##### 



Exhibit 13.0

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.

|                                    |  |                        |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|----------------------------------- |  | ---------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | - |  | - | --------- | -
|                                    |  |                       
|                                    |  | At December 31,       
|                                    |  |                       
|                                    |  | 2003                   |           | 2002 |  | 2001 |           | 2000 |  | 1999
|                                    |  |                        |           |      |  |      |           |      |  |     
|                                    |  |                       
|                                    |  | (Dollars in Thousands)
|Financial Condition and Other Data: |  |                        |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Total assets                        |  | $                      | 5,585,190 |      |  | $    | 4,853,636 |      |  | $    | 2,932,043 |   |  | $ | 2,502,119 |   |  | $ | 2,284,800 |  
|Net loans                           |  |                        | 3,730,780 |      |  |      | 2,978,945 |      |  |      | 2,229,753 |   |  |   | 1,902,921 |   |  |   | 1,667,192 |  
|Securities(1)                       |  |                        | 1,505,782 |      |  |      | 1,581,381 |      |  |      | 593,393   |   |  |   | 487,240   |   |  |   | 512,361   |  
|Deposits                            |  |                        | 4,483,521 |      |  |      | 4,006,813 |      |  |      | 2,466,152 |   |  |   | 2,064,019 |   |  |   | 1,676,148 |  
|Subordinated debentures             |  |                        | 136,000   |      |  |      | 136,000   |      |  |      | 36,000    |   |  |   | 30,000    |   |  |   | 30,000    |  
|Borrowings                          |  |                        | 505,542   |      |  |      | 353,374   |      |  |      | 238,000   |   |  |   | 260,558   |   |  |   | 449,612   |  
|Stockholders equity(2)             |  |                        | 414,466   |      |  |      | 282,367   |      |  |      | 174,124   |   |  |   | 133,645   |   |  |   | 110,107   |  
|Nonperforming assets                |  |                        | 5,857     |      |  |      | 4,654     |      |  |      | 991       |   |  |   | 2,631     |   |  |   | 5,354     |  
|Ratio of equity to assets           |  |                        | 7.42      | %    |  |      | 5.82      | %    |  |      | 5.94      | % |  |   | 5.34      | % |  |   | 4.82      | %

|                                                            |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------- |  | ---------------------------------------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                            |  |                                                     
|                                                            |  | For the Years Ended December 31,                    
|                                                            |  |                                                     
|                                                            |  | 2003                                                 |         | 2002 |  | 2001 |         | 2000 |  | 1999
|                                                            |  |                                                      |         |      |  |      |         |      |  |     
|                                                            |  |                                                     
|                                                            |  | (Dollars in Thousands, Except Per Share Information)
|Operating Data:                                             |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Interest income                                             |  | $                                                    | 260,262 |      |  | $    | 205,178 |      |  | $    | 202,787 |   |  | $ | 186,688 |   |  | $ | 158,683 |  
|Interest expense                                            |  |                                                      | 91,714  |      |  |      | 80,232  |      |  |      | 104,330 |   |  |   | 103,704 |   |  |   | 87,969  |  
|                                                            |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Net interest income                                         |  |                                                      | 168,548 |      |  |      | 124,946 |      |  |      | 98,457  |   |  |   | 82,984  |   |  |   | 70,714  |  
|Provision for loan losses                                   |  |                                                      | 9,967   |      |  |      | 9,673   |      |  |      | 5,620   |   |  |   | 9,765   |   |  |   | 5,645   |  
|                                                            |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Net interest income after provision for loan
    losses     |  |                                                      | 158,581 |      |  |      | 115,273 |      |  |      | 92,837  |   |  |   | 73,219  |   |  |   | 65,069  |  
|Noninterest income                                          |  |                                                      | 23,203  |      |  |      | 12,142  |      |  |      | 6,905   |   |  |   | 4,751   |   |  |   | 4,075   |  
|Noninterest expense(3)                                      |  |                                                      | 80,208  |      |  |      | 64,349  |      |  |      | 49,296  |   |  |   | 40,099  |   |  |   | 37,198  |  
|                                                            |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Income before taxes                                         |  |                                                      | 101,576 |      |  |      | 63,066  |      |  |      | 50,446  |   |  |   | 37,871  |   |  |   | 31,946  |  
|Income tax expense                                          |  |                                                      | 36,938  |      |  |      | 24,138  |      |  |      | 19,958  |   |  |   | 13,743  |   |  |   | 12,878  |  
|                                                            |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Net income                                                  |  | $                                                    | 64,638  |      |  | $    | 38,928  |      |  | $    | 30,488  |   |  | $ | 24,128  |   |  | $ | 19,068  |  
|                                                            |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Operating Ratios and Other Data:                            |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Return on average assets                                    |  |                                                      | 1.26    | %    |  |      | 1.14    | %    |  |      | 1.12    | % |  |   | 1.02    | % |  |   | 0.87    | %
|Return on average equity                                    |  |                                                      | 18.84   |      |  |      | 18.42   |      |  |      | 19.58   |   |  |   | 20.12   |   |  |   | 18.00   |  
|Interest rate spread(4)                                     |  |                                                      | 3.21    |      |  |      | 3.46    |      |  |      | 3.30    |   |  |   | 3.24    |   |  |   | 3.04    |  
|Net interest margin(4)                                      |  |                                                      | 3.41    |      |  |      | 3.73    |      |  |      | 3.69    |   |  |   | 3.59    |   |  |   | 3.29    |  
|Efficiency ratio(5)                                         |  |                                                      | 41.83   |      |  |      | 46.94   |      |  |      | 46.79   |   |  |   | 45.70   |   |  |   | 49.74   |  
|Noninterest expense to average assets                       |  |                                                      | 1.56    |      |  |      | 1.88    |      |  |      | 1.82    |   |  |   | 1.70    |   |  |   | 1.69    |  
|Average equity to average assets                            |  |                                                      | 6.66    |      |  |      | 6.18    |      |  |      | 5.74    |   |  |   | 4.90    |   |  |   | 4.81    |  
|Dividend payout ratio(6)                                    |  |                                                      | 8.51    |      |  |      | 10.64   |      |  |      | 10.39   |   |  |   | 8.06    |   |  |   |        |  
|Asset Quality Data:                                         |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Nonperforming assets to total assets                        |  |                                                      | 0.10    | %    |  |      | 0.10    | %    |  |      | 0.03    | % |  |   | 0.11    | % |  |   | 0.23    | %
|Nonperforming loans to total loans                          |  |                                                      | 0.15    |      |  |      | 0.15    |      |  |      | 0.04    |   |  |   | 0.13    |   |  |   | 0.27    |  
|Allowance for loan losses to total loans                    |  |                                                      | 1.61    |      |  |      | 1.61    |      |  |      | 1.53    |   |  |   | 1.50    |   |  |   | 1.16    |  
|Net charge-offs to average gross loans                      |  |                                                      | 0.06    |      |  |      | 0.23    |      |  |      | 0.00    |   |  |   | 0.02    |   |  |   | 0.07    |  
|Bank Regulatory Capital Ratios:                             |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Tier I risk-based capital                                   |  |                                                      | 10.92   | %    |  |      | 10.26   | %    |  |      | 9.65    | % |  |   | 9.71    | % |  |   | 10.04   | %
|Total risk-based capital                                    |  |                                                      | 12.18   |      |  |      | 11.52   |      |  |      | 10.91   |   |  |   | 10.97   |   |  |   | 11.29   |  
|Leverage ratio (Tier I capital to total
    average assets) |  |                                                      | 7.86    |      |  |      | 7.57    |      |  |      | 7.26    |   |  |   | 6.95    |   |  |   | 6.58    |  
|Per Share Data:                                             |  |                                                      |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Basic earnings per share(2)(7)                              |  | $                                                    | 1.48    |      |  | $    | 0.98    |      |  | $    | 0.80    |   |  | $ | 0.65    |   |  | $ | 0.51    |  
|Diluted earnings per share(2)(7)                            |  |                                                      | 1.41    |      |  |      | 0.94    |      |  |      | 0.77    |   |  |   | 0.62    |   |  |   | 0.50    |  
|Dividends declared per share(7)                             |  |                                                      | 0.12    |      |  |      | 0.10    |      |  |      | 0.08    |   |  |   | 0.05    |   |  |   |        |  






|    |                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes available-for-sale securities and
    held-to-maturity securities.                                                                                                                                                                                                                                   
|(2) | In conjunction with the acquisitions of First
    Continental Bank in July 2003 and Bank of Canton of California
    in October 2002, the Company issued 2.3 million and
    2.7 million shares of common stock, respectively.                                                                                
|(3) | Includes $6.75 million of expense
    representing litigation settlement in 2002.                                                                                                                                                                                                                             
|(4) | Calculated on a nontax equivalent basis.                                                                                                                                                                                                                                                                      
|(5) | Represents noninterest expense divided by the
    total of our net interest income before provision for loan
    losses and our noninterest income.                                                                                                                                                           
|(6) | Dividends declared per share as a percentage of
    diluted earnings per share.                                                                                                                                                                                                                               
|(7) | The Company completed a two-for-one stock split
    in each of the years 2001 and 2003. Accordingly, for the years
    ended December 31, 2002 through 1999, basic earnings per
    share, diluted earnings per share and dividends per share have
    been restated to reflect the effect of the stock split.

17



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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. These statements are based
on certain assumptions that are subject to risk and
uncertainties. Actual results could be materially different than
such statements.

The following discussion and analysis is
intended to assist in an understanding of the significant
factors that influence our financial condition at
December 31, 2003 as compared to December 31, 2002. It
also analyzes our results of operations for the year ended
December 31, 2003 as compared to the year ended
December 31, 2002, and for the year ended December 31,
2002 as compared to the year ended December 31, 2001. You
should read the discussion and analysis together with our
financial statements and corresponding notes included in this
Annual Report.

Impact of Critical Accounting
Policies

Our consolidated financial statements are
prepared in accordance with generally accepted accounting
principles and follow general industry practices. The most
significant accounting policies followed by the Company are
presented in Note 1 to the consolidated financial
statements. These policies, along with the disclosures presented
in the other financial statement notes and in this discussion
and analysis, provide information on how significant assets and
liabilities are valued in the financial statements and how those
values are determined. The critical accounting policies include
estimation techniques and judgments that are based on the
relevant variables and the Companys assumptions.

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

The Use of
Estimates.The preparation of the
Consolidated Financial Statements in accordance with Generally
Accepted Accounting Principles (GAAP) requires
management to make certain estimates and assumptions which
affect the amounts of reported assets and liabilities as well as
contingent assets and liabilities as of the date of these
financial statements. These estimates and assumptions also
affect the reported amounts of revenues and expenses during the
reporting period(s). The Company has established detailed
policies and control procedures that are intended to ensure that
valuation methods are well controlled and applied consistently
from period to period.

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

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

Management also applies judgment to derive loss
factors associated with each credit facility. These loss factors
are considered by type of obligor and collateral. Whenever
possible, the Company uses its own historical loss experience or
independent verifiable data to estimate the loss factors. Many
factors can affect managements estimates of a loss factor.
The application of different loss factors will change the amount
of the

18



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##### 



allowance for credit losses determined to be
appropriate by the Company. Given the process the Company
follows in determining the risk grading of its loans, management
believes the current risk gradings assigned to loans are
appropriate.


Managements judgment is also applied when
considering uncertainties based on current macroeconomic
conditions and other factors. For example, judgment as to the
economic outlook in California will affect managements
assessment of potential losses based on exposure to that
marketplace. Notwithstanding the judgment required in assessing
the allowance for loan losses, the Company believes its estimate
for the allowance for loan losses is adequate.

Fair Value of Certain
Assets.Certain assets of the Company
are recorded at fair value. In some cases, the fair value used
is an estimate. Included among these assets are securities that
are classified as available for sale, goodwill and other
intangible assets, other real estate owned and impaired loans.
These estimates may change from period to period as they are
affected by changes in interest rates and other market
conditions. Losses not anticipated or greater than anticipated
could result if the Company were forced to sell one of these
assets, subsequently discovering that its estimate of fair value
had been too high. Gains not anticipated or greater than
anticipated could result if the Company were to sell one of
these assets, subsequently discovering that its estimate of fair
value had been too low. The Company arrives at estimates of fair
value as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Available-for-Sale
    Securities:The fair values of most
    securities classified as available for sale are based on quoted
    market prices. If quoted market prices are not available, fair
    values are extrapolated from the quoted prices of similar
    instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Goodwill and Other Intangible
    Assets:As discussed in Note 3 to
    the Consolidated Financial Statements, which this discussion
    accompanies, the Company establishes goodwill and other
    intangible assets by estimating fair value of assets and
    liabilities acquired using various valuation approaches such as
    market value, replacement costs and estimated cash flows for
    future periods. Additionally, the Company must assess goodwill
    and other intangible assets each year for impairment. This
    assessment involves reviewing or revising estimated cash flows
    for future periods. If the future cash flows are materially less
    than the estimates, the Company would be required to take a
    charge against earnings to write down the asset to the lower
    fair value.

Income Taxes.The
provision for income taxes is based on income reported for
financial statement purposes and differs from the amount of
taxes currently payable, since certain income and expense items
are reported for financial statement purposes in different
periods than those for tax reporting purposes.

The Company accounts for income taxes using the
asset and liability approach, the objective of which is to
establish deferred tax assets and liabilities for the temporary
differences between the financial reporting basis and the tax
basis of the Companys assets and liabilities at enacted
tax rates expected to be in effect when such amounts are
realized or settled. A valuation allowance is established for
deferred tax assets if, based on the weight of available
evidence, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. A valuation
allowance is established, when necessary, to reduce the deferred
tax assets to the amount that is more likely than not to be
realized.

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

When the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation in 1996, it
elected to continue to use the method of accounting for stock
options which did not recognize compensation expense at the time
options were granted. As required by SFAS No. 123, pro
forma amounts of compensation expense and the pro forma effect
on net income and earnings per share are disclosed each year as
if the Company had instead elected to use the accounting method
that recognizes compensation expense. The Company adopted
SFAS No. 148 Accounting for Stock-Based
Compensation  Transition and Disclosure during
2003. The pro forma amounts of compensation expense and the pro
forma effect on net income and earnings per share are disclosed
in Note 2 to the Consolidated Financial Statements using
the Black-Scholes model for pricing options. Had the Company
elected to adopt

19



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##### 



the SFAS No. 123 fair value based
method of accounting instead of pro forma disclosure, additional
compensation expense, as disclosed in Note 14 to the
Consolidated Financial Statements, would have been recognized.


Recent Accounting Pronouncements

Note 2 to the Consolidated Financial
Statements discusses new accounting policies adopted by the
Company during 2003 and the expected impact of accounting
policies issued or proposed, but not yet required to be adopted.
To the extent the adoption of new accounting standards
materially affects the Companys financial condition,
results of operations, or liquidity, the impacts are discussed
in the applicable sections of this financial review and Notes to
the Consolidated Financial Statements. The Company adopted
SFAS No. 141, Business Combinations and
SFAS No. 142, Goodwill and Other Intangible
Assets, in June 2002 and has applied the requirements
in connection with all acquisitions since then. The adoption of
the other pronouncements had no material effect to the
Companys financial condition and results of operations.

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.

Our results of operations in 2003 have been
affected by our acquisitions of Bank of Canton of California
(BCC) and First Continental Bank (FCB).
The impact of these events is described in more detail below.

We also earn noninterest income, which is
generally made up of commercial banking fees and other fees paid
by our customers, and gains on sales of loans and securities. In
addition to interest expense, our income is impacted by
noninterest expenses (primarily our personnel, occupancy and
professional fees), and our provision for loan losses. Other
factors beyond our control, such as 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.

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 loans. Through the
consumer business division, the Bank offers consumer deposit
products including savings accounts, checking accounts and time
deposits. The consumer division also originates residential
mortgage (one to four family) loans and home equity lines of
credit.

Through the commercial banking division, the Bank
originates commercial real estate loans for primary users, as
well as for investors. The Bank also originates multifamily
mortgages, which are typically secured by five- to 50-unit
residential buildings, within its primary market areas. Loans
secured by residential buildings in excess of 50 units are
underwritten pursuant to the Banks underwriting standards
for commercial nonresidential real estate loans. Both types of
commercial real estate loans are generally adjustable-rate or
fixed-rate for an initial period of time and then become
adjustable-rate loans. They are generally amortized over
25 to 30 years or less and have balloon payments in
15 years or less.

Construction loans are originated generally for
the construction of entry-level and first-time move-up housing
within California or mixed-use properties. The Bank focuses on
mid-tier builders. Construction loans are generally prime based,
are generally written for a one-year term and may have up to a
one-year renewal option.

The Bank provides commercial business loans to
customers for working capital purposes for accounts receivable
and inventory, as well as loans to finance equipment. In
addition, the Bank offers small business

20



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loans, for which 75% to 85% of the principal
balance is generally guaranteed by the U.S. Small Business
Administration.


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

Net Income.We
earned $64.6 million in net income in 2003, as compared to
$38.9 million in net income in 2002, an increase of
$25.7 million, or 66.1%. Our return on average assets was
1.26% in 2003, as compared to 1.14% in 2002, and our return on
average equity was 18.84% in 2003, as compared to 18.42% in 2002.

We have experienced steady growth in net income
during the periods presented. The increase in our net income in
2003, as compared to 2002, was primarily a result of an increase
in net interest income from $124.9 million in 2002 to
$168.5 million in 2003, before provision for loan losses
and an increase in gain on sale of securities and loans. The
increase in net interest income from 2002 to 2003 reflects the
acquisitions of BCC and FCB, the organic growth of the
Companys loan portfolio, and the income from core deposits.

Partially offsetting the increase in the net
interest income was the increase in noninterest expense from
$64.3 million in 2002 to $80.2 million in 2003. The
increase in noninterest expenses, as described below, resulted
primarily from the increased personnel expenses due to the
additional staffing associated with the BCC and FCB
acquisitions, the Hong Kong branch and the growth of the
Banks commercial banking business.

The provision for loan losses increased from
$9.7 million in 2002 to $10.0 million in 2003. The
provision for loan loss was $5.6 million in 2001. The
increases reflect the increase in the commercial loan portfolio
during the years and the credit risk inherent in the portfolio.
The Bank uses a systematic methodology to calculate the
allowance for loan losses. By applying this methodology, which
takes into account our loan portfolio mix, credit quality and
loan growth, we determine the appropriateness of our allowance
for loan losses. We adjust the allowance for loan losses by
quarterly provisions charged to earnings.

We earned $38.9 million for 2002, as
compared to $30.5 million in net income for 2001. Our
return on average assets was 1.14% for 2002, as compared to
1.12% for 2001, and our return on average equity was 18.42% in
2002, as compared to 19.58% for 2001.

The increase in net income in 2002, as compared
to 2001, was primarily the result of an increase in net interest
income from $98.5 million to $124.9 million for the
year, before provision for loan losses. The reasons for the
increase in the net interest income in 2002 compared to 2001 are
discussed below.

Partially offsetting the increase in net interest
income was the increase in noninterest expenses from
$49.3 million in 2001 to $64.3 million in 2002. The
increase in our noninterest expenses, as discussed below,
resulted primarily from litigation settlement expenses and
associated legal fees, the additional operating expenses
associated with the acquisition of BCC in October 2002, and
increases in personnel expenses incurred as a result of the
continued expansion of our commercial banking activities.

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), declined to 3.49% for 2003 from 3.79% for 2002. Our net
interest margin calculated on a nontax equivalent basis declined
to 3.41% for 2003 from 3.73% for 2002. The reduction in the net
interest margin reflects our acquisition of BCC in October 2002
and the overall interest rate reduction during 2003. The net
interest margin of BCC was only 2.23% when acquired. Our net
interest income for 2003 was $168.5 million, an increase of
$43.6 million, or 34.9%, from our net interest income of
$124.9 million for 2002, primarily as a result of the
following factors:



| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| |  | We increased the average balance of loans in our
    portfolio from $2.44 billion in 2002 to $3.38 billion
    in 2003.
|
| |  | We increased our average balance of securities
    from $893.2 million in 2002 to $1.55 billion in 2003.               

21



---



##### 





| |   |                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We reduced our average cost of deposits from
    2.16% in 2002 to 1.61% in 2003.                                                                                                                                       
|
| |  | Partially offsetting these factors was a decrease
    in the average yield on securities from 5.38% in 2002 to 4.41%
    in 2003, and a decrease in the average yield on loans from 6.43%
    in 2002 to 5.67% in 2003.

Our net interest margin, calculated on a fully
tax equivalent basis, improved to 3.79% for 2002 from 3.73% for
2001. Accordingly, our net interest margin, calculated on a
nontax equivalent basis, improved to 3.73% for 2002 from 3.69%
for 2001. Our net interest income for 2002 was
$124.9 million, an increase of $26.5 million, or
26.9%, from our net interest income of $98.5 million for
2001, primarily as a result of the following factors:



| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We increased the average balance of loans in our
    portfolio from $2.06 billion in 2001 to $2.44 billion
    in 2002.                                                                                                                    
|
| |  | We increased our average balance of securities
    from $580.9 million in 2001 to $893.2 million in 2002.                                                                                                                                  
|
| |  | We reduced our average cost of deposits from
    3.88% in 2001 to 2.16% in 2002.                                                                                                                                                           
|
| |  | Partially offsetting the reduction in the deposit
    cost was a decrease in the average yield on securities from
    6.43% in 2001 to 5.38% in 2002, and a decrease in the average
    yield on loans from 7.97% in 2001 to 6.43% in 2002.

22



---



##### 



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 dollar amounts of interest expense
of average interest-bearing liabilities, expressed both in
dollars and rates:

|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |      |      | 
|-------------------------------------------------------------------- | ------------------------------- | --------------------------------------- | --------- | --------- | --------- | ---------- | ------- | ------- | ------ | --------- | ---- | ---------- | ---- | ------- | --------- | --------- | --------- | ---------- | ------- | ------- | ------ |  | ---- | ---- | ---- | - | --------- | --------- | --------- | - | ------- | ------- | ------ |  | ---- | ---- | ---- | 
|                                                                     |                                 |                                        
|                                                                     |                                 | For the Years Ended December 31,       
|                                                                     |                                 |                                        
|                                                                     |                                 |                                         |           |           |           |           
|                                                                     |                                 | 2003                                    |           | 2002      |           | 2001      
|                                                                     |                                 |                                         |           |           |           |           
|                                                                     |                                 |                                         |           | Interest  |           |            |         |         |        | Interest  |      |            |      |         |           | Interest  |           |           
|                                                                     |                                 | Average                                 |           | Income or |           | Average    |         | Average |        | Income or |      | Average    |      | Average |           | Income or |           | Average   
|                                                                     |                                 | Balance                                 |           | Expense   |           | Yield/Cost |         | Balance |        | Expense   |      | Yield/Cost |      | Balance |           | Expense   |           | Yield/Cost
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |           
|                                                                     |                                 |                                        
|                                                                     |                                 | (Dollars in Thousands)                 
|Interest-earning assets:                                             |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|                                                                     | Loans(1)                        |                                         | $         | 3,380,121 |           |            | $       | 191,754 |        |           |      | 5.67       | %    |         | $         | 2,442,790 |           |            | $       | 156,983 |        |  |      | 6.43 | %    |   | $         | 2,062,419 |           |   | $       | 164,328 |        |  |      | 7.97 | %   
|                                                                     | Securities                      |                                         |           | 1,550,841 |           |            |         | 68,447  |        |           |      | 4.41       |      |         |           | 893,240   |           |            |         | 48,039  |        |  |      | 5.38 |      |   |           | 580,869   |           |   |         | 37,358  |        |  |      | 6.43 |     
|                                                                     | Other                           |                                         |           | 9,826     |           |            |         | 61      |        |           |      | 0.63       |      |         |           | 10,423    |           |            |         | 156     |        |  |      | 1.50 |      |   |           | 26,243    |           |   |         | 1,101   |        |  |      | 4.20 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Total interest-earning assets                                        |                                 |                                         | 4,940,788 |           |           |            | 260,262 |         |        |           | 5.27 |            |      |         | 3,346,453 |           |           |            | 205,178 |         |        |  | 6.13 |      |      |   | 2,669,531 |           |           |   | 202,787 |         |        |  | 7.60 |     
|Noninterest-earning assets                                           |                                 |                                         | 209,442   |           |           |            |        |         |        |           |     |            |      |         | 74,632    |           |           |            |        |         |        |  |     |      |      |   | 42,547    |           |           |   |        |         |        |  |     |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Total assets                                                         |                                 | $                                       | 5,150,230 |           |           | $          | 260,262 |         |        |           | 5.05 |            |      | $       | 3,421,085 |           |           | $          | 205,178 |         |        |  | 6.00 |      |      | $ | 2,712,078 |           |           | $ | 202,787 |         |        |  | 7.48 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Interest-bearing liabilities:                                        |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|                                                                     | Deposits:                       |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |      |     
|                                                                     |                                 | NOW, checking and money market accounts |           | $         | 624,330   |            |         | $       | 6,774  |           |      |            | 1.09 |         |           | $         | 389,303   |            |         | $       | 5,952  |  |      |      | 1.53 |   |           | $         | 236,002   |   |         | $       | 5,080  |  |      |      | 2.15 | 
|                                                                     |                                 | Savings accounts                        |           |           | 787,796   |            |         |         | 7,191  |           |      |            | 0.91 |         |           |           | 521,050   |            |         |         | 6,582  |  |      |      | 1.26 |   |           |           | 405,271   |   |         |         | 8,229  |  |      |      | 2.03 | 
|                                                                     |                                 | Time deposits                           |           |           | 2,552,769 |            |         |         | 54,759 |           |      |            | 2.15 |         |           |           | 1,752,021 |            |         |         | 48,702 |  |      |      | 2.78 |   |           |           | 1,501,202 |   |         |         | 74,126 |  |      |      | 4.94 | 
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|                                                                     | Total interest-bearing deposits |                                         |           | 3,964,895 |           |            |         | 68,724  |        |           |      | 1.73       |      |         |           | 2,662,374 |           |            |         | 61,236  |        |  |      | 2.30 |      |   |           | 2,142,475 |           |   |         | 87,435  |        |  |      | 4.08 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|                                                                     | Borrowings                      |                                         |           | 348,973   |           |            |         | 15,068  |        |           |      | 4.32       |      |         |           | 277,272   |           |            |         | 14,343  |        |  |      | 5.17 |      |   |           | 256,650   |           |   |         | 14,051  |        |  |      | 5.47 |     
|Subordinated debentures                                              |                                 |                                         | 136,000   |           |           |            | 7,922   |         |        |           | 5.83 |            |      |         | 63,300    |           |           |            | 4,653   |         |        |  | 7.35 |      |      |   | 30,554    |           |           |   | 2,844   |         |        |  | 9.31 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Total interest-bearing liabilities                                   |                                 |                                         | 4,449,868 |           |           |            | 91,714  |         |        |           | 2.06 |            |      |         | 3,002,946 |           |           |            | 80,232  |         |        |  | 2.67 |      |      |   | 2,429,679 |           |           |   | 104,330 |         |        |  | 4.29 |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Noninterest-bearing deposits                                         |                                 |                                         | 296,306   |           |           |            |         |         |        |           |      |            |      |         | 166,809   |           |           |            |         |         |        |  |      |      |      |   | 109,160   |           |           |   |         |         |        |  |      |     
|Other noninterest-bearing liabilities                                |                                 |                                         | 61,047    |           |           |            |         |         |        |           |      |            |      |         | 39,992    |           |           |            |         |         |        |  |      |      |      |   | 17,514    |           |           |   |         |         |        |  |      |     
|Stockholders equity                                                 |                                 |                                         | 343,009   |           |           |            |         |         |        |           |      |            |      |         | 211,338   |           |           |            |         |         |        |  |      |      |      |   | 155,725   |           |           |   |         |         |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Total liabilities and stockholders equity                           |                                 | $                                       | 5,150,230 |           |           |            |         |         |        |           |      |            |      | $       | 3,421,085 |           |           |            |         |         |        |  |      |      |      | $ | 2,712,078 |           |           |   |         |         |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Net interest income/net interest rate spread(2)                      |                                 |                                         |           |           |           | $          | 168,548 |         |        |           | 3.21 | %          |      |         |           |           |           | $          | 124,946 |         |        |  | 3.46 | %    |      |   |           |           |           | $ | 98,457  |         |        |  | 3.30 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Net interest-earning assets/net interest margin(3)                   |                                 | $                                       | 490,920   |           |           |            |         |         |        |           | 3.41 | %          |      | $       | 343,507   |           |           |            |         |         |        |  | 3.73 | %    |      | $ | 239,851   |           |           |   |         |         |        |  | 3.69 | %   
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     
|Ratio of interest-earning assets to
    interest-bearing liabilities |                                 |                                         | 1.11      | x         |           |            |         |         |        |           |      |            |      |         | 1.11      | x         |           |            |         |         |        |  |      |      |      |   | 1.10x     |           |           |   |         |         |        |  |      |     
|                                                                     |                                 |                                         |           |           |           |            |         |         |        |           |      |            |      |         |           |           |           |            |         |         |        |  |      |      |      |   |           |           |           |   |         |         |        |  |      |     



---



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

23



---



##### 



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

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.

|                                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |        |         |  
|------------------------------------------ | ----------------------- | ---------------------------------------------------------- | ------ | -------------------------- | ------ | --- | ------- | ------- | ------- | ---- | ------ | ------ | ------ | - | ------- | ------- | ------- | - | -------- | -------- | -------- | - | ------ | ------ | ------- | -
|                                           |                         |                                                            |        |                           
|                                           |                         | For the Year Ended                                         |        | For the Year Ended        
|                                           |                         | December 31, 2003                                          |        | December 31, 2002         
|                                           |                         | Compared to the Year Ended                                 |        | Compared to the Year Ended
|                                           |                         | December 31, 2002                                          |        | December 31, 2001         
|                                           |                         |                                                            |        |                           
|                                           |                         | Volume                                                     |        | Rate                       |        | Net |         | Volume  |         | Rate |        | Net   
|                                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |       
|                                           |                         |                                                           
|                                           |                         | (Dollars in Thousands)                                    
|Interest income:                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |       
|                                           | Loans                   |                                                            | $      | 50,067                     |        |     | $       | (15,296 | )       |      | $      | 34,771 |        |   | $       | 150,125 |         |   | $        | (157,470 | )        |   | $      | (7,345 | )      
|                                           | Securities              |                                                            |        | 26,981                     |        |     |         | (6,573  | )       |      |        | 20,408 |        |   |         | 15,359  |         |   |          | (4,678   | )        |   |        | 10,681 |        
|                                           | Other                   |                                                            |        | (9                         | )      |     |         | (86     | )       |      |        | (95    | )      |   |         | (457    | )       |   |          | (488     | )        |   |        | (945   | )      
|                                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |       
|                                           |                         | Total interest income on interest-earning assets           |        |                            | 77,039 |     |         |         | (21,955 | )    |        |        | 55,084 |   |         |         | 165,027 |   |          |          | (162,636 | ) |        |        | 2,391   |  
|                                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |       
|Interest expense:                          |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |       
|                                           | Deposits:               |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |        |        
|                                           |                         | NOW, checking, and money market accounts                   |        |                            | 1,583  |     |         |         | (762    | )    |        |        | 821    |   |         |         | 1,574   |   |          |          | (702     | ) |        |        | 872     |  
|                                           |                         | Savings accounts                                           |        |                            | 1,330  |     |         |         | (721    | )    |        |        | 609    |   |         |         | 5,104   |   |          |          | (6,751   | ) |        |        | (1,647  | )
|                                           |                         | Time deposits                                              |        |                            | 12,104 |     |         |         | (6,046  | )    |        |        | 6,058  |   |         |         | 15,735  |   |          |          | (41,159  | ) |        |        | (25,424 | )
|                                           | Borrowings              |                                                            |        | 2,009                      |        |     |         | (1,284  | )       |      |        | 725    |        |   |         | 931     |         |   |          | (639     | )        |   |        | 292    |        
|                                           | Subordinated debentures |                                                            |        | 3,990                      |        |     |         | (721    | )       |      |        | 3,269  |        |   |         | 2,251   |         |   |          | (442     | )        |   |        | 1,809  |        
|                                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |       
|                                           |                         | Total interest expense on interest-bearing
    liabilities |        |                            | 21,016 |     |         |         | (9,534  | )    |        |        | 11,482 |   |         |         | 25,595  |   |          |          | (49,693  | ) |        |        | (24,098 | )
|                                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |       
|Increase (decrease) in net interest income |                         | $                                                          | 56,023 |                            |        | $   | (12,421 | )       |         | $    | 43,602 |        |        | $ | 139,432 |         |         | $ | (112,943 | )        |          | $ | 26,489 |       
|                                           |                         |                                                            |        |                            |        |     |         |         |         |      |        |        |        |   |         |         |         |   |          |          |          |   |        |       

Provision for Loan
Losses.For the year ended
December 31, 2003, our provision for loan losses was
$10.0 million, an increase of $294,000 from our provision
of $9.7 million for the previous year. The provision for
loan losses stayed constant despite our larger loan portfolio
due to higher than expected recoveries in 2003. For the year
ended December 31, 2002, our provision for loan losses was
$9.7 million, an increase of $4.1 million from our
provision of $5.6 million for the year ended
December 31, 2001. The increase in our provision for 2002
from 2001 was a result of the growth in the commercial loan
portfolio during the year and credit risk inherent in the
portfolio.

