased Under Agreements to Resell

     The Company periodically purchases securities under agreements to resell
(repurchase agreements). The amounts advanced under such agreements represent
short-term loans. During the agreement period, the securities are maintained by
the dealer under a written custodial agreement that explicitly recognizes the
Company's interest in the securities.

  Investment and Mortgage-backed Securities

     In accordance with Statement of Financial Accounting Standards No. 115
(SFAS No. 115) 'Accounting for Certain Investments in Debt and Equity
Securities,' the Company has designated a portion of the investment and
mortgage-backed securities portfolio as 'held to maturity' securities. As such,
this portion of the portfolio is carried at cost, adjusted for the amortization
of premiums and accretion of discounts. Cost is determined on a specific
identification basis. Inasmuch as the Company has the ability and intent to hold
the 'held to maturity' securities in its portfolio until maturity, the carrying
value has not been adjusted to reflect decreases in market value from amortized
cost, if any. Also in accordance with SFAS No. 115, the Company has designated a
portion of the investment and mortgage-backed securities portfolio as 'available
for sale.' Such securities are carried at fair value. Fair value is the quoted
market price. Unrealized holding gains or losses for 'available for sale'
securities are excluded from earnings and reported in a separate component of
stockholders' equity, net of tax. Premiums and discounts on investment and
mortgage-backed securities are amortized against interest income, using the
interest method, with the amortization period extending to the maturity date of
the securities. Gains or losses on the sale of securities are recognized when
sold. The Company does not maintain a trading account for securities.

  Loans

     Loans are carried at the principal balance outstanding adjusted for the
amortization of premiums and the accretion of discounts. Premiums and discounts
are recognized as an adjustment of loan yield by the interest method based on
the contractual term of the loans. Interest is accrued as earned.

     Loans are generally placed on nonaccrual status when the payments become 90
days past due, or earlier if, in management's opinion, the full and timely
collection of principal or interest becomes uncertain. Any accrued and unpaid
interest on such loans is reversed and charged against current income.

     The Company recognizes interest income on nonaccrual loans to the extent
received in cash. However, where there is doubt regarding the ultimate
collectibility of the loan principal, cash receipts, whether designated as
principal or interest, are applied to reduce the carrying value of the loan.

     Loan origination fees, net of certain direct origination costs, are
deferred and recognized as an adjustment of the loan yield over the contractual
life of the loan. Amortization of deferred loan fees is discontinued on
nonperforming loans.

     The Company considers a loan to be impaired when, based on current
information and events, it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the loan
agreement, including scheduled interest payments. For a loan that has been
restructured, the contractual terms of the loan agreement refer to the
contractual terms specified by the original loan agreement, not the contractual
terms specified by the restructuring agreement.

     When evaluating loans for possible impairment, the Company makes an
individual assessment for impairment when and while such loans are on nonaccrual
status, or the loan has been restructured. When a loan has been identified as
being impaired, the amount of impairment will be measured by the Company using
discounted cash flows, except when it is determined that the primary remaining
source of repayment for the loan is the operation or liquidation of the
underlying collateral. In such cases, the current fair value of the collateral,
reduced by estimated costs to sell, will be used in place of discounted cash
flows. The Company does not apply the loan-by-loan evaluation process described
above to large groups of smaller balance homogeneous loans that are evaluated
collectively for impairment, such as residential mortgage (one to four family)
loans, home equity, and other consumer loans.

                                       29
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
     If the measurement of the impaired loan is less than the recorded
investment in the loan (including accrued interest, net deferred loan fees or
costs and unamortized premium or discount), an impairment is recognized by
creating or adjusting an existing allocation of the allowance for loan losses.
The Company's charge-off policy with respect to impaired loans is similar to its
charge-off policy for all loans. Specifically, loans are charged off in the
month in which they are considered uncollectible.

  Allowance for Loan Losses

     The allowance for loan losses is based on management's continuous
evaluation of various factors affecting collectibility of the loan portfolio.
These factors include, but are not limited to, changes in the composition of the
portfolio, current and forecasted economic conditions, overall portfolio
quality, review of specific problem loans, and historical loan loss experience.
The allowance for loan losses is based on estimates, and ultimate losses may
vary from the current estimates. These estimates are reviewed periodically and,
as adjustments become necessary, they are reported in earnings in the period in
which they become known. The allowance is increased by provisions charged to
expense and reduced by loan losses, net of recoveries.

     The determination of the allowance for loan losses is based on estimates
that are susceptible to changes in the economic environment and market
conditions. Management believes that, as of December 31, 1999 and 1998, the
allowance for loan losses is adequate based on information currently available.
If the strength of the economy in the Company's principal market areas is not
sustainable, the Company's loan portfolios could be adversely affected and
higher charge-offs and increases in nonperforming assets could result. Such an
adverse impact could also require a larger allowance for loan losses.

  Loan Servicing Assets

     Servicing assets consist of originated mortgage servicing rights and are
included in other assets. These rights are recorded based on the relative fair
values of the servicing rights and underlying loans and are amortized over the
period of the related loan servicing income stream. Amortization of these rights
is reflected in the statement of income under the caption of loan servicing
fees. The Company assesses servicing assets for impairment in accordance with
the provisions of SFAS No. 125. For the years presented, servicing assets and
the related amortization were not material.

  Premises and Equipment

     Premises and equipment are carried at cost, less accumulated depreciation
and amortization. Provisions for depreciation and amortization are determined on
a straight-line basis over the lesser of the estimated useful lives or the terms
of the leases. Terms range from three to ten years for furniture, equipment, and
computer software, and from forty to fifty years for premises.

  Other Real Estate Owned ('OREO')

     Foreclosed assets (other real estate owned) consist of properties acquired
through, or in lieu of, foreclosure and are carried at the lower of cost or fair
value (less estimated selling costs), and are included in other assets. Cost
includes the unpaid loan balance adjusted for applicable accrued interest,
unamortized deferred loan fees and acquisition costs. In the event that the fair
value (less estimated selling costs) is less than cost at the time of
acquisition, the shortfall is charged to the allowance for loan losses.
Subsequent write-downs, if any, and disposition gains and losses are reflected
as charges to current operations.

                                       30
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
  Goodwill

     Goodwill balances included in other assets are not significant and are
amortized over seven years.

  Securities Sold Under Agreements to Repurchase

     The Company periodically enters into sales of securities under agreements
to repurchase (reverse repurchase agreements). Fixed-coupon reverse repurchase
agreements are treated as financing. Accordingly, the securities underlying the
agreement remain in the asset accounts and the obligations to repurchase
securities sold are reflected as a liability in the consolidated balance sheets.
The securities underlying the agreements are delivered to the dealers who
arrange the transactions. Under some agreements, the dealers may sell, lend, or
otherwise dispose of the securities to other parties and agree to resell to the
Company substantially identical securities at the maturities of the agreements.

  Interest Rate Cap Agreements

     The Company periodically enters into interest rate cap agreements as a
means of managing its interest rate exposure. Premiums paid on cap agreements
are amortized over the life of the agreements. The results of cap transactions
are recognized currently as an adjustment to interest expense.

  Accounting for Income Taxes

     The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), 'Accounting for Income
Taxes.' SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. The Company
provides a valuation allowance against net deferred tax assets to the extent
that realization of the assets is not considered more likely than not. The
Company and United file a consolidated federal income tax return and a combined
California tax return.

  Earnings Per Share

     In accordance with SFAS No. 128, 'Earnings per Share,' which specifies the
computation, presentation and disclosure requirements for earnings per share
('EPS'), the Company computes basic EPS by dividing net income by the weighted
average number of shares outstanding during the period. Diluted EPS considers
the possible dilutive effect of instruments, such as convertible debt,
convertible preferred stock, and stock options.

  Transfers of Financial Assets

     The Company accounts for transfers of financial assets in accordance with
SFAS No. 125, 'Accounting for Transfers and Servicing Financial Assets and
Extinguishment of Liabilities.' SFAS No. 125 requires application of a financial
component's approach that focuses on control. Under this approach, after a
transfer of financial assets, an entity recognizes the financial and servicing
assets it controls and the liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. The statement also distinguishes transfers of financial assets
that are sales from transfers of financial assets that are secured borrowings.

  Segment Information

     The Company adopted SFAS No. 131, 'Disclosures about Segments of an
Enterprise and Related Information,' on January 1, 1998. SFAS No. 131 supersedes
SFAS No. 14 'Financial Reporting for Segments of a Business Enterprise'
replacing the 'industry segment' approach with the 'management' approach. The
management approach designates the internal organization that is used by
management for making operating decision and assessing performance as the source
of the Company's reportable segments. SFAS No. 131 also requires disclosure
about products and services, geographic areas and major customers. The adoption
of SFAS No. 131 did not affect the consolidated results of operations or
consolidated financial position as previously reported.

                                       31
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. RECENT ACCOUNTING PRONOUNCEMENTS

     SFAS No. 133, 'Accounting for Derivative Instruments and Hedging
Activities,' as amended by SFAS No. 137, will become effective for fiscal years
beginning after June 15, 2000. SFAS No. 133 defines derivative instruments and
requires that they be recognized as assets or liabilities in the statement of
financial position, measured at fair value. It further specifies the nature of
changes in the fair value of the derivatives which are included in the current
period results of operations and those which are included in other comprehensive
income. Management has assessed the impact of SFAS No. 133 and determined that
adoption will not have a material impact on the financial statements of the
Company based on the hedges currently in place.

3. RESTRICTIONS ON CASH AND DUE FROM BANKS

     The Bank is required to maintain a percentage of its deposits as reserves
either in cash or on deposit at the Federal Reserve Bank. As of December 31,
1999 and 1998, the reserve requirements were $4.4 million and $2.4 million,
respectively.

4. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

     Securities purchased under agreements to resell averaged $403,000 and $8.4
million during 1999 and 1998, respectively. There were no amounts outstanding at
any month end in 1999. The maximum amounts outstanding at any month end during
1998 was $25.0 million. There were no securities purchased under agreement to
resell at December 31, 1999 and 1998.

5. INVESTMENT AND MORTGAGE-BACKED SECURITIES

     The amortized cost and approximate market value of investment securities
and mortgage-backed securities classified as available for sale and held to
maturity at December 31, 1999 and 1998 are shown below (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                          1999
                                                                    -------------------------------------------------
                                                                                   GROSS         GROSS
                                                                    AMORTIZED    UNREALIZED    UNREALIZED     MARKET
                                                                      COST         GAINS         LOSSES       VALUE
                                                                    ---------    ----------    ----------    --------
<S>                                                                 <C>          <C>           <C>           <C>
Investment securities available for sale:
  Trust Preferred Securities.....................................   $ 103,182       $ --        $ 11,912     $ 91,270
                                                                    ---------    ----------    ----------    --------
Mortgage-backed securities available for sale:
  GNMA...........................................................     102,417         --           5,018       97,399
  FNMA...........................................................      72,698         --           3,631       69,067
  Other..........................................................      73,295         --           2,576       70,719
                                                                    ---------    ----------    ----------    --------
     Total mortgage-backed securities available for sale.........     248,410         --          11,225      237,185
                                                                    ---------    ----------    ----------    --------
Total investment and mortgage-backed securities available for
  sale...........................................................   $ 351,592       $ --        $ 23,137     $328,455
                                                                    ---------    ----------    ----------    --------
                                                                    ---------    ----------    ----------    --------
Investment securities held to maturity:
  Municipal Securities...........................................   $  43,633       $ --        $  4,383     $ 39,250
                                                                    ---------    ----------    ----------    --------
Mortgage-backed securities held to maturity:
  FNMA...........................................................      91,307         --           4,912       86,395
  FHLMC..........................................................      41,848         --           2,288       39,560
  Other..........................................................       7,118         --             328        6,790
                                                                    ---------    ----------    ----------    --------
  Total mortgage-backed securities held to maturity..............     140,273         --           7,528      132,745
                                                                    ---------    ----------    ----------    --------
Total investment and mortgage-backed securities held to
  maturity.......................................................   $ 183,906       $ --        $ 11,911     $171,995
                                                                    ---------    ----------    ----------    --------
                                                                    ---------    ----------    ----------    --------
</TABLE>

                                       32
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. INVESTMENT AND MORTGAGE-BACKED SECURITIES--(CONTINUED)

<TABLE>
<CAPTION>
                                                                                          1998
                                                                    -------------------------------------------------
                                                                                   GROSS         GROSS
                                                                    AMORTIZED    UNREALIZED    UNREALIZED     MARKET
                                                                      COST         GAINS         LOSSES       VALUE
                                                                    ---------    ----------    ----------    --------
<S>                                                                 <C>          <C>           <C>           <C>
Investment securities available for sale:
  Trust Preferred Securities.....................................   $  99,436      $   --        $1,725      $ 97,711
  Municipal Securities...........................................      43,617         847            --        44,464
  Other..........................................................       1,500          --            --         1,500
                                                                    ---------    ----------    ----------    --------
     Total investment securities available for sale..............     144,553         847         1,725       143,675
                                                                    ---------    ----------    ----------    --------
Mortgage-backed securities available for sale:
  GNMA...........................................................     114,403       1,152            --       115,555
  FNMA...........................................................      80,660          --         2,290        78,370
  Other..........................................................      91,071         676            --        91,747
                                                                    ---------    ----------    ----------    --------
     Total mortgage-backed securities available for sale.........     286,134       1,828         2,290       285,672
                                                                    ---------    ----------    ----------    --------
Total investment and mortgage-backed securities available for
  sale...........................................................   $ 430,687      $2,675        $4,015      $429,347
                                                                    ---------    ----------    ----------    --------
                                                                    ---------    ----------    ----------    --------
Mortgage-backed securities held to maturity:
  FNMA...........................................................   $ 103,961      $   --        $3,316      $100,645
  FHLMC..........................................................      44,218          --         1,504        42,714
  Other..........................................................      10,031          --           318         9,713
                                                                    ---------    ----------    ----------    --------
Total mortgage-backed securities held to maturity................   $ 158,210      $   --        $5,138      $153,072
                                                                    ---------    ----------    ----------    --------
                                                                    ---------    ----------    ----------    --------
</TABLE>

     During 1998, United purchased $368.9 million of securities in conjunction
with a leverage strategy which was adopted to leverage the capital which was
raised in April 1998. Included in the security purchases were $120.4 million of
GNMA securities, $99.9 million of AAA rated fifteen-year mortgage-backed
securities, $105.0 million of municipal bonds and $43.6 million of trust
preferred securities. The average yield on the securities purchased was 6.73%.

     The interest income on the municipal securities which were purchased during
1998 and included in the 1999 and 1998 results of operations were the stated
yields of 5.03% and 5.00%, respectively. The tax equivalent yields on the
securities were 7.46% and 7.41%, respectively.