The Bank uses a systematic methodology to
calculate the allowance for loan losses. Through application of
this methodology, which takes into account our loan portfolio
mix, credit quality, loan growth, the amount and trends relating
to our delinquent and nonperforming loans, regulatory policies,
general economic conditions and other factors relating to the
collectibility of loans in our portfolio, we determine the
appropriateness of our allowance for loan losses, which is
adjusted by quarterly provisions charged against earnings.

24



---



##### 



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

|                                        |  |                                  |        |      |  |      |        |  |  |   |       | 
|--------------------------------------- |  | -------------------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ----- | 
|                                        |  |                                 
|                                        |  | For the Years Ended December 31,
|                                        |  |                                 
|                                        |  | 2003                             |        | 2002 |  | 2001
|                                        |  |                                  |        |      |  |     
|                                        |  |                                 
|                                        |  | (Dollars in Thousands)          
|Commercial banking fees                 |  | $                                | 6,546  |      |  | $    | 4,845  |  |  | $ | 3,324 | 
|Service charges on deposit accounts     |  |                                  | 2,249  |      |  |      | 1,704  |  |  |   | 1,342 | 
|Gain on sale of securities              |  |                                  | 11,013 |      |  |      | 3,398  |  |  |   | 602   | 
|Gain on sale of loans                   |  |                                  | 3,030  |      |  |      | 1,838  |  |  |   | 1,445 | 
|Loan servicing and miscellaneous income |  |                                  | 365    |      |  |      | 357    |  |  |   | 192   | 
|                                        |  |                                  |        |      |  |      |        |  |  |   |       | 
|Total noninterest income                |  | $                                | 23,203 |      |  | $    | 12,142 |  |  | $ | 6,905 | 
|                                        |  |                                  |        |      |  |      |        |  |  |   |       | 

Our noninterest income increased by
$11.1 million, or 91.1%, to $23.2 million for the year
ended December 31, 2003, from $12.1 million for the
preceding year. The increase was primarily due to an increase in
gain from sale of small business loans and securities as well as
commercial banking fees. Gain on sale of loans and securities
increased by 168.2% to $14.0 million for the year ended
December 31, 2003, compared with $5.2 million for the
corresponding period of 2002, due primarily to increased
securities sales as part of our planned securities portfolio
restructuring. Please refer to the Securities section below for
additional information. Commercial banking fees increased 35.1%
to $6.5 million for the year ended December 31, 2003,
as compared to $4.8 million for the corresponding period of
2002, as a result of increased commercial banking activities,
primarily our trade finance business.

Our noninterest income increased by
$5.2 million, or 75.8%, to $12.1 million for the year
ended December 31, 2002, from $6.9 million for the
preceding year. The increase was primarily due to generating
more commercial banking fees in 2002, resulting from the
continued growth of our Commercial Banking Division, increased
gain on sales of securities, and increased small business loan
sales in 2002, resulting from a higher origination volume.

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

|                                          |  |                                  |        |      |  |      |        |   |  |   |        |  
|----------------------------------------- |  | -------------------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                          |  |                                 
|                                          |  | For the Years Ended December 31,
|                                          |  |                                 
|                                          |  | 2003                             |        | 2002 |  | 2001
|                                          |  |                                  |        |      |  |     
|                                          |  |                                 
|                                          |  | (Dollars in Thousands)          
|Personnel                                 |  | $                                | 42,310 |      |  | $    | 29,965 |   |  | $ | 24,959 |  
|Occupancy                                 |  |                                  | 5,869  |      |  |      | 5,326  |   |  |   | 5,303  |  
|Data processing                           |  |                                  | 4,826  |      |  |      | 3,463  |   |  |   | 2,878  |  
|Furniture and equipment                   |  |                                  | 3,661  |      |  |      | 2,614  |   |  |   | 2,723  |  
|Professional fees and contracted services |  |                                  | 5,802  |      |  |      | 5,626  |   |  |   | 3,848  |  
|Deposit insurance                         |  |                                  | 695    |      |  |      | 467    |   |  |   | 393    |  
|Communication                             |  |                                  | 1,066  |      |  |      | 726    |   |  |   | 593    |  
|Foreclosed assets expense                 |  |                                  |       |      |  |      | 2      |   |  |   | 11     |  
|Intangible amortization                   |  |                                  | 1,762  |      |  |      | 227    |   |  |   |       |  
|Litigation settlement expense             |  |                                  |       |      |  |      | 6,750  |   |  |   |       |  
|Miscellaneous expense                     |  |                                  | 14,217 |      |  |      | 9,183  |   |  |   | 8,588  |  
|                                          |  |                                  |        |      |  |      |        |   |  |   |        |  
|Total noninterest expense                 |  | $                                | 80,208 |      |  | $    | 64,349 |   |  | $ | 49,296 |  
|                                          |  |                                  |        |      |  |      |        |   |  |   |        |  
|Efficiency ratio                          |  |                                  | 41.83  | %    |  |      | 46.94  | % |  |   | 46.79  | %
|Noninterest expenses to average assets    |  |                                  | 1.56   |      |  |      | 1.88   |   |  |   | 1.82   |  

Our noninterest expense increased to
$80.2 million for 2003, from $64.3 million for 2002,
an increase of $15.9 million, or 24.7%. The higher expenses
in 2003 resulted primarily from a $12.3 million increase in
personnel expenses due to the additional staffing that resulted
from the acquisitions of BCC and FCB, the

25



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##### 



Hong Kong branch and the growth of the
Banks commercial banking business. Miscellaneous expenses
increased from $9.2 million in 2002 to $14.2 million
in 2003, primarily as a result of increases in expenses
associated with the BCC operations and FCB acquisition, merchant
card processing, and advertising.


Our noninterest expense increased to
$64.3 million for 2002, from $49.3 million for 2001,
an increase of $15.1 million, or 30.5%. The higher expenses
in 2002 resulted primarily from litigation settlement expense of
$6.75 million and $1.8 million of associated legal
fees, which are in included in professional fees, a
$5.0 million increase in personnel expenses due to
additional staffing required to support the growth of the
Banks commercial banking business, and operating expenses
associated with the BCC acquisition on October 28, 2002.
Professional fees for 2002 of $5.6 million represented an
increase of $1.8 million from $3.8 million in 2001,
reflecting primarily the legal fees associated with defending
the litigation that was settled in 2002. Miscellaneous expenses
increased from $8.6 million in 2001 to $9.2 million in
2002, primarily as a result of increases in expenses associated
with the BCC acquisition, merchant card processing, insurance,
bank service fees, and travel.

Provision for Income
Taxes.During 2003, we recorded a
$36.9 million provision for income taxes, which resulted in
an effective tax rate of 36.4%, compared with 38.3% for the year
ended December 31, 2002. The decrease in the effective tax
rate resulted primarily from the realization of tax benefits
from the Banks lending activities in Enterprise Zones,
which are areas in California designated by the California
Technology, Trade and Commerce Agency as being areas where
business investment is targeted. Taxpayers that conduct business
activities within these boundaries may qualify for special tax
benefits.

During 2002, we recorded a $24.1 million
provision for income taxes, which resulted in an effective tax
rate of 38.3%, compared with 39.6% for the year ended
December 31, 2001. The lower effective tax rate reflects
the increased realization of Enterprise Zone benefits and the
increased municipal securities portfolio. Additionally, the
effective tax rate decreased due to a $350,000 tax benefit
resulting from a California state tax law change in which half
of the taxes attributable to cumulative loan losses through
December 31, 2001 taken for state income tax purposes were
permanently forgiven.

Financial Condition

The size of the balance sheet increased from
$4.85 billion at December 31, 2002, to
$5.59 billion at December 31, 2003, an increase of
$731.6 million, or 15.1%. On July 14, 2003, the
Company announced the completion of its acquisition of FCB, with
$356.7 million in assets, $243.1 million of loans and
$325.6 million of deposits. The Company issued
approximately 2.3 million shares of its common stock in
exchange for all the outstanding shares of common stock of FCB.
During 2003, the balance sheet increased $731.6 million of
which $374.9 million was the result of internal growth with
the balance being attributable to the FCB acquisition. This
internal growth resulted primarily from the increase in the size
of our loan portfolio of $516.8 million offset by a
decrease in our securities portfolio of $131.9 million.

Our loan portfolio increased from
$3.03 billion at December 31, 2002 to
$3.79 billion at December 31, 2003, an increase of
$763.8 million, or 25.2%. The portfolio increased primarily
as a result of the acquisition of FCB and the origination of
loans from the BCC customer base during 2003, partially offset
by the internal securitizations of loans.

Total loans in 2003 included loans acquired from
FCB, which totaled $243.1 million at the acquisition date.
Total new loan commitments in 2003, as detailed below, were
$2.06 billion and were primarily commercial loans. During
2003, the Bank internally securitized a total of
$91.9 million of residential (one to four family) loans and
$194.2 million of multifamily loans. In an internal
securitization, the Bank securitizes its loans with Fannie Mae
loans that are held in the residential mortgage (one to four
family) and multifamily loan portfolios and retains the
resulting securities in the available-for-sale portfolio.
Accordingly, no gain or loss is recognized since no assets are
sold. The Bank performs internal securitizations for risk-based
capital management purposes. The Banks risk-based capital
ratio has improved following a securitization, since the
securities have a lower risk-based capital requirement than do
the whole loans which were securitized.

Our securities portfolio, including
available-for-sale and held-to-maturity securities, decreased
from $1.58 billion at December 31, 2002 to
$1.51 billion at December 31, 2003. This decrease in
securities is a

26



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##### 



result of sales of $942.1 million, and
principal repayments and securities calls of
$618.9 million, mostly offset by purchases of
$1.26 billion and internal securitizations of
$286.0 million.


The size of the balance sheet increased from
$2.93 billion at December 31, 2001 to
$4.85 billion at December 31, 2002. This increase of
$1.92 billion, or 65.5%, resulted primarily from the
acquisition of BCC, with $1.45 billion in assets, for
$220.0 million, of which $168.8 million was paid in
cash, and 2.7 million new common shares were issued. The
BCC acquisition was the primary reason for the increase in the
size of the balance sheet. During 2002, the balance sheet
increased by $467.8 million as a result of internal growth.
Of this increase, $248.4 million resulted primarily from
the increase in the size of our loan portfolio.

Our loan portfolio increased from
$2.26 billion at December 31, 2001 to
$3.03 billion at December 31, 2002, an increase of
$763.5 million, or 33.7%. The portfolio increased primarily
as a result of the origination of loans for portfolio retention
during 2002 and the BCC acquisition, partially offset by the
internal securitization of loans.

Total loans included in the December 31,
2002 loan portfolio that were acquired from BCC were
$515.1 million. Total new loan commitments in 2002 were
$1.46 billion and were primarily commercial loans. During
2002, the Bank internally securitized a total of
$188.4 million of residential (one to four family) loans
and $126.5 million of multifamily loans.

Our securities portfolio, including
available-for-sale and held-to-maturity securities, increased
from $593.4 million at December 31, 2001 to
$1.58 billion at December 31, 2002. This represented
an increase of $988.0 million, or 166.5%. The securities
portfolio increased primarily as a result of the BCC acquisition
and the internal securitizations of loans. BCC had a securities
portfolio of $865.0 million as of the acquisition date.
That portfolio was substantially restructured in the fourth
quarter of 2002, as discussed below. At December 31, 2002,
approximately $312.3 million of securities from the
internal securitizations remained in the securities portfolio.

Loan Portfolio.We
originated commercial real estate loans of $634.5 million
in 2003, as compared to $355.7 million in 2002, and
multifamily originations increased to $612.6 million in
2003, as compared with $480.9 million in 2002. Construction
originations totaled $344.4 million in 2003, compared with
$269.8 million in 2002. Additionally, we originated
$235.0 million of commercial loans in 2003, as compared to
$193.8 million in 2002. We originated $199.2 million
of residential mortgage (one to four family) loans during 2003,
as compared with $128.4 million during 2002.

27



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##### 



The table below shows the composition of our loan
portfolio by amount and percentage of total gross loans in each
major loan category at the dates indicated:

|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |        |  
|------------------------------------------ | ----------------- | ---------------------- | --------- | --------- |  | ------ | ----- | ------ | - | ------ | --------- | --------- |  | ------ | ----- | ------ | - | ------ | --------- | --------- |  |  | ----- | ------ | - | - | --------- | --------- |  |  | ----- | ------ | - | - | --------- | --------- |  |  | ----- | ------ | -
|                                           |                   |                       
|                                           |                   | At December 31,       
|                                           |                   |                       
|                                           |                   |                        |           |           |  |        |       |        |   |       
|                                           |                   | 2003                   |           | 2002      |  | 2001   |       | 2000   |   | 1999  
|                                           |                   |                        |           |           |  |        |       |        |   |       
|                                           |                   | Amount                 |           | %         |  | Amount |       | %      |   | Amount |           | %         |  | Amount |       | %      |   | Amount |           | %        
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |          
|                                           |                   |                       
|                                           |                   | (Dollars in Thousands)
|Commercial:                                |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|Secured by real estate  nonresidential    |                   | $                      | 1,724,179 |           |  |        | 45.37 | %      |   | $      | 1,279,809 |           |  |        | 42.20 | %      |   | $      | 798,882   |           |  |  | 35.22 | %      |   | $ | 597,981   |           |  |  | 30.91 | %      |   | $ | 435,061   |           |  |  | 25.77 | %     
|Secured by real estate  multifamily       |                   |                        | 1,162,565 |           |  |        | 30.59 |        |   |        | 914,630   |           |  |        | 30.16 |        |   |        | 677,271   |           |  |  | 29.86 |        |   |   | 514,697   |           |  |  | 26.61 |        |   |   | 423,838   |           |  |  | 25.11 |       
|Construction                               |                   |                        | 293,875   |           |  |        | 7.74  |        |   |        | 216,218   |           |  |        | 7.13  |        |   |        | 182,558   |           |  |  | 8.05  |        |   |   | 131,878   |           |  |  | 6.82  |        |   |   | 89,710    |           |  |  | 5.31  |       
|Business                                   |                   |                        | 302,159   |           |  |        | 7.95  |        |   |        | 261,787   |           |  |        | 8.63  |        |   |        | 163,628   |           |  |  | 7.21  |        |   |   | 99,401    |           |  |  | 5.14  |        |   |   | 59,332    |           |  |  | 3.52  |       
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|                                           | Total commercial  |                        |           | 3,482,778 |  |        |       | 91.65  |   |        |           | 2,672,444 |  |        |       | 88.12  |   |        |           | 1,822,339 |  |  |       | 80.34  |   |   |           | 1,343,957 |  |  |       | 69.48  |   |   |           | 1,007,941 |  |  |       | 59.71  |  
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|Consumer:                                  |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|Residential mortgage (one to four family)  |                   |                        | 274,392   |           |  |        | 7.22  |        |   |        | 311,067   |           |  |        | 10.25 |        |   |        | 430,057   |           |  |  | 18.96 |        |   |   | 574,219   |           |  |  | 29.68 |        |   |   | 665,923   |           |  |  | 39.45 |       
|Other                                      |                   |                        | 43,117    |           |  |        | 1.13  |        |   |        | 49,372    |           |  |        | 1.63  |        |   |        | 16,003    |           |  |  | 0.70  |        |   |   | 16,288    |           |  |  | 0.84  |        |   |   | 14,248    |           |  |  | 0.84  |       
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|                                           | Total consumer    |                        |           | 317,509   |  |        |       | 8.35   |   |        |           | 360,439   |  |        |       | 11.88  |   |        |           | 446,060   |  |  |       | 19.66  |   |   |           | 590,507   |  |  |       | 30.52  |   |   |           | 680,171   |  |  |       | 40.29  |  
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|                                           | Total gross loans |                        |           | 3,800,287 |  |        |       | 100.00 | % |        |           | 3,032,883 |  |        |       | 100.00 | % |        |           | 2,268,399 |  |  |       | 100.00 | % |   |           | 1,934,464 |  |  |       | 100.00 | % |   |           | 1,688,112 |  |  |       | 100.00 | %
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|Net deferred loan origination (fees) costs |                   |                        | (8,644    | )         |  |        |       |        |   |        | (5,073    | )         |  |        |       |        |   |        | (4,096    | )         |  |  |       |        |   |   | (2,642    | )         |  |  |       |        |   |   | (1,417    | )         |  |  |       |       
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|Loans                                      |                   |                        | 3,791,643 |           |  |        |       |        |   |        | 3,027,810 |           |  |        |       |        |   |        | 2,264,303 |           |  |  |       |        |   |   | 1,931,822 |           |  |  |       |        |   |   | 1,686,695 |           |  |  |       |       
|Allowance for loan losses                  |                   |                        | (60,863   | )         |  |        |       |        |   |        | (48,865   | )         |  |        |       |        |   |        | (34,550   | )         |  |  |       |        |   |   | (28,901   | )         |  |  |       |        |   |   | (19,503   | )         |  |  |       |       
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       
|                                           | Total net loans   |                        | $         | 3,730,780 |  |        |       |        |   |        | $         | 2,978,945 |  |        |       |        |   |        | $         | 2,229,753 |  |  |       |        |   |   | $         | 1,902,921 |  |  |       |        |   |   | $         | 1,667,192 |  |  |       |        |  
|                                           |                   |                        |           |           |  |        |       |        |   |        |           |           |  |        |       |        |   |        |           |           |  |  |       |        |   |   |           |           |  |  |       |        |   |   |           |           |  |  |       |       

28



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##### 



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

|                   |                                                |                        |           |         |           |      |           |         |           |   |           |         |           | 
|------------------ | ---------------------------------------------- | ---------------------- | --------- | ------- | --------- | ---- | --------- | ------- | --------- | - | --------- | ------- | --------- | 
|                   |                                                | 2003                   |           | 2002    |           | 2001
|                   |                                                |                        |           |         |           |     
|                   |                                                |                       
|                   |                                                | (Dollars in Thousands)
|Commercial:        |                                                |                        |           |         |           |      |           |         |           |   |           |        
|                   | Secured by real estate 
    nonresidential(1) |                        | $         | 634,501 |           |      | $         | 355,662 |           |   | $         | 310,087 |          
|                   | Secured by real estate  multifamily(1)        |                        |           | 612,603 |           |      |           | 480,934 |           |   |           | 256,797 |          
|                   | Construction                                   |                        |           | 344,352 |           |      |           | 269,771 |           |   |           | 251,740 |          
|                   | Business                                       |                        |           | 235,007 |           |      |           | 193,847 |           |   |           | 205,916 |          
|                   |                                                |                        |           |         |           |      |           |         |           |   |           |        
|                   |                                                | Total commercial loans |           |         | 1,826,463 |      |           |         | 1,300,214 |   |           |         | 1,024,540 | 
|Consumer:          |                                                |                        |           |         |           |      |           |         |           |   |           |        
|                   | Residential mortgage (one to four family)(1)   |                        |           | 199,169 |           |      |           | 128,371 |           |   |           | 126,277 |          
|                   | Home equity and other                          |                        |           | 34,605  |           |      |           | 32,198  |           |   |           | 18,464  |          
|                   |                                                |                        |           |         |           |      |           |         |           |   |           |        
|                   |                                                | Total consumer loans   |           |         | 233,774   |      |           |         | 160,569   |   |           |         | 144,741   | 
|                   |                                                |                        |           |         |           |      |           |         |           |   |           |        
|Total originations |                                                | $                      | 2,060,237 |         |           | $    | 1,460,783 |         |           | $ | 1,169,281 |        
|                   |                                                |                        |           |         |           |      |           |         |           |   |           |        



---



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

As a result of our continued focus on commercial
lending activities and the FCB acquisition, loan growth remained
concentrated in our commercial loan portfolio, which totaled
$3.48 billion at December 31, 2003, a 30.3% increase
from $2.67 billion at December 31, 2002. Of this
increase, $97.0 million resulted from the FCB acquisition
and the balance was attributable to organic growth.

Our commercial loan portfolio increased 46.6%
during 2002 from $1.82 billion at December 31, 2001,
to $2.67 billion at December 31, 2002. Of this
increase, $399.0 million resulted from the BCC acquisition.

As a result of changing the loan origination
focus to commercial loans, we are originating more loans that
reprice in shorter time periods than the traditional repricing
terms of residential mortgage (one to four family) loans.
Construction loans, commercial business loans and small business
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 and our acquisitions of BCC amd FCB, the loans
which reprice or mature within the next year decreased to
$1.85 billion at December 31, 2003, from
$1.90 billion at December 31, 2002.

Loans that reprice or mature within the next year
increased to $1.90 billion at December 31, 2002 from
$1.49 billion at December 31, 2001.

The Company manages its risk-based capital level
through a variety of means, including internal loan
securitizations. In such securitizations, the Company exchanges
either multifamily or residential mortgage (one to four family)
loans for Fannie Mae (FNMA) securities. Residential
mortgage (one to four family) loans are generally included in
the 50% risk weight for risk-based capital purposes, whereas
multifamily loans may fall either into the 50% or 100% risk
weight depending on the specific criteria of each individual
loan. FNMA securities are classified as a 20% risk weight.

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

Through these securitization transactions, the
Company also reduces its credit risk. In these securitizations,
the Company fully transfers credit risk on the related loans to
FNMA. The Companys yield

29



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##### 



on the FNMA securities is lower than the average
yield on the underlying loans. This difference is the guarantee
fee that is retained by FNMA as compensation for relieving the
Company of the credit risk on these loans. Since the Company
retains all of the securities issued by FNMA in the
securitization, no gain or loss is recognized on the exchange
transaction. The Company continues to service the loans included
in these securitizations. The amount of servicing rights
capitalized at December 31, 2003 and 2002, along with the
related amortization into interest income over the life of the
underlying securities, were not material.


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

The Company internally securitized
$91.9 million and $188.4 million of one to four
residential loans and $194.2 million and
$126.5 million of multifamily loans for 2003 and 2002,
respectively.

The table below sets forth the estimated
repricing of our loan portfolio at December 31, 2003.
Adjustable-rate mortgages are shown in the period in which they
reprice, rather than when they become due, with the exception of
adjustable-rate loans that have reached a contractual floor.
Loans that are at the floor level are shown in the period they
become due. The table does not include the effects of possible
prepayments.

The rate of loan prepayment varies from time to
time, depending upon various factors, including market interest
rates.

|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |           |           | 
|----------------------------- | ----------------------------------------- | ---------------------- | - | ----------- | --------- | ----------- | - | ---------- | ------- | ------------ | - | ------------ | ------- | ----- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------ | ------ | - | --------- | --------- | --------- | 
|                              |                                           |                       
|                              |                                           | At December 31, 2003  
|                              |                                           |                       
|                              |                                           |                        |   | 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)
|Commercial:                   |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|                              | Secured by real estate  nonresidential   |                        | $ | 922,675     |           |             | $ | 39,049     |         |              | $ | 90,610       |         |       | $ | 638,506 |         |  | $ | 29,512  |         |  | $ | 3,827  |        |   | $         | 1,724,179 |          
|                              | Secured by real estate  multifamily      |                        |   | 274,751     |           |             |   | 161,387    |         |              |   | 270,063      |         |       |   | 105,020 |         |  |   | 351,344 |         |  |   |       |        |   |           | 1,162,565 |          
|                              | Construction                              |                        |   | 273,349     |           |             |   | 20,526     |         |              |   |             |         |       |   |        |         |  |   |        |         |  |   |       |        |   |           | 293,875   |          
|                              | Business                                  |                        |   | 295,787     |           |             |   | 4,269      |         |              |   | 866          |         |       |   |        |         |  |   |        |         |  |   | 1,237  |        |   |           | 302,159   |          
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|                              |                                           | Total commercial       |   |             | 1,766,562 |             |   |            | 225,231 |              |   |              | 361,539 |       |   |         | 743,526 |  |   |         | 380,856 |  |   |        | 5,064  |   |           |           | 3,482,778 | 
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|Consumer:                     |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|                              | Residential mortgage (one to four family) |                        |   | 39,084      |           |             |   | 6,060      |         |              |   | 32,815       |         |       |   | 13,338  |         |  |   | 146,224 |         |  |   | 36,871 |        |   |           | 274,392   |          
|                              | Other                                     |                        |   | 42,849      |           |             |   | 136        |         |              |   | 61           |         |       |   |        |         |  |   |        |         |  |   | 71     |        |   |           | 43,117    |          
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|                              |                                           | Total consumer         |   |             | 81,933    |             |   |            | 6,196   |              |   |              | 32,876  |       |   |         | 13,338  |  |   |         | 146,224 |  |   |        | 36,942 |   |           |           | 317,509   | 
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|                              |                                           | Total gross loans      |   | $           | 1,848,495 |             |   | $          | 231,427 |              |   | $            | 394,415 |       |   | $       | 756,864 |  |   | $       | 527,080 |  |   | $      | 42,006 |   |           | $         | 3,800,287 | 
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|Net deferred origination fees |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   | (8,644    | )        
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|Loans                         |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   | 3,791,643 |          
|Allowance for loan losses     |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   | (60,863   | )        
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          
|Net loans                     |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        | $ | 3,730,780 |          
|                              |                                           |                        |   |             |           |             |   |            |         |              |   |              |         |       |   |         |         |  |   |         |         |  |   |        |        |   |           |          

30



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##### 



The following table sets forth the contractual
maturity of gross loans at December 31, 2003. 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.

|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |           |           | 
|----------------------------- | ----------------------------------------- | ---------------------- | - | ----------- | ------- | ----------- | - | ---------- | ------- | ------------ | - | ------------ | ------- | ----- | - | --------- | --------- |  | - | ------- | ------- |  | - | ------ | ------- | - | --------- | --------- | --------- | 
|                              |                                           |                       
|                              |                                           | At December 31, 2003  
|                              |                                           |                       
|                              |                                           |                        |   | 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)
|Commercial:                   |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|                              | Secured by real estate  nonresidential   |                        | $ | 68,213      |         |             | $ | 109,523    |         |              | $ | 334,895      |         |       | $ | 1,121,258 |           |  | $ | 57,616  |         |  | $ | 32,674 |         |   | $         | 1,724,179 |          
|                              | Secured by real estate  multifamily      |                        |   | 1,562       |         |             |   | 486        |         |              |   | 30,224       |         |       |   | 511,414   |           |  |   | 618,119 |         |  |   | 760    |         |   |           | 1,162,565 |          
|                              | Construction                              |                        |   | 241,325     |         |             |   | 47,098     |         |              |   | 4,000        |         |       |   |          |           |  |   |        |         |  |   | 1,452  |         |   |           | 293,875   |          
|                              | Business                                  |                        |   | 240,895     |         |             |   | 28,968     |         |              |   | 22,009       |         |       |   | 3,324     |           |  |   | 3,640   |         |  |   | 3,323  |         |   |           | 302,159   |          
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|                              |                                           | Total commercial       |   |             | 551,995 |             |   |            | 186,075 |              |   |              | 391,128 |       |   |           | 1,635,996 |  |   |         | 679,375 |  |   |        | 38,209  |   |           |           | 3,482,778 | 
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|Consumer:                     |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|                              | Residential mortgage (one to four family) |                        |   | 4,098       |         |             |   | 285        |         |              |   | 7,213        |         |       |   | 11,033    |           |  |   | 157,484 |         |  |   | 94,279 |         |   |           | 274,392   |          
|                              | Other                                     |                        |   | 3,396       |         |             |   | 162        |         |              |   | 289          |         |       |   | 67        |           |  |   | 3,914   |         |  |   | 35,289 |         |   |           | 43,117    |          
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|                              |                                           | Total consumer         |   |             | 7,494   |             |   |            | 447     |              |   |              | 7,502   |       |   |           | 11,100    |  |   |         | 161,398 |  |   |        | 129,568 |   |           |           | 317,509   | 
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|                              |                                           | Total gross loans      |   | $           | 559,489 |             |   | $          | 186,522 |              |   | $            | 398,630 |       |   | $         | 1,647,096 |  |   | $       | 840,773 |  |   | $      | 167,777 |   |           | $         | 3,800,287 | 
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|Net deferred origination fees |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   | (8,644    | )        
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|Loans                         |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   | 3,791,643 |          
|Allowance for loan losses     |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   | (60,863   | )        
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          
|Net loans                     |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         | $ | 3,730,780 |          
|                              |                                           |                        |   |             |         |             |   |            |         |              |   |              |         |       |   |           |           |  |   |         |         |  |   |        |         |   |           |          

The following table sets forth the dollar amount
of all loans and mortgage-backed securities for which final
payment is not due until after December 31, 2004:

|                                           |                                           |                             |           |            |         |       |           |         |           |   |           |         |           | 
|------------------------------------------ | ----------------------------------------- | --------------------------- | --------- | ---------- | ------- | ----- | --------- | ------- | --------- | - | --------- | ------- | --------- | 
|                                           |                                           |                            
|                                           |                                           | Due After December 31, 2004
|                                           |                                           |                            
|                                           |                                           | Fixed                       |           | Adjustable |         | Total
|                                           |                                           |                             |           |            |         |      
|                                           |                                           |                            
|                                           |                                           | (Dollars in Thousands)     
|Commercial:                                |                                           |                             |           |            |         |       |           |         |           |   |           |        
|                                           | Secured by real estate  nonresidential   |                             | $         | 124,909    |         |       | $         | 676,595 |           |   | $         | 801,504 |          
|                                           | Secured by real estate  multifamily      |                             |           | 184,195    |         |       |           | 703,619 |           |   |           | 887,814 |          
|                                           | Construction                              |                             |           | 4,266      |         |       |           | 16,260  |           |   |           | 20,526  |          
|                                           | Business                                  |                             |           | 6,372      |         |       |           |        |           |   |           | 6,372   |          
|                                           |                                           |                             |           |            |         |       |           |         |           |   |           |        
|                                           |                                           | Total commercial            |           |            | 319,742 |       |           |         | 1,396,474 |   |           |         | 1,716,216 | 
|                                           |                                           |                             |           |            |         |       |           |         |           |   |           |        
|Consumer:                                  |                                           |                             |           |            |         |       |           |         |           |   |           |        
|                                           | Residential mortgage (one to four family) |                             |           | 192,823    |         |       |           | 42,484  |           |   |           | 235,307 |          
|                                           | Other                                     |                             |           | 268        |         |       |           |        |           |   |           | 268     |          
|                                           |                                           |                             |           |            |         |       |           |         |           |   |           |        
|                                           |                                           | Total consumer              |           |            | 193,091 |       |           |         | 42,484    |   |           |         | 235,575   | 
|Total loans                                |                                           |                             | 512,833   |            |         |       | 1,438,958 |         |           |   | 1,951,791 |        
|Mortgage-backed securities                 |                                           |                             | 958,932   |            |         |       |          |         |           |   | 958,932   |        
|                                           |                                           |                             |           |            |         |       |           |         |           |   |           |        
|Total loans and mortgage-backed securities |                                           | $                           | 1,471,765 |            |         | $     | 1,438,958 |         |           | $ | 2,910,723 |        
|                                           |                                           |                             |           |            |         |       |           |         |           |   |           |        

Risk Elements.We
generally place loans on nonaccrual status when they become
90 days past due, unless the loan is both well secured and
in the process of collection. Loans may be placed on nonaccrual
status earlier if, in managements opinion, the full and
timely collection of principal or interest becomes uncertain.