                                       33
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. INVESTMENT AND MORTGAGE-BACKED SECURITIES--(CONTINUED)
     As of December 31, 1999, remaining maturities on mortgage-backed securities
classified as held to maturity and available for sale were as follows (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                                 1999
                                                                         ---------------------
                                                                         AMORTIZED     MARKET
                                                                           COST        VALUE
                                                                         ---------    --------
<S>                                                                      <C>          <C>
Available for sale:
  Investment securities available for sale
     After ten years..................................................   $ 103,182    $ 91,270
  Mortgage-backed securities available for sale
     After ten years..................................................     248,410     237,185
                                                                         ---------    --------
Total investment and mortgage-backed securities available
  for sale............................................................   $ 351,592    $328,455
                                                                         ---------    --------
                                                                         ---------    --------
Held to maturity:
  Investment securities held to maturity
     After ten years..................................................   $  43,633    $ 39,250
                                                                         ---------    --------
  Mortgage-backed securities held to maturity:
     In one year or less..............................................          30          30
     After one year through five years................................       1,570       1,510
     After five years through ten years...............................          35          35
     After ten years..................................................     138,638     131,170
                                                                         ---------    --------
  Total mortgage-backed securities held to
     maturity.........................................................   $ 140,273    $132,745
                                                                         ---------    --------
Total investment and mortgage-backed securities held to
  maturity............................................................   $ 183,906    $171,995
                                                                         ---------    --------
                                                                         ---------    --------
</TABLE>

     Approximately $386.8 million and $448.5 million of mortgage-backed
securities have been pledged to secure contractual arrangements entered into by
the Company at December 31, 1999 and 1998, respectively. No available for sale
securities were sold in 1999. Proceeds from the sale of available for sale
securities during 1998 and 1997 totaled $5.5 million and $23.4 million,
respectively. Gross realized losses totaled $6,000 in 1998 and $806,000 in 1997.

     There were no mortgage-backed securities sold under agreements to
repurchase as of December 31, 1999 or 1998 or at any time during 1999. When the
Company enters into these transactions, the obligations generally mature within
one year and generally represent agreements to repurchase the same securities.

                                       34
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. LOANS

     As of December 31, 1999 and 1998, the composition of the loan portfolio was
as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                        1999          1998
                                                                    ------------  ------------
<S>                                                                 <C>           <C>
Commercial:
  Secured by real estate-nonresidential...........................  $    435,061  $    229,693
  Secured by real estate-multifamily..............................       423,838       346,967
  Construction....................................................        89,710        61,486
  Commercial business.............................................        59,332        46,240
                                                                    ------------  ------------
Total commercial loans............................................     1,007,941       684,386
                                                                    ------------  ------------
Consumer:
  Residential mortgage (one to four family).......................       665,923       790,789
  Other...........................................................        14,248        16,711
                                                                    ------------  ------------
Total consumer loans..............................................       680,171       807,500
                                                                    ------------  ------------
Gross loans.......................................................     1,688,112     1,491,886
Net deferred loan (fees) costs....................................        (1,417)          262
                                                                    ------------  ------------
Loans.............................................................     1,686,695     1,492,148
Allowance for loan losses.........................................       (19,503)      (14,922)
                                                                    ------------  ------------
Net loans.........................................................  $  1,667,192  $  1,477,226
                                                                    ------------  ------------
                                                                    ------------  ------------
</TABLE>

     In the table above, construction loans are presented net of undrawn
commitments of $118.1 million and $121.3 million at December 31, 1999 and 1998,
respectively. As of December 31, 1999, loans at fixed interest rates amounted to
$628.0 million, and loans at variable interest rates amounted to $1.06 billion.
As of December 31, 1999, the portfolio above contained $765.4 million of loans
that were interest-rate sensitive within one year, $301.0 million from one to
five years, $245.6 million from five to ten years, $209.1 million from ten to
twenty years and $167.0 million over twenty years. Loans of approximately $4.6
million and $6.1 million were on nonaccrual status at December 31, 1999 and
1998, respectively.

     As of December 31, 1999, residential mortgage (one to four family) and
multifamily loans with a book value and market value of $982.0 million were
pledged to secure FHLB advances (see Note 9). The Company serviced real estate
loans for others of $20.1 million and $12.2 million at December 31, 1999 and
1998, respectively. These loans are not included in the consolidated balance
sheets. In connection therewith, the Company held trust funds of approximately
$1.0 million and $1.5 million as of December 31, 1999 and 1998, respectively,
all of which were segregated in separate accounts and included in the respective
balance sheets. Some agreements with investors to whom the Company has sold
loans have provisions which could require repurchase of loans under certain
circumstances. Management does not believe that any such repurchases will be
significant.

     The following table sets forth impaired loan disclosures as of and for the
years ended December 31, 1999, 1998, and 1997 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                       1999     1998      1997
                                                                       ----    ------    ------
<S>                                                                    <C>     <C>       <C>
Impaired loan with an allowance.....................................   $--     $1,359    $1,359
Impaired loan without an allowance..................................    --         --        20
                                                                       ----    ------    ------
     Total impaired loans...........................................   $--     $1,359    $1,379
                                                                       ----    ------    ------
                                                                       ----    ------    ------
Allowance for impaired loan under SFAS No. 114......................   $--     $  109    $  109
                                                                       ----    ------    ------
                                                                       ----    ------    ------
Interest income recognized on impaired loans during the year........   $69     $   89    $   68
                                                                       ----    ------    ------
                                                                       ----    ------    ------
</TABLE>

                                       35
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. LOANS--(CONTINUED)
     In the table above, the loan included in the impaired loan without an
allowance category is a loan for which the discounted cash flows, collateral
value (net of estimated selling costs) or market price equals or exceeds the
carrying value of the loan. This loan does not require an allowance.

     For the years ended December 31, 1999, 1998 and 1997, the activity in the
allowance for loan losses was as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                 1999       1998       1997
                                                               ---------  ---------  ---------
<S>                                                            <C>        <C>        <C>
Balance at beginning of year.................................  $  14,922  $  12,142  $  11,682
Provision for loan losses....................................      5,645      3,412      1,154
Loans charged off............................................     (1,198)      (681)    (1,069)
Recoveries...................................................        134         49        375
                                                               ---------  ---------  ---------
Balance at end of year.......................................  $  19,503  $  14,922  $  12,142
                                                               ---------  ---------  ---------
                                                               ---------  ---------  ---------
</TABLE>

7. PREMISES AND EQUIPMENT

     As of December 31, 1999 and 1998, premises and equipment were as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                                                           1999       1998
                                                                         ---------  ---------
<S>                                                                      <C>        <C>
Land and buildings.....................................................  $  19,135  $  19,114
Leasehold improvements.................................................      8,877      8,596
Equipment, furniture and fixtures......................................     11,000     13,578
                                                                         ---------  ---------
                                                                            39,012     41,288
Less accumulated depreciation and amortization.........................    (17,948)   (17,826)
                                                                         ---------  ---------
     Total.............................................................  $  21,064  $  23,462
                                                                         ---------  ---------
                                                                         ---------  ---------
</TABLE>

     Depreciation and amortization expense was $2.6 million, $2.6 million and
$2.3 million for the years ended December 31, 1999, 1998 and 1997, respectively.