31



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##### 



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.


The following is the Banks risk elements
table at the dates indicated:

|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |   |       |           | 
|--------------------------------------------------------------------------- | ----------- | ----------------------------------------- | -------------------------- | ---- | ----- | --------- | ----- | ---- | ----- | --------- | ----- | - | --- | --------- | ---- | - | ----- | --------- | ---- | - | ----- | --------- | 
|                                                                            |             |                                          
|                                                                            |             | At December 31,                          
|                                                                            |             |                                          
|                                                                            |             | 2003                                      |                            | 2002 |       | 2001      |       | 2000 |       | 1999     
|                                                                            |             |                                           |                            |      |       |           |       |      |       |          
|                                                                            |             |                                          
|                                                                            |             | (Dollars in Thousands)                   
|Nonaccrual loans:                                                           |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|                                                                            | Commercial: |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |   |      
|                                                                            |             | Secured by real estate  nonresidential   |                            | $    |      |           |       | $    |      |           |       | $ |    |           |      | $ | 740   |           |      | $ | 3,806 |          
|                                                                            |             | Secured by real estate  multifamily      |                            |      |      |           |       |      |      |           |       |   | 210 |           |      |   |      |           |      |   |      |          
|                                                                            |             | Construction                              |                            |      | 5,102 |           |       |      | 4,533 |           |       |   |    |           |      |   | 104   |           |      |   | 104   |          
|                                                                            |             | Business                                  |                            |      | 631   |           |       |      | 68    |           |       |   |    |           |      |   |      |           |      |   |      |          
|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|                                                                            |             |                                           | Total commercial           |      |       | 5,733     |       |      |       | 4,601     |       |   |     | 210       |      |   |       | 844       |      |   |       | 3,910     | 
|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|                                                                            | Consumer:   |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |   |      
|                                                                            |             | Residential mortgage (one to four family) |                            |      | 124   |           |       |      |      |           |       |   | 781 |           |      |   | 1,672 |           |      |   | 722   |          
|                                                                            |             | Other                                     |                            |      |      |           |       |      | 53    |           |       |   |    |           |      |   |      |           |      |   |      |          
|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|                                                                            |             |                                           | Total consumer             |      |       | 124       |       |      |       | 53        |       |   |     | 781       |      |   |       | 1,672     |      |   |       | 722       | 
|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|                                                                            |             |                                           | Total nonaccrual loans     |      |       | 5,857     |       |      |       | 4,654     |       |   |     | 991       |      |   |       | 2,516     |      |   |       | 4,632     | 
|Other real estate owned (OREO)                                              |             |                                           |                           |      |       |           |      |      |       |           |      |   |     |           | 115  |   |       |           | 722  |  
|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|                                                                            |             |                                           | Total nonperforming assets |      | $     | 5,857     |       |      | $     | 4,654     |       |   | $   | 991       |      |   | $     | 2,631     |      |   | $     | 5,354     | 
|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|Nonperforming assets to total assets                                        |             |                                           | 0.10                       | %    |       |           | 0.10  | %    |       |           | 0.03  | % |     |           | 0.11 | % |       |           | 0.23 | %
|Nonaccrual loans to total loans                                             |             |                                           | 0.15                       |      |       |           | 0.15  |      |       |           | 0.04  |   |     |           | 0.13 |   |       |           | 0.27 |  
|Nonperforming assets to total loans and OREO                                |             |                                           | 0.15                       |      |       |           | 0.15  |      |       |           | 0.04  |   |     |           | 0.14 |   |       |           | 0.32 |  
|                                                                            |             |                                           | Total loans                |      | $     | 3,791,643 |       |      | $     | 3,027,810 |       |   | $   | 2,264,303 |      |   | $     | 1,931,822 |      |   | $     | 1,686,695 | 
|                                                                            |             |                                           |                            |      |       |           |       |      |       |           |       |   |     |           |      |   |       |           |      |  
|Gross income not recognized on nonaccrual loans                             |             | $                                         | 363                        |      |       | $         | 211   |      |       | $         | 24    |   |     | $         | 116  |   |       | $         | 201  |  
|Accruing loans contractually past due
    90 days or more                   |             |                                           | 1,469                      |      |       |           | 4,302 |      |       |           | 1,269 |   |     |           |     |   |       |           |     |  
|Loans classified as troubled debt restructurings
    but not included above |             |                                           | 9,094                      |      |       |           |      |      |       |           |      |   |     |           |     |   |       |           |     |  

Total nonperforming assets were $5.9 million
at December 31, 2003, an increase of $1.2 million,
from $4.7 million at December 31, 2002. The increase
was attributable to two construction loans to the same borrower
on the same property that were over 90 days past due. The
Bank records OREO at the lower of carrying value or fair value
less estimated disposal costs. Any write-down of OREO is charged
to earnings.

The $9.1 million performing restructured
loan in the table above represents a performing commercial real
estate loan. No interest rate concessions were made on this
loan. The restructured classification is due to the Bank making
interest rate concessions on a separate $1.2 million loan
to the same obligor on the same property during the year. The
$1.2 million loan is included in the nonaccrual
construction loans balance in the table above. The obligor may
make additional draws under this facility, but such draws would
not have a material impact on the Companys nonperforming
assets.

32



---



##### 



Management cannot predict the extent to which
economic conditions in the Banks market area may worsen or
the full impact that such conditions may have on the Banks
loan portfolio. Accordingly, there can be no assurance that
other loans will not become 90 days or more past due, be
placed on nonaccrual status, or become impaired or restructured
loans or OREO in the future.

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



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

With the exception of the loans described in the
above and the classified loans, we are not aware of any other
loans as of December 31, 2003 where the known credit
problems of the borrower lead us to believe that they will not
comply with their repayment schedule, or that would result in
the loan being included in the nonperforming loan table at a
future date. Despite our efforts, it is impossible for us to
accurately predict the extent to which economic conditions in
our market areas may worsen, or to 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. Since 1998, we have engaged
an independent loan review firm to examine the classification of
our commercial loan portfolio. The firm reviews new commercial
loan commitments in excess of $100,000 and also conducts annual
reviews based on a specified criteria. The 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.

The ratio of nonperforming assets to total assets
remained consistent at 0.10% as of December 31, 2003, and
December 31, 2002. Total nonperforming assets were
$5.9 million at December 31, 2003, compared with
$4.7 million at December 31, 2002. Total nonperforming
assets increased to $4.7 million at December 31, 2002
from $991,000 at December 31, 2001. The 2002 increase was
primarily due to four additional construction nonaccrual loans
of $4.5 million.

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

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

Management also applies judgment to derive loss
factors associated with each credit facility. These loss factors
are considered by type of obligor and collateral. Whenever
possible, the Company uses its own historical loss experience or
independent verifiable data to estimate the loss factors. Many
factors can affect managements estimates of a loss factor.
The application of different loss factors will change the amount
of the

33



---



##### 



allowance for credit losses determined to be
appropriate by the Company. Given the process the Company
follows in determining the risk grading of its loans, management
believes the current risk gradings assigned to loans are
appropriate.


Managements judgment is also applied when
considering uncertainties based on current macroeconomic
conditions and other factors. For example, judgment as to the
economic outlook in California will affect managements
assessment of potential losses based on exposure to that
marketplace. Notwithstanding the judgment required in assessing
the allowance for loan losses, the Company believes its estimate
for the allowance for loan losses is adequate.

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

|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |       |     |       | 
|-------------------------------------------- | ------------------------- | ----------------------------------------- | ----------------- | ----- | ----- | ----- | ------ | ----- | ----- | ----- | ------ | ----- | --- | --- | ------ | ----- | --- | --- | ------ | ----- | --- | ----- | 
|                                             |                           |                                          
|                                             |                           | For the Years Ended December 31,         
|                                             |                           |                                          
|                                             |                           | 2003                                      |                   | 2002  |       | 2001  |        | 2000  |       | 1999 
|                                             |                           |                                           |                   |       |       |       |        |       |       |      
|                                             |                           |                                          
|                                             |                           | (Dollars in Thousands)                   
|Allowance for loan losses:                   |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|Balance beginning of period                  |                           | $                                         | 48,865            |       |       | $     | 34,550 |       |       | $     | 28,901 |       |     | $   | 19,503 |       |     | $   | 14,922 |      
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|Acquired allowance for loan losses           |                           |                                           | 4,028             |       |       |       | 10,162 |       |       |       |       |       |     |     |       |       |     |     |       |      
|                                             | Provision for loan losses |                                           |                   | 9,967 |       |       |        | 9,673 |       |       |        | 5,620 |     |     |        | 9,765 |     |     |        | 5,645 |    
|Charge-offs:                                 |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             | Commercial:               |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |       |    
|                                             |                           | Secured by real estate  nonresidential   |                   |       | 87    |       |        |       |      |       |        |       |    |     |        |       | 551 |     |        |       | 380 |      
|                                             |                           | Secured by real estate  multifamily      |                   |       |      |       |        |       |      |       |        |       |    |     |        |       |    |     |        |       |    |      
|                                             |                           | Construction                              |                   |       | 170   |       |        |       | 2,172 |       |        |       |    |     |        |       |    |     |        |       |    |      
|                                             |                           | Business                                  |                   |       | 2,713 |       |        |       | 3,337 |       |        |       | 121 |     |        |       | 165 |     |        |       | 689 |      
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             |                           |                                           | Total commercial  |       |       | 2,970 |        |       |       | 5,509 |        |       |     | 121 |        |       |     | 716 |        |       |     | 1,069 | 
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             | Consumer:                 |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |       |    
|                                             |                           | Residential mortgage (one to four family) |                   |       |      |       |        |       |      |       |        |       |    |     |        |       | 37  |     |        |       | 9   |      
|                                             |                           | Other                                     |                   |       | 379   |       |        |       | 54    |       |        |       |    |     |        |       | 164 |     |        |       | 120 |      
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             |                           |                                           | Total consumer    |       |       | 379   |        |       |       | 54    |        |       |     |    |        |       |     | 201 |        |       |     | 129   | 
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             |                           |                                           | Total charge-offs |       |       | 3,349 |        |       |       | 5,563 |        |       |     | 121 |        |       |     | 917 |        |       |     | 1,198 | 
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|Recoveries:                                  |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             | Commercial:               |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |       |    
|                                             |                           | Secured by real estate  nonresidential   |                   |       | 30    |       |        |       |      |       |        |       |    |     |        |       | 535 |     |        |       |    |      
|                                             |                           | Secured by real estate  multifamily      |                   |       |      |       |        |       |      |       |        |       |    |     |        |       |    |     |        |       | 114 |      
|                                             |                           | Construction                              |                   |       | 300   |       |        |       |      |       |        |       |    |     |        |       |    |     |        |       |    |      
|                                             |                           | Business                                  |                   |       | 952   |       |        |       | 13    |       |        |       | 68  |     |        |       |    |     |        |       |    |      
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             |                           |                                           | Total commercial  |       |       | 1,282 |        |       |       | 13    |        |       |     | 68  |        |       |     | 535 |        |       |     | 114   | 
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             | Consumer:                 |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |       |    
|                                             |                           | Residential mortgage (one to four family) |                   |       |      |       |        |       |      |       |        |       |    |     |        |       |    |     |        |       |    |      
|                                             |                           | Other                                     |                   |       | 70    |       |        |       | 30    |       |        |       | 82  |     |        |       | 15  |     |        |       | 20  |      
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             |                           |                                           | Total consumer    |       |       | 70    |        |       |       | 30    |        |       |     | 82  |        |       |     | 15  |        |       |     | 20    | 
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|                                             |                           |                                           | Total recoveries  |       |       | 1,352 |        |       |       | 43    |        |       |     | 150 |        |       |     | 550 |        |       |     | 134   | 
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|Balance at end of period                     |                           | $                                         | 60,863            |       |       | $     | 48,865 |       |       | $     | 34,550 |       |     | $   | 28,901 |       |     | $   | 19,503 |      
|                                             |                           |                                           |                   |       |       |       |        |       |       |       |        |       |     |     |        |       |     |     |        |      
|Allowance for loan losses to ending loans    |                           |                                           | 1.61              | %     |       |       | 1.61   | %     |       |       | 1.53   | %     |     |     | 1.50   | %     |     |     | 1.16   | %    
|Net charge-offs to average loans outstanding |                           |                                           | 0.06              |       |       |       | 0.23   |       |       |       | 0.00   |       |     |     | 0.02   |       |     |     | 0.07   |      

34



---



##### 



During 2003, we increased the allowance for loan
losses to $60.9 million from $48.9 million at
December 31, 2002, an increase of $12.0 million, or
24.6%. This increase was primarily due to the continued growth
of the commercial loan portfolio and the resulting increase in
the risk profile inherent in the portfolio. The increased
allowance resulted from a provision of $10.0 million
coupled with the $4.0 million for allowance for loan losses
from FCB, net of net charge-offs of $2.0 million during the
year.

During 2002, we increased the allowance for loan
losses to $48.9 million from $34.6 million at
December 31, 2001, an increase of $14.3 million, or
41.4%. This increase was primarily due to the $10.1 million
allowance acquired from BCC, with the balance being attributable
to the continued growth of the commercial loan portfolio and the
resulting increase in the risk profile inherent in the
portfolio. BCCs allowance at the acquisition date of
$8.9 million was increased by $1.2 million by the
Company to reflect a loss from the sale of a problem loan
acquired from BCC. The loan was identified during the due
diligence process, and the loss was factored into the
acquisition cost.

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.

|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |       |       | 
|------------------------------- | ----------------------------------------- | ---------------------- | ------ | ------ | ------ | ------ | ------ | ----- | ----- | ------ | ------ | ------ | ------ | ------ | ------ | ----- | ----- | ------ | ------ | ------ | ------ |  | ------ | ----- | ----- | - | ------ | ------ | ------ |  | ------ | ----- | ----- | - | ------ | ----- | ------ |  | ------ | ----- | ----- | 
|                                |                                           |                       
|                                |                                           | At December 31,       
|                                |                                           |                       
|                                |                                           |                        |        |        |        |        |        |       |       |       
|                                |                                           | 2003                   |        | 2002   |        | 2001   |        | 2000  |       | 1999  
|                                |                                           |                        |        |        |        |        |        |       |       |       
|                                |                                           | Amount                 |        | %      |        | Amount |        | %     |       | Amount |        | %      |        | Amount |        | %     |       | Amount |        | %     
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |       
|                                |                                           |                       
|                                |                                           | (Dollars in Thousands)
|Allocated:                      |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|Commercial(1):                  |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|                                | Secured by real estate  nonresidential   |                        | $      | 30,628 |        |        |        | 45.37 | %     |        | $      | 18,647 |        |        |        | 42.20 | %     |        | $      | 11,435 |        |  |        | 35.22 | %     |   | $      | 10,321 |        |  |        | 30.91 | %     |   | $      | 5,823 |        |  |        | 25.77 | %    
|                                | Secured by real estate  multifamily      |                        |        | 6,891  |        |        |        | 30.59 |       |        |        | 8,977  |        |        |        | 30.16 |       |        |        | 6,087  |        |  |        | 29.86 |       |   |        | 4,572  |        |  |        | 26.61 |       |   |        | 2,919 |        |  |        | 25.11 |      
|                                | Construction                              |                        |        | 11,676 |        |        |        | 7.74  |       |        |        | 9,275  |        |        |        | 7.13  |       |        |        | 4,654  |        |  |        | 8.05  |       |   |        | 3,646  |        |  |        | 6.82  |       |   |        | 2,903 |        |  |        | 5.31  |      
|                                | Business                                  |                        |        | 10,825 |        |        |        | 7.95  |       |        |        | 7,017  |        |        |        | 8.63  |       |        |        | 4,401  |        |  |        | 7.21  |       |   |        | 2,788  |        |  |        | 5.14  |       |   |        | 1,259 |        |  |        | 3.52  |      
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|                                |                                           | Total commercial       |        |        | 60,020 |        |        |       | 91.65 |        |        |        | 43,916 |        |        |       | 88.12 |        |        |        | 26,577 |  |        |       | 80.34 |   |        |        | 21,327 |  |        |       | 69.48 |   |        |       | 12,904 |  |        |       | 59.71 | 
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|Consumer(1):                    |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|                                | Residential mortgage (one to four family) |                        |        | 292    |        |        |        | 7.22  |       |        |        | 1,555  |        |        |        | 10.25 |       |        |        | 2,187  |        |  |        | 18.96 |       |   |        | 2,930  |        |  |        | 29.68 |       |   |        | 1,709 |        |  |        | 39.45 |      
|                                | Other                                     |                        |        | 551    |        |        |        | 1.13  |       |        |        | 635    |        |        |        | 1.63  |       |        |        | 183    |        |  |        | 0.70  |       |   |        | 173    |        |  |        | 0.84  |       |   |        | 192   |        |  |        | 0.84  |      
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|                                |                                           | Total consumer         |        |        | 843    |        |        |       | 8.35  |        |        |        | 2,190  |        |        |       | 11.88 |        |        |        | 2,370  |  |        |       | 19.66 |   |        |        | 3,103  |  |        |       | 30.52 |   |        |       | 1,901  |  |        |       | 40.29 | 
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|Total allocated                 |                                           |                        | 60,863 |        |        |        | 100.00 | %     |       |        | 46,106 |        |        |        | 100.00 | %     |       |        | 28,947 |        |        |  | 100.00 | %     |       |   | 24,430 |        |        |  | 100.00 | %     |       |   | 14,805 |       |        |  | 100.00 | %    
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|Unallocated                     |                                           |                        |       |        |        |        |        |       |       |        | 2,759  |        |        |        |        |       |       |        | 5,603  |        |        |  |        |       |       |   | 4,471  |        |        |  |        |       |       |   | 4,698  |       |        |  |        |      
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      
|Total allowance for loan losses |                                           | $                      | 60,863 |        |        |        |        |       |       | $      | 48,865 |        |        |        |        |       |       | $      | 34,550 |        |        |  |        |       |       | $ | 28,901 |        |        |  |        |       |       | $ | 19,503 |       |        |  |        |      
|                                |                                           |                        |        |        |        |        |        |       |       |        |        |        |        |        |        |       |       |        |        |        |        |  |        |       |       |   |        |        |        |  |        |       |       |   |        |       |        |  |        |      



---



|    |                                                                                    
|--- | -----------------------------------------------------------------------------------
|(1) | Percentages represent gross loan category as a
    percentage of total gross loans.

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

The Companys portfolio investments are
governed by the Asset/ Liability Policy (A/L
Policy), which is approved by the Board of Directors of
the Company. The A/L Policy sets forth exposure limits for

35



---



##### 



selected investments, as a function of total
assets, total securities and Tier I Capital. The A/ L
Policy further sets forth maximum maturity and duration limits
for securities. The A/ L Policy also further limits the
concentration in a particular investment as a function of the
total issue. The A/ L Policy sets forth goals for each type of
investment with respect to Return on Assets, Return on Equity
and Return on Risk-Based Capital. It also sets forth limits for
interest rate sensitivity for each type of investment.


Permitted investments include
U.S. Government obligations, agency securities, municipal
obligations, investment grade securities, commercial paper,
corporate debt, money market mutual funds and guaranteed
preferred beneficial interests in junior subordinated
debentures. The Companys Board has directed management to
invest in securities with the objective of optimizing the yield
on investments that appropriately balances the risk-based
capital utilization and interest rate sensitivity. The A/ L
Policy requires that all securities be of investment grade at
the time of purchase.

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

The securities portfolio (including available for
sale and held to maturity) totaled $1.51 billion at
December 31, 2003, compared with $1.58 billion at
December 31, 2002. The decrease of $75.6 million, or
4.8%, in the securities portfolio resulted primarily from the
sales of $942.1 million, principal repayments and
securities calls of $618.9 million, partially offset by
security purchases of $1.26 billion, internal
securitization of multifamily and one to four family loans, and
the acquisition of FCB. At the time FCB was acquired, FCB had a
securities portfolio of $56.3 million.

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

During 2003, the Company increased its held to
maturity portfolio from $112.0 million at December 31,
2002 to $284.7 million. This increase of
$172.7 million resulted from purchased securities during
the period that were classified as held to maturity, a
reflection of the Companys intent and ability to hold
these securities to maturity based upon our liquidity position
and the size of our portfolio. The Company plans from
time-to-time to continue to purchase securities for its
held-to-maturity portfolio. However, for the foreseeable future,
the Company expects that the preponderance of its securities
portfolio will be classified as available for sale.

36



---



##### 



The following table presents our securities
portfolio at the dates indicated:

|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |         |         | 
|---------------------------------------------------------------------- | -------------------------- | ------------------------------------------------------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | - | --------- | ------- | --------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                       |                            |                                                        
|                                                                       |                            | At December 31,                                        
|                                                                       |                            |                                                        
|                                                                       |                            |                                                         |           |         |           |          
|                                                                       |                            | 2003                                                    |           | 2002    |           | 2001     
|                                                                       |                            |                                                         |           |         |           |          
|                                                                       |                            | Amortized                                               |           | Market  |           | Amortized |           | Market  |           | Amortized |           | Market 
|                                                                       |                            | Cost                                                    |           | Value   |           | Cost      |           | Value   |           | Cost      |           | Value  
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |        
|                                                                       |                            |                                                        
|                                                                       |                            | (Dollars in Thousands)                                 
|Investment securities available for sale:                              |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       | Trust Preferred Securities |                                                         | $         | 13,189  |           |           | $         | 12,795  |           |           | $         | 62,313  |           |   | $         | 58,176  |           |   | $       | 100,327 |         |   | $       | 89,929  |        
|                                                                       | Federal Agency Notes       |                                                         |           | 222,309 |           |           |           | 218,753 |           |           |           | 45,252  |           |   |           | 45,304  |           |   |         | 36,507  |         |   |         | 36,378  |        
|                                                                       | Foreign Debt Securities    |                                                         |           |        |           |           |           |        |           |           |           | 8,017   |           |   |           | 8,014   |           |   |         |        |         |   |         |        |        
|                                                                       | Asset-backed Securities    |                                                         |           | 16,426  |           |           |           | 16,285  |           |           |           | 5,826   |           |   |           | 5,739   |           |   |         | 12,018  |         |   |         | 12,012  |        
|                                                                       | Municipals                 |                                                         |           | 90      |           |           |           | 90      |           |           |           | 360     |           |   |           | 360     |           |   |         |        |         |   |         |        |        
|                                                                       | Domestic Corporate Bonds   |                                                         |           | 5,153   |           |           |           | 5,148   |           |           |           |        |           |   |           |        |           |   |         |        |         |   |         |        |        
|                                                                       | Commercial Paper           |                                                         |           | 9,991   |           |           |           | 9,991   |           |           |           |        |           |   |           |        |           |   |         |        |         |   |         |        |        
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       |                            | Total investment securities available for sale          |           | $       | 267,158   |           |           | $       | 263,062   |           |           | $       | 121,768   |   |           | $       | 117,593   |   |         | $       | 148,852 |   |         | $       | 138,319 | 
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|Mortgage-backed securities available for sale:                         |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       | FNMA                       |                                                         | $         | 440,835 |           |           | $         | 440,453 |           |           | $         | 577,731 |           |   | $         | 590,373 |           |   | $       | 206,902 |         |   | $       | 206,777 |        
|                                                                       | GNMA                       |                                                         |           | 79,103  |           |           |           | 78,842  |           |           |           | 280,263 |           |   |           | 286,153 |           |   |         | 145,091 |         |   |         | 145,395 |        
|                                                                       | FHLMC                      |                                                         |           | 275,882 |           |           |           | 273,940 |           |           |           | 289,094 |           |   |           | 289,959 |           |   |         | 47,747  |         |   |         | 46,928  |        
|                                                                       | Other                      |                                                         |           | 163,687 |           |           |           | 164,773 |           |           |           | 184,919 |           |   |           | 185,309 |           |   |         | 4,504   |         |   |         | 4,502   |        
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       |                            | Total mortgage-backed securities available for
    sale |           | $       | 959,507   |           |           | $       | 958,008   |           |           | $       | 1,332,007 |   |           | $       | 1,351,794 |   |         | $       | 404,244 |   |         | $       | 403,602 | 
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|Total investment and mortgage-backed securities
    available for sale |                            | $                                                       | 1,226,665 |         |           | $         | 1,221,070 |         |           | $         | 1,453,775 |         |           | $ | 1,469,387 |         |           | $ | 553,096 |         |         | $ | 541,921 |        
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|Investment securities held to maturity:                                |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       | Municipals                 |                                                         | $         | 184,264 |           |           | $         | 187,735 |           |           | $         | 111,049 |           |   | $         | 113,637 |           |   | $       | 50,444  |         |   | $       | 49,667  |        
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|Mortgage-backed securities held to maturity:                           |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       | GNMA                       |                                                         | $         | 99,524  |           |           | $         | 98,713  |           |           | $         |        |           |   | $         |        |           |   | $       |        |         |   | $       |        |        
|                                                                       | Other                      |                                                         |           | 924     |           |           |           | 924     |           |           |           | 945     |           |   |           | 945     |           |   |         | 1,028   |         |   |         | 1,028   |        
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       |                            | Total mortgage-backed securities held to maturity       |           | $       | 100,448   |           |           | $       | 99,637    |           |           | $       | 945       |   |           | $       | 945       |   |         | $       | 1,028   |   |         | $       | 1,028   | 
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|Total investment and mortgage-backed securities
    held to maturity   |                            | $                                                       | 284,712   |         |           | $         | 287,372   |         |           | $         | 111,994   |         |           | $ | 114,582   |         |           | $ | 51,472  |         |         | $ | 50,695  |        
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        
|                                                                       |                            | Total securities                                        |           | $       | 1,511,377 |           |           | $       | 1,508,442 |           |           | $       | 1,565,769 |   |           | $       | 1,583,969 |   |         | $       | 604,568 |   |         | $       | 592,616 | 
|                                                                       |                            |                                                         |           |         |           |           |           |         |           |           |           |         |           |   |           |         |           |   |         |         |         |   |         |        

At December 31, 2003, the carrying value of
the securities was $1.51 billion, and was consistent with
the market value of $1.51 billion. At December 31,
2002, the carrying value of the securities was
$1.57 billion, and the market value was $1.58 billion.
During 2003, the total unrealized loss on securities was
$2.9 million. Of this loss, $5.6 million relates to
securities that are available for sale. The unrealized
$5.6 million loss, net of tax benefit of $2.4 million,
is included as a reduction to stockholders equity. The
$2.7 million gain between the carrying value and market
value of securities that are held to maturity has not been
recognized in the financial statements for the year ended
December 31, 2003.

In conjunction with the Companys review of
the fair value of securities, for the twelve months ended
December 31, 2003, an other than temporary
impairment charge of $787,000 was recorded for trust
preferred securities contained in the available-for-sale
portfolio due to the downgrading of the issuing bank holding
companies from rating agencies.

37



---



##### 



The following table presents the carrying value,
weighted average yields and contractual maturities of our
securities at December 31, 2003:

|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |      |      |  
|----------------------------------------------------------------------- | ------------------------ | ------------------------------------------------------- | ------ | -------------- | ------ | ---------------- | ---- | --------------- | ---- | -------- | ------ | -------- | ------ | -------- | ---- | -------- | ---- | -------- | ------- | -------- | ------- |  | ----- | ---- | ---- | - | ------- | - | --------- |  | ---- | - | ---- | - | --------- | ------- | --------- |  | ---- | ---- | ---- | -
|                                                                        |                          |                                                        
|                                                                        |                          | At December 31, 2003                                   
|                                                                        |                          |                                                        
|                                                                        |                          |                                                         |        |                |        |                  |      |                
|                                                                        |                          |                                                         |        | After One Year |        | After Five Years |      |                
|                                                                        |                          |                                                         |        | Through        |        | Through          |      |                 |      |         
|                                                                        |                          | Within One Year                                         |        | Five Years     |        | Ten Years        |      | After Ten Years |      | Total   
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |         
|                                                                        |                          | Book                                                    |        | Weighted       |        | Book             |      | Weighted        |      | Book     |        | Weighted |        | Book     |      | Weighted |      | Book     |         | Weighted
|                                                                        |                          | Carrying                                                |        | Average        |        | Carrying         |      | Average         |      | Carrying |        | Average  |        | Carrying |      | Average  |      | Carrying |         | Average 
|                                                                        |                          | Value                                                   |        | Yield          |        | Value            |      | Yield           |      | Value    |        | Yield    |        | Value    |      | Yield    |      | Value    |         | Yield   
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |         
|                                                                        |                          |                                                        
|                                                                        |                          | (Dollars in Thousands)                                 
|Investment securities available for sale:                               |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|Trust Preferred Securities                                              |                          | $                                                       |       |                |        |                  |     | %               |      | $        |       |          |        |          |     | %        |      | $        |        |          |         |  |      | %    |      | $ | 12,795  |   |           |  | 3.45 | % |      | $ | 12,795    |         |           |  | 3.45 | %   
|                                                                        | Federal Agency Notes     |                                                         |        | 59,968         |        |                  |      | 0.97            |      |          |        | 9,932    |        |          |      | 3.11     |      |          |         | 148,853  |         |  |       | 4.58 |      |   |         |  |           |  |      |  |      |   |           | 218,753 |           |  |      | 3.52 |     
|                                                                        | Foreign Debt Securities  |                                                         |        |               |        |                  |      |                |      |          |        |         |        |          |      |         |      |          |         |         |         |  |       |     |      |   |         |  |           |  |      |  |      |   |           |        |           |  |      |     |     
|                                                                        | Asset-backed Securities  |                                                         |        |               |        |                  |      |                |      |          |        | 16,285   |        |          |      | 3.91     |      |          |         |         |         |  |       |     |      |   |         |  |           |  |      |  |      |   |           | 16,285  |           |  |      | 3.91 |     
|                                                                        | Municipals               |                                                         |        |               |        |                  |      |                |      |          |        |         |        |          |      |         |      |          |         | 90       |         |  |       | 4.21 |      |   |         |  |           |  |      |  |      |   |           | 90      |           |  |      | 4.21 |     
|                                                                        | Domestic Corporate Bonds |                                                         |        |               |        |                  |      |                |      |          |        | 5,148    |        |          |      | 3.35     |      |          |         |         |         |  |       |     |      |   |         |  |           |  |      |  |      |   |           | 5,148   |           |  |      | 3.35 |     
|                                                                        | Commercial Paper         |                                                         |        | 9,991          |        |                  |      | 1.12            |      |          |        |         |        |          |      |         |      |          |         |         |         |  |       |     |      |   |         |  |           |  |      |  |      |   |           | 9,991   |           |  |      | 1.12 |     
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|                                                                        |                          | Total investment securities available for sale          |        |                | 69,959 |                  |      |                 | 0.99 |          |        |          | 31,365 |          |      |          | 3.56 |          |         |          | 148,943 |  |       |      | 4.58 |   |         |   | 12,795    |  |      |   | 3.45 |   |           |         | 263,062   |  |      |      | 3.45 |  
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|Mortgage-backed securities available for sale:                          |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|FNMA                                                                    |                          |                                                         |       |                |        |                  |     |                 |      |          |       |          |        |          |     |          |      |          | 29,696  |          |         |  | 6.04  |      |      |   | 410,757 |   |           |  | 4.32 |   |      |   | 440,453   |         |           |  | 3.63 |     
|GNMA                                                                    |                          |                                                         |       |                |        |                  |     |                 |      |          |       |          |        |          |     |          |      |          |        |          |         |  |      |      |      |   | 78,842  |   |           |  | 3.63 |   |      |   | 78,842    |         |           |  | 4.44 |     
|FHLMC                                                                   |                          |                                                         |       |                |        |                  |     |                 |      |          |       |          |        |          |     |          |      |          | 19,096  |          |         |  | 3.97  |      |      |   | 254,844 |   |           |  | 4.34 |   |      |   | 273,940   |         |           |  | 4.31 |     
|Other                                                                   |                          |                                                         |       |                |        |                  |     |                 |      |          |       |          |        |          |     |          |      |          |        |          |         |  |      |      |      |   | 164,773 |   |           |  | 4.44 |   |      |   | 164,773   |         |           |  | 4.44 |     
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|                                                                        |                          | Total mortgage-backed securities available for
    sale |        |                |       |                  |      |                 |     |          |        |          |       |          |      |          |     |          |         |          | 48,792  |  |       |      | 5.23 |   |         |   | 909,216   |  |      |   | 4.29 |   |           |         | 958,008   |  |      |      | 4.34 |  
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|Total investment and mortgage- backed securities
    available for sale |                          |                                                         | 69,959 |                |        |                  | 0.99 |                 |      |          | 31,365 |          |        |          | 3.56 |          |      |          | 197,735 |          |         |  | 4.74  |      |      |   | 922,011 |   |           |  | 4.28 |   |      |   | 1,221,070 |         |           |  | 4.14 |     
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|Investment securities held to maturity:                                 |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|Municipals                                                              |                          |                                                         |       |                |        |                  |     |                 |      |          |       |          |        |          |     |          |      |          | 328     |          |         |  | 2.13  |      |      |   | 183,936 |   |           |  | 4.43 |   |      |   | 184,264   |         |           |  | 4.43 |     
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|Mortgage-backed securities held to maturity:                            |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|GNMA                                                                    |                          |                                                         |       |                |        |                  |     |                 |      |          |       |          |        |          |     |          |      |          |        |          |         |  |      |      |      |   | 99,524  |   |           |  | 5.26 |   |      |   | 99,524    |         |           |  | 5.26 |     
|Other mortgage-backed securities                                        |                          |                                                         |       |                |        |                  |     |                 |      |          | 10     |          |        |          | 7.38 |          |      |          | 1       |          |         |  | 14.63 |      |      |   | 913     |   |           |  | 7.46 |   |      |   | 924       |         |           |  | 7.47 |     
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|Total investment and mortgage- backed securities
    held to maturity   |                          |                                                         |       |                |        |                  |     |                 |      |          | 10     |          |        |          |     |          |      |          | 329     |          |         |  | 2.12  |      |      |   | 284,373 |   |           |  | 2.87 |   |      |   | 284,712   |         |           |  | 2.86 |     
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     
|                                                                        |                          | Total securities                                        |        | $              | 69,959 |                  |      |                 | 0.99 | %        |        | $        | 31,375 |          |      |          | 3.57 | %        |         | $        | 198,064 |  |       |      | 4.74 | % |         | $ | 1,197,384 |  |      |   | 3.95 | % |           | $       | 1,505,782 |  |      |      | 3.90 | %
|                                                                        |                          |                                                         |        |                |        |                  |      |                 |      |          |        |          |        |          |      |          |      |          |         |          |         |  |       |      |      |   |         |   |           |  |      |   |      |   |           |         |           |  |      |     

Deposits.Deposits
have traditionally been our primary source of funds to use in
lending and investment activities. At December 31, 2003,
57.4% of our deposits were time deposits, 22.9% were NOW, demand
deposit and money market accounts, and 19.7% were savings
accounts. By comparison, at December 31, 2002, 62.4% of our
deposits were time deposits, 20.3% were NOW, demand deposit and
money market accounts, and 17.3% were savings accounts.

We obtain our deposits primarily from the
communities we serve. With the exception of state and federal
government entities (Public Fund Sector)
contributing 8.5% of total deposits, no other material portion
of our deposits were from or were dependent upon any one
customer or industry. Our business is not seasonal in nature. We
accept deposits over $100,000 from customers. Included in the
figure for time deposits at

38



---



##### 



December 31, 2003 is $1.53 billion of
deposits of $100,000 or greater, compared to $1.39 billion
at December 31, 2002. Such deposits made up 34.1% of total
deposits at December 31, 2003, compared to 34.8% at
December 31, 2002. At December 31, 2002, we did not
have any brokered deposits, compared to $2.3 million at
December 31, 2003.


Our average cost of deposits during 2003 was
1.61% as compared to 2.16% for 2002 and 3.88% for 2001. Our
average interest rate paid on deposits was 1.33%, 1.90% and
2.85% at December 31, 2003, 2002 and 2001, respectively.

Core deposits include NOW, checking, and money
market accounts and savings accounts. Core deposits increased
27.0% to $1.91 billion at December 31, 2003, compared
to $1.50 billion at December 31, 2002. This growth in
core deposits resulted primarily from the Banks continued
focus on developing new commercial relationships in the ethnic
Chinese community, further expansion into the Banks retail
niche market, and the acquisition of FCB. Time deposits
increased 2.8% to $2.57 billion at December 31, 2003,
from $2.50 billion at December 31, 2002, primarily as
a result of the acquisition of FCB.

Core deposits increased 71.5% to
$1.50 billion at the end of 2002, compared to
$877.1 million for the year ended December 31, 2001.
This growth in core deposits resulted primarily from the
acquisition of BCC during which the Bank acquired
$1.25 billion in deposits. Of this total,
$333.1 million were represented by core deposits and
$913.5 million by time deposits. The balance of the
increase was due to the expansion into the Banks retail
niche market. Time deposits increased 57.5% to
$2.50 billion at December 31, 2002, from
$1.59 billion at December 31, 2001, also due to the
above factors.

The following table presents the time to maturity
of the time deposit accounts at December 31, 2003:

|                        |  |                        |           | 
|----------------------- |  | ---------------------- | --------- | 
|Maturity Period         |  | Amount                
|                        |  |                       
|                        |  | (Dollars in Thousands)
|One year or less        |  | $                      | 2,338,964 | 
|Two through three years |  |                        | 228,943   | 
|Thereafter              |  |                        | 5,503     | 
|                        |  |                        |           | 
|                        |  | $                      | 2,573,410 | 
|                        |  |                        |           | 

At December 31, 2003, the Bank had
$1.53 billion in certificate accounts in amounts of
$100,000 or more maturing as follows:

|                         |       |                        |         |           | 
|------------------------ | ----- | ---------------------- | ------- | --------- | 
|Maturity Period          |       | Amount                
|                         |       |                       
|                         |       | (Dollars in Thousands)
|Three months or less     |       | $                      | 569,389 |          
|Over 3 through 6 months  |       |                        | 382,002 |          
|Over 6 through 12 months |       |                        | 424,669 |          
|Over 12 months           |       |                        | 154,506 |          
|                         |       |                        |         |          
|                         | Total |                        | $       | 1,530,566 | 
|                         |       |                        |         |          

Other Borrowings.The Bank maintains borrowing lines with numerous correspondent
banks and brokers and with the Federal Home Loan Bank
(FHLB) of San Francisco to supplement our
supply of lendable funds and to manage liquidity. Such
borrowings are generally secured with mortgage loans and/or
securities with a market value at least equal to outstanding
balances. In addition to loans and securities, advances from the
FHLB of San Francisco are typically secured by a pledge of
our stock in the FHLB of San Francisco. At
December 31, 2003, we had $481.3 million of advances
outstanding and $353.4 million outstanding at
December 31, 2002. At December 31, 2003, we had
$617.1 million of additional FHLB borrowings that we could
utilize.

Included in the $481.3 million of FHLB
advances as of December 31, 2003 were $209.9 million
of short-term, fixed-rate advances that mature within one year.
All the $271.4 million in long-term advances mature between
2004 and 2008. As of December 31, 2003, $231.0 million
of these advances may be terminated at the option of the FHLB of
San Francisco. The FHLB, at their option, may terminate the
advances at quarterly

39



---



##### 



intervals at specified periods ranging from three
to five years beyond the original advance dates. As of April
2004, an additional $10.0 million may be terminated. To
date, the FHLB has not exercised its option to terminate any
advances to the Company. In the event the FHLB decided to
exercise this option, the Company would need to pay these
advances back.


As of December 31, 2003, the Hong Kong
branch had short-term borrowings of $24.2 million
principally denominated in Hong Kong dollars with local
financial institutions for asset/liability management purposes.

The Wells Fargo Bank borrowing line of
$10.0 million established in 2002 for liquidity purposes is
active as of December 31, 2003 and not drawn upon. The
interest rate on the line which matures in December 2004 was
2.20% at December 31, 2003.

Subordinated Debentures of the Company
(TPS).The Company
established special purpose trusts in 1998, 2001, and 2002 for
the purpose of issuing Guaranteed Preferred Beneficial Interests
in its Subordinated Debentures (Capital Securities).
The trusts exist for the sole purpose of issuing the Capital
Securities and investing the proceeds thereof in Subordinated
Debentures issued by the Company. Payment of distributions out
of the monies held by the trusts and payments on liquidation of
the trusts, or the redemption of the Capital Securities, are
guaranteed by the Company to the extent the trusts have funds
available thereof. The obligations of the Company under the
guarantees and the Subordinated Debentures are subordinate and
junior in right of payment to all indebtedness of the Company
and will be structurally subordinated to all liabilities and
obligations of the Companys subsidiaries. These trusts are
not consolidated on our financial statements. Please see
Note 2 to the Consolidated Financial Statements for further
discussion.

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

Regulatory Capital.Under capital adequacy guidelines and the regulatory framework
for prompt corrective action, the Bank must meet specific
capital guidelines as calculated under regulatory accounting
practices. As of December 31, 2003, the Bank met the
Well Capitalized requirements under these
guidelines. The total risk-based capital ratio of the Bank at
December 31, 2003, was 12.18%, as compared with 11.52% at
December 31, 2002. The ratio of Tier I Capital (as
defined in the regulations) to average assets (as defined) of
the Bank at December 31, 2003, was 7.86% as compared with
7.57% at December 31, 2002. The increase in these two
ratios was primarily due to 2003 net income.

The Company is categorized as Well
Capitalized. The Companys total risk-based capital
ratio is higher than the Banks due to the inclusion of the
Capital Securities as capital in the risk-based
capital calculation. Capital Securities are includable as
capital up to 25% of Tier I Capital. As discussed in
Note 2 to the Consolidated Financial Statements, which this
discussion accompanies, the trusts were deconsolidated for
reporting purposes pursuant to the FIN 46R interpretation.
The Federal Reserve has issued interim guidance allowing the
inclusion of capital securities in Tier I capital
regardless of the FIN 46R interpretation. The ultimate
decision of the banking regulators is not known at this time.
One potential impact of not including these capital securities
is that the Federal Reserve Bank may no longer allow the trust
preferred securities to count towards Tier I capital of the
Company. Even in such event, the Company would continue to be
well capitalized. The Banks Tier I capital would be
unaffected, since all trust preferred securities have been
issued at the holding company level.

Stockholders
Equity.Effective July 11, 2003,
the Company issued approximately 2.3 million common shares
with an aggregate value of $70.0 million in conjunction
with the acquisition of FCB. Total common shares outstanding at
December 31, 2003 were 45.0 million, compared with
42.0 million outstanding at December 31, 2002; prior
periods have been restated for the April 2003 two-for-one stock
split.

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

40



---



##### 



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, 2003, we had
$2.34 billion of certificates of deposit scheduled to
mature within one year. We believe that our liquidity resources
will provide us with sufficient amounts of cash necessary to
meet these commitments.

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

Capital Resources.The Company has continuously declared quarterly dividends on
common stock since 2000. The Company paid aggregate dividends of
$5.0 million and $4.0 million during 2003 and 2002,
respectively. The payment of such dividends did not have a
significant impact on the liquidity of the Company. As a result
of the dividend payouts, the total capital of the Company was
reduced by $5.0 million and $4.0 million during 2003
and 2002, respectively. The payment of dividends during 2003 had
the effect of reducing the Tier I leverage capital ratio by
13 basis points and risk-based capital ratio by
13 basis points. The payment of dividends during 2002 had
the effect of reducing the Tier I leverage capital ratio by
13 basis points and risk-based capital ratio by
12 basis points.

Contractual Obligation and Off-Balance-Sheet
Arrangements.In the ordinary course
of operations, the Company enters into certain contractual
obligations. Such obligations include the funding of operations
through debt issuances as well as leases for premises and
equipment. The Company also enters into limited use of
derivative financial instruments, which create contractual
obligations, as part of its interest rate risk management
process and customer accommodation activities. The Company
engages in certain financial transactions that are not recorded
on the Companys balance sheet, in accordance with
generally accepted accounting principles, or may be recorded on
the Companys balance sheet in amounts that are different
than the full contract or notional amount of the transaction.
Such transactions are structured to meet the financial needs of
customers, manage the Companys credit, market or liquidity
risks, diversify funding sources or optimize capital.

41



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##### 



The following table presents, as of
December 31, 2003, the Companys significant
contractual obligations by expected payment funding or maturity
dates. The payment amounts represent those amounts contractually
due to recipients.

|                                |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |         | 
|------------------------------- | ----------------------------------------- | ---------------------------------------- | --------- | --------- |  | --------- | --------- | --------- |  | ------- | ------- | ------- |  |  | ------- | ------- |  |  | ------- | ------- | 
|                                |                                           |                                         
|                                |                                           | Payments Due/Stated Maturities By Period
|                                |                                           |                                         
|                                |                                           |                                          |           | Less than |  |           |           | More than
|Contractual Obligations         |                                           | Total                                    |           | 1 Year    |  | 1-3 Years |           | 3-5 Years |  | 5 Years
|                                |                                           |                                          |           |           |  |           |           |           |  |        
|                                |                                           |                                         
|                                |                                           | (Dollars in Thousands)                  
|Deposits:                       |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                | Demand and savings(1)                     |                                          | $         | 1,910,111 |  |           | $         | 1,910,111 |  |         | $       |        |  |  | $       |        |  |  | $       |        | 
|                                | Time deposits                             |                                          |           | 2,573,410 |  |           |           | 2,338,586 |  |         |         | 229,321 |  |  |         | 5,503   |  |  |         |        | 
|                                |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                |                                           |                                          | 4,483,521 |           |  |           | 4,248,697 |           |  |         | 229,321 |         |  |  | 5,503   |         |  |  |        |        
|Borrowings:                     |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                | Bank borrowings                           |                                          |           | 24,194    |  |           |           | 24,194    |  |         |         |        |  |  |         |        |  |  |         |        | 
|                                | FHLB borrowings                           |                                          |           | 481,348   |  |           |           | 209,940   |  |         |         | 21,000  |  |  |         | 250,408 |  |  |         |        | 
|                                | Subordinated debentures                   |                                          |           | 136,000   |  |           |           |          |  |         |         |        |  |  |         |        |  |  |         | 136,000 | 
|                                |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                |                                           |                                          | 641,542   |           |  |           | 234,134   |           |  |         | 21,000  |         |  |  | 250,408 |         |  |  | 136,000 |        
|Off-balance-sheet arrangements: |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|Letters of credit               |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                | Commercial                                |                                          |           | 16,462    |  |           |           | 16,462    |  |         |         |        |  |  |         |        |  |  |         |        | 
|                                | Standby                                   |                                          |           | 23,022    |  |           |           | 23,022    |  |         |         |        |  |  |         |        |  |  |         |        | 
|                                |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                |                                           |                                          | 39,484    |           |  |           | 39,484    |           |  |         |        |         |  |  |        |         |  |  |        |        
|Commitments to extend credit:   |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                | Consumer (including residential mortgage) |                                          |           | 65,619    |  |           |           | 65,619    |  |         |         |        |  |  |         |        |  |  |         |        | 
|                                | Commercial (excluding construction)       |                                          |           | 344,160   |  |           |           | 344,160   |  |         |         |        |  |  |         |        |  |  |         |        | 
|                                | Construction                              |                                          |           | 235,219   |  |           |           | 235,219   |  |         |         |        |  |  |         |        |  |  |         |        | 
|                                |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                |                                           |                                          | 644,998   |           |  |           | 644,998   |           |  |         |        |         |  |  |        |         |  |  |        |        
|Lease obligations:              |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                | Operating leases                          |                                          |           | 27,802    |  |           |           | 5,182     |  |         |         | 8,158   |  |  |         | 5,813   |  |  |         | 8,649   | 
|                                | Capital leases                            |                                          |           |          |  |           |           |          |  |         |         |        |  |  |         |        |  |  |         |        | 
|                                |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                |                                           |                                          | 27,802    |           |  |           | 5,182     |           |  |         | 8,158   |         |  |  | 5,813   |         |  |  | 8,649   |        
|Other obligations:              |                                           |                                          |           |           |  |           |           |           |  |         |         |         |  |  |         |         |  |  |         |        
|                                | Foreign exchange contracts                |                                          |           | 17,122    |  |           |           | 17,122    |  |         |         |        |  |  |         |        |  |  |         |        | 



---



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

Deposits.Deposit
liabilities represent the primary source of funding for the
Companys lending and investment activities. Deposits are
raised primarily from the marketplace communities we serve.
Approximately 42.6% of the deposits are composed of transaction,
savings and money market accounts that have no stated maturity.
The remaining 57.4% of deposits are composed of time deposits,
the majority of which have remaining maturities of less than one
year. The Companys business is not seasonal in nature, and
it accepts deposits over $100,000 from customers. With one
exception, no single customer or industry accounts for a
meaningful percentage of deposits. The exception is the Public
Funds Sector whose balances total $380.5 million or 8.5% of
total deposits as of December 31, 2003, with one entity
accounting for a majority of those balances. Please refer to
Note 8 in the Notes to Consolidated Financial Statements
for additional details on the deposit portfolio.

42



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##### 



Borrowings.The Bank
maintains borrowing lines with numerous correspondent banks and
with the Federal Home Loan Bank (FHLB) of
San Francisco to supplement our supply of lendable funds
and to manage liquidity. Such borrowings are generally secured
with mortgage loans and/or securities with a market value at
least equal to outstanding balances. In addition to loans and
securities, advances from the FHLB of San Francisco are
typically secured by a pledge of our stock in the FHLB of
San Francisco. Please refer to the Other Borrowings section
above for additional discussion of borrowings. As of
December 31, 2003, the Bank borrowings referenced in the
above table all had remaining maturities of less than three
months.

In 1998, 2001 and 2002, the Company issued Junior
Subordinated Debentures (Debentures). As of
December 31, 2003, the net outstanding balance of the
Debentures totaled $136.0 million. The Debentures are
subordinate and junior in right of payment to all indebtedness
of the Company and will be structurally subordinated to all
liabilities and obligations of the Companys subsidiaries.
The Debentures are owned solely by special purpose trusts
created by the Company during the same time period to raise
funds for capital and expansion purposes by issuing capital
securities. The Company owns the common equity of the trusts,
which equates to a three-percent interest in the outstanding
balance of the Debentures held by the trusts. The Debentures
bear either fixed interest at 9.4% or variable interests based
on LIBOR rates, and have stated maturities ranging from
May 1, 2028 through November 7, 2032. The Debentures
may be redeemed early by the Company after a stated period based
on the original terms of each trust. Interest is payable either
semi-annually or quarterly. Please refer to Notes 10 and 19
in the Notes to Consolidated Financial Statements for additional
details on the Junior Subordinated Debentures and the Special
Purpose Trusts.

Letters of Credit.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 with 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 deposits held at the Company.

Commitments to Extend
Credit.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 valuable assets.

Lease Obligations.The Company leases various premises and equipment under
noncancellable operating leases, many of which contain renewal
options and some of which contain escalation clauses. The
contractual minimum future lease payments are shown in the table
above and do not contain common area costs or maintenance
charges, nor do they reflect future contractual minimum lease
receipts from sublessees or tenants at the Companys
facilities. As of December 31, 2003, the Company had no
obligations under capital leases. Please refer to Note 18
in the Notes to Consolidated Financial Statements for additional
details on lease commitments.

Foreign Exchange
Contracts.Foreign exchange contracts
are contracts to purchase or sell currencies in the
over-the-counter market. Such contracts can be either for
immediate or forward delivery. Entering into foreign exchange
contracts agreements involves the risk of dealing with counter
parties and their ability to meet the terms of the contracts.
The Company purchases or sells foreign exchange contracts in
order to mitigate risk in and/or hedge a balance sheet or
off-balance sheet foreign exchange position. Additionally, the
Company purchases and sells foreign exchange contracts for
customers, as long as the foreign exchange risk is fully covered
with an offsetting position. Please refer to Note 16 in the
Notes to Consolidated Financial Statements for additional
details on foreign exchange derivative instruments.



| |                
| | ---------------
| | Risk Management

Overview.We manage
all major aspects of our business through an integrated risk
infrastructure that includes planning and review processes. We
derive our revenue from assuming and managing financial risk. We
evaluate our risk and returns to produce sustainable revenue, to
reduce earnings volatility and increase shareholder value. Our
business exposes us to four major risks: liquidity, credit,
market and operational.

43



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##### 



Liquidity risk is the inability to accommodate
liability maturities and withdrawals, fund asset growth and
otherwise meet contractual obligations at reasonable market
rates. Credit risk is the inability of a customer to meet its
repayment obligations. Market risk is the fluctuation in asset
values caused by changes in market prices and yields.
Operational risk is the potential for loss resulting from events
involving people, processes, technology, execution, legal,
regulatory or reputation. We evaluate risk through our Board of
Directors.

The key committees of the Company are as follows:



| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | Bank-Wide Risk Management Committee reviews
    credit market, liquidity and operational risk.                                            
|
| |  | Credit and Risk Committees review credit
    policies, products, and problem assets risk.                                                 
|
| |  | Asset/ Liability and Investment Committees review
    securities, loans and borrowings to assess yield, market and
    interest rate risk.
|
| |  | Audit Committee reviews scope and coverage of
    external and corporate reporting and audit activities.                                  

Three Lines of
Defense.Management has established
control processes and procedures to align risk-taking and risk
management throughout our organization. The lines of business
are responsible for identifying, quantifying, mitigating and
managing all risks. Lines of business make and execute business
plans, which makes this group most familiar with the changing
nature of risks and therefore best able to take actions to
manage and mitigate those risks. Except for a limited amount of
trading-related business activities, interest rate risk
associated with our business activities is managed centrally in
the Corporate Treasury function.

Risk Management translates business plans into
approved limits, approves requests for changes to those limits,
approves transactions as appropriate and works closely with
business divisions to establish and monitor risk parameters.

Internal Audit provides an independent assessment
of our management systems and internal control systems. Internal
Audit activities are designed to provide reasonable assurance
that resources are adequately protected; significant financial,
managerial and operating information is complete, and accurate,
and employees actions are in compliance with corporate
policies, standards, procedures, and applicable laws and
regulations.



| |                          
| | -------------------------
| | Liquidity Risk Management

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

At December 31, 2003, we had
$2.34 billion of certificates of deposit scheduled to
mature within one year. We believe that our liquidity resources
will provide us with sufficient amounts of cash necessary to
meet these commitments.

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

At December 31, 2003, both the Company and
the Bank met all of their regulatory capital requirements with
risk-based capital ratios of 12.94% and 12.18%, respectively.



| |                       
| | ----------------------
| | Credit Risk Management

The Companys credit risk management is an
integrated process that stresses consistency with credit
policies, line of business, accountability, oversight by the
Chief Credit Officer and comprehensive risk

44



---



##### 



measurement and frequent monitoring. Credit risk
is also reviewed regularly by the Companys Regulatory
Examiners and Internal Audit and is subject to examination by
external auditors and regulators.


Credit risk (including counterparty risk) is
managed within the framework and guidance of comprehensive
policies. Actual credit performance and exceptions are measured
and managed through detailed tracking and analysis, and credit
policies are routinely reviewed and/or modified as appropriate.

All portfolios of credit risk are subject to
periodic reviews, to ensure that the risk identification
processes are functioning properly and that credit standards are
followed. Such reviews are conducted by the business divisions
themselves and by the office of the Chief Credit Officer. Credit
risk is also reviewed regularly by the Companys loan
examiners and Internal Audit and is subject to examination by
external auditors and regulators.



| |                       
| | ----------------------
| | Market Risk Management

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 reviews our interest rate
risk exposure quarterly. Our Board of Directors has appointed an
Asset/ Liability Committee which includes certain 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 projects the effect that changes in interest
rates will have on our net portfolio value (NPV) and
whether such effects are within the limits set by the Board.

We also monitor our interest rate sensitivity
through the use of a model which estimates the change in our 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.

As market interest rates decrease, the average
expected life of our fixed-rate loans and investment securities
shorten due to quicker prepayments, causing a relatively
moderate increase in their value. The value of our deposit
portfolio 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 increasing.

As market interest rates rise, the average
expected life of our fixed-rate loans and securities lengthen as
prepayments decrease, causing a decline in value. The value of
our deposits increases slowly in a rising rate environment, due
to the concentration of time deposits in our deposit base which
have terms of one year or less.

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

45



---



##### 



The following table lists the percentage change
in our net portfolio value, assuming an immediate change in
interest rates of plus or minus 100 and 200 basis points,
from the level at December 31, 2003 and 2002 and sustained
through the projected forward rates. 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.

|                                         |  |                                          |         |          |  |          |          |   |  |  |        |   
|---------------------------------------- |  | ---------------------------------------- | ------- | -------- |  | -------- | -------- | - |  |  | ------ | --
|                                         |  |                                         
|Change in Interest Rates in Basis Points |  | Net Portfolio Value at December 31, 2003
|                                         |  |                                         
|(Rate Shock)                             |  | Amount                                   |         | $ Change |  | % Change
|                                         |  |                                          |         |          |  |         
|                                         |  |                                         
|                                         |  | (Dollars in Thousands)                  
|200                                      |  | $                                        | 614,523 |          |  | $        | (130,825 | ) |  |  | (17.55 | )%
|100                                      |  |                                          | 687,338 |          |  |          | (58,010  | ) |  |  | (7.78  | ) 
|0                                        |  |                                          | 745,348 |          |  |          |         |   |  |  |       |   
|(100)                                    |  |                                          | 776,855 |          |  |          | 31,507   |   |  |  | 4.23   |   
|(200)                                    |  |                                          | 720,582 |          |  |          | (24,766  | ) |  |  | (3.32  | ) 

|                                         |  |                                          |         |          |  |          |         |   |  |  |        |   
|---------------------------------------- |  | ---------------------------------------- | ------- | -------- |  | -------- | ------- | - |  |  | ------ | --
|                                         |  |                                         
|Change in Interest Rates in Basis Points |  | Net Portfolio Value at December 31, 2002
|                                         |  |                                         
|(Rate Shock)                             |  | Amount                                   |         | $ Change |  | % Change
|                                         |  |                                          |         |          |  |         
|                                         |  |                                         
|                                         |  | (Dollars in Thousands)                  
|200                                      |  | $                                        | 380,195 |          |  | $        | (84,116 | ) |  |  | (18.12 | )%
|100                                      |  |                                          | 433,780 |          |  |          | (30,531 | ) |  |  | (6.58  | ) 
|0                                        |  |                                          | 464,311 |          |  |          |        |   |  |  |       |   
|(100)                                    |  |                                          | 474,999 |          |  |          | 10,688  |   |  |  | 2.30   |   
|(200)                                    |  |                                          | 433,416 |          |  |          | (30,895 | ) |  |  | (6.65  | ) 

The NPV model that we use has some shortcomings.
We have to make certain assumptions, including estimated
prepayments, 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.



| |                            
| | ---------------------------
| | Operational Risk Management

Operational risk is the potential for loss
resulting from events involving people, processes, technology,
legal/regulatory issues, external events, execution and
reputation. Successful operational risk management is
particularly important to a diversified financial services
company like ours because of the nature, volume and complexity
of our various businesses.

The Bank-Wide Risk Management Committee provides
oversight to accelerate and facilitate consistency of effective
policies, best practices, controls and monitoring tools for
managing and assessing all types of operational risks across the
Company. Such risks are managed through corporate wide or
business division specific policies and procedures, controls and
monitoring tools. Examples of these include personnel management
practices, data reconciliation processes, transaction processing
monitoring and analysis, systems interruptions and new product
introduction processes.

Operational risks fall into two major categories,
business specific and corporate-wide affecting all business
lines. Operational Risk Management plays a different role in
each category. For business specific risks, Operational Risk
Management works with the divisions to ensure consistency in
policies, processes, and assessments. With respect to
corporate-wide risks, such as information security, business
recovery, legal and compliance, Operational Risk Management
assesses the risks, develops a consolidated corporate view and
communicates that view to the business level.

To manage company wide risks, we maintain
specialized support groups, such as Legal, Information Security,
Business Recovery, Finance, Compliance, and Technology and
Operations. These groups assist the lines of business in the
development and implementation of risk management practices
specific to the needs of

46



---



##### 



the individual businesses. An example of such an
effort is our company-wide implementation of the anti-money
laundering aspects of the USA PATRIOT Act.




| |                       
| | ----------------------
| | Additional Information

Trading Price of Common
Stock.On November 5, 1998, the
Companys stock began trading on The Nasdaq National Stock
Market under the ticker symbol UCBH. On
March 4, 2004, the stock closed at $39.98. The common
stocks high and low bid price for each of the four
quarters ended December 31, 2003 and December 31, 2002
were as follows:

|                                 |  |         |       |         |  |         |       |         |  |         |       |         |  |         |       |         |  |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|-------------------------------- |  | ------- | ----- | ------- |  | ------- | ----- | ------- |  | ------- | ----- | ------- |  | ------- | ----- | ------- |  | - | ----- |  |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                 |  | 2003    |       | 2003    |  | 2003    |       | 2003    |  | 2002    |       | 2002    |  | 2002    |       | 2002   
|                                 |  | Fourth  |       | Third   |  | Second  |       | First   |  | Fourth  |       | Third   |  | Second  |       | First  
|                                 |  | Quarter |       | Quarter |  | Quarter |       | Quarter |  | Quarter |       | Quarter |  | Quarter |       | Quarter
|                                 |  |         |       |         |  |         |       |         |  |         |       |         |  |         |       |        
|High bid price during quarter(1) |  | $       | 39.87 |         |  | $       | 33.40 |         |  | $       | 29.10 |         |  | $       | 22.37 |         |  | $ | 21.71 |  |  | $ | 21.53 |  |  | $ | 20.39 |  |  | $ | 17.99 | 
|Low bid price during quarter(1)  |  | $       | 31.32 |         |  | $       | 29.00 |         |  | $       | 22.53 |         |  | $       | 20.55 |         |  | $ | 16.86 |  |  | $ | 17.83 |  |  | $ | 17.98 |  |  | $ | 13.74 | 



---



|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Adjusted for two-for-one stock split for
    shareholders of record as of March 31, 2001 and completed
    on April 11, 2001, and as of March 31, 2003 and
    completed on April 11, 2003.

As of December 31, 2003, there were
23,545 shareholders of the Companys common stock. The
Company and the Bank are prohibited by federal regulations from
paying dividends if the payment would reduce their regulatory
capital below certain minimum requirements. The Company declared
dividends totaling $0.10 per share in 2002 and
$0.12 per share in 2003.

47



---



##### 



PRICEWATERHOUSECOOPERS LOGO


REPORT OF INDEPENDENT AUDITORS

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, of changes in stockholders equity and
comprehensive income (loss) and of cash flows present fairly, in
all material respects, the financial position of UCBH Holdings,
Inc. and its subsidiaries (the Company) at
December 31, 2003 and 2002, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States of
America. 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 of
America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of 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 our opinion.