8. DEPOSITS

     As of December 31, 1999 and 1998, deposit balances were as follows (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                  1999                      1998
                                                         ----------------------    ----------------------
                                                                       WEIGHTED                  WEIGHTED
                                                                       AVERAGE                   AVERAGE
                                                          BALANCE        RATE       BALANCE        RATE
                                                         ----------    --------    ----------    --------
<S>                                                      <C>           <C>         <C>           <C>
NOW, checking and money market accounts...............   $  193,995      1.14%     $  163,954      1.28%
Savings accounts......................................      264,138      1.92         232,635      2.20
Time deposits:
     Less than $100,000...............................      821,355      4.50         878,197      4.88
     $100,000 or greater..............................      396,660      4.91         359,109      5.04
                                                         ----------                ----------
     Total time deposits..............................    1,218,015      4.64       1,237,306      4.93
                                                         ----------                ----------
       Total deposits.................................   $1,676,148      3.80      $1,633,895      4.17
                                                         ----------                ----------
                                                         ----------                ----------
</TABLE>

                                       36
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. DEPOSITS--(CONTINUED)
     As of December 31, 1999, remaining maturities on time deposits were as
follows (dollars in thousands):

<TABLE>
<S>                                                           <C>
2000........................................................  $  1,200,380
2001........................................................        15,963
2002........................................................         1,078
2003........................................................           204
2004........................................................           278
Aggregate thereafter........................................           112
                                                              ------------
Total.......................................................  $  1,218,015
                                                              ------------
                                                              ------------
</TABLE>

     For the years ended December 31, 1999, 1998 and 1997, interest expense on
deposits was as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                           1999       1998       1997
                                                                         ---------  ---------  ---------
<S>                                                                      <C>        <C>        <C>
NOW, checking and money market accounts................................  $   2,498  $   1,640  $   1,392
Savings accounts.......................................................      5,047      4,918      4,834
Time deposits..........................................................     54,677     58,568     55,570
Less penalties for early withdrawal....................................       (267)      (236)      (283)
                                                                         ---------  ---------  ---------
Total..................................................................  $  61,955  $  64,890  $  61,513
                                                                         ---------  ---------  ---------
                                                                         ---------  ---------  ---------
</TABLE>

     As of December 31, 1999 and 1998, the composition of deposits by interest
rate was as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                  1999          1998
                                                                              ------------  ------------
<S>                                                                           <C>           <C>
Under 3%....................................................................  $    393,861  $    371,021
3.00% to 3.99%..............................................................       227,568       226,293
4.00% to 4.99%..............................................................       664,621       384,220
5.00% to 5.99%..............................................................       387,729       643,079
6.00% to 6.99%..............................................................         2,364         9,277
7.00% to 7.99%..............................................................            --            --
8.00% to 8.99%..............................................................             5             5
                                                                              ------------  ------------
     Total..................................................................  $  1,676,148  $  1,633,895
                                                                              ------------  ------------
                                                                              ------------  ------------
</TABLE>

9. BORROWINGS

  Federal Home Loan Bank Advances

     The Company maintains a secured credit facility with the Federal Home Loan
Bank of San Francisco (FHLB-SF) against which the Company may take advances. The
terms of this credit facility require the Company to maintain in safekeeping
with the FHLB-SF eligible collateral of at least 100% of outstanding advances.
At December 31,1999, there were $421.5 million of advances outstanding, of which
$188.5 million were short term and $233.0 million were long term. Included in
the long-term FHLB advances as of December 31, 1999 were $216.0 million of
advances with provisions which allow the FHLB-SF, at their option, to terminate
the advances at quarterly intervals at specified periods ranging from three to
five years beyond the advance dates. The advances were secured with
mortgage-backed securities and loans. At December 31, 1998, there were $368.0
million of advances outstanding, of which $135.0 million were short term and
$233.0 million were long term. The fixed-rate long-term debt outstanding as of
December 31, 1999, of $233.0 million matures in 2008. The weighted average
contractual maturity as of December 31, 1999 was 100 months. At December 31,
1999, credit availability under this facility was approximately $253.1 million.

                                       37
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. BORROWINGS--(CONTINUED)
  Federal Reserve Bank Borrowings

     In December of 1998, the Bank entered into the Treasury Investment Program
with the Federal Reserve Bank of San Francisco. This borrowing line allows the
Bank to utilize deposits made to the U.S. Treasury for federal tax payments
until the Treasury needs the funds.

     This borrowing line must be fully collateralized at all times, and at
December 31, 1999 the maximum amount of borrowings allowed based on collateral
placed with the Federal Reserve Bank was approximately $31.5 million. Borrowings
outstanding at December 31, 1999 were $28.1 million.

     For the years ended December 31, 1999 and 1998, the following advances were
outstanding (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                     1999        1998
                                                                                  ----------  ----------
<S>                                                                               <C>         <C>
FHLB of San Francisco advances:
  Average balance outstanding...................................................  $  397,394  $  186,504
  Maximum amount outstanding at any month end period............................     468,000     368,000
  Balance outstanding at end of period..........................................     421,500     368,000
  Weighted average interest rate during the period..............................       5.38%       5.51%
  Weighted average interest rate at end of period...............................       5.65%       5.33%
  Weighted average remaining term to maturity at end of period (in years).......           5           6
FRB direct investment borrowings:
  Average balance outstanding...................................................  $   22,595  $       --
  Maximum amount outstanding at any month end period............................      83,739          --
  Balance outstanding at end of period..........................................      28,112          --
  Weighted average interest rate during the period..............................       4.65%          --
  Weighted average interest rate at end of period...............................       3.99%          --
  Weighted average remaining term to maturity at end of period (in years).......           0          --
Securities sold under agreements to repurchase:
  Average balance outstanding...................................................  $      130  $      112
  Maximum amount outstanding at any month end...................................       1,500          --
  Balance outstanding at end of period..........................................          --          --
  Weighted average interest rate during the period..............................       5.48%       6.75%
  Weighted average interest rate at end of period...............................          --          --
  Weighted average remaining term to maturity at end of period..................          --          --
</TABLE>

     The interest rate on the FHLB debt ranged from 4.06% to 6.05% and the
weighted average interest rate was 5.65% at December 31, 1999 and 5.38% for the
year then ended. Interest is paid either at maturity for overnight advances, and
monthly or quarterly for other advances, dependent upon the term of the advance
and the collateral supporting the advance. Principal is due at maturity. The
interest expense on such advances was $21.4 million and $10.3 million for the
years ended December 31, 1999 and 1998, respectively.

10. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR SUBORDINATED DEBENTURES
    OF UCBH HOLDINGS, INC. (UCBH)

     On April 17, 1998, UCBH Trust Co. (the 'Trust'), a Delaware statutory
business trust owned by the Company, issued $30 million of 9.375% Guaranteed
Preferred Beneficial Interests in UCBH's Subordinated Debentures ('Capital
Securities'). The Trust exists for the sole purpose of issuing the Capital
Securities and investing the proceeds thereof in 9.375% Junior Subordinated
Debentures issued by UCBH. The Junior Subordinated Debentures mature on May 1,
2028. Payment of distributions out of the monies held by the Trust and payments
on liquidation of the Trust or the redemption of the Capital Securities are
guaranteed by UCBH to the extent the Trust has funds available therefor. The
obligations of UCBH under the Guarantee and the Junior

                                       38
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR SUBORDINATED DEBENTURES
    OF UCBH HOLDINGS, INC. (UCBH)--(CONTINUED)
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. Distributions on the Capital Securities
are payable semi-annually, in arrears on May 1 and November 1 of each year,
commencing November 1, 1998. The Junior Subordinated Debentures are not
redeemable prior to May 1, 2005, unless certain events have occurred.

     The proceeds from the issuance of the Capital Securities were used
primarily to provide additional capital for the Bank. Interest expense on the
Capital Securities was $2.8 million for the year ended December 31, 1999, and
$2.0 million in 1998.

11. STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS

     The Company and the Bank are subject to various regulatory requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by the regulators that, if undertaken, could have direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of its
assets, liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts are also subject to
qualitative judgments by the regulators about components, weightings, and other
factors.

     Qualitative measures established by regulation to ensure capital adequacy
require financial institutions to maintain minimum amounts and ratios (set forth
in the table below) of total and Tier I Capital (as defined in the regulations)
to risk weighed assets (as defined), and of Tier I Capital (as defined) to
average assets (as defined). Management believes, as of December 31, 1999, that
the Company and the Bank met all capital adequacy requirements to which they are
subject.