LOGO

San Francisco, California


March 4, 2004


48



---



##### 



UCBH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)


|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |           |           | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ------------------------------------------ | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                                                                                                                                                                                                                          |                |                                           
|                                                                                                                                                                                                                                                          |                | December 31,                              
|                                                                                                                                                                                                                                                          |                |                                           
|                                                                                                                                                                                                                                                          |                | 2003                                       |           | 2002     
|                                                                                                                                                                                                                                                          |                |                                            |           |          
|ASSETS                                                                                                                                                                                                                                                   
|Cash and due from banks                                                                                                                                                                                                                                   |                | $                                          | 76,786    |           |           | $ | 58,954    |          
|Investment and mortgage-backed securities
    available for sale, at fair value                                                                                                                                                                           |                |                                            | 1,221,070 |           |           |   | 1,469,387 |          
|Investment and mortgage-backed securities held to
    maturity (fair value $287,372 at December 31, 2003 and
    $114,582 at December 31, 2002)                                                                                                           |                |                                            | 284,712   |           |           |   | 111,994   |          
|Federal Home Loan Bank stock and other
    equity securities                                                                                                                                                                                              |                |                                            | 41,316    |           |           |   | 40,162    |          
|Loans                                                                                                                                                                                                                                                     |                |                                            | 3,791,643 |           |           |   | 3,027,810 |          
|Allowance for loan losses                                                                                                                                                                                                                                 |                |                                            | (60,863   | )         |           |   | (48,865   | )        
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|Net loans                                                                                                                                                                                                                                                 |                |                                            | 3,730,780 |           |           |   | 2,978,945 |          
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|Accrued interest receivable                                                                                                                                                                                                                               |                |                                            | 21,756    |           |           |   | 22,641    |          
|Premises and equipment, net                                                                                                                                                                                                                               |                |                                            | 84,145    |           |           |   | 81,697    |          
|Goodwill                                                                                                                                                                                                                                                  |                |                                            | 87,437    |           |           |   | 46,052    |          
|Intangible assets                                                                                                                                                                                                                                         |                |                                            | 11,111    |           |           |   | 10,734    |          
|Other assets                                                                                                                                                                                                                                              |                |                                            | 26,077    |           |           |   | 33,070    |          
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|                                                                                                                                                                                                                                                          |                | Total assets                               |           | $         | 5,585,190 |   |           | $         | 4,853,636 | 
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|LIABILITIES                                                                                                                                                                                                                                              
|Noninterest-bearing deposits                                                                                                                                                                                                                              |                | $                                          | 324,615   |           |           | $ | 267,532   |          
|Interest-bearing deposits                                                                                                                                                                                                                                 |                |                                            | 4,158,906 |           |           |   | 3,739,281 |          
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|                                                                                                                                                                                                                                                          | Total deposits |                                            |           | 4,483,521 |           |   |           | 4,006,813 |          
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|Borrowings                                                                                                                                                                                                                                                |                |                                            | 505,542   |           |           |   | 353,374   |          
|Subordinated debentures                                                                                                                                                                                                                                   |                |                                            | 136,000   |           |           |   | 136,000   |          
|Accrued interest payable                                                                                                                                                                                                                                  |                |                                            | 8,346     |           |           |   | 11,659    |          
|Other liabilities                                                                                                                                                                                                                                         |                |                                            | 37,315    |           |           |   | 63,423    |          
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|                                                                                                                                                                                                                                                          |                | Total liabilities                          |           |           | 5,170,724 |   |           |           | 4,571,269 | 
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|Commitments and contingencies                                                                                                                                                                                                                             |                |                                            |          |           |           |   |          |          
|STOCKHOLDERS EQUITY                                                                                                                                                                                                                                     
|Preferred stock, $.01 par value, authorized
    10,000,000 shares, none issued and outstanding                                                                                                                                                            |                |                                            |          |           |           |   |          |          
|Common stock, $.01 par value, authorized
    180,000,000 and 90,000,000 shares at December 31, 2003
    and at December 31, 2002, respectively, shares issued and
    outstanding 45,038,378 at December 31, 2003 and 42,018,728
    at December 31, 2002 |                |                                            | 450       |           |           |   | 210       |          
|Additional paid-in capital                                                                                                                                                                                                                                |                |                                            | 208,990   |           |           |   | 124,440   |          
|Accumulated other comprehensive (loss) income                                                                                                                                                                                                             |                |                                            | (3,245    | )         |           |   | 9,053     |          
|Retained earnings  substantially
    restricted                                                                                                                                                                                                          |                |                                            | 208,271   |           |           |   | 148,664   |          
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|                                                                                                                                                                                                                                                          |                | Total stockholders equity                 |           |           | 414,466   |   |           |           | 282,367   | 
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          
|                                                                                                                                                                                                                                                          |                | Total liabilities and stockholders equity |           | $         | 5,585,190 |   |           | $         | 4,853,636 | 
|                                                                                                                                                                                                                                                          |                |                                            |           |           |           |   |           |          

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

49



---



##### 



UCBH HOLDINGS, INC.



CONSOLIDATED STATEMENTS OF INCOME


(Dollars in Thousands, Except for Per Share
Data)


|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |         |         | 
|---------------------------- | ------------------------------------------------------------------ | ------------------------------------------------------- | ------- | ------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                             |                                                                    |                                                        
|                             |                                                                    | For the Years Ended December 31,                       
|                             |                                                                    |                                                        
|                             |                                                                    | 2003                                                    |         | 2002    |         | 2001
|                             |                                                                    |                                                         |         |         |         |     
|Interest income:             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             | Loans                                                              |                                                         | $       | 191,754 |         |      | $      | 156,983 |         |   | $      | 164,328 |        
|                             | Funds sold and securities purchased under
    agreements to resell |                                                         |         | 61      |         |      |        | 156     |         |   |        | 1,101   |        
|                             | Investment and mortgage-backed securities                          |                                                         |         | 68,447  |         |      |        | 48,039  |         |   |        | 37,358  |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             |                                                                    | Total interest income                                   |         |         | 260,262 |      |        |         | 205,178 |   |        |         | 202,787 | 
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|Interest expense:            |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             | Deposits                                                           |                                                         |         | 68,724  |         |      |        | 61,236  |         |   |        | 87,435  |        
|                             | Short-term borrowings                                              |                                                         |         | 1,084   |         |      |        | 565     |         |   |        | 972     |        
|                             | Subordinated debentures                                            |                                                         |         | 7,922   |         |      |        | 4,653   |         |   |        | 2,844   |        
|                             | Long-term borrowings                                               |                                                         |         | 13,984  |         |      |        | 13,778  |         |   |        | 13,079  |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             |                                                                    | Total interest expense                                  |         |         | 91,714  |      |        |         | 80,232  |   |        |         | 104,330 | 
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             |                                                                    | Net interest income                                     |         |         | 168,548 |      |        |         | 124,946 |   |        |         | 98,457  | 
|Provision for loan losses    |                                                                    |                                                         | 9,967   |         |         |      | 9,673  |         |         |   | 5,620  |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             |                                                                    | Net interest income after provision for loan
    losses |         |         | 158,581 |      |        |         | 115,273 |   |        |         | 92,837  | 
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|Noninterest income:          |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             | Commercial banking fees                                            |                                                         |         | 6,546   |         |      |        | 4,845   |         |   |        | 3,324   |        
|                             | Service charges on deposits                                        |                                                         |         | 2,249   |         |      |        | 1,704   |         |   |        | 1,342   |        
|                             | Gain on sale of securities                                         |                                                         |         | 11,013  |         |      |        | 3,398   |         |   |        | 602     |        
|                             | Gain on sale of loans                                              |                                                         |         | 3,030   |         |      |        | 1,838   |         |   |        | 1,445   |        
|                             | Miscellaneous income                                               |                                                         |         | 365     |         |      |        | 357     |         |   |        | 192     |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             |                                                                    | Total noninterest income                                |         |         | 23,203  |      |        |         | 12,142  |   |        |         | 6,905   | 
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|Noninterest expense:         |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             | Personnel                                                          |                                                         |         | 42,310  |         |      |        | 29,965  |         |   |        | 24,959  |        
|                             | Occupancy                                                          |                                                         |         | 5,869   |         |      |        | 5,326   |         |   |        | 5,303   |        
|                             | Data processing                                                    |                                                         |         | 4,826   |         |      |        | 3,463   |         |   |        | 2,878   |        
|                             | Furniture and equipment                                            |                                                         |         | 3,661   |         |      |        | 2,614   |         |   |        | 2,723   |        
|                             | Professional fees and contracted services                          |                                                         |         | 5,802   |         |      |        | 5,626   |         |   |        | 3,848   |        
|                             | Deposit insurance                                                  |                                                         |         | 695     |         |      |        | 467     |         |   |        | 393     |        
|                             | Communication                                                      |                                                         |         | 1,066   |         |      |        | 726     |         |   |        | 593     |        
|                             | Intangible amortization                                            |                                                         |         | 1,762   |         |      |        | 227     |         |   |        |        |        
|                             | Litigation settlement                                              |                                                         |         |        |         |      |        | 6,750   |         |   |        |        |        
|                             | Miscellaneous expense                                              |                                                         |         | 14,217  |         |      |        | 9,185   |         |   |        | 8,599   |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             |                                                                    | Total noninterest expense                               |         |         | 80,208  |      |        |         | 64,349  |   |        |         | 49,296  | 
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|Income before taxes          |                                                                    |                                                         | 101,576 |         |         |      | 63,066 |         |         |   | 50,446 |        
|Income tax expense           |                                                                    |                                                         | 36,938  |         |         |      | 24,138 |         |         |   | 19,958 |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|                             |                                                                    | Net income                                              |         | $       | 64,638  |      |        | $       | 38,928  |   |        | $       | 30,488  | 
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|Basic earnings per share     |                                                                    | $                                                       | 1.48    |         |         | $    | 0.98   |         |         | $ | 0.80   |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|Diluted earnings per share   |                                                                    | $                                                       | 1.41    |         |         | $    | 0.94   |         |         | $ | 0.77   |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        
|Dividends declared per share |                                                                    | $                                                       | 0.12    |         |         | $    | 0.10   |         |         | $ | 0.08   |        
|                             |                                                                    |                                                         |         |         |         |      |        |         |         |   |        |        

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

50



---



##### 



UCBH HOLDINGS, INC.



CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
(LOSS)


FOR THE YEARS ENDED DECEMBER 31, 2003,
2002, AND 2001


(Dollars in Thousands)


|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |         |  
|---------------------------- | ------------------------------------------------------------------------------------- | ------------ | ---------- | ---------- |  | ------------- | --- | ---------------- |  | ------------- | ------- | ------------- | - | ------ | ------- | ------- | - | - | ------- | ------ | - | - | ------- | ------- | - |  | - | ------- | -
|                             |                                                                                       |              |            |            |  | Accumulated   |     |                  |  |               |         |              
|                             |                                                                                       | Common Stock |            | Additional |  | Other         |     |                  |  | Total         |         |              
|                             |                                                                                       |              |            | Paid-in    |  | Comprehensive |     | Retained         |  | Stockholders |         | Comprehensive
|                             |                                                                                       | Shares       |            | Amount     |  | Capital       |     | Income (Loss)(1) |  | Earnings      |         | Equity        |   | Income
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |       
|Balance at December 31, 2000 |                                                                                       |              | 37,499,216 |            |  | $             | 94  |                  |  | $             | 60,366  |               |   | $      | (13,019 | )       |   | $ | 86,204  |        |   | $ | 133,645 |         |   |  |   |        
|                             | Net income                                                                            |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         | 30,488 |   |   |         | 30,488  |   |  | $ | 30,488  |  
|                             | Other comprehensive income, net of tax(1)                                             |              |            |           |  |               |     |                 |  |               |         |              |   |        |         | 6,538   |   |   |         |       |   |   |         | 6,538   |   |  |   | 6,538   |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Comprehensive income                                                                  |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         |       |   |   |         |        |   |  | $ | 37,026  |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Stock options exercised, including related tax
    benefit                            |              |            | 1,219,348  |  |               |     | 6                |  |               |         | 6,413         |   |        |         |        |   |   |         |       |   |   |         | 6,419   |   |  |   |         |  
|                             | Cash dividend $0.08 per share                                                         |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         | (2,966 | ) |   |         | (2,966  | ) |  |   |         |  
|                             | Stock split                                                                           |              |            |           |  |               |     | 94               |  |               |         | (94           | ) |        |         |        |   |   |         |       |   |   |         |        |   |  |   |         |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|Balance at December 31, 2001 |                                                                                       |              | 38,718,564 |            |  |               | 194 |                  |  |               | 66,685  |               |   |        | (6,481  | )       |   |   | 113,726 |        |   |   | 174,124 |         |   |  |   |        
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Net income                                                                            |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         | 38,928 |   |   |         | 38,928  |   |  | $ | 38,928  |  
|                             | Other comprehensive income, net of tax(1)                                             |              |            |           |  |               |     |                 |  |               |         |              |   |        |         | 15,534  |   |   |         |       |   |   |         | 15,534  |   |  |   | 15,534  |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Comprehensive income                                                                  |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         |       |   |   |         |        |   |  | $ | 54,462  |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Stock options exercised, including related tax
    benefit                            |              |            | 648,980    |  |               |     | 3                |  |               |         | 6,518         |   |        |         |        |   |   |         |       |   |   |         | 6,521   |   |  |   |         |  
|                             | Cash dividend $0.10 per share                                                         |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         | (3,990 | ) |   |         | (3,990  | ) |  |   |         |  
|                             | Issuance of shares in connection with acquisition
    of Bank of Canton of California |              |            | 2,651,184  |  |               |     | 13               |  |               |         | 51,237        |   |        |         |        |   |   |         |       |   |   |         | 51,250  |   |  |   |         |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|Balance at December 31, 2002 |                                                                                       |              | 42,018,728 |            |  |               | 210 |                  |  |               | 124,440 |               |   |        | 9,053   |         |   |   | 148,664 |        |   |   | 282,367 |         |   |  |   |        
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Net income                                                                            |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         | 64,638 |   |   |         | 64,638  |   |  | $ | 64,638  |  
|                             | Other comprehensive loss, net of tax(1)                                               |              |            |           |  |               |     |                 |  |               |         |              |   |        |         | (12,298 | ) |   |         |       |   |   |         | (12,298 | ) |  |   | (12,298 | )
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Comprehensive income                                                                  |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         |       |   |   |         |        |   |  | $ | 52,340  |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|                             | Stock options exercised, including related tax
    benefit                            |              |            | 729,143    |  |               |     | 7                |  |               |         | 14,785        |   |        |         |        |   |   |         |       |   |   |         | 14,792  |   |  |   |         |  
|                             | Cash dividend $0.12 per share                                                         |              |            |           |  |               |     |                 |  |               |         |              |   |        |         |        |   |   |         | (5,031 | ) |   |         | (5,031  | ) |  |   |         |  
|                             | Issuance of shares in connection with acquisition
    of First Continental Bank       |              |            | 2,290,507  |  |               |     | 23               |  |               |         | 69,975        |   |        |         |        |   |   |         |       |   |   |         | 69,998  |   |  |   |         |  
|                             | Stock split                                                                           |              |            |           |  |               |     | 210              |  |               |         | (210          | ) |        |         |        |   |   |         |       |   |   |         |        |   |  |   |         |  
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        
|Balance at December 31, 2003 |                                                                                       |              | 45,038,378 |            |  | $             | 450 |                  |  | $             | 208,990 |               |   | $      | (3,245  | )       |   | $ | 208,271 |        |   | $ | 414,466 |         |   |  |   |        
|                             |                                                                                       |              |            |            |  |               |     |                  |  |               |         |               |   |        |         |         |   |   |         |        |   |   |         |         |   |  |   |        



---



|    |                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Accumulated Other Comprehensive Income (Loss)
    arises solely from net unrealized gains (losses) on securities
    available for sale, presented net of tax.

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

51



---



##### 



UCBH HOLDINGS, INC.



CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Dollars in Thousands)


|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |          |          |          |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ----------------------------------------------------------- | ----------------------------------------- | -------- | ---------- | -------- | ------ | --------- | ---------- | -------- | ------ | -------- | -------- | -------- | -
|                                                                                                                                                                             |                                                                                                  |                                                            
|                                                                                                                                                                             |                                                                                                  | For the Years Ended December 31,                           
|                                                                                                                                                                             |                                                                                                  |                                                            
|                                                                                                                                                                             |                                                                                                  | 2003                                                        |                                           | 2002     |            | 2001    
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |         
|Operating activities:                                                                                                                                                        |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Net income                                                                                       |                                                             | $                                         | 64,638   |            |          | $      | 38,928    |            |          | $      | 30,488   |         
|                                                                                                                                                                             | Adjustments to reconcile net income to net cash
    provided by (used for) operating activities: |                                                             |                                           |          |            |          |        |           |            |          |        |          |         
|                                                                                                                                                                             |                                                                                                  | Provision for loan losses                                   |                                           |          | 9,967      |          |        |           | 9,673      |          |        |          | 5,620    |         
|                                                                                                                                                                             |                                                                                                  | Increase in accrued interest receivable                     |                                           |          | 1,939      |          |        |           | 6,466      |          |        |          | 320      |         
|                                                                                                                                                                             |                                                                                                  | Amortization of purchase price adjustments                  |                                           |          | (3,321     | )        |        |           | (1,027     | )        |        |          |         |         
|                                                                                                                                                                             |                                                                                                  | Amortization of core deposit intangible                     |                                           |          | 1,762      |          |        |           | 227        |          |        |          |         |         
|                                                                                                                                                                             |                                                                                                  | Depreciation and amortization of premises and
    equipment |                                           |          | 5,810      |          |        |           | 2,901      |          |        |          | 2,579    |         
|                                                                                                                                                                             |                                                                                                  | Decrease (increase) in other assets                         |                                           |          | 13,525     |          |        |           | (2,110     | )        |        |          | (6,118   | )       
|                                                                                                                                                                             |                                                                                                  | (Decrease) increase in other liabilities                    |                                           |          | (8,692     | )        |        |           | 11,307     |          |        |          | 6,378    |         
|                                                                                                                                                                             |                                                                                                  | Decrease in accrued interest payable                        |                                           |          | (3,509     | )        |        |           | (1,422     | )        |        |          | (1,068   | )       
|                                                                                                                                                                             |                                                                                                  | Gain on sale of loans, securities and other assets          |                                           |          | (14,043    | )        |        |           | (5,236     | )        |        |          | (2,047   | )       
|                                                                                                                                                                             |                                                                                                  | Other, net                                                  |                                           |          | 9,054      |          |        |           | 2,134      |          |        |          | 1,772    |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             |                                                                                                  |                                                             | Net cash provided by operating activities |          |            | 77,130   |        |           |            | 61,841   |        |          |          | 37,924   |  
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|Investing activities:                                                                                                                                                        |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Acquisition, net of cash acquired                                                                |                                                             |                                           | 46,280   |            |          |        | (130,489  | )          |          |        |         |         
|                                                                                                                                                                             | Investments and mortgage-backed securities,
    available for sale:                              |                                                             |                                           |          |            |          |        |           |            |          |        |          |         
|                                                                                                                                                                             |                                                                                                  | Principal payments and maturities                           |                                           |          | 599,925    |          |        |           | 306,982    |          |        |          | 174,489  |         
|                                                                                                                                                                             |                                                                                                  | Purchases                                                   |                                           |          | (1,080,127 | )        |        |           | (1,070,856 | )        |        |          | (309,879 | )       
|                                                                                                                                                                             |                                                                                                  | Sales                                                       |                                           |          | 953,144    |          |        |           | 953,141    |          |        |          | 156,229  |         
|                                                                                                                                                                             |                                                                                                  | Called                                                      |                                           |          | 98,932     |          |        |           | 92,073     |          |        |          |         |         
|                                                                                                                                                                             | Investments and mortgage-backed securities, held
    to maturity:                                |                                                             |                                           |          |            |          |        |           |            |          |        |          |         
|                                                                                                                                                                             |                                                                                                  | Principal payments and maturities                           |                                           |          | 21,900     |          |        |           | 83         |          |        |          | 1,789    |         
|                                                                                                                                                                             |                                                                                                  | Purchases                                                   |                                           |          | (193,544   | )        |        |           | (74,440    | )        |        |          | (10,062  | )       
|                                                                                                                                                                             | Loans originated and purchased, net of principal
    collections                                 |                                                             |                                           | (939,264 | )          |          |        | (641,986  | )          |          |        | (487,024 | )       
|                                                                                                                                                                             | Proceeds from the sale of loans                                                                  |                                                             |                                           | 135,948  |            |          |        | 75,283    |            |          |        | 44,880   |         
|                                                                                                                                                                             | Purchases of premises and other equipment                                                        |                                                             |                                           | (9,414   | )          |          |        | (1,402    | )          |          |        | (1,731   | )       
|                                                                                                                                                                             | Proceeds from the sale of other assets                                                           |                                                             |                                           |         |            |          |        |          |            |          |        | 190      |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             |                                                                                                  |                                                             | Net cash used in investment activities    |          |            | (366,220 | )      |           |            | (491,611 | )      |          |          | (431,119 | )
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|Financing activities:                                                                                                                                                        |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Net increase in demand deposits, NOW, money
    market and savings accounts                      |                                                             |                                           | 307,944  |            |          |        | 287,454   |            |          |        | 244,783  |         
|                                                                                                                                                                             | Net (decrease) increase in time deposits                                                         |                                                             |                                           | (154,356 | )          |          |        | (9,307    | )          |          |        | 157,350  |         
|                                                                                                                                                                             | Proceeds from long-term borrowings                                                               |                                                             |                                           |         |            |          |        | 16,000    |            |          |        |         |         
|                                                                                                                                                                             | Payments on long-term borrowings                                                                 |                                                             |                                           | (4,000   | )          |          |        |          |            |          |        | (5,000   | )       
|                                                                                                                                                                             | Increase (decrease) in short-term borrowings                                                     |                                                             |                                           | 156,634  |            |          |        | 62,500    |            |          |        | (17,558  | )       
|                                                                                                                                                                             | Proceeds from issuance of common stock                                                           |                                                             |                                           | 5,432    |            |          |        | 3,185     |            |          |        | 4,674    |         
|                                                                                                                                                                             | Payment of cash dividend on common stock                                                         |                                                             |                                           | (4,732   | )          |          |        | (3,714    | )          |          |        | (2,661   | )       
|                                                                                                                                                                             | Proceeds from issuance of subordinated debentures                                                |                                                             |                                           |         |            |          |        | 100,000   |            |          |        | 6,000    |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             |                                                                                                  |                                                             | Net cash provided by financing activities |          |            | 306,922  |        |           |            | 456,118  |        |          |          | 387,588  |  
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|Net increase (decrease) in cash and cash
    equivalents                                                                                                                     |                                                                                                  |                                                             | 17,832                                    |          |            |          | 26,348 |           |            |          | (5,607 | )       
|Cash and cash equivalents at the beginning of the
    year                                                                                                                   |                                                                                                  |                                                             | 58,954                                    |          |            |          | 32,606 |           |            |          | 38,213 |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|Cash and cash equivalents at the end of the year                                                                                                                             |                                                                                                  | $                                                           | 76,786                                    |          |            | $        | 58,954 |           |            | $        | 32,606 |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|Supplemental disclosure of cash flow information:                                                                                                                            |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Cash paid during the year for interest                                                           |                                                             | $                                         | 95,223   |            |          | $      | 81,654    |            |          | $      | 105,398  |         
|                                                                                                                                                                             | Cash paid during the year for income taxes                                                       |                                                             |                                           | 37,610   |            |          |        | 32,271    |            |          |        | 22,300   |         
|Supplemental schedule of noncash investing and
    financing activities:                                                                                                     |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Loans transferred to foreclosed property                                                         |                                                             |                                           |         |            |          |        |          |            |          |        | 48       |         
|                                                                                                                                                                             | Loans securitized                                                                                |                                                             |                                           | 286,050  |            |          |        | 315,234   |            |          |        | 109,635  |         
|                                                                                                                                                                             | Securities transferred to available for sale
    securities(1)                                   |                                                             |                                           |         |            |          |        |          |            |          |        | 116,387  |         
|Acquisitions of First Continental Bank in 2003,
    and Bank of Canton of California and Brooklyn, New York
    branch in 2002 were accounted for using the purchase method: |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Fair value of assets acquired                                                                    |                                                             |                                           | 402,385  |            |          |        | 1,555,880 |            |          |        |         |         
|                                                                                                                                                                             | Fair value of liabilities assumed                                                                |                                                             |                                           | 326,897  |            |          |        | 1,331,214 |            |          |        |         |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Net assets acquired                                                                              |                                                             |                                           | 75,488   |            |          |        | 224,666   |            |          |        |         |         
|                                                                                                                                                                             | Less common stock issued                                                                         |                                                             |                                           | (69,998  | )          |          |        | (51,250   | )          |          |        |         |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         
|                                                                                                                                                                             | Cash paid                                                                                        |                                                             | $                                         | 5,490    |            |          | $      | 173,416   |            |          | $      |         |         
|                                                                                                                                                                             |                                                                                                  |                                                             |                                           |          |            |          |        |           |            |          |        |         



---



|    |                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------
|(1) | Such securities were transferred from held to
    maturity securities when SFAS No. 133 was adopted in
    2001.

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

52



---



##### 



UCBH HOLDINGS, INC.



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


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

Organization

UCBH Holdings, Inc. (the Company or
UCBH) is a bank holding company that conducts its
business through its principal subsidiary, United Commercial
Bank (the Bank), a California state-chartered
commercial bank. The Company commenced a full-service branch in
Hong Kong in 2003 and through the acquisition of Broadway
National Bank started business in New York in late 2002.
The Bank 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 which
are consolidated on a line-by-line basis. Significant
intercompany accounts and transactions are eliminated in the
consolidation. As discussed in Note 2, certain special
purpose trusts are deconsolidated and are accounted for by the
equity methods. Substantially all loans are originated for the
Companys portfolio and held for investment. Certain
reclassifications have been made to prior years
consolidated financial statements to conform to the
December 31, 2003 presentation.

In April 2001 and 2003, the Company completed
two-for-one stock splits. Furthermore, as discussed in
Note 12 of the consolidated financial statements, on
January 9, 2003, the Company declared its second
two-for-one stock split in the legal form of a stock dividend
for shareholders of record as of March 31, 2003.
Accordingly, the financial statements for all years presented
have been restated to reflect the effect of these stock splits.

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 estimated results.

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.

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 (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

53



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)





1.     Basis of
Presentation and Summary of Significant Accounting and Reporting
Policies  (Continued)


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
expected life of the securities. Gains or losses on the sale of
securities derived from the difference between the sales price
and the securities carrying value, 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.

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.

54



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)





1.     Basis of
Presentation and Summary of Significant Accounting and Reporting
Policies  (Continued)


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. A formal process is used to
establish an adequate allowance for loan losses.

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

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

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

The allowance is increased by provisions charged
to expense and reduced by loan losses, net of recoveries. Loans
are charged off when they are classified as a loss.
For any loan which is deemed classified, an impairment
assessment is performed and the amount by which the recorded
loan amount exceeds the value of the property or other
collateral securing the loan is charged off, unless the loan is
both well secured and in the process of collection. Recoveries
of amounts that have been previously charged off are only
recorded to the extent cash is received.

Management believes that, as of December 31,
2003 and 2002, the allowance for loan losses was adequate based
on information available at the time. If the economy weakens in
the Companys principal market areas, 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 and increased charge-offs.

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.

55



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)





1.     Basis of
Presentation and Summary of Significant Accounting and Reporting
Policies  (Continued)


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.

Accounting
for Acquisitions of Certain Financial Institutions

In October 2002, the FASB issued
SFAS No. 147 which provides guidance on the
application of the purchase method to acquisitions of financial
institutions. Except for transactions between two or more mutual
enterprise, this statement removes acquisitions of financial
institutions from the scope of both Statement 72 and
Interpretation 9 and requires that those transactions be
accounted for in accordance with SFAS No. 141,
Business Combinations, and No. 142,
Goodwill and Other Intangible Assets.
SFAS No. 147 became effective upon issuance and
requires companies to cease amortization of unidentified
intangible assets associated with certain branch acquisitions
and reclassify these assets to goodwill. In addition, this
statement amends SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, to
include in its scope long-term customer-relationship intangible
assets of financial institutions, such as depositor and borrower
relationship intangible assets and credit cardholder intangible
assets and thus subject those intangible assets to the same
undiscounted cash flow recoverability test and impairment loss
recognition and measurement provisions required for other
long-lived assets.

The First Continental Bank (FCB) and
Bank of Canton of California (BCC) acquisitions were
accounted for in accordance with SFAS No. 147. The
Company does not have any assets subject to the specialized
accounting guidance provided in SFAS No. 72 or
SFAS No. 147.

Goodwill and
Other Intangibles

In accordance with SFAS No. 142 and
No. 141, goodwill resulting from the Companys
acquisitions of FCB and BCC will not be amortized to expense
over a fixed period of time, but will be tested for impairment
at least annually. Identifiable intangible assets, namely core
deposit intangibles related to the FCB and BCC acquisitions and
the purchase of certain assets and liabilities of a bank branch
in Brooklyn, New York, are amortized over their estimated
period of benefit which approximates 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
agreements 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.

Derivative
Instruments and Hedging Activities

Financial derivatives are instruments where a
notional principal amount is tied to an underlying such as
interest rate, currency exchange rate or other financial asset,
index or pricing measure. Examples of derivative

56



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)





1.     Basis of
Presentation and Summary of Significant Accounting and Reporting
Policies  (Continued)


financial instrument are: foreign exchange
contracts (swaps and forwards), interest rate swaps, options,
caps, floors, forwards, and similar instruments.

The Company does not speculate on the future
direction of interest or exchange rates. Nonetheless, the
Company may from time-to-time enter into financial derivative
transactions to mitigate interest rate exposures inherent in its
assets, liabilities or its net interest position and/or to hedge
various market or foreign exchange risks. The Company may also
engage in financial derivative transactions on behalf of
customers and to facilitate their transactions.

As of December 31, 2003 and 2002, the
Company had no derivative transactions designated as hedges
according to the relevant accounting criteria. The
Companys derivatives not accounted for as hedges are
carried at fair value in the financial statements with any gains
or losses reflected in current net income.

Accounting
for Income Taxes

The Company accounts for income taxes in
accordance with 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 the Bank
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. 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities. SFAS No. 140
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. The Company recognizes as servicing assets, rights
to service loans it does not own but services for others for a
fee. These originated mortgage servicing rights are 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. The Company assesses servicing assets
for impairment in accordance with the provisions of
SFAS No. 140. For the years presented, servicing
assets and the related amortization were not material.

Additionally, the Company exchanges either
multifamily or residential mortgage (one to four family) loans
for FNMA securities. These internal securitizations do not have
a cash impact to the Company, since selected loans from the
Companys loan portfolio are exchanged for FNMA securities.
Such securities are represented by exactly the same loans
previously held in the Companys loan portfolio. The FNMA
securities are generally held as available for sale
(AFS) securities in the Companys investment
and mortgage backed securities portfolio.

57



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)





1.     Basis of
Presentation and Summary of Significant Accounting and Reporting
Policies  (Continued)


Since the Company retains all of the securities
issued by FNMA in the securitization, no gain or loss is
recognized on the exchange transaction. The Company continues to
service the loans included in these securitizations. The amount
of servicing rights capitalized at December 31, 2003 and
2002, along with the related amortization into interest income
over the life of the underlying securities, were not material.

Segment
Information

The Company adheres to SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information. For the years presented, segment reporting
reflects the Companys one Commercial Banking Business.
SFAS No. 131 also requires disclosure about products
and services, geographic areas and major customers. The
restatement of SFAS No. 131, as discussed in
Note 13, did not affect the consolidated results of
operations or consolidated financial position as previously
reported.

Translation
of Foreign Currencies

The Company considers the functional currency of
its foreign branch to be the U.S. dollar. Accordingly, the
Company remeasures monetary assets and liabilities at year-end
exchange rates while nonmonetary items are remeasured at
historical rates. Income and expense accounts are remeasured at
the average rates in effect during the year, except for
depreciation which is remeasured at historical rates. Foreign
currency transaction gains and losses are recognized in income
in the period of occurrence.



|   |                                 
|-- | --------------------------------
|2. | Recent Accounting Pronouncements

Accounting
for Asset Retirement Obligations

In June 2001, the FASB issued
SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement addresses financial accounting
and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement
costs. This statement requires that the fair value of a
liability for an asset retirement obligation be recognized in
the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs
are capitalized as part of the carrying amount of the long-lived
asset.

This statement was effective for financial
statements issued for fiscal years beginning after June 15,
2002. The adoption of SFAS No. 143 did not have a
material impact on the financial condition or operating results
of the Company.

Gains and
Losses from Extinguishment of Debt

In April 2002, the FASB issued
SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13,
and Technical Corrections. Among other provisions,
SFAS No. 145 rescinds SFAS No. 4,
Reporting Gains and Losses from Extinguishment of
Debt. Accordingly, gains or losses from extinguishment of
debt shall not be reported as extraordinary items unless the
extinguishment qualifies as an extraordinary item under the
criteria of APB No. 30. Gains or losses from extinguishment
of debt that do not meet the criteria of APB No. 30 should
be reclassified to income from continuing operations in all
prior periods presented.

This statement was effective for fiscal years
beginning after May 15, 2002. The adoption of
SFAS No. 145 did not have a material impact on our
financial position or results of operations.