     As of December 31, 1999, the Bank met the 'well capitalized' requirements
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized, the Bank must maintain minimum total risk-based, Tier I
risk-based and Tier I leverage ratio as set forth in the table. There are no
conditions or events since December 31, 1999 that management believes have
changed the institution's category.

     The Company's and the Bank's actual capital amounts and ratios are also
presented in the following table (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                                   TO BE WELL
                                                                                                CAPITALIZED UNDER
                                                                             FOR CAPITAL        PROMPT CORRECTIVE
                                                         ACTUAL           ADEQUACY PURPOSES     ACTION PROVISIONS
                                                    -----------------     -----------------     -----------------
                                                     AMOUNT     RATIO      AMOUNT     RATIO      AMOUNT     RATIO
                                                    --------    -----     --------    -----     --------    -----
<S>                                                 <C>         <C>       <C>         <C>       <C>         <C>
As of December 31, 1999:
Total Capital (to risk weighted assets)
  United Commercial Bank.........................   $167,919    11.29%    $118,938    8.00%     $148,672    10.00%
  UCBH Holdings, Inc.............................    171,925    11.55      119,067    8.00
Tier I Capital (to risk weighted assets)
  United Commercial Bank.........................   $149,324    10.04%    $ 59,469    4.00%     $ 89,203     6.00%
  UCBH Holdings, Inc.............................    153,310    10.30       59,534    4.00
Tier I Capital (to average assets)
  (Leverage Ratio)
  United Commercial Bank.........................   $149,324     6.58%    $ 90,722    4.00%     $113,403     5.00%
  UCBH Holdings, Inc.............................    153,310     6.75       90,824    4.00
</TABLE>

                                       39
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11. STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS--(CONTINUED)
     The following is a reconciliation of capital under Generally Accepted
Accounting Principles ('GAAP') with regulatory capital at December 31, 1999
(dollars in thousands):

<TABLE>
<CAPTION>
                                                           TIER I CAPITAL                     RISK-BASED CAPITAL
                                                  ---------------------------------    ---------------------------------
                                                      UNITED              UCBH             UNITED              UCBH
                                                  COMMERCIAL BANK    HOLDINGS, INC.    COMMERCIAL BANK    HOLDINGS, INC.
                                                  ---------------    --------------    ---------------    --------------
<S>                                               <C>                <C>               <C>                <C>
GAAP Capital...................................      $ 136,121          $110,107          $ 136,121          $110,107
Nonallowable components:
  Unrealized losses on securities available for
     sale......................................         13,419            13,419             13,419            13,419
  Goodwill.....................................           (181)             (181)              (181)             (181)
  Servicing rights.............................            (35)              (35)               (35)              (35)
Additional capital components:
  Guaranteed preferred beneficial interests in
     junior subordinated debentures............             --            30,000                 --            30,000
  Allowance for loan losses-limited............             --                --             18,595            18,615
                                                  ---------------    --------------    ---------------    --------------
Regulatory capital.............................      $ 149,324          $153,310          $ 167,919          $171,925
                                                  ---------------    --------------    ---------------    --------------
                                                  ---------------    --------------    ---------------    --------------
</TABLE>

     During 1998, in a Private Offering, the Company issued common stock to
various purchasers raising $128.6 million net of issue costs. In conjunction
with the Private Offering, and pursuant to the terms of an Exchange and
Redemption Agreement (the Agreement) with Selling Stockholders, $20.6 million of
Long-Term Debt to Affiliates, which was due to Selling Stockholders, was
exchanged for shares of Common Stock. The Company used approximately $120.0
million of the proceeds raised to redeem all of the shares of Common Stock then
owned by the Selling Shareholders, which included the shares of Common Stock
exchanged for the Long-Term Debt to Affiliates. As a result, the Selling
Shareholders are no longer affiliated with the Company. The Company and United
are prohibited by federal regulations from paying dividends if the payment would
reduce their regulatory capital below certain minimum requirements. The Company
did not declare or pay dividends in the years ended December 31, 1999, 1998 or
1997.

                                       40
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. EARNINGS PER SHARE

     The following is a reconciliation of the numerator and denominator of the
basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                                         -----------------------------------------------
                                                           INCOME             SHARES           PER SHARE
                                                         (NUMERATOR)       (DENOMINATOR)        AMOUNT
                                                         -----------       -------------       ---------
                                                             (DOLLARS IN THOUSANDS, EXCEPT PER SHARE
                                                                            AMOUNTS)
<S>                                                      <C>               <C>                 <C>
1999:
Basic:
  Net income..........................................     $19,068            9,333,333          $2.04
Effect of stock options...............................          --              151,694
                                                         -----------       -------------
Diluted:
  Net income..........................................     $19,068            9,485,027          $2.01
                                                         -----------       -------------
                                                         -----------       -------------
1998:
Basic:
  Net income..........................................     $10,888            8,351,852          $1.30
Effect of long-term debt to affiliates................         347              581,233
                                                         -----------       -------------
Diluted:
  Net income and assumed conversions..................     $11,235            8,933,085          $1.26
                                                         -----------       -------------
                                                         -----------       -------------
1997:
Basic:
  Net income..........................................     $ 7,299            6,000,000          $1.22
Effect of long-term debt to affiliates................       1,077            1,974,000
                                                         -----------       -------------
Diluted:
  Net income and assumed conversions..................     $ 8,376            7,974,000          $1.05
                                                         -----------       -------------
                                                         -----------       -------------
</TABLE>

13. SEGMENT INFORMATION

     The Company adopted SFAS No. 131 'Disclosures about Segments of an
Enterprise and Related Information,' on January 1, 1998. SFAS No. 131 superseded
SFAS No. 14 'Financial Reporting for Segments of a Business Enterprise'
replacing the 'industry segment' approach with the 'management' approach. The
management approach designates the internal organization that is used by
management for making operating decisions and assessing performance as the
source of the Company's reportable segments. The adoption of SFAS No. 131 did
not affect the consolidated results of operations or consolidated financial
position as previously reported.

     The Company has determined that its reportable segments are those that are
based on the Company's method of internal reporting, which disaggregates its
business into two reportable segments: Consumer Banking and Commercial Banking.
Both segments serve all of California's residents. Historically, our customer
base has been primarily the ethnic Chinese communities located mainly in the San
Francisco Bay area, Sacramento/Stockton and metropolitan Los Angeles.

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

                                       41
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. SEGMENT INFORMATION--(CONTINUED)
     Following is segment information of the Company for the years ended
December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                                       RECONCILING
IN MILLIONS                                                  COMMERCIAL    CONSUMER       ITEMS          TOTAL
                                                             ----------   ----------   -----------     ----------
<S>                                                          <C>          <C>          <C>             <C>
1999
Net interest income (before provision for loan losses).....   $ 22,768    $   47,946      $  --        $   70,714
Segment net income.........................................      4,368        14,700         --            19,068
Segment total assets.......................................    998,086     1,286,714         --         2,284,800
1998
Net interest income (before provision for loan losses).....   $ 13,686    $   38,751      $  --        $   52,437
Segment net income.........................................      2,614         8,278         (4)(1)        10,888
Segment total assets.......................................    679,656     1,467,676         --         2,147,332
1997
Net interest income (before provision for loan losses).....   $ 10,074    $   33,265      $  --        $   43,339
Segment net income.........................................      2,565         5,184       (450)(1)         7,299
Segment total assets.......................................    496,933     1,064,717         --         1,561,650
</TABLE>