58



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |                                                   
|-- | --------------------------------------------------
|2. | Recent Accounting Pronouncements 
    (Continued)

Costs
Associated with Exit or Disposal Activities

In June 2002, the FASB issued
SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS No. 146
requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred
and nullifies the guidance of EITF No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in Restructuring), which recognized a
liability for an exit cost at the date of an entitys
commitment to an exit plan. SFAS No. 146 requires that
the initial measurement of a liability be at fair value.

This statement was effective for exit or disposal
activities that are initiated after December 31, 2002. The
adoption of SFAS No. 146 did not have a material
impact on the financial condition or operating results of the
Company.

Guarantees

In November 2002, the FASB issued FASB
Interpretation No. 45 (FIN No. 45),
Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. This interpretation expands the disclosures to be
made by a guarantor in its financial statements about its
obligations under certain guarantees and requires the guarantor
to recognize a liability for the fair value of an obligation
assumed under a guarantee.

The recognition requirements of
FIN No. 45 are to be applied prospectively to
guarantees issued or modified after December 31, 2002. The
adoption of FIN No. 45 did not have a material impact
on the financial condition or operating results of the Company.

Accounting
for Stock-Based Compensation

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

The Company elects to continue accounting for
stock-based compensation in accordance with APB Opinion
No. 25. At December 31, 2003, the Company has one
stock-based employee compensation plan, which is described more
fully in Note 14. No stock-based employee compensation cost
is reflected in net income, as all options granted under this
plan had an exercise price equal to the market value of the
underlying common stock on the date of grant.

59



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |                                                   
|-- | --------------------------------------------------
|2. | Recent Accounting Pronouncements 
    (Continued)

The following table illustrates the effect on net
income and earnings per share if the Company had applied the
fair value recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, to
stock-based employee compensation.

|                            |                                                                                                                                                    |                            |   |        |   |      |   |        |   |  |   |        |  
|--------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | - | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|                            |                                                                                                                                                    |                           
|                            |                                                                                                                                                    | December 31,              
|                            |                                                                                                                                                    |                           
|                            |                                                                                                                                                    | 2003                       |   | 2002   |   | 2001
|                            |                                                                                                                                                    |                            |   |        |   |     
|                            |                                                                                                                                                    |                           
|                            |                                                                                                                                                    | (Dollars in Thousands,    
|                            |                                                                                                                                                    | Except Earnings Per Share)
|Net income:                 |                                                                                                                                                    |                            |   |        |   |      |   |        |   |  |   |       
|                            | As reported                                                                                                                                        |                            | $ | 64,638 |   |      | $ | 38,928 |   |  | $ | 30,488 |  
|                            | Deduct: Total stock-based employee compensation
    expense determined under fair value based method of all awards,
    net of related tax effects |                            |   | (4,452 | ) |      |   | (3,413 | ) |  |   | (2,414 | )
|                            |                                                                                                                                                    |                            |   |        |   |      |   |        |   |  |   |       
|                            | Pro forma net income                                                                                                                               |                            | $ | 60,186 |   |      | $ | 35,515 |   |  | $ | 28,074 |  
|                            |                                                                                                                                                    |                            |   |        |   |      |   |        |   |  |   |       
|Basic earnings per share:   |                                                                                                                                                    |                            |   |        |   |      |   |        |   |  |   |       
|                            | As reported                                                                                                                                        |                            | $ | 1.48   |   |      | $ | 0.98   |   |  | $ | 0.80   |  
|                            | Pro forma                                                                                                                                          |                            | $ | 1.38   |   |      | $ | 0.90   |   |  | $ | 0.74   |  
|Diluted earnings per share: |                                                                                                                                                    |                            |   |        |   |      |   |        |   |  |   |       
|                            | As reported                                                                                                                                        |                            | $ | 1.41   |   |      | $ | 0.94   |   |  | $ | 0.77   |  
|                            | Pro forma                                                                                                                                          |                            | $ | 1.32   |   |      | $ | 0.86   |   |  | $ | 0.71   |  

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

Consolidation
of Variable Interest Entities

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

As of December 31, 2003, the Company adopted
FASB Interpretation No. 46R (revised December 2003),
Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51 (FIN 46R).
FIN 46R clarifies the application of Accounting Research
Bulletin No. 51, Consolidated Financial Statements and
finalizes this statement for public entities. Under
FIN 46R, a VIE is defined as an entity subject to
consolidation based on criteria specified in FIN 46R.

In 1998, 2001 and 2002, the Company created
certain special purpose trusts for the purpose of issuing
capital securities. Through the third quarter of 2003, these
trusts were consolidated into the financial results of the
Company. Under FIN 46R, the trusts would no longer be
consolidated as the trusts are deemed VIEs and

60



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |                                                   
|-- | --------------------------------------------------
|2. | Recent Accounting Pronouncements 
    (Continued)

the Company does not have a variable interest in
the trusts. Consequently, the trusts have been deconsolidated
from the financial results of the Company effective
December 31, 2003 with consistent presentation for periods
presented.

The impact of this deconsolidation on the
Companys financial condition and operating results was
immaterial, resulting primarily in classification changes on the
Balance Sheet. A potential outcome arising as a result of
FIN 46R is that the Federal Reserve Bank may no longer
allow the capital securities issued by the trusts to be included
in Tier I capital of the Company. The Federal Reserve has
provided interim guidance that these securities may continue to
be included in the Companys Tier I capital. The
ultimate decision of the banking regulators is unknown at this
time. If regulatory requirements had required exclusion of these
securities from Tier I capital, the Company would still
have been well capitalized at December 31, 2003. The
Banks Tier I capital would be unaffected as the
trusts and their securities have been issued at the holding
company level.

Derivative
Instruments and Hedging Activities

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

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

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

The Company adopted SFAS No. 149 on
July 1, 2003. The adoption did not a have a material impact
on our consolidated financial statements.

Certain
Financial Instruments with Characteristics of Both Liabilities
and Equities

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

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

61



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |                                                   
|-- | --------------------------------------------------
|2. | Recent Accounting Pronouncements 
    (Continued)

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

3.     Goodwill,
Intangibles and Business Combinations

2003
Activity

On July 14, 2003, the Company announced the
completion of its acquisition of privately-held FCB, a
full-service commercial bank headquartered in Rosemead,
California, with four branches serving the San Gabriel
Valley in Southern California. The acquisition was undertaken to
strengthen the Companys competitive position and market
share in the Southern California marketplace and better position
the Company for future growth.

Under the terms of the agreement announced on
April 3, 2003, FCB merged into the Companys
subsidiary, UCB, and the Company issued approximately
2.3 million shares of its common stock in exchange for all
of the outstanding shares of common stock of FCB. The merger was
effected under the charter and insurance of deposits of UCB, and
UCB, as the surviving entity, continues to operate as the wholly
owned subsidiary of the Company under the name United
Commercial Bank.

The acquisition was effective July 11, 2003
and was accounted for using the purchase method of accounting in
accordance with SFAS No. 141, Business
Combinations. The results of FCBs operations have
been included in the consolidated financial statements since
that date. The aggregate purchase price was approximately
$76.2 million, composed of cash of $6.2 million and
$70.0 million of the Companys common stock, valued at
the per share closing price on The Nasdaq National Stock Market
on the closing date of the acquisition.

In accordance with SFAS No. 141, the
Company recorded the assets acquired and liabilities assumed at
their fair values at the acquisition date. The total acquisition
cost (including direct transaction costs) exceeded the fair
value of the new assets acquired by $46.4 million. This
amount was recognized as intangible assets, consisting of
goodwill of $44.2 million and a core deposit intangible of
$2.2 million. The fair value determination of core deposit
intangibles was based upon independent appraiser valuation. The
professional service fees with regard to the acquisition were
reflected as a component of the total purchase price. The
following table summarizes the estimated fair values of the
assets acquired and liabilities assumed at the date of
acquisition (dollars in thousands):

|                          |                           |   |         |         | 
|------------------------- | ------------------------- | - | ------- | ------- | 
|Cash and cash equivalents |                           | $ | 51,770  |        
|Securities                |                           |   | 56,854  |        
|Loans, net                |                           |   | 243,015 |        
|Goodwill                  |                           |   | 44,248  |        
|Core deposit intangibles  |                           |   | 2,225   |        
|Other assets              |                           |   | 4,460   |        
|                          |                           |   |         |        
|                          | Total assets acquired     |   | $       | 402,572 | 
|                          |                           |   |         |        
|Deposits                  |                           |   | 325,975 |        
|Other liabilities         |                           |   | 428     |        
|                          |                           |   |         |        
|                          | Total liabilities assumed |   | $       | 326,403 | 
|                          |                           |   |         |        
|                          | Net assets acquired       |   | $       | 76,169  | 
|                          |                           |   |         |        

In accordance with SFAS No. 142,
Goodwill and Other Intangible Assets, goodwill will
not be expensed over a fixed period of time, but will be tested
for impairment on a regular basis. None of the

62



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



3.     Goodwill,
Intangibles and Business Combinations 
(Continued)


$44.2 million in goodwill is expected to be
deductible for income tax purposes. Identifiable intangible
assets, namely core deposit intangibles, of $2.2 million
are amortized over their estimated period of benefit which
approximates seven years. Amortization expense for the core
deposit intangibles was $435,000 for the period from the
acquisition date through December 31, 2003, representing
the accumulated amortization at that date.

2002
Activity

On October 28, 2002, the Company acquired
all of the outstanding shares of Bank of Canton of California, a
California banking corporation (BCC) in exchange for
cash and the Companys common stock. The acquisition was
undertaken to strengthen the Companys competitive position
and market share in the ethnic Chinese and Asian communities in
the California marketplace and provide the Company with a wider
product offering.

Effective immediately upon acquisition, the
Company transferred all of the shares of BCC to UCB, pursuant to
the terms of the agreement dated as of the date of the closing
by and between the Company and UCB. Immediately following the
transfer of the BCC shares to UCB, BCC was merged with and into
UCB, with UCB as the sole surviving entity. The merger was
effected under the charter and insurance of deposits of UCB, and
UCB, as the surviving entity, continues to operate as the wholly
owned subsidiary of the Company under the name United
Commercial Bank.

The acquisition was accounted for using the
purchase method of accounting in accordance with
SFAS No. 141. The results of BCCs operations
have been included in the consolidated financial statements
since that date. The aggregate purchase price was
$220.0 million including cash of $168.8 million and
the Companys common stock valued at $51.3 million.
The valuation of common stock was based upon the average of the
per share closing prices on The Nasdaq National Stock Market of
the Companys common stock during the twenty consecutive
trading days prior to closing. The cash portion of the purchase
price was funded by the Companys issuance of
$90.0 million in trust preferred securities and the
borrowing by its wholly owned subsidiary UCB of
$80.6 million from the Federal Home Loan Bank of
San Francisco (FHLB).

63



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



3.     Goodwill,
Intangibles and Business Combinations 
(Continued)


In accordance with SFAS No. 141, the
Company recorded the assets acquired and liabilities assumed at
their fair values at the acquisition date. The total acquisition
cost (including direct transaction costs) exceeded the fair
value of the new assets acquired by $55.6 million. This
amount was recognized as intangible assets, consisting of
goodwill of $46.1 million and a core deposit intangible of
$9.5 million. The fair value determination of properties
and core deposit intangible amounted to $62.6 million and
$9.5 million, respectively and was based upon independent
appraiser valuation. The professional service fees with regard
to the acquisition were reflected as a component of the total
purchase price. The Companys management estimated the fair
value of certain liabilities assumed based upon its best
knowledge at the time which resulted in fair value of
$7.5 million. This consists primarily of employee severance
of $925,481, tax liability of $4.6 million, contractual
early termination penalties of $261,518, and other liabilities
of $674,990. The following table summarizes the estimated fair
values of the assets acquired and liabilities assumed at the
date of acquisition (dollars in thousands):

|                          |                           |   |           |           | 
|------------------------- | ------------------------- | - | --------- | --------- | 
|Cash and cash equivalents |                           | $ | 42,815    |          
|Securities                |                           |   | 865,366   |          
|Loans, net                |                           |   | 506,604   |          
|Premises and equipment    |                           |   | 62,592    |          
|Goodwill                  |                           |   | 46,052    |          
|Core deposit intangible   |                           |   | 9,541     |          
|Other assets              |                           |   | 20,929    |          
|                          |                           |   |           |          
|                          | Total assets acquired     |   | $         | 1,553,899 | 
|                          |                           |   |           |          
|Deposits                  |                           |   | 1,249,999 |          
|Borrowings                |                           |   | 36,953    |          
|Other liabilities         |                           |   | 30,400    |          
|                          |                           |   |           |          
|                          | Total liabilities assumed |   | $         | 1,317,352 | 
|                          |                           |   |           |          
|                          | Net assets acquired       |   | $         | 236,547   | 
|                          |                           |   |           |          

In accordance with SFAS No. 142,
Goodwill and Other Intangible Assets, goodwill will
not be expensed over a fixed period of time, but will be tested
for impairment on a regular basis. None of the
$46.1 million in goodwill is expected to be deductible for
income tax purposes. Identifiable intangible assets, namely core
deposit intangibles, of $9.5 million are amortized over
their estimated period of benefit which approximates seven
years. Amortization expense for the BCC core deposit intangibles
was $865,000 and $227,000 for the periods ended
December 31, 2003 and 2002, respectively.

On December 16, 2002, the Company acquired
the deposit portfolio and physical branch of Broadway National
Bank (BNB) in Brooklyn, New York in exchange
for cash. The acquisition was undertaken to enter the
New York marketplace and establish a platform for future
growth in the area.

In accordance with SFAS No. 141, the
Company recorded the assets acquired and liabilities assumed at
their fair values at the acquisition date. The total acquisition
cost (including direct transaction costs) exceeded the fair
value of the new assets acquired by $1.4 million, resulting
in a core deposit intangible of $1.4 million. In accordance
with SFAS No. 142, Goodwill and Other Intangible
Assets, the core deposit intangible will be amortized over
their estimated period of benefit. Amortization expense for the
BNB core deposit intangible was $611,000 for the year ended
December 31, 2003.

64



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



3.     Goodwill,
Intangibles and Business Combinations 
(Continued)


Unaudited pro forma consolidated results of
operations for the years ended December 31, 2003 and 2002
as though FCB and BCC had been acquired as of January 1,
2002 follow (dollars in thousands):

|                           |  |      |         |      |  |   |         | 
|-------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                           |  | 2003 |         | 2002
|                           |  |      |         |     
|Net interest income        |  | $    | 174,377 |      |  | $ | 149,734 | 
|Net income                 |  | $    | 65,783  |      |  | $ | 46,638  | 
|Basic earnings per share   |  | $    | 1.51    |      |  | $ | 1.11    | 
|Diluted earnings per share |  | $    | 1.44    |      |  | $ | 1.06    | 

The following table summarizes the changes in the
carrying amount of goodwill (dollars in thousands):

|                                         |  |   |        |  
|---------------------------------------- |  | - | ------ | -
|December 31, 2001                        |  | $ |       |  
|Bank of Canton of California acquisition |  |   | 46,052 |  
|                                         |  |   |        |  
|December 31, 2002                        |  |   | 46,052 |  
|                                         |  |   |        |  
|First Continental Bank acquisition       |  |   | 44,248 |  
|Adjustments                              |  |   | (2,863 | )
|                                         |  |   |        |  
|December 31, 2003                        |  | $ | 87,437 |  
|                                         |  |   |        |  

The adjustments to goodwill relates to certain
asset write-downs on BCC post acquisition date.

The gross carrying amount of intangible assets
and the associated accumulated amortization are as follows
(dollars in thousands):

|                  |  |                |        |                          |  |   |        |  
|----------------- |  | -------------- | ------ | ------------------------ |  | - | ------ | -
|                  |  | Gross Carrying |        |                         
|                  |  | Amount         |        | Accumulated Amortization
|                  |  |                |        |                         
|December 31, 2003 |  | $              | 10,734 |                          |  | $ | (227   | )
|                  |  |                |        |                          |  |   |        |  
|December 31, 2002 |  | $              | 11,111 |                          |  | $ | (1,989 | )
|                  |  |                |        |                          |  |   |        |  

The amortization expense for the years ended
December 31, 2003, 2002 and 2001 was $1.7 million,
$227,000 and $0, respectively. The amortization expense for
amortizable intangible assets for the years ending
December 31, 2004, 2005, 2006, 2007 and 2008 is estimated
to be $1.9 million, $1.4 million, $1.2 million,
$1.1 million and $1.1 million, respectively.

The Company has no intangible assets with
indefinite lives.



|   |                                            
|-- | -------------------------------------------
|4. | 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, 2003 and 2002, the
reserve requirements were $6.8 million and
$1.2 million, respectively.



|   |                                              
|-- | ---------------------------------------------
|5. | Investment and Mortgage-backed
    Securities

Federal agency notes, mortgage-backed securities
(MBS), and collateralized mortgage obligations
(CMO) are guaranteed by GNMA, FNMA, or FHLMC.
Substantially all of the securities were rated, as indicated in
the table below, by at least one nationally recognized
statistical rating organization (NRSRO).

65



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



5.     Investment and
Mortgage-backed
Securities  (Continued)


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, 2003 is shown below. Additionally, the portion
of the portfolio with unrealized loss positions are presented
for 2003 below (dollars in thousands):

|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |         |        |  
|---------------------------------------------- | ---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | --------- | ----------------------------------------------------- | ------- | ------------ | ------ | ------ | ----- | ----- | ------- | ---------- | ------ | ----- | --------- | ---------- | ------- | ----- | ------- | ---------- | ------- | - | ------- | ------- | ------ | - | ----- | ----- | ----- | - | ---- | ---- | ---- | - | ------- | ------- | ------- | - | ------- | ------- | ------ | -
|                                               |                                                                                                      |                                                                     
|                                               |                                                                                                      | December 31, 2003                                                   
|                                               |                                                                                                      |                                                                     
|                                               |                                                                                                      |                                                                      |           |                                                      
|                                               |                                                                                                      | Total Portfolio                                                      |           | Portion of Portfolio with An Unrealized Loss Position
|                                               |                                                                                                      |                                                                      |           |                                                      
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |       
|                                               |                                                                                                      |                                                                      |           | Less Than 12                                          |         | 12 Months or |        |       
|                                               |                                                                                                      |                                                                      |           | Months                                                |         | More         |        | Total 
|                                               |                                                                                                      |                                                                      |           | Gross                                                 |         | Gross        |        |        |       |       |         |            |        |      
|                                               |                                                                                                      | Amortized                                                            |           | Unrealized                                            |         | Unrealized   |        | Market |       | Fair  |         | Unrealized |        | Fair  |           | Unrealized |         | Fair  |         | Unrealized
|Description                                    |                                                                                                      | Cost                                                                 |           | Gains                                                 |         | Losses       |        | Value  |       | Value |         | Losses     |        | Value |           | Losses     |         | Value |         | Losses    
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |           
|Investment Securities Available for Sale:      |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               | Trust Preferred Securities                                                                           |                                                                      | $         | 13,189                                                |         |              | $      | 141    |       |       | $       | (535       | )      |       | $         | 12,795     |         |       | $       | 4,253      |         |   | $       | (248    | )      |   | $     | 4,713 |       |   | $    | (287 | )    |   | $       | 8,966   |         |   | $       | (535    | )     
|                                               | Federal Agency Notes                                                                                 |                                                                      |           | 222,309                                               |         |              |        | 107    |       |       |         | (3,662     | )      |       |           | 218,754    |         |       |         | 179,196    |         |   |         | (3,662  | )      |   |       |      |       |   |      |     |      |   |         | 179,196 |         |   |         | (3,662  | )     
|                                               | Domestic Debt Securities and Commercial Paper                                                        |                                                                      |           | 15,144                                                |         |              |        | 41     |       |       |         | (46        | )      |       |           | 15,139     |         |       |         | 2,020      |         |   |         | (46     | )      |   |       |      |       |   |      |     |      |   |         | 2,020   |         |   |         | (46     | )     
|                                               | Asset-backed Securities                                                                              |                                                                      |           | 16,426                                                |         |              |        | 1      |       |       |         | (143       | )      |       |           | 16,284     |         |       |         | 16,202     |         |   |         | (143    | )      |   |       |      |       |   |      |     |      |   |         | 16,202  |         |   |         | (143    | )     
|                                               | Municipals                                                                                           |                                                                      |           | 90                                                    |         |              |        |       |       |       |         |           |        |       |           | 90         |         |       |         |           |         |   |         |        |        |   |       |      |       |   |      |     |      |   |         |        |         |   |         |        |       
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               |                                                                                                      | Total Investment Securities Available for Sale                       |           |                                                       | 267,158 |              |        |        | 290   |       |         |            | (4,386 | )     |           |            | 263,062 |       |         |            | 201,671 |   |         |         | (4,099 | ) |       |       | 4,713 |   |      |      | (287 | ) |         |         | 206,384 |   |         |         | (4,386 | )
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|Mortgage-backed Securities Available for Sale: |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               | FNMA                                                                                                 |                                                                      |           | 440,835                                               |         |              |        | 3,433  |       |       |         | (3,815     | )      |       |           | 440,453    |         |       |         | 224,956    |         |   |         | (3,815  | )      |   |       |      |       |   |      |     |      |   |         | 224,956 |         |   |         | (3,815  | )     
|                                               | GNMA                                                                                                 |                                                                      |           | 79,103                                                |         |              |        | 406    |       |       |         | (667       | )      |       |           | 78,842     |         |       |         | 29,686     |         |   |         | (667    | )      |   |       |      |       |   |      |     |      |   |         | 29,686  |         |   |         | (667    | )     
|                                               | FHLMC                                                                                                |                                                                      |           | 275,882                                               |         |              |        | 1,435  |       |       |         | (3,377     | )      |       |           | 273,940    |         |       |         | 132,808    |         |   |         | (3,377  | )      |   |       |      |       |   |      |     |      |   |         | 132,808 |         |   |         | (3,377  | )     
|                                               | Other                                                                                                |                                                                      |           | 163,687                                               |         |              |        | 1,391  |       |       |         | (305       | )      |       |           | 164,773    |         |       |         | 11,899     |         |   |         | (305    | )      |   |       |      |       |   |      |     |      |   |         | 11,899  |         |   |         | (305    | )     
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               | Total Mortgage-backed Securities Available for
    Sale                                              |                                                                      |           | 959,507                                               |         |              |        | 6,665  |       |       |         | (8,164     | )      |       |           | 958,008    |         |       |         | 399,349    |         |   |         | (8,164  | )      |   |       |      |       |   |      |     |      |   |         | 399,349 |         |   |         | (8,164  | )     
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               | Total Investment Securities Available for Sale
    and Mortgage-backed Securities Available for Sale |                                                                      | $         | 1,226,665                                             |         |              | $      | 6,955  |       |       | $       | (12,550    | )      |       | $         | 1,221,070  |         |       | $       | 601,020    |         |   | $       | (12,263 | )      |   | $     | 4,713 |       |   | $    | (287 | )    |   | $       | 605,733 |         |   | $       | (12,550 | )     
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|Investment Securities Held to Maturity:        |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               | Municipal Securities                                                                                 |                                                                      | $         | 184,264                                               |         |              | $      | 4,601  |       |       | $       | (1,130     | )      |       | $         | 187,735    |         |       | $       | 37,761     |         |   | $       | (1,130  | )      |   | $     |      |       |   | $    |     |      |   | $       | 37,761  |         |   | $       | (1,130  | )     
|Mortgage-backed Securities Held to Maturity:   |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               |                                                                                                      | GNMA                                                                 |           |                                                       | 99,524  |              |        |        | 3     |       |         |            | (814   | )     |           |            | 98,713  |       |         |            | 83,469  |   |         |         | (814   | ) |       |       |      |   |      |      |     |   |         |         | 83,469  |   |         |         | (814   | )
|                                               |                                                                                                      | Other                                                                |           |                                                       | 924     |              |        |        |      |       |         |            |       |       |           |            | 924     |       |         |            |        |   |         |         |       |   |       |       |      |   |      |      |     |   |         |         |        |   |         |         |       |  
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|                                               |                                                                                                      | Total Investment and Mortgage-backed Securities
    Held to Maturity |           |                                                       | 284,712 |              |        |        | 4,604 |       |         |            | (1,944 | )     |           |            | 287,372 |       |         |            | 121,230 |   |         |         | (1,944 | ) |       |       |      |   |      |      |     |   |         |         | 121,230 |   |         |         | (1,944 | )
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        
|Total securities                               |                                                                                                      | $                                                                    | 1,511,377 |                                                       |         | $            | 11,559 |        |       | $     | (14,494 | )          |        | $     | 1,508,442 |            |         | $     | 722,250 |            |         | $ | (14,207 | )       |        | $ | 4,713 |       |       | $ | (287 | )    |      | $ | 726,963 |         |         | $ | (14,494 | )      
|                                               |                                                                                                      |                                                                      |           |                                                       |         |              |        |        |       |       |         |            |        |       |           |            |         |       |         |            |         |   |         |         |        |   |       |       |       |   |      |      |      |   |         |         |         |   |         |        

66



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



5.     Investment and
Mortgage-backed
Securities  (Continued)


The amortized cost of securities below book value
for less than twelve months as of December 31, 2003 totaled
$736.5 million. The table below presents the distribution
of these securities by credit rating by NRSROs (dollars in
thousands):

|                                              |       |     |         |         |  |    |        |        |  |   |       |        | 
|--------------------------------------------- | ----- | --- | ------- | ------- |  | -- | ------ | ------ |  | - | ----- | ------ | 
|                                              |       | AAA |         | AA-     |  | A-
|                                              |       |     |         |         |  |   
|Federal Agency Notes                          |       | $   | 182,858 |         |  | $  |       |        |  | $ |      |       
|MBS and CMOs                                  |       |     | 491,796 |         |  |    |       |        |  |   |      |       
|Trust Preferred Securities                    |       |     |        |         |  |    |       |        |  |   | 4,501 |       
|Domestic Debt Securities and Commercial Paper |       |     |        |         |  |    |       |        |  |   | 2,066 |       
|Asset-Backed Securities                       |       |     |        |         |  |    | 12,697 |        |  |   | 3,647 |       
|Municipal Securities                          |       |     | 38,322  |         |  |    | 570    |        |  |   |      |       
|                                              |       |     |         |         |  |    |        |        |  |   |       |       
|                                              | Total |     | $       | 712,976 |  |    | $      | 13,267 |  |   | $     | 10,214 | 
|                                              |       |     |         |         |  |    |        |        |  |   |       |       

On average, these securities were 1.9% below
their respective book value. As a percentage of its book value,
the single largest unrealized loss on one Federal Agency Note
was 6.6%. In the available-for-sale portfolio,
63 securities were below book value. In the
held-to-maturity portfolio, which had a high concentration of
municipal bonds with nominal par amounts, 65 securities
were below book value.

The $4.5 million of trust preferred consists
of one pooled trust preferred securities issue that is
collateralized by subordinated debentures. Domestic debt
securities and commercial paper is represented by two corporate
bonds that have been downgraded since issuance dates.
Asset-backed securities are fully collateralized by automobile
loans. All of the municipal bonds have credit enhancements,
either from bond insurance or state guarantee funds.

As of December 31, 2003, there was one trust
preferred security that was below book value for more than
twelve months, specifically since May 1999. It is a floating
rate issue indexed to 3-month LIBOR and is carried at par value
with an amortized cost of $5.0 million. The security,
issuer, and bank holding company guaranteeing the debt are
unrated by the three NRSROs. Management believes that the
security remains below book value due to the low absolute coupon
rate of the security and that as the 3-month LIBOR rate
increases, the value of the security will increase.

Management considers the impairment of value to
be attributable to the movement of market interest rates and
believes the fair value will improve over time due to the high
credit ratings of the securities. Management has the intent and
ability to hold these securities to maturity.

67



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



5.     Investment and
Mortgage-backed
Securities  (Continued)


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, 2002 is shown below (dollars in thousands):

|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |         |           | 
|---------------------------------------------- | -------------------------- | ---------------------------------------------------------------------- | --------- | ---------- | --------- | ---------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | --------- | ------- | --------- | 
|                                               |                            |                                                                       
|                                               |                            | December 31, 2002                                                     
|                                               |                            |                                                                       
|                                               |                            |                                                                        |           | Gross      |           | Gross      |        |       
|                                               |                            | Amortized                                                              |           | Unrealized |           | Unrealized |        | Market
|                                               |                            | Cost                                                                   |           | Gains      |           | Losses     |        | Value 
|                                               |                            |                                                                        |           |            |           |            |        |       
|Investment securities available for sale:      |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               | Trust Preferred Securities |                                                                        | $         | 62,313     |           |            | $      | 6      |        |   | $      | (4,143 | )      |   | $         | 58,176  |          
|                                               | Federal Agency Notes       |                                                                        |           | 45,252     |           |            |        | 55     |        |   |        | (3     | )      |   |           | 45,304  |          
|                                               | Foreign Debt Securities    |                                                                        |           | 8,017      |           |            |        |       |        |   |        | (3     | )      |   |           | 8,014   |          
|                                               | Asset-backed Securities    |                                                                        |           | 5,826      |           |            |        |       |        |   |        | (87    | )      |   |           | 5,739   |          
|                                               | Municipals                 |                                                                        |           | 360        |           |            |        |       |        |   |        |       |        |   |           | 360     |          
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               |                            | Total investment securities available for sale                         |           |            | 121,768   |            |        |        | 61     |   |        |        | (4,236 | ) |           |         | 117,593   | 
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|Mortgage-backed securities available for sale: |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               | FNMA                       |                                                                        |           | 577,731    |           |            |        | 13,380 |        |   |        | (738   | )      |   |           | 590,373 |          
|                                               | GNMA                       |                                                                        |           | 280,263    |           |            |        | 5,890  |        |   |        |       |        |   |           | 286,153 |          
|                                               | FHLMC                      |                                                                        |           | 289,094    |           |            |        | 1,736  |        |   |        | (871   | )      |   |           | 289,959 |          
|                                               | Other                      |                                                                        |           | 184,919    |           |            |        | 485    |        |   |        | (95    | )      |   |           | 185,309 |          
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               |                            | Total mortgage-backed securities available for
    sale                |           |            | 1,332,007 |            |        |        | 21,491 |   |        |        | (1,704 | ) |           |         | 1,351,794 | 
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               |                            | Total investment and mortgage-backed securities
    available for sale |           | $          | 1,453,775 |            |        | $      | 21,552 |   |        | $      | (5,940 | ) |           | $       | 1,469,387 | 
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|Investment securities held to maturity:        |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               | Municipal Securities       |                                                                        | $         | 111,049    |           |            | $      | 2,793  |        |   | $      | (205   | )      |   | $         | 113,637 |          
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|Mortgage-backed securities held to maturity:   |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               | Other                      |                                                                        |           | 945        |           |            |        |       |        |   |        |       |        |   |           | 945     |          
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|                                               |                            | Total investment and mortgage-backed securities
    held to maturity   |           | $          | 111,994   |            |        | $      | 2,793  |   |        | $      | (205   | ) |           | $       | 114,582   | 
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        
|Total securities                               |                            | $                                                                      | 1,565,769 |            |           | $          | 24,345 |        |        | $ | (6,145 | )      |        | $ | 1,583,969 |        
|                                               |                            |                                                                        |           |            |           |            |        |        |        |   |        |        |        |   |           |        

68



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



5.     Investment and
Mortgage-backed
Securities  (Continued)


As of December 31, 2003, remaining
maturities on investment and mortgage-backed securities
classified as held to maturity and available for sale were as
follows (dollars in thousands):

|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |   |         |           |           | 
|------------------- | ---------------------------------------------- | -------------------------------------------- | ---------------------------------------------------------------------- | -------------------------------------------------------------------- | ------- | --------- | --------- | - | ------- | --------- | --------- | 
|                    |                                                |                                             
|                    |                                                | 2003                                        
|                    |                                                |                                             
|                    |                                                | Amortized                                    |                                                                        | Market                                                              
|                    |                                                | Cost                                         |                                                                        | Value                                                               
|                    |                                                |                                              |                                                                        |                                                                     
|Available for sale: |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    | Investment securities available for sale:      |                                              |                                                                        |                                                                      |         |           |           |   |        
|                    |                                                | In one year or less                          |                                                                        | $                                                                    | 69,960  |           |           | $ | 69,959  |          
|                    |                                                | After one year through five years            |                                                                        |                                                                      | 31,623  |           |           |   | 31,365  |          
|                    |                                                | After five years through ten years           |                                                                        |                                                                      | 152,386 |           |           |   | 148,943 |          
|                    |                                                | After ten years                              |                                                                        |                                                                      | 13,189  |           |           |   | 12,795  |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                |                                              | Subtotal                                                               |                                                                      |         | 267,158   |           |   |         | 263,062   |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    | Mortgage-backed securities available for sale: |                                              |                                                                        |                                                                      |         |           |           |   |        
|                    |                                                | In one year or less                          |                                                                        |                                                                      |        |           |           |   |        |          
|                    |                                                | After five years through ten years           |                                                                        |                                                                      | 48,601  |           |           |   | 48,792  |          
|                    |                                                | After ten years                              |                                                                        |                                                                      | 910,906 |           |           |   | 909,216 |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                |                                              | Subtotal                                                               |                                                                      |         | 959,507   |           |   |         | 958,008   |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                |                                              | Total investment and mortgage-backed securities
    available for sale |                                                                      | $       | 1,226,665 |           |   | $       | 1,221,070 |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    | Held to maturity:                              |                                              |                                                                        |                                                                      |         |           |           |   |        
|                    |                                                | Investment securities held to maturity:      |                                                                        |                                                                      |         |           |           |   |         |          
|                    |                                                | After five years through ten years           |                                                                        | $                                                                    | 328     |           |           | $ | 371     |          
|                    |                                                | After ten years                              |                                                                        |                                                                      | 183,936 |           |           |   | 187,364 |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                |                                              |                                                                        | Subtotal                                                             |         |           | 184,264   |   |         |           | 187,735   | 
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                | Mortgage-backed securities held to maturity: |                                                                        |                                                                      |         |           |           |   |         |          
|                    |                                                |                                              | After one year through five years                                      |                                                                      |         | 10        |           |   |         | 10        |          
|                    |                                                |                                              | After five years through ten years                                     |                                                                      |         | 1         |           |   |         | 1         |          
|                    |                                                |                                              | After ten years                                                        |                                                                      |         | 100,437   |           |   |         | 99,626    |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                |                                              | Subtotal                                                               |                                                                      | $       | 100,448   |           |   | $       | 99,637    |          
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                |                                              |                                                                        | Total investment and mortgage-backed securities
    held to maturity |         | $         | 284,712   |   |         | $         | 287,372   | 
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  
|                    |                                                |                                              |                                                                        | Total securities                                                     |         | $         | 1,511,377 |   |         | $         | 1,508,442 | 
|                    |                                                |                                              |                                                                        |                                                                      |         |           |           |  

Approximately $692.8 million and
$573.5 million of investment and mortgage-backed securities
have been pledged to secure contractual arrangements entered
into by the Company at December 31, 2003 and 2002,
respectively. Proceeds from the sale of available for sale
securities during 2003 totaled $953.3 million, with gross
realized gains of $18.4 million and gross realized losses
of $7.4 million. During 2002, proceeds from the sale of
available for sale securities totaled $953.1 million, with
gross realized gains of $5.1 million and gross realized
losses of $1.7 million. During 2001, proceeds from the sale
of available for sale securities totaled $156.2 million,
with gross realized gains of $1.0 million and gross
realized losses of $400,000.