------------------
(1) Represents losses on sale of securities, net of taxes

14. STOCK OPTION PLAN

     In May 1998, the Company adopted a Stock Option Plan ('Plan') which
provides for the granting of stock options to eligible officers, employees and
directors of the Company and United. The Company has reserved 933,333 shares of
Common Stock to be issued pursuant to the Plan. All of the options are
exercisable for ten years following the option grant date and vest over a three
year period. The following table summarizes the stock option activity during the
years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                           1999                         1998
                                                                 -------------------------    -------------------------
                                                                 NUMBER        WEIGHTED       NUMBER        WEIGHTED
                                                                   OF          AVERAGE          OF          AVERAGE
                                                                 SHARES     EXERCISE PRICE    SHARES     EXERCISE PRICE
                                                                 -------    --------------    -------    --------------
<S>                                                              <C>        <C>               <C>        <C>
Options outstanding, beginning of year........................   620,000        $15.00             --        $   --
Granted.......................................................   265,000         15.24        620,000         15.00
Canceled or expired...........................................      (500)        15.00             --            --
Exercised.....................................................        --            --             --            --
                                                                 -------                      -------
Options outstanding, end of year..............................   884,500         15.07        620,000         15.00
                                                                 -------                      -------
                                                                 -------                      -------
Shares exercisable end of year................................   215,000         15.00             --            --
Weighted average fair value of options granted during the
  year........................................................                    3.72                         3.71
Market value of stock at December 31, 1999....................                   20.56                        13.25
</TABLE>

     For options outstanding at December 31, 1999, the range of exercise prices
was as follows:

<TABLE>
<CAPTION>
                       OPTIONS       WEIGHTED AVERAGE     WEIGHTED AVERAGE       OPTIONS       WEIGHTED AVERAGE
EXERCISE PRICE       OUTSTANDING      EXERCISE PRICE       REMAINING LIFE      EXERCISABLE      EXERCISE PRICE
-----------------    -----------     ----------------     ----------------     -----------     ----------------
<S>                  <C>             <C>                  <C>                  <C>             <C>
$15.00                  871,000           $15.00                 8.56             215,000           $15.00
 19.75                   13,500            19.75                 9.54                  --               --
                     -----------                                               -----------
Total/Average           884,500            15.07                 8.57             215,000            15.00
                     -----------                                               -----------
                     -----------                                               -----------
</TABLE>

                                       42
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. STOCK OPTION PLAN--(CONTINUED)
     In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 (SFAS No. 123), 'Accounting for Stock-Based Compensation.'
This Statement establishes a new fair value based accounting method for
stock-based compensation for plans and encourages, but does not require,
employers to adopt the new method in place of the provisions of Accounting
Principles Board ('APB') Release No. 25. Companies may continue to apply the
accounting provisions of APB No. 25 in determining net income. However, they
must apply the disclosure requirements of SFAS No. 123 for all grants issued
after 1994. The Company elected to apply the provisions of APB No. 25 in
accounting for the employee stock plan described above. Accordingly, no
compensation cost has been recognized for stock options granted under the Plan.

     If the computed fair values of the stock awards had been amortized to
expense over the vesting period of the awards, pro forma amounts would have been
as shown in the following table. The impact of outstanding nonvested stock
options has been excluded from the pro forma calculation.

<TABLE>
<CAPTION>
                                                                               1999            1998
                                                                              -------         -------
                                                                               (DOLLARS IN THOUSANDS,
                                                                             EXCEPT EARNINGS PER SHARE)
<S>                                                                           <C>             <C>
Net income:
  As reported.........................................................        $19,068         $10,888
  Pro forma...........................................................         18,476          10,561
Basic earnings per share:
  As reported.........................................................           2.04            1.30
  Pro forma...........................................................           1.98            1.26
Diluted earnings per share:
  As reported.........................................................           2.01            1.26
  Pro forma...........................................................           1.95            1.22
</TABLE>

     These calculations require the use of option pricing models, even though
such models were developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differ
from the Company's stock option awards. These models also require subjective
assumptions, including future stock price volatility, dividend yield, and
expected time to exercise, which greatly affect the calculated values. The
following weighted average assumptions were used in the Black-Scholes option
pricing model for options granted in 1999 and 1998:

<TABLE>
<CAPTION>
                                                                                         1999      1998
                                                                                        ------    ------
<S>                                                                                     <C>       <C>
Dividend yield.......................................................................     1.70%     1.50%
Volatility...........................................................................    28.20%    28.12%
Risk-free interest rate..............................................................     5.20%     5.60%
Expected lives (years)...............................................................        5         5
</TABLE>

                                       43
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

15. FEDERAL AND STATE TAXES ON INCOME

     Following is a summary of the provision for taxes on income (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                             ---------------------------
                                                                              1999       1998      1997
                                                                             -------    ------    ------
<S>                                                                          <C>        <C>       <C>
Current tax expense:
  Federal.................................................................   $ 1,933    $6,080    $3,244
  State...................................................................     1,104     1,282     1,881
                                                                             -------    ------    ------
                                                                               3,037     7,362     5,125
                                                                             -------    ------    ------
Deferred tax (benefit) expense:
  Federal.................................................................     8,288       411     1,155
  State...................................................................     1,553        82      (490)
                                                                             -------    ------    ------
                                                                               9,841       493       665
                                                                             -------    ------    ------
                                                                             $12,878    $7,855    $5,790
                                                                             -------    ------    ------
                                                                             -------    ------    ------
</TABLE>

     Deferred tax liabilities (assets) are comprised of the following (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                                         YEARS ENDED
                                                                                         DECEMBER 31,
                                                                                      ------------------
                                                                                       1999       1998
                                                                                      -------    -------
<S>                                                                                   <C>        <C>
Deferred tax liabilities:
  Deferred loan fees...............................................................   $ 2,640    $ 2,786
  FHLB dividends...................................................................     2,966      2,691
  Purchase accounting adjustments..................................................       124        177
  Market value adjustments on certain loans and securities.........................     8,208         --
  State taxes......................................................................     1,231         --
  Other............................................................................       137         48
                                                                                      -------    -------
                                                                                       15,306      5,702
                                                                                      -------    -------
Deferred tax assets:
  Loan and OREO loss allowances....................................................    (6,477)    (4,927)
  Market value adjustments on certain loans and securities.........................        --     (1,243)
  Depreciation.....................................................................      (515)      (637)
  Unrealized losses on securities available for sale...............................    (9,700)      (546)
  State taxes......................................................................        --       (322)
  Compensation and benefits........................................................      (213)      (271)
  Other............................................................................      (162)      (204)
                                                                                      -------    -------
                                                                                      (17,067)    (8,150)
                                                                                      -------    -------
Net deferred tax assets............................................................   $(1,761)   $(2,448)
                                                                                      -------    -------
                                                                                      -------    -------
</TABLE>

                                       44
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

15. FEDERAL AND STATE TAXES ON INCOME--(CONTINUED)
     The following table reconciles the statutory income tax rate to the
consolidated effective income tax rate:

<TABLE>
<CAPTION>
                                                                             YEARS ENDED
                                                                             DECEMBER 31,
                                                                        ----------------------
                                                                        1999     1998     1997
                                                                        ----     ----     ----
<S>                                                                     <C>      <C>      <C>
Federal income tax rate.............................................    35.0%    35.0%    34.0%
State franchise tax rate, net of federal income tax effects.........     6.9%     6.9%     7.2%
                                                                        ----     ----     ----
Statutory income tax rate...........................................    41.9%    41.9%    41.2%
                                                                        ----     ----     ----
Increase (reduction) in tax rate resulting from:
  Tax exempt income.................................................    (2.3%)   (1.9%)     --
  Amortization of intangibles.......................................     0.1%     0.1%     0.2%
  Reversal of allowance.............................................      --       --     (2.2%)
  Other, net........................................................     0.6%     3.7%     5.0%
                                                                        ----     ----     ----
                                                                        40.3%    43.8%    44.2%
                                                                        ----     ----     ----
                                                                        ----     ----     ----
</TABLE>

     Taxes on income included the following (dollars in thousands):

<TABLE>
<CAPTION>
                                                                               YEARS ENDED
                                                                               DECEMBER 31,
                                                                            ------------------
                                                                             1999       1998
                                                                            -------    -------
<S>                                                                         <C>        <C>
Net deferred (asset) liability:                                             $(1,461)   $(2,036)
  Federal income tax.....................................................      (300)      (412)
                                                                            -------    -------
  State franchise tax....................................................    (1,761)    (2,448)
                                                                            -------    -------
(Prepaid income taxes) taxes payable.....................................    (2,772)       877
                                                                            -------    -------
                                                                            $(4,533)   $(1,571)
                                                                            -------    -------
                                                                            -------    -------
</TABLE>

     Tax years 1996 through 1999 remain open for both Internal Revenue Service
purposes and California Franchise Tax Board purposes.

16. DERIVATIVE FINANCIAL INSTRUMENT AND FINANCIAL INSTRUMENTS WITH
    OFF-BALANCE-SHEET RISK

     The Company is a party to derivative financial instruments and financial
instruments with off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers and to reduce its own exposure to
fluctuations in interest rates. The Company does not hold or issue financial
instruments for trading purposes. Financial instruments in the normal course of
business include commitments to extend and purchase credit, forward commitments
to sell loans, letters of credit 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 reflects the extent of involvement the
Company has in particular classes of financial instruments.

     The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual or notional amount of those instruments. The
Company uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments. For interest-rate swap
and cap transactions and forward commitments to sell loans, the contract or
notional amounts do not represent exposure to credit loss. The Company controls
the credit risk of its interest-rate swap and cap agreements and forward
commitments to sell loans through credit approvals, limits, and monitoring
procedures. The Company does not require collateral or other security to support
interest-rate swap transactions with credit risk.

                                       45
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

16. DERIVATIVE FINANCIAL INSTRUMENT AND FINANCIAL INSTRUMENTS WITH
    OFF-BALANCE-SHEET RISK--(CONTINUED)
     Contract or notional amounts of derivative financial instruments and
financial instruments with off-balance-sheet risk as of December 31, 1999 and
1998 are as follows (dollars in millions):

<TABLE>
<CAPTION>
                                                                               1999      1998
                                                                              ------    ------
<S>                                                                           <C>       <C>
Financial instruments whose contract amounts represent credit risk:
  Commitments to extend credit:
     Consumer (including residential mortgage).............................   $ 32.0    $ 33.2
     Commercial (excluding construction)...................................     77.0      44.6
     Construction..........................................................    126.9     135.0
  Letters of credit........................................................      6.4       4.5
Financial instruments whose notional or contract amounts exceed the amount
  of credit risk:
  Interest-rate cap agreements.............................................   $160.0    $200.0
</TABLE>

     Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses.
The Company evaluates each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on management's credit evaluation of the
counterparty. Collateral held generally includes residential or commercial real
estate, accounts receivable, or other assets.

     Letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. These letters of credit are usually
secured by inventories or by deposits held at the Company.

     In order to minimize the exposure arising from forward contracts, the
Company enters into hedge options from time to time. Interest rate caps are
interest rate protection instruments that involve the payment from the seller to
the buyer of an interest differential. This differential represents the
difference between current interest rates and agreed-upon rate applied to a
notional principal amount. The Company is a purchaser of interest rate caps. At
December 31, 1999 and at December 31, 1998 the Company had LIBOR-based interest
rate caps with a notional amount of $160 million and $200 million, respectively,
outstanding. The Company had no interest rate caps outstanding as of December
31, 1997. 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. For the years ended December 31, 1999 and 1998, costs associated with
the interest rate caps negatively impacted net interest income by $753,000 and
$638,000, respectively.

17. CONCENTRATIONS OF CREDIT RISK

     The Company's loan activity is primarily with customers located throughout
the State of California. Substantially all residential and commercial real
estate loans are secured by properties located in the State of California and
are originated at 80% loan-to-value or less. Management believes that the risk
of significant losses in excess of underlying collateral value is low.

                                       46
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

18. LEASE COMMITMENTS AND CONTINGENT LIABILITIES

  Lease Commitments

     The Company leases various premises under noncancellable operating leases,
many of which contain renewal options and some of which contain escalation
clauses.

     Future minimum rental payments, which do not include common area costs, due
each year under existing operating leases that have initial or remaining
noncancellable lease terms in excess of one year as of December 31, 1999, are
payable as follows (dollars in thousands):

<TABLE>
<S>                                                                        <C>
2000.....................................................................  $   3,372
2001.....................................................................      2,856
2002.....................................................................      2,417
2003.....................................................................      2,085
2004.....................................................................      1,302
Aggregate thereafter.....................................................      8,523
                                                                           ---------
Total minimum payments required..........................................  $  20,555
                                                                           ---------
                                                                           ---------
</TABLE>

     Rental expense was approximately $3.5 million, $3.4 million and $3.2
million for the years ended December 31, 1999, 1998 and 1997, respectively.

  Contingent Liabilities

     The 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 operations or financial
condition.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

     Statement of Financial Accounting Standards 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, 1999 and 1998, by application of the described methods and
significant assumptions.

  Cash and Short-Term Investments

     For these short-term instruments, the carrying value of $24.3 million at
December 31, 1999 and $15.1 million at December 31, 1998 is a reasonable
estimate of fair value.

  Investment and Mortgage-backed Securities

     The aggregate fair value of investment and mortgage-backed securities is
$527.5 million at December 31, 1999 and $602.8 million at December 31, 1998.
Fair value equals quoted market price, if available. If a quoted market price is
not available, fair value is estimated using quoted market prices for similar
securities.

  Loans Receivable

     The aggregate fair value of loans receivable is $1.66 billion at December
31, 1999 and $1.51 billion at December 31, 1998. Fair value 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.

  Deposit Liabilities

     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. The aggregate fair value
of deposits is $1.68 billion at December 31, 1999 and $1.64 billion at December
31, 1998.

                                       47
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

19. FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)
  Federal Home Loan Bank Advances and Other Borrowings

     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. The aggregate fair value of Federal Home Loan Bank
advances and other borrowings at December 31, 1999 was $403.6 million and $376.9
million at December 31, 1998. There were no borrowings outstanding at December
31, 1997.

  Guaranteed Preferred Beneficial Interests in Junior Subordinated Debentures

     The fair value of the Company's junior subordinated debentures is estimated
using market interest rates currently being offered for similar unrated debt
instruments. The fair market value of junior subordinated debentures was $28.2
million at December 31, 1999 and $32.0 million at December 31, 1998.

  Interest Rate Cap Agreements

     The fair value of the cap agreements used for hedging purposes is the
estimated amount that the Company would receive or pay to terminate the
agreements at the reporting date, taking into account current interest rates and
the current creditworthiness of the cap counterparties. The fair market value of
cap agreements at December 31, 1999 was $3.2 million and $2.0 million at
December 31, 1998.

  Commitments to Extend Credit, Commitments to Purchase Loans, Securities Sold
  But Not Owned, and Options on Interest Rate Futures

     The 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, fair value also considers the difference between current
levels of interest rates and the committed rates. Fair values for securities
sold but not owned and options on interest rate futures are based on quoted
market prices or dealer quotes. The fair value of commitments to extend credit
and commitments to purchase loans cannot be readily determined. There were no
put or call options at December 31, 1999 and 1998.