There were no mortgage-backed securities sold
under agreements to repurchase as of December 31, 2003 or
2002 or at any time during 2003. When the Company enters into
these transactions, the obligations generally mature within one
year and generally represent agreements to repurchase the same
securities.

69



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |      
|-- | -----
|6. | Loans

As of December 31, 2003 and 2002, the
composition of the loan portfolio was as follows (dollars in
thousands):

|                          |                                           |      |           |           |  |   |           |           | 
|------------------------- | ----------------------------------------- | ---- | --------- | --------- |  | - | --------- | --------- | 
|                          |                                           | 2003 |           | 2002     
|                          |                                           |      |           |          
|Commercial:               |                                           |      |           |           |  |   |           |          
|                          | Secured by real estate  nonresidential   |      | $         | 1,724,179 |  |   | $         | 1,279,809 | 
|                          | Secured by real estate  multifamily      |      |           | 1,162,565 |  |   |           | 914,630   | 
|                          | Construction                              |      |           | 293,875   |  |   |           | 216,218   | 
|                          | Business                                  |      |           | 302,159   |  |   |           | 261,787   | 
|                          |                                           |      |           |           |  |   |           |          
|Total commercial loans    |                                           |      | 3,482,778 |           |  |   | 2,672,444 |          
|                          |                                           |      |           |           |  |   |           |          
|Consumer:                 |                                           |      |           |           |  |   |           |          
|                          | Residential mortgage (one to four family) |      |           | 274,392   |  |   |           | 311,067   | 
|                          | Other                                     |      |           | 43,117    |  |   |           | 49,372    | 
|                          |                                           |      |           |           |  |   |           |          
|Total consumer loans      |                                           |      | 317,509   |           |  |   | 360,439   |          
|                          |                                           |      |           |           |  |   |           |          
|Gross loans               |                                           |      | 3,800,287 |           |  |   | 3,032,883 |          
|Net deferred loan fees    |                                           |      | (8,644    | )         |  |   | (5,073    | )        
|                          |                                           |      |           |           |  |   |           |          
|Loans                     |                                           |      | 3,791,643 |           |  |   | 3,027,810 |          
|Allowance for loan losses |                                           |      | (60,863   | )         |  |   | (48,865   | )        
|                          |                                           |      |           |           |  |   |           |          
|Net loans                 |                                           | $    | 3,730,780 |           |  | $ | 2,978,945 |          
|                          |                                           |      |           |           |  |   |           |          

As of December 31, 2003, loans at fixed
interest rates amounted to $537.0 million, and loans at
variable interest rates amounted to $3.26 billion. Included
in the $3.26 billion of variable interest rates are
$1.11 billion of loans that have reached their contractual
floor and are treated as fixed-rate loans for interest rate
sensitivity purposes. Loans of approximately $5.9 million
and $4.7 million were on nonaccrual status at
December 31, 2003 and 2002, respectively.

As of December 31, 2003, residential
mortgage (one to four family) and multifamily loans with a book
value and market value of $1.2 billion were pledged to
secure FHLB advances (see Note 9). The Company serviced
real estate loans for others, excluding loans internally
securitized, of $423.9 million and $112.6 million at
December 31, 2003 and 2002, respectively. These loans are
not included in the consolidated balance sheets. In connection
therewith, the Company held trust funds of approximately
$14.1 million and $16.9 million as of
December 31, 2003 and 2002, 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.

70



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



6.     Loans  (Continued)


The following table indicates the Companys
impaired loans for the years ended December 31, 2003, 2002,
and 2001 (dollars in thousands):

|                                                                 |                      |      |       |       |  |      |   |   |  |   |   |   | 
|---------------------------------------------------------------- | -------------------- | ---- | ----- | ----- |  | ---- | - | - |  | - | - | - | 
|                                                                 |                      | 2003 |       | 2002  |  | 2001
|                                                                 |                      |      |       |       |  |     
|Impaired loans with an allowance                                 |                      | $    | 4,965 |       |  | $    |  |   |  | $ |  |  
|Impaired loans without an allowance                              |                      |      |      |       |  |      |  |   |  |   |  |  
|                                                                 |                      |      |       |       |  |      |   |   |  |   |   |  
|                                                                 | Total impaired loans |      | $     | 4,965 |  |      | $ |  |  |   | $ |  | 
|                                                                 |                      |      |       |       |  |      |   |   |  |   |   |  
|Allowance for impaired loans under
    SFAS No. 114              |                      | $    | 2,128 |       |  | $    |  |   |  | $ |  |  
|                                                                 |                      |      |       |       |  |      |   |   |  |   |   |  
|Interest income recognized on impaired loans
    during the year |                      | $    |      |       |  | $    |  |   |  | $ |  |  
|                                                                 |                      |      |       |       |  |      |   |   |  |   |   |  

For the years ended December 31, 2003, 2002,
and 2001, the activity in the allowance for loan losses was as
follows (dollars in thousands):

|                                   |  |      |        |      |  |      |        |   |  |   |        |  
|---------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                   |  | 2003 |        | 2002 |  | 2001
|                                   |  |      |        |      |  |     
|Balance at beginning of year       |  | $    | 48,865 |      |  | $    | 34,550 |   |  | $ | 28,901 |  
|Acquired allowance for loan losses |  |      | 4,028  |      |  |      | 10,162 |   |  |   |       |  
|Provision for loan losses          |  |      | 9,967  |      |  |      | 9,673  |   |  |   | 5,620  |  
|Loans charged off                  |  |      | (3,349 | )    |  |      | (5,563 | ) |  |   | (121   | )
|Recoveries                         |  |      | 1,352  |      |  |      | 43     |   |  |   | 150    |  
|                                   |  |      |        |      |  |      |        |   |  |   |        |  
|Balance at end of year             |  | $    | 60,863 |      |  | $    | 48,865 |   |  | $ | 34,550 |  
|                                   |  |      |        |      |  |      |        |   |  |   |        |  



|   |                       
|-- | ----------------------
|7. | Premises and Equipment

As of December 31, 2003, and 2002, premises
and equipment were as follows (dollars in thousands):

|                                               |       |      |         |        |  |   |         |        | 
|---------------------------------------------- | ----- | ---- | ------- | ------ |  | - | ------- | ------ | 
|                                               |       | 2003 |         | 2002  
|                                               |       |      |         |       
|Land and buildings                             |       | $    | 104,981 |        |  | $ | 105,153 |       
|Leasehold improvements                         |       |      | 17,095  |        |  |   | 15,161  |       
|Equipment, furniture and fixtures              |       |      | 25,163  |        |  |   | 20,230  |       
|                                               |       |      |         |        |  |   |         |       
|                                               |       |      | 147,239 |        |  |   | 140,544 |       
|Less accumulated depreciation and amortization |       |      | (63,094 | )      |  |   | (58,847 | )     
|                                               |       |      |         |        |  |   |         |       
|                                               | Total |      | $       | 84,145 |  |   | $       | 81,697 | 
|                                               |       |      |         |        |  |   |         |       

Total depreciation and amortization expense was
$5.8 million, $2.9 million and $2.6 million for
the years ended December 31, 2003, 2002, and 2001,
respectively.

71



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



7.     Premises and
Equipment  (Continued)


Rental income was $6.2 million,
$1.8 million and $968,207 for the years ended
December 31, 2003, 2002 and 2001, respectively. The future
noncancellable minimum lease payment receivables as of
December 31, 2003 are as follows (dollars in thousands):

|                    |       |   |       |        | 
|------------------- | ----- | - | ----- | ------ | 
|2004                |       | $ | 4,927 |       
|2005                |       |   | 4,009 |       
|2006                |       |   | 2,451 |       
|2007                |       |   | 1,861 |       
|2008                |       |   | 1,064 |       
|2009 and thereafter |       |   | 643   |       
|                    |       |   |       |       
|                    | Total |   | $     | 14,955 | 
|                    |       |   |       |       



|   |         
|-- | --------
|8. | Deposits

As of December 31, 2003 and 2002, deposit
balances were as follows (dollars in thousands):

|                                        |                     |                |           |           |           |         |      |          |      |   |         |           |           |  |      |      |      |  
|--------------------------------------- | ------------------- | -------------- | --------- | --------- | --------- | ------- | ---- | -------- | ---- | - | ------- | --------- | --------- |  | ---- | ---- | ---- | -
|                                        |                     |                |           |          
|                                        |                     | 2003           |           | 2002     
|                                        |                     |                |           |          
|                                        |                     |                |           | Weighted  |           |         |      | Weighted
|                                        |                     |                |           | Average   |           |         |      | Average 
|                                        |                     | Balance        |           | Rate      |           | Balance |      | Rate    
|                                        |                     |                |           |           |           |         |      |         
|NOW, checking and money market accounts |                     | $              | 1,026,047 |           |           |         | 0.65 | %        |      | $ | 813,122 |           |           |  | 0.86 | %   
|Savings accounts                        |                     |                | 884,064   |           |           |         | 0.77 |          |      |   | 691,318 |           |           |  | 1.10 |     
|Time deposits:                          |                     |                |           |           |           |         |      |          |      |   |         |           |           |  |      |     
|                                        | Less than $100,000  |                |           | 1,042,843 |           |         |      | 1.73     |      |   |         | 1,109,633 |           |  |      | 2.36 |     
|                                        | $100,000 or greater |                |           | 1,530,567 |           |         |      | 1.82     |      |   |         | 1,392,740 |           |  |      | 2.53 |     
|                                        |                     |                |           |           |           |         |      |          |      |   |         |           |           |  |      |     
|                                        | Total time deposits |                |           | 2,573,410 |           |         |      | 1.79     |      |   |         | 2,502,373 |           |  |      | 2.45 |     
|                                        |                     |                |           |           |           |         |      |          |      |   |         |           |           |  |      |     
|                                        |                     | Total deposits |           | $         | 4,483,521 |         |      |          | 1.33 | % |         | $         | 4,006,813 |  |      |      | 1.90 | %
|                                        |                     |                |           |           |           |         |      |          |      |   |         |           |           |  |      |     

As of December 31, 2003, remaining
maturities on time deposits were as follows (dollars in
thousands):

|     |       |   |           |           | 
|---- | ----- | - | --------- | --------- | 
|2004 |       | $ | 2,338,964 |          
|2005 |       |   | 212,516   |          
|2006 |       |   | 16,427    |          
|2007 |       |   | 3,251     |          
|2008 |       |   | 2,252     |          
|     |       |   |           |          
|     | Total |   | $         | 2,573,410 | 
|     |       |   |           |          

For the years ended December 31, 2003, 2002,
and 2001, interest expense on deposits was as follows (dollars
in thousands):

|                                        |       |      |        |        |  |      |        |        |  |   |        |        | 
|--------------------------------------- | ----- | ---- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                        |       | 2003 |        | 2002   |  | 2001
|                                        |       |      |        |        |  |     
|NOW, checking and money market accounts |       | $    | 6,774  |        |  | $    | 5,952  |        |  | $ | 5,080  |       
|Savings accounts                        |       |      | 7,191  |        |  |      | 6,582  |        |  |   | 8,229  |       
|Time deposits                           |       |      | 55,153 |        |  |      | 49,083 |        |  |   | 74,422 |       
|Less penalties for early withdrawal     |       |      | (394   | )      |  |      | (381   | )      |  |   | (296   | )     
|                                        |       |      |        |        |  |      |        |        |  |   |        |       
|                                        | Total |      | $      | 68,724 |  |      | $      | 61,236 |  |   | $      | 87,435 | 
|                                        |       |      |        |        |  |      |        |        |  |   |        |       

72



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##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



8.     Deposits  (Continued)


Time deposit interest expense for 2003 includes a
benefit of $2.9 million related to amortization of fair
value premium in connection with the acquisitions of FCB and
Bank of Canton of California. The premium is related to fixed
maturity deposits and is amortized to interest expense over the
remaining deposit maturities of one year.



|   |           
|-- | ----------
|9. | Borrowings

For the years ended December 31, 2003, 2002,
and 2001, the following short- and long-term borrowings were
outstanding (dollars in thousands):

|                                  |                                                                             |      |   |         |   |      |   |         |   |  |   |         |  
|--------------------------------- | --------------------------------------------------------------------------- | ---- | - | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                  |                                                                             | 2003 |   | 2002    |   | 2001
|                                  |                                                                             |      |   |         |   |     
|Short-term borrowings:            |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|FHLB of San Francisco advances:   |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|                                  | Average balance outstanding                                                 |      | $ | 76,826  |   |      | $ | 23,606  |   |  | $ | 18,768  |  
|                                  | Maximum amount outstanding at any month-end period                          |      |   | 212,180 |   |      |   | 322,000 |   |  |   | 39,177  |  
|                                  | Balance outstanding at end of period                                        |      |   | 209,940 |   |      |   | 77,500  |   |  |   | 5,000   |  
|                                  | Weighted average interest rate during the period                            |      |   | 1.41    | % |      |   | 2.40    | % |  |   | 5.60    | %
|                                  | Weighted average interest rate at end of period                             |      |   | 1.00    | % |      |   | 1.13    | % |  |   | 6.52    | %
|                                  | Weighted average remaining term to maturity at
    end of period (in years) |      |   | 0       |   |      |   | 0       |   |  |   | 0       |  
|FRB direct investment borrowings: |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|                                  | Average balance outstanding                                                 |      | $ |        |   |      | $ |        |   |  | $ | 710     |  
|                                  | Maximum amount outstanding at any month-end period                          |      |   |        |   |      |   |        |   |  |   | 10,000  |  
|                                  | Balance outstanding at end of period                                        |      |   |        |   |      |   |        |   |  |   |        |  
|                                  | Weighted average interest rate during the period                            |      |   |        | % |      |   |        | % |  |   | 5.56    | %
|                                  | Weighted average interest rate at end of period                             |      |   |        | % |      |   |        | % |  |   |        | %
|Long-term borrowings:             |                                                                             |      |   |         |   |      |   |         |   |  |   |        
|                                  | FHLB of San Francisco advances:                                             |      |   |         |   |      |   |         |   |  |   |         |  
|                                  | Average balance outstanding                                                 |      | $ | 271,688 |   |      | $ | 253,666 |   |  | $ | 237,171 |  
|                                  | Maximum amount outstanding at any month-end period                          |      |   | 274,000 |   |      |   | 285,953 |   |  |   | 238,000 |  
|                                  | Balance outstanding at end of period                                        |      |   | 271,408 |   |      |   | 275,874 |   |  |   | 233,000 |  
|                                  | Weighted average interest rate during the period                            |      |   | 5.15    | % |      |   | 5.43    | % |  |   | 5.51    | %
|                                  | Weighted average interest rate at end of period                             |      |   | 5.12    | % |      |   | 5.08    | % |  |   | 5.44    | %
|                                  | Weighted average remaining term to maturity at
    end of period (in years) |      |   | 4       |   |      |   | 5       |   |  |   | 6       |  

The Company maintains a secured credit facility
with the FHLB of San Francisco against which the Company
may take advances. The terms of this credit facility require the
Company to maintain in safekeeping with the FHLB of
San Francisco eligible collateral of at least 100% of
outstanding advances. Included in the long-term borrowings were
$244.4 million of advances maturing in 2008 with provisions
which allow the FHLB of San Francisco, at their option, to
terminate the advances at quarterly intervals at specified
periods ranging from three to five years beyond the advance
dates. As of December 31, 2003, $232.0 million of
these advances may be terminated at the option of the FHLB. The
advances were secured with mortgage-backed securities and loans.
At December 31, 2003, credit availability under this
facility was approximately $617.1 million.

73



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



9.     Borrowings  (Continued)


During 2003, the Company renewed its borrowing
line of $10.0 million with Wells Fargo Bank it established
in 2002. The Company has never taken an advance under the terms
of the line.



|    |                        
|--- | -----------------------
|10. | Subordinated Debentures

The Company established special purpose trusts in
1998, 2001, and 2002 for the purpose of issuing Guaranteed
Preferred Beneficial Interests in UCBHs Junior
Subordinated Debentures (Capital Securities). The
trusts exist for the sole purpose of issuing the Capital
Securities and investing the proceeds thereof in Junior
Subordinated Debentures issued by the Company. Payment of
distributions out of the monies held by the trusts and payments
on liquidation of the trusts or the redemption of the Capital
Securities are guaranteed by the Company to the extent the
trusts have funds available thereof. The obligations of the
Company under the guarantees and the Junior Subordinated
Debentures are subordinate and junior in right of payment to all
indebtedness of the Company and will be structurally
subordinated to all liabilities and obligations of the
Companys subsidiaries.

A total of $90.0 million of the proceeds
from the 2002 issuances were used to fund a portion of the
purchase price of the BCC acquisition. The remaining proceeds
from the issuance of the Capital Securities were used to provide
additional capital for the Bank. Interest expense on the Capital
Securities was $8.2 million for the year ended
December 31, 2003 and $4.8 million for the year ended
December 3, 2002, and $2.8 million for the year ended
December 31, 2001.

The table below summarizes the outstanding
Capital Securities issued by each special purpose trust and the
debentures issued by UCBH to each trust as of December 31,
2003 (dollars in thousands):

|                                 |  |                    |                |            |  |                |        |       |  |                               |        |          |  |              |                    |              |  |                    |  |                      |       |  |       |  |       |               |  |                                                       |  |                     
|-------------------------------- |  | ------------------ | -------------- | ---------- |  | -------------- | ------ | ----- |  | ----------------------------- | ------ | -------- |  | ------------ | ------------------ | ------------ |  | ------------------ |  | -------------------- | ----- |  | ----- |  | ----- | ------------- |  | ----------------------------------------------------- |  | --------------------
|                                 |  |                    |                |            |  |                |        |       |  |                               |        |          |  |              |                    |             
|                                 |  |                    |                |            |  |                |        |       |  | Capital Securities and Junior |        |          |  |              |                    |             
|                                 |  |                    |                |            |  |                |        |       |  | Subordinated Debentures       |        |          |  |              |                    |             
|                                 |  |                    |                |            |  |                |        |       |  |                               |        |          |  |             
|                                 |  | Capital Securities |                | Principal  |  |                |        |       |  | Annualized                    |        | Current  |  |              |                    | Payable/    
|                                 |  |                    |                | Balance of |  | Not Redeemable |        |       |  | Coupon                        |        | Interest |  | Date of Rate |                    | Distribution
|Trust Name                       |  | Issuance Date      |                | Amount     |  | Debentures     |        | Until |  | Stated Maturity               |        | Rate     |  | Rate         |                    | Change       |  | Dates             
|                                 |  |                    |                |            |  |                |        |       |  |                               |        |          |  |              |                    |              |  |                   
|UCBH Trust Co.                   |  |                    | April 1998     |            |  | $              | 30,000 |       |  | $                             | 30,928 |          |  |              | May 1, 2005        |              |  | May 1, 2028        |  |                      | 9.38% |  |       |  | 9.38% |               |  |                                                      |  | May 1
    November 1
|UCBH Capital Trust I             |  |                    | November 2001  |            |  |                | 6,000  |       |  |                               | 6,186  |          |  |              | December 8, 2006   |              |  | December 8, 2031   |  | 6-month LIBOR+ 3.75% |       |  | 4.98% |  |       | December 2003 |  | June 8
    December 8                                
|UCBH Holdings Statutory Trust I  |  |                    | March 2002     |            |  |                | 10,000 |       |  |                               | 10,310 |          |  |              | March 26, 2007     |              |  | March 26, 2032     |  | 3-month LIBOR+ 3.60% |       |  | 4.77% |  |       | December 2003 |  | March 26
    June 26
    September 26
    December 26
|UCBH Holdings Statutory Trust II |  |                    | September 2002 |            |  |                | 25,000 |       |  |                               | 25,774 |          |  |              | September 26, 2007 |              |  | September 26, 2032 |  | 3-month LIBOR+ 3.40% |       |  | 4.57% |  |       | December 2003 |  | March 26
    June 26
    September 26
    December 26
|UCBH Capital Trust II            |  |                    | October 2002   |            |  |                | 20,000 |       |  |                               | 20,619 |          |  |              | November 7, 2007   |              |  | November 7, 2032   |  | 3-month LIBOR+ 3.45% |       |  | 4.62% |  |       | November 2003 |  | February 7
    May 7
    August 7
    November 7     
|UCBH Capital Trust III           |  |                    | October 2002   |            |  |                | 18,000 |       |  |                               | 18,557 |          |  |              | November 7, 2007   |              |  | November 7, 2032   |  | 3-month LIBOR+ 3.66% |       |  | 4.83% |  |       | November 2003 |  | February 7
    May 7
    August 7
    November 7     
|UCBH Capital Trust IV            |  |                    | October 2002   |            |  |                | 27,000 |       |  |                               | 27,836 |          |  |              | November 7, 2007   |              |  | November 7, 2032   |  | 3-month LIBOR+ 3.45% |       |  | 4.63% |  |       | November 2003 |  | February 7
    May 7
    August 7
    November 7     

74



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|    |                                                             
|--- | ------------------------------------------------------------
|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 regulators that, if undertaken, could have a 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, 2003, that the
Company and the Bank met all capital adequacy requirements to
which they are subject.

As of December 31, 2003, the Bank was
classified as a well capitalized institution under
the regulatory framework for prompt corrective action. To be
classified 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, 2003 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):

|                                         |                        |        |   |                   |  |                   |  |                   |   |            |   |         |  |  |  |      |   |  |   |         |  |  |  |       |  
|---------------------------------------- | ---------------------- | ------ | - | ----------------- |  | ----------------- |  | ----------------- | - | ---------- | - | ------- |  |  |  | ---- | - |  | - | ------- |  |  |  | ----- | -
|                                         |                        |        |   |                   |  |                   |  |                   |   |           
|                                         |                        |        |   |                   |  |                   |  |                   |   | To Be Well
|                                         |                        |        |   |                   |  |                   |  | Capitalized Under
|                                         |                        |        |   | For Capital       |  | Prompt Corrective
|                                         |                        | Actual |   | Adequacy Purposes |  | Action Provisions
|                                         |                        |        |   |                   |  |                  
|                                         |                        | Amount |   | Ratio             |  | Amount            |  | Ratio             |   | Amount     |   | Ratio  
|                                         |                        |        |   |                   |  |                   |  |                   |   |            |   |        
|As of December 31, 2003                  |                        |        |   |                   |  |                   |  |                   |   |            |   |         |  |  |  |      |   |  |   |         |  |  |  |      
|Total Capital (to risk-weighted assets)  |                        |        |   |                   |  |                   |  |                   |   |            |   |         |  |  |  |      |   |  |   |         |  |  |  |      
|                                         | United Commercial Bank |        | $ | 473,036           |  |                   |  | 12.18             | % |            | $ | 310,800 |  |  |  | 8.00 | % |  | $ | 388,499 |  |  |  | 10.00 | %
|                                         | UCBH Holdings, Inc.    |        |   | 503,538           |  |                   |  | 12.94             |   |            |   | 311,197 |  |  |  | 8.00 |   |  |   |         |  |  |  |       |  
|Tier I Capital (to risk-weighted assets) |                        |        |   |                   |  |                   |  |                   |   |            |   |         |  |  |  |      |   |  |   |         |  |  |  |      
|                                         | United Commercial Bank |        | $ | 424,321           |  |                   |  | 10.92             | % |            | $ | 155,400 |  |  |  | 4.00 | % |  | $ | 233,100 |  |  |  | 6.00  | %
|                                         | UCBH Holdings, Inc.    |        |   | 454,762           |  |                   |  | 11.69             |   |            |   | 155,599 |  |  |  | 4.00 |   |  |   |         |  |  |  |       |  
|Tier I Capital (to average assets)       |                        |        |   |                   |  |                   |  |                   |   |            |   |         |  |  |  |      |   |  |   |         |  |  |  |      
|                                         | (Leverage Ratio)       |        |   |                   |  |                   |  |                   |   |            |   |         |  |  |  |      |   |  |   |         |  |  |  |       |  
|                                         | United Commercial Bank |        | $ | 424,321           |  |                   |  | 7.86              | % |            | $ | 215,935 |  |  |  | 4.00 | % |  | $ | 269,919 |  |  |  | 5.00  | %
|                                         | UCBH Holdings, Inc.    |        |   | 454,762           |  |                   |  | 8.42              |   |            |   | 216,148 |  |  |  | 4.00 |   |  |   |         |  |  |  |       |  

75



---



##### 



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,
2003 (dollars in thousands):

|                               |                                                                       |                |         |                    |   |            |         |                |   |   |         |         |   |   |         |         |  
|------------------------------ | --------------------------------------------------------------------- | -------------- | ------- | ------------------ | - | ---------- | ------- | -------------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                               |                                                                       |                |         |                   
|                               |                                                                       | Tier I Capital |         | Risk-Based Capital
|                               |                                                                       |                |         |                   
|                               |                                                                       | United         |         |                    |   | United     |         |               
|                               |                                                                       | Commercial     |         | UCBH               |   | Commercial |         | UCBH          
|                               |                                                                       | Bank           |         | Holdings, Inc.     |   | Bank       |         | Holdings, Inc.
|                               |                                                                       |                |         |                    |   |            |         |               
|GAAP Capital                   |                                                                       | $              | 520,024 |                    |   | $          | 414,465 |                |   | $ | 520,024 |         |   | $ | 414,465 |        
|Nonallowable components:       |                                                                       |                |         |                    |   |            |         |                |   |   |         |         |   |   |         |        
|                               | Unrealized losses on securities available for sale                    |                |         | 3,245              |   |            |         | 3,245          |   |   |         | 3,245   |   |   |         | 3,245   |  
|                               | Goodwill                                                              |                |         | (98,548            | ) |            |         | (98,548        | ) |   |         | (98,548 | ) |   |         | (98,548 | )
|                               | Mortgage servicing rights  excess                                    |                |         | (400               | ) |            |         | (400           | ) |   |         | (400    | ) |   |         | (400    | )
|Additional capital components: |                                                                       |                |         |                    |   |            |         |                |   |   |         |         |   |   |         |        
|                               | Subordinated debentures                                               |                |         |                   |   |            |         | 136,000        |   |   |         |        |   |   |         | 136,000 |  
|                               | Allowance for loan losses  limited to
    1.25% of risk-based assets |                |         |                   |   |            |         |               |   |   |         | 48,715  |   |   |         | 48,776  |  
|                               |                                                                       |                |         |                    |   |            |         |                |   |   |         |         |   |   |         |        
|Regulatory capital             |                                                                       | $              | 424,321 |                    |   | $          | 454,762 |                |   | $ | 473,036 |         |   | $ | 503,538 |        
|                               |                                                                       |                |         |                    |   |            |         |                |   |   |         |         |   |   |         |        

The Company and the Bank are prohibited by
federal regulations from paying dividends if the payment would
reduce their regulatory capital below certain minimum
requirements. Following its offering in 1998, the Company
commenced paying dividends in 2000. During 2003, 2002 and 2001,
the Company declared dividends totaling $0.12 per share,
$0.10 per share and $0.08 per share, respectively.

76



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

12.     Earnings Per
Share

Effective April 8, 2003, the Company
completed a two-for-one stock split. The following is a
reconciliation of the numerator and denominator of the basic and
diluted earnings per share on a post-split basis. Accordingly,
the financial statements for the years ended December 31,
2002 and 2001 have been restated to reflect the effect of the
stock split.

|                        |            |                                                  |   |               |  |           |           |            |  |  |   |      | 
|----------------------- | ---------- | ------------------------------------------------ | - | ------------- |  | --------- | --------- | ---------- |  |  | - | ---- | 
|                        |            |                                                 
|                        |            | Years Ended December 31,                        
|                        |            | 2003, 2002, and 2001                            
|                        |            |                                                 
|                        |            | Income                                           |   | Shares        |  | Per Share
|                        |            | (Numerator)                                      |   | (Denominator) |  | Amount   
|                        |            |                                                  |   |               |  |          
|                        |            |                                                 
|                        |            | (Dollars in Thousands, Except Per Share Amounts)
|2003:                   |            |                                                  |   |               |  |           |           |            |  |  |   |     
|Basic:                  |            |                                                  |   |               |  |           |           |            |  |  |   |     
|                        | Net income |                                                  | $ | 64,638        |  |           |           | 43,585,216 |  |  | $ | 1.48 | 
|Effect of stock options |            |                                                  |  |               |  |           | 2,146,055 |            |  |  |   |     
|                        |            |                                                  |   |               |  |           |           |            |  |  |   |     
|Diluted:                |            |                                                  |   |               |  |           |           |            |  |  |   |     
|                        | Net income |                                                  | $ | 64,638        |  |           |           | 45,731,271 |  |  | $ | 1.41 | 
|                        |            |                                                  |   |               |  |           |           |            |  |  |   |     
|2002:                   |            |                                                  |   |               |  |           |           |            |  |  |   |     
|Basic:                  |            |                                                  |   |               |  |           |           |            |  |  |   |     
|                        | Net income |                                                  | $ | 38,928        |  |           |           | 39,657,766 |  |  | $ | 0.98 | 
|Effect of stock options |            |                                                  |  |               |  |           | 1,857,160 |            |  |  |   |     
|                        |            |                                                  |   |               |  |           |           |            |  |  |   |     
|Diluted:                |            |                                                  |   |               |  |           |           |            |  |  |   |     
|                        | Net income |                                                  | $ | 38,928        |  |           |           | 41,514,926 |  |  | $ | 0.94 | 
|                        |            |                                                  |   |               |  |           |           |            |  |  |   |     
|2001:                   |            |                                                  |   |               |  |           |           |            |  |  |   |     
|Basic:                  |            |                                                  |   |               |  |           |           |            |  |  |   |     
|                        | Net income |                                                  | $ | 30,488        |  |           |           | 38,146,766 |  |  | $ | 0.80 | 
|Effect of stock options |            |                                                  |  |               |  |           | 1,809,006 |            |  |  |   |     
|                        |            |                                                  |   |               |  |           |           |            |  |  |   |     
|Diluted:                |            |                                                  |   |               |  |           |           |            |  |  |   |     
|                        | Net income |                                                  | $ | 30,488        |  |           |           | 39,955,772 |  |  | $ | 0.77 | 
|                        |            |                                                  |   |               |  |           |           |            |  |  |   |     

13.     Segment
Information

The Company adheres to SFAS No. 131
Disclosures about Segments of an Enterprise and Related
Information. For the years presented, segment reporting
reflects the Companys one Commercial Banking Business. As
the Company evolved from its savings and loan business primarily
focused on consumer business to its recent commercial banking
business, the Company, its Board of Directors and its expanded
Executive Management team (Management) are presented
with internal reports focused solely on its Commercial Banking.
Management makes operating decisions and assesses performance
based on its Commercial Banking Business. The restatement to one
segment from the Commercial and Consumer segments better align
with Managements focus and assessment of the business and
did not affect the consolidated results of operations or
consolidated financial position as previously reported.
Accordingly, all interest income, net income and assets
attributable to this segment.