                                       48
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

20. PARENT COMPANY

     Condensed unconsolidated financial information of UCBH Holdings, Inc. is
presented below.

                            CONDENSED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   FOR THE YEARS ENDED
                                                                                       DECEMBER 31,
                                                                                   --------------------
                                                                                     1999       1998
                                                                                   ---------  ---------
<S>                                                                                <C>        <C>
                                     ASSETS
Cash and due from banks..........................................................  $      --  $      --
Investment and mortgage-backed securities available for sale, at fair value......        500      1,500
Investment in subsidiaries.......................................................    136,121    130,477
Other assets.....................................................................      3,984      2,361
                                                                                   ---------  ---------
  Total assets...................................................................  $ 140,605  $ 134,338
                                                                                   ---------  ---------
                                                                                   ---------  ---------

                                   LIABILITIES
Accrued interest payable.........................................................  $     469  $     469
Other liabilities................................................................         29        231
Junior subordinated debentures payable to UCBH Trust Co..........................     30,000     30,000
                                                                                   ---------  ---------
  Total liabilities..............................................................     30,498     30,700
                                                                                   ---------  ---------

                              STOCKHOLDERS' EQUITY
Common stock.....................................................................         93         93
Additional paid-in capital.......................................................     59,485     59,443
Subsidiary's accumulated other comprehensive income..............................    (13,419)      (778)
Retained earnings................................................................     63,948     44,880
                                                                                   ---------  ---------
  Total stockholders' equity.....................................................    110,107    103,638
                                                                                   ---------  ---------
  Total liabilities and stockholders' equity.....................................  $ 140,605  $ 134,338
                                                                                   ---------  ---------
                                                                                   ---------  ---------
</TABLE>

                         CONDENSED STATEMENT OF INCOME
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                FOR THE YEARS ENDED
                                                                                   DECEMBER 31,
                                                                          -------------------------------
                                                                            1999       1998       1997
                                                                          ---------  ---------  ---------
<S>                                                                       <C>        <C>        <C>
                                 INCOME
Interest income on investment securities................................  $      18  $      50  $      --
Dividends from subsidiary...............................................      3,100      1,625        250
Miscellaneous income....................................................         --          6         --
                                                                          ---------  ---------  ---------
  Total income..........................................................      3,118      1,681        250
                                                                          ---------  ---------  ---------

                                EXPENSE
Interest expense on junior subordinated debentures......................      2,812      1,985         --
Interest expense on long-term debt to affiliates........................         --        599      1,825
Miscellaneous expense...................................................        878        257        205
                                                                          ---------  ---------  ---------
  Total expense.........................................................      3,690      2,841      2,030
                                                                          ---------  ---------  ---------
Loss before taxes and equity in undistributed net income of
  subsidiary............................................................       (572)    (1,160)    (1,780)
Income tax benefit......................................................      1,355        827         --
Equity in undistributed net income of subsidiary........................     18,285     11,221      9,079
                                                                          ---------  ---------  ---------
  Net income............................................................  $  19,068  $  10,888  $   7,299
                                                                          ---------  ---------  ---------
                                                                          ---------  ---------  ---------
</TABLE>

                                       49
<PAGE>

                              UCBH HOLDINGS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

20. PARENT COMPANY--(CONTINUED)
                       CONDENSED STATEMENT OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     FOR THE YEARS ENDED
                                                                                        DECEMBER 31,
                                                                               -------------------------------
                                                                                 1999       1998       1997
                                                                               ---------  ---------  ---------
<S>                                                                            <C>        <C>        <C>
                            OPERATING ACTIVITIES
Net income                                                                     $  19,068  $  10,888  $   7,299
  Adjustments to reconcile net income to net cash provided by (used for)
     operating activities:
     Equity in undistributed net income of subsidiary........................    (18,285)   (11,221)    (9,079)
     Decrease in other assets................................................     (1,623)    (2,361)        --
     Increase in accrued interest payable....................................         --        469         --
     (Decrease) increase in other liabilities................................       (160)       231         --
                                                                               ---------  ---------  ---------
       Net cash used for operating activities................................     (1,000)    (1,994)    (1,780)
                                                                               ---------  ---------  ---------

                            INVESTING ACTIVITIES
Purchases of investments and mortgage-backed securities, available for
  sale.......................................................................         --     (1,500)        --
Maturities of investments available for sale.................................      1,500         --         --
Capital contribution to subsidiary...........................................         --    (35,750)    (1,500)
                                                                               ---------  ---------  ---------
       Net cash provided by (used in) investing activities...................      1,500    (37,250)    (1,500)
                                                                               ---------  ---------  ---------

                            FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of redemptions and of issue
  costs......................................................................         --     29,248         --
Proceeds from issuance of junior subordinated debentures to UCBH Trust
  Co. .......................................................................         --     30,000         --
Long-term debt to affiliates issued..........................................         --         --      1,500
Increase in capitalized interest component of long-term debt to affiliates...         --    (20,060)     1,825
                                                                               ---------  ---------  ---------
       Net cash provided by financing activities.............................         --     39,188      3,325
                                                                               ---------  ---------  ---------
Net increase (decrease) in cash and cash equivalents.........................        500        (56)        45
Cash and cash equivalents beginning of year..................................          0         56         11
                                                                               ---------  ---------  ---------
Cash and cash equivalents end of year........................................  $     500  $       0  $      56
                                                                               ---------  ---------  ---------
                                                                               ---------  ---------  ---------
</TABLE>

                                       50
<PAGE>

                       UNAUDITED SUPPLEMENTAL INFORMATION

UCBH HOLDINGS, INC.

  Quarterly Condensed Consolidated Financial Information
<TABLE>
<CAPTION>
                                                1999 QUARTERS                               1998 QUARTERS
                                   ----------------------------------------    ----------------------------------------
<S>                                <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
                                   FOURTH      THIRD     SECOND      FIRST     FOURTH      THIRD     SECOND      FIRST
                                   ------------------------------------------------------------------------------------

<CAPTION>
                                                    (DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S>                                <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Interest income.................   $41,617    $40,412    $38,727    $37,927    $37,375    $35,265    $30,071    $28,120
Interest expense................    22,498     21,956     21,493     22,022     22,814     21,820     17,588     16,171
                                   -------    -------    -------    -------    -------    -------    -------    -------
Net interest income.............    19,119     18,456     17,234     15,905     14,561     13,445     12,483     11,949
                                   -------    -------    -------    -------    -------    -------    -------    -------
Provision for credit losses.....     2,167      1,475      1,278        725      1,229        782        768        633
Noninterest income..............       926        997      1,436        716        916        754      1,174        558
Noninterest expense.............     9,155      9,384      9,289      9,370      8,441      7,950      8,049      9,245
                                   -------    -------    -------    -------    -------    -------    -------    -------
Income before income taxes......     8,723      8,594      8,103      6,526      5,807      5,467      4,840      2,629
Income tax expense..............     3,471      3,506      3,303      2,598      2,446      2,339      1,992      1,078
                                   -------    -------    -------    -------    -------    -------    -------    -------
Net income......................   $ 5,252    $ 5,088    $ 4,800    $ 3,928    $ 3,361    $ 3,128    $ 2,848    $ 1,551
                                   -------    -------    -------    -------    -------    -------    -------    -------
                                   -------    -------    -------    -------    -------    -------    -------    -------
Net income per common share:
Basic net income................   $  0.56    $  0.55    $  0.51    $  0.42    $  0.36    $  0.34    $  0.33    $  0.26
Diluted net income..............      0.55       0.53       0.50       0.42       0.36       0.34       0.32       0.23
</TABLE>

                                       51