77



---



##### 



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, 2003, 2002, and 2001
(dollars in thousands):

|     |                                                            |            |   |           | 
|---- | ---------------------------------------------------------- | ---------- | - | --------- | 
|     |                                                            | Commercial
|     |                                                            |           
|2003 |                                                            |            |   |          
|     | Net interest income (before provision for loan
    losses) |            | $ | 168,548   | 
|     | Segment net income                                         |            |   | 64,638    | 
|     | Segment total assets                                       |            |   | 5,585,190 | 
|2002 |                                                            |            |   |          
|     | Net interest income (before provision for loan
    losses) |            | $ | 124,946   | 
|     | Segment net income                                         |            |   | 38,928    | 
|     | Segment total assets                                       |            |   | 4,853,636 | 
|2001 |                                                            |            |   |          
|     | Net interest income (before provision for loan
    losses) |            | $ | 98,457    | 
|     | Segment net income                                         |            |   | 30,488    | 
|     | Segment total assets                                       |            |   | 2,932,043 | 

14.     Employee
Benefit Plans



| |                  
| | -----------------
| | 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 the Bank. The Plan was amended in April 1999 to
increase the number of shares reserved to be issued pursuant to
the Plan from 1,306,666 shares to 1,866,666, on a
post-split basis. The Plan was amended in April 2001 to increase
the number of shares reserved to be issued pursuant to the Plan
from 1,866,666 shares to 3,733,332 shares, on a
post-split basis. The plan was amended in April 2003 to increase
the number of shares reserved for issuance pursuant to the plan
from 3,733,332 shares to 9,567,600 shares, on a
post-split basis.

78



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



14.     Employee
Benefit Plans  (Continued)


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, 2003, 2002 and 2001:

|                                                                         |  |           |           |                |  |           |       |                |  |           |           |                |  |   |       |  |  |  |            |   |  |   |       | 
|------------------------------------------------------------------------ |  | --------- | --------- | -------------- |  | --------- | ----- | -------------- |  | --------- | --------- | -------------- |  | - | ----- |  |  |  | ---------- | - |  | - | ----- | 
|                                                                         |  |           |           |                |  |          
|                                                                         |  | 2003      |           | 2002           |  | 2001     
|                                                                         |  |           |           |                |  |          
|                                                                         |  |           |           | Weighted       |  |           |       | Weighted       |  |           |           | Weighted      
|                                                                         |  | Number    |           | Average        |  | Number    |       | Average        |  | Number    |           | Average       
|                                                                         |  | of Shares |           | Exercise Price |  | of Shares |       | Exercise Price |  | of Shares |           | Exercise Price
|                                                                         |  |           |           |                |  |           |       |                |  |           |           |               
|Options outstanding, beginning of year                                   |  |           | 4,988,206 |                |  | $         | 10.04 |                |  |           | 5,171,582 |                |  | $ | 8.99  |  |  |  | 3,521,464  |   |  | $ | 4.05  | 
|Granted                                                                  |  |           | 798,450   |                |  |           | 27.63 |                |  |           | 538,600   |                |  |   | 16.75 |  |  |  | 3,267,100  |   |  |   | 12.31 | 
|Canceled or expired                                                      |  |           | (102,327  | )              |  |           | 18.93 |                |  |           | (72,996   | )              |  |   | 16.64 |  |  |  | (397,634   | ) |  |   | 10.93 | 
|Exercised                                                                |  |           | (729,143  | )              |  |           | 7.45  |                |  |           | (648,980  | )              |  |   | 4.90  |  |  |  | (1,219,348 | ) |  |   | 3.84  | 
|                                                                         |  |           |           |                |  |           |       |                |  |           |           |                |  |   |       |  |  |  |            |   |  |   |       | 
|Options outstanding, end of year                                         |  |           | 4,955,186 |                |  |           | 13.07 |                |  |           | 4,988,206 |                |  |   | 10.04 |  |  |  | 5,171,582  |   |  |   | 8.79  | 
|                                                                         |  |           |           |                |  |           |       |                |  |           |           |                |  |   |       |  |  |  |            |   |  |   |       | 
|Shares exercisable end of year                                           |  |           | 2,977,803 |                |  |           | 9.23  |                |  |           | 2,436,316 |                |  |   | 7.12  |  |  |  | 1,690,196  |   |  |   | 3.89  | 
|Weighted average fair value of options granted
    during the year       |  |           |           |                |  |           | 7.70  |                |  |           |           |                |  |   | 5.07  |  |  |  |            |   |  |   | 5.17  | 
|Market value of stock at December 31, 2003,
    2002 and 2001 period end |  |           |           |                |  | $         | 38.97 |                |  |           |           |                |  | $ | 21.23 |  |  |  |            |   |  | $ | 14.22 | 

For options outstanding at December 31,
2003, the range of exercise prices was as follows:

|               |  |             |           |                  |  |                  |       |             |  |                  |      |  |  |  |           |  |  |   |       | 
|-------------- |  | ----------- | --------- | ---------------- |  | ---------------- | ----- | ----------- |  | ---------------- | ---- |  |  |  | --------- |  |  | - | ----- | 
|               |  | Options     |           | Weighted Average |  | Weighted Average |       | Options     |  | Weighted Average
|Exercise Price |  | Outstanding |           | Exercise Price   |  | Remaining Life   |       | Exercisable |  | Exercise Price  
|               |  |             |           |                  |  |                  |       |             |  |                 
|$3.75-$10.00   |  |             | 1,218,601 |                  |  | $                | 4.21  |             |  |                  | 5.00 |  |  |  | 1,218,601 |  |  | $ | 4.21  | 
|$10.01-$20.00  |  |             | 2,972,735 |                  |  |                  | 12.97 |             |  |                  | 7.40 |  |  |  | 1,756,202 |  |  |   | 12.69 | 
|$20.01-$30.00  |  |             | 588,850   |                  |  |                  | 25.76 |             |  |                  | 9.30 |  |  |  | 3,000     |  |  |   | 24.75 | 
|$30.01-$40.00  |  |             | 175,000   |                  |  |                  | 33.62 |             |  |                  | 9.80 |  |  |  |          |  |  |   |      | 
|               |  |             |           |                  |  |                  |       |             |  |                  |      |  |  |  |           |  |  |   |       | 
|Total/Average  |  |             | 4,955,186 |                  |  |                  | 13.07 |             |  |                  | 7.10 |  |  |  | 2,977,803 |  |  |   | 9.23  | 
|               |  |             |           |                  |  |                  |       |             |  |                  |      |  |  |  |           |  |  |   |       | 

In October 1995, the FASB issued
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 for 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. Please
refer to Note 2 for additional information.

79



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



14.     Employee
Benefit Plans  (Continued)


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 2003, 2002, and 2001:

|                        |  |      |       |      |  |      |       |   |  |  |       |  
|----------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                        |  | 2003 |       | 2002 |  | 2001
|                        |  |      |       |      |  |     
|Dividend yield          |  |      | 0.60  | %    |  |      | 0.40  | % |  |  | 0.60  | %
|Volatility              |  |      | 21.18 | %    |  |      | 30.45 | % |  |  | 43.31 | %
|Risk-free interest rate |  |      | 3.45  | %    |  |      | 3.90  | % |  |  | 4.80  | %
|Expected lives (years)  |  |      | 7.4   |      |  |      | 6.5   |   |  |  | 6.5   |  

United
Commercial Bank Savings Plus Plan

The Bank has a 401(k) tax deferred savings plus
plan (401(k) Plan) under which eligible employees
may elect to defer a portion of their salary (up to 15%) as a
contribution to the 401(k) Plan. The Bank matches the
employees contributions at a rate set by the Board of
Directors. The Plan provides for employer contributions of
50 percent of employee contributions for all employees for
2001, 2002 and 2003. For 2001, 2002 and 2003, employer
contributions were limited to $2,000 per participant. The
matching contribution vests ratably over the first five years of
service.

For the years ended December 31, 2003, 2002,
and 2001, the Bank contributed $899,000, $646,000, and $475,000,
respectively, to the 401(k) Plan.

In connection with the FCB acquisition, former
FCB employees who were eligible to participate were able to
enroll in UCBs 401(k) plan as of July 12, 2003.

In connection with the BCC acquisition, former
BCC employees became participants in the UCB 401(k) Plan as of
January 1, 2003.



|    |                                  
|--- | ---------------------------------
|15. | Federal and State Taxes on Income

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

|                                |         |                          |        |        |  |      |         |        |   |   |         |        |  
|------------------------------- | ------- | ------------------------ | ------ | ------ |  | ---- | ------- | ------ | - | - | ------- | ------ | -
|                                |         |                         
|                                |         | Years Ended December 31,
|                                |         |                         
|                                |         | 2003                     |        | 2002   |  | 2001
|                                |         |                          |        |        |  |     
|Current tax expense:            |         |                          |        |        |  |      |         |        |   |   |         |       
|                                | Federal |                          | $      | 21,685 |  |      | $       | 27,296 |   |   | $       | 24,450 |  
|                                | State   |                          |        | 4,238  |  |      |         | 8,565  |   |   |         | 7,421  |  
|                                |         |                          |        |        |  |      |         |        |   |   |         |       
|                                |         | $                        | 25,923 |        |  |      | 35,861  |        |   |   | 31,871  |       
|                                |         |                          |        |        |  |      |         |        |   |   |         |       
|Deferred tax (benefit) expense: |         |                          |        |        |  |      |         |        |   |   |         |       
|                                | Federal |                          | $      | 10,542 |  |      |         | (6,554 | ) |   |         | (9,262 | )
|                                | State   |                          |        | 473    |  |      |         | (5,169 | ) |   |         | (2,651 | )
|                                |         |                          |        |        |  |      |         |        |   |   |         |       
|                                |         | $                        | 11,015 |        |  |      | (11,723 | )      |   |   | (11,913 | )     
|                                |         |                          |        |        |  |      |         |        |   |   |         |       
|                                |         | $                        | 36,938 |        |  | $    | 24,138  |        |   | $ | 19,958  |       
|                                |         |                          |        |        |  |      |         |        |   |   |         |       

80



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



15.     Federal and
State Taxes on Income  (Continued)


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

|                             |                                                          |              |         |         |   |   |         |         |  
|---------------------------- | -------------------------------------------------------- | ------------ | ------- | ------- | - | - | ------- | ------- | -
|                             |                                                          |             
|                             |                                                          | Years Ended 
|                             |                                                          | December 31,
|                             |                                                          |             
|                             |                                                          | 2003         |         | 2002   
|                             |                                                          |              |         |        
|Deferred tax liabilities:    |                                                          |              |         |         |   |   |         |        
|                             | Fixed asset basis differences                            |              | $       | 640     |   |   | $       | 1,604   |  
|                             | Deferred loan fees                                       |              |         | 5,084   |   |   |         | 3,857   |  
|                             | FHLB dividends                                           |              |         | 3,769   |   |   |         | 3,443   |  
|                             | Purchase accounting adjustments                          |              |         | 25,311  |   |   |         | 20,044  |  
|                             | Unrealized gains on available for sale securities        |              |         |        |   |   |         | 6,555   |  
|                             | State taxes                                              |              |         | 305     |   |   |         |        |  
|                             | Other                                                    |              |         | 1,909   |   |   |         | 779     |  
|                             |                                                          |              |         |         |   |   |         |        
|                             |                                                          |              | 37,018  |         |   |   | 36,282  |        
|                             |                                                          |              |         |         |   |   |         |        
|Deferred tax assets:         |                                                          |              |         |         |   |   |         |        
|                             | Loan and OREO loss allowances                            |              |         | (21,302 | ) |   |         | (16,423 | )
|                             | Market value adjustments on certain securities           |              |         | (2,065  | ) |   |         | (8,012  | )
|                             | Unrealized (losses) on available for sale
    securities |              |         | (2,350  | ) |   |         |        |  
|                             | State taxes                                              |              |         |        |   |   |         | (1,922  | )
|                             | Compensation and benefits                                |              |         | (1,045  | ) |   |         | (1,500  | )
|                             | Other                                                    |              |         | (605    | ) |   |         | (449    | )
|                             |                                                          |              |         |         |   |   |         |        
|                             |                                                          |              | (27,367 | )       |   |   | (28,306 | )      
|                             |                                                          |              |         |         |   |   |         |        
|Net deferred tax liabilities |                                                          | $            | 9,651   |         |   | $ | 7,976   |        
|                             |                                                          |              |         |         |   |   |         |        

The components for deferred tax liabilities
(assets) by jurisdiction are as follows (dollars in thousands):

|                                   |                              |              |   |       |  |  |   |       |  
|---------------------------------- | ---------------------------- | ------------ | - | ----- |  |  | - | ----- | -
|                                   |                              |             
|                                   |                              | Years Ended 
|                                   |                              | December 31,
|                                   |                              |             
|                                   |                              | 2003         |   | 2002 
|                                   |                              |              |   |      
|Net deferred liabilities (assets): |                              |              |   |       |  |  |   |      
|                                   | Federal income tax           |              | $ | 6,792 |  |  | $ | 8,618 |  
|                                   | State franchise tax          |              |   | 2,859 |  |  |   | (642  | )
|                                   |                              |              |   |       |  |  |   |      
|                                   | Net deferred tax liabilities |              | $ | 9,651 |  |  | $ | 7,976 |  
|                                   |                              |              |   |       |  |  |   |      

The following table reconciles the statutory
income tax rate to the consolidated effective income tax rate:

|                                                                |                                                   |              |      |      |   |      |      |      |   |  |      |      |  
|--------------------------------------------------------------- | ------------------------------------------------- | ------------ | ---- | ---- | - | ---- | ---- | ---- | - |  | ---- | ---- | -
|                                                                |                                                   |             
|                                                                |                                                   | Years Ended 
|                                                                |                                                   | December 31,
|                                                                |                                                   |             
|                                                                |                                                   | 2003         |      | 2002 |   | 2001
|                                                                |                                                   |              |      |      |   |     
|Federal income tax rate                                         |                                                   |              | 35.0 | %    |   |      | 35.0 | %    |   |  | 35.0 | %   
|State franchise tax rate, net of federal income
    tax effects |                                                   |              | 7.0  |      |   |      | 7.0  |      |   |  | 7.0  |     
|                                                                |                                                   |              |      |      |   |      |      |      |   |  |      |     
|Statutory income tax rate                                       |                                                   |              | 42.0 |      |   |      | 42.0 |      |   |  | 42.0 |     
|                                                                |                                                   |              |      |      |   |      |      |      |   |  |      |     
|Increase (reduction) in tax rate resulting
    from:            |                                                   |              |      |      |   |      |      |      |   |  |      |     
|                                                                | California and federal tax credits and incentives |              |      | (3.8 | ) |      |      | (2.5 | ) |  |      | (1.3 | )
|                                                                | Tax exempt income                                 |              |      | (2.4 | ) |      |      | (1.8 | ) |  |      | (1.3 | )
|                                                                | Other, net                                        |              |      | 0.6  |   |      |      | 0.6  |   |  |      | 0.2  |  
|                                                                |                                                   |              |      |      |   |      |      |      |   |  |      |     
|                                                                |                                                   |              | 36.4 | %    |   |      | 38.3 | %    |   |  | 39.6 | %   
|                                                                |                                                   |              |      |      |   |      |      |      |   |  |      |     

81



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



15.     Federal and
State Taxes on Income  (Continued)


The years 2000 through 2002 remain open for
Internal Revenue Service purposes and the years 1999 through
2002 remain open for California Franchise Tax Board purposes.
The 2003 Federal and State tax returns have not yet been filed.



|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|16. | Derivative Financial Instruments and Financial
    Instruments with Off-Balance-Sheet Risk

The Company is a party to derivative financial
instruments and financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing
needs of its customers and to reduce its own exposure to
fluctuations in interest rates. The Company does not hold or
issue financial instruments for trading purposes. Financial
instruments in the normal course of business include commitments
to extend and purchase credit, forward commitments to sell
loans, letters of credit, foreign exchange contracts, and
interest-rate caps. Those instruments involve, to varying
degrees, elements of credit and interest-rate risk in excess of
the amount recognized in the statement of financial position.
The contract or notional amounts of those instruments 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, foreign exchange contracts, and forward commitments
to sell loans through credit approvals, limits, and monitoring
procedures. The Company does not require collateral or other
security to support interest-rate swap transactions with credit
risk.

Contract or notional amounts of derivative
financial instruments and financial instruments with
off-balance-sheet risk as of December 31, 2003 and 2002 are
as follows (dollars in millions):

|                                                                        |                               |                                           |      |      |       |  |      |   |       | 
|----------------------------------------------------------------------- | ----------------------------- | ----------------------------------------- | ---- | ---- | ----- |  | ---- | - | ----- | 
|                                                                        |                               | 2003                                      |      | 2002
|                                                                        |                               |                                           |      |     
|Financial instruments whose contract amounts
    represent credit risk: |                               |                                           |      |      |       |  |      |  
|                                                                        | Commitments to extend credit: |                                           |      |      |       |  |      |   |      
|                                                                        |                               | Consumer (including residential mortgage) |      | $    | 65.6  |  |      | $ | 86.5  | 
|                                                                        |                               | Commercial (excluding construction)       |      |      | 344.2 |  |      |   | 342.1 | 
|                                                                        |                               | Construction                              |      |      | 235.2 |  |      |   | 188.6 | 
|                                                                        |                               | Letters of credit                         |      |      | 39.5  |  |      |   | 49.1  | 
|Foreign exchange contracts receivable                                   |                               |                                           | 17.1 |      |       |  | 10.2 |  
|Foreign exchange contracts payable                                      |                               |                                           | 17.1 |      |       |  | 10.2 |  
|Commitments to purchase securities                                      |                               |                                           |     |      |       |  | 17.3 |  

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

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

82



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|    |                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------
|16. | Derivative Financial Instruments and Financial
    Instruments with Off-Balance-Sheet
    Risk  (Continued)

Foreign exchange contracts are contracts to
purchase or sell currencies in the over-the-counter market. Such
contracts can be either for immediate or forward delivery.
Entering into foreign exchange contract agreements involves the
risk of dealing with counter parties and their ability to meet
the terms of the contracts. The Bank purchases or sells foreign
exchange contracts in order to hedge a balance sheet or
off-balance-sheet foreign exchange position. Additionally, the
Bank purchases and sells foreign exchange contracts for
customers, as long as the foreign exchange risk is fully hedged
with an offsetting position.

Interest-rate caps are interest rate protection
instruments that involve the payment from the seller to the
buyer of an interest differential. This differential represents
the difference between current interest rates and agreed-upon
rate applied to a notional principal amount. Entering into
interest-rate cap agreements involves the risk of dealing with
counter parties and their ability to meet the terms of the
contracts. Notional principal amounts often are used to express
the volume of these transactions, but the amounts potentially
subject to credit risk are much smaller. The Company may be a
purchaser of interest-rate caps and swaps. At December 31,
2003 and 2002, no interest rate caps or swaps were outstanding.
For the year ended December 31, 2003, interest-rate caps
and swaps reduced interest income by $30,000. For the year ended
December 31, 2002, interest-rate caps and swaps did not
affect net interest income.



|    |                              
|--- | -----------------------------
|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.
Commercial real estate loans are generally originated at 65% or
less loan to value. Multifamily loans are generally originated
at 75% or less loan to value. Management believes that the risk
of significant losses is low.



|    |                                                 
|--- | ------------------------------------------------
|18. | Lease Commitments and Contingent
    Liabilities



| |                  
| | -----------------
| | Lease Commitments

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

Future minimum rental payments, 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, 2003,
are payable as follows (dollars in thousands):

|                     |                                 |   |       |        | 
|-------------------- | ------------------------------- | - | ----- | ------ | 
|2004                 |                                 | $ | 5,182 |       
|2005                 |                                 |   | 4,518 |       
|2006                 |                                 |   | 3,640 |       
|2007                 |                                 |   | 3,140 |       
|2008                 |                                 |   | 2,673 |       
|Aggregate thereafter |                                 |   | 8,649 |       
|                     |                                 |   |       |       
|                     | Total minimum payments required |   | $     | 27,802 | 
|                     |                                 |   |       |       

Rental expense was approximately
$6.5 million, $4.4 million, and $3.8 million for
the years ended December 31, 2003, 2002, and 2001,
respectively.

83



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



18.     Lease
Commitments and Contingent
Liabilities  (Continued)




| |                       
| | ----------------------
| | 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

SFAS 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, 2003 and
2002, by application of the described methods and significant
assumptions.



| |                                    
| | -----------------------------------
| | Cash and Short-term
    Investments

For these short-term instruments, the carrying
value of $76.8 million at December 31, 2003 and
$59.0 million at December 31, 2002 is a reasonable
estimate of fair value.



| |                                              
| | ---------------------------------------------
| | Investment and Mortgage-backed
    Securities

The aggregate fair value of investment and
mortgage-backed securities is $1.51 billion at
December 31, 2003 and $1.62 billion at
December 31, 2002. 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
$3.84 billion at December 31, 2003 and
$3.07 billion at December 31, 2002. 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 $4.49 billion at
December 31, 2003 and $4.03 billion at
December 31, 2002.



| |                                                         
| | --------------------------------------------------------
| | Federal Home Loan Bank Advances and
    Other Borrowings

Fair value of Federal Home Loan Bank
advances and other borrowings are 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, 2003 was $529.3 million and
$381.0 million at December 31, 2002.

84



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



19.     Fair Value of
Financial Instruments  (Continued)




| |                        
| | -----------------------
| | 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 the junior subordinated debentures was
$138.6 million at December 31, 2003 and
$135.7 million at December 31, 2002.



| |                       
| | ----------------------
| | Derivative Instruments

At of December 31, 2003 and 2002, the
Company had no derivative instruments designed as hedges
according to the relevant accounting criteria, see Note 1
for further discussion. The Companys derivative
instruments not accounted for at fair value in the financial
statements with any gains or losses reflected in current net
income. The fair value of foreign exchange contracts are
recognized and reported as either assets or liabilities on the
balance sheet. The fair value for outstanding contracts was nil
at December 31, 2003 and $12,000 at December 31, 2002.



| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | 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 counter parties. 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, 2003 or
December 31, 2002.

85



---



##### 



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)


|                                                                 |                                            |              |         |         |  |   |         |         | 
|---------------------------------------------------------------- | ------------------------------------------ | ------------ | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |                                            |             
|                                                                 |                                            | December 31,
|                                                                 |                                            |             
|                                                                 |                                            | 2003         |         | 2002   
|                                                                 |                                            |              |         |        
|ASSETS                                                          
|Cash and due from banks                                          |                                            | $            | 5,021   |         |  | $ | 15,913  |        
|Investment in subsidiaries                                       |                                            |              | 520,024 |         |  |   | 390,924 |        
|Other assets                                                     |                                            |              | 28,164  |         |  |   | 14,104  |        
|                                                                 |                                            |              |         |         |  |   |         |        
|                                                                 | Total assets                               |              | $       | 553,209 |  |   | $       | 420,941 | 
|                                                                 |                                            |              |         |         |  |   |         |        
|LIABILITIES                                                     
|Accrued interest payable                                         |                                            | $            | 980     |         |  | $ | 1,224   |        
|Other liabilities                                                |                                            |              | 1,763   |         |  |   | 1,350   |        
|Junior subordinated debentures, payable to
    subsidiary trusts |                                            |              | 136,000 |         |  |   | 136,000 |        
|                                                                 |                                            |              |         |         |  |   |         |        
|                                                                 | Total liabilities                          |              |         | 138,743 |  |   |         | 138,574 | 
|                                                                 |                                            |              |         |         |  |   |         |        
|STOCKHOLDERS EQUITY                                            
|Common stock                                                     |                                            |              | 450     |         |  |   | 210     |        
|Additional paid-in capital                                       |                                            |              | 208,990 |         |  |   | 124,440 |        
|Subsidiarys accumulated other comprehensive
    (loss) income   |                                            |              | (3,245  | )       |  |   | 9,053   |        
|Retained earnings                                                |                                            |              | 208,271 |         |  |   | 148,664 |        
|                                                                 |                                            |              |         |         |  |   |         |        
|                                                                 | Total stockholders equity                 |              |         | 414,466 |  |   |         | 282,367 | 
|                                                                 |                                            |              |         |         |  |   |         |        
|                                                                 | Total liabilities and stockholders equity |              | $       | 553,209 |  |   | $       | 420,941 | 
|                                                                 |                                            |              |         |         |  |   |         |        

86



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



20.     Parent
Company  (Continued)


CONDENSED STATEMENT OF INCOME

(Dollars in Thousands)


|                                                                                    |               |                                  |         |        |  |      |        |        |  |   |        |        | 
|----------------------------------------------------------------------------------- | ------------- | -------------------------------- | ------- | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                                                                    |               |                                 
|                                                                                    |               | For the Years Ended December 31,
|                                                                                    |               |                                 
|                                                                                    |               | 2003                             |         | 2002   |  | 2001
|                                                                                    |               |                                  |         |        |  |     
|INCOME                                                                             
|Interest income on investment securities                                            |               | $                                |        |        |  | $    | 2      |        |  | $ | 56     |       
|Dividends from subsidiary                                                           |               |                                  |        |        |  |      | 2,000  |        |  |   | 800    |       
|                                                                                    |               |                                  |         |        |  |      |        |        |  |   |        |       
|                                                                                    | Total income  |                                  |         |       |  |      |        | 2,002  |  |   |        | 856    | 
|                                                                                    |               |                                  |         |        |  |      |        |        |  |   |        |       
|EXPENSE                                                                            
|Interest expense on junior subordinated debentures                                  |               |                                  | 7,924   |        |  |      | 4,663  |        |  |   | 2,845  |       
|Miscellaneous expense                                                               |               |                                  | 3,712   |        |  |      | 3,275  |        |  |   | 2,562  |       
|                                                                                    |               |                                  |         |        |  |      |        |        |  |   |        |       
|                                                                                    | Total expense |                                  |         | 11,636 |  |      |        | 7,938  |  |   |        | 5,407  | 
|                                                                                    |               |                                  |         |        |  |      |        |        |  |   |        |       
|Income (loss) before taxes and equity in
    undistributed net income of subsidiary |               |                                  | (11,636 | )      |  |      | (5,936 | )      |  |   | (4,551 | )     
|Income tax benefit                                                                  |               |                                  | 4,742   |        |  |      | 3,187  |        |  |   | 2,135  |       
|Equity in undistributed net income of subsidiary                                    |               |                                  | 71,532  |        |  |      | 41,677 |        |  |   | 32,904 |       
|                                                                                    |               |                                  |         |        |  |      |        |        |  |   |        |       
|                                                                                    | Net income    |                                  | $       | 64,638 |  |      | $      | 38,928 |  |   | $      | 30,488 | 
|                                                                                    |               |                                  |         |        |  |      |        |        |  |   |        |       

87



---



##### 



UCBH HOLDINGS, INC.


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



20.     Parent
Company  (Continued)


CONDENSED STATEMENT OF CASH FLOWS

(Dollars in Thousands)


|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |   |         |        |  
|----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------------ | ----------------------------------------- | ---- | ------- | ------- | -------- | - | ------- | -------- | ------ | - | ------- | ------ | -
|                                                                                          |                                                                                                  |                                                 
|                                                                                          |                                                                                                  | For the Years Ended December 31,                
|                                                                                          |                                                                                                  |                                                 
|                                                                                          |                                                                                                  | 2003                                             |                                           | 2002 |         | 2001   
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |        
|OPERATING ACTIVITIES                                                                     
|Net income                                                                                |                                                                                                  | $                                                | 64,638                                    |      |         | $       | 38,928   |   |         | $        | 30,488 |  
|                                                                                          | Adjustments to reconcile net income to net cash
    provided by (used for) operating activities: |                                                  |                                           |      |         |         |          |   |         |          |        |   |        
|                                                                                          |                                                                                                  | Equity in undistributed net income of subsidiary |                                           |      | (71,532 | )       |          |   | (41,676 | )        |        |   | (32,904 | )     
|                                                                                          |                                                                                                  | (Increase) decrease in other assets              |                                           |      | (1,771  | )       |          |   | (8,105  | )        |        |   | 164     |       
|                                                                                          |                                                                                                  | (Decrease) increase in accrued interest payable  |                                           |      | (244    | )       |          |   | 723     |          |        |   | 31      |       
|                                                                                          |                                                                                                  | Increase in other liabilities                    |                                           |      | 8,317   |         |          |   | 3,419   |          |        |   | 1,823   |       
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  
|                                                                                          |                                                                                                  |                                                  | Net cash used for operating activities    |      |         | (592    | )        |   |         | (6,711   | )      |   |         | (398   | )
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  
|INVESTING ACTIVITIES                                                                     
|Capital contribution to subsidiary                                                        |                                                                                                  |                                                  | (11,000                                   | )    |         |         | (131,250 | ) |         |          | (5,000 | )
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  
|                                                                                          |                                                                                                  |                                                  | Net cash used in investing activities     |      |         | (11,000 | )        |   |         | (131,250 | )      |   |         | (5,000 | )
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  
|FINANCING ACTIVITIES                                                                     
|Proceeds from issuance of common stock                                                    |                                                                                                  |                                                  | 5,432                                     |      |         |         | 54,434   |   |         |          | 4,674  |  
|Proceeds from issuance of junior subordinated
    debentures, payable to subsidiary trust |                                                                                                  |                                                  |                                          |      |         |         | 100,000  |   |         |          | 6,000  |  
|Payment of cash dividend on common stock                                                  |                                                                                                  |                                                  | (4,732                                    | )    |         |         | (3,715   | ) |         |          | (2,661 | )
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  
|                                                                                          |                                                                                                  |                                                  | Net cash provided by financing activities |      |         | 700     |          |   |         | 150,719  |        |   |         | 8,013  |  
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  
|Net (decrease) increase in cash and cash
    equivalents                                  |                                                                                                  |                                                  | (10,892                                   | )    |         |         | 12,758   |   |         |          | 2,615  |  
|Cash and cash equivalents beginning of year                                               |                                                                                                  |                                                  | 15,913                                    |      |         |         | 3,155    |   |         |          | 540    |  
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  
|Cash and cash equivalents end of year                                                     |                                                                                                  | $                                                | 5,021                                     |      |         | $       | 15,913   |   |         | $        | 3,155  |  
|                                                                                          |                                                                                                  |                                                  |                                           |      |         |         |          |   |         |          |        |  

88



---



##### 



UNAUDITED SUPPLEMENTAL INFORMATION

UCBH Holdings, Inc.

Quarterly
Condensed Consolidated Financial Information

|                            |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |       |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |      | 
|--------------------------- | --------------------- | ------------------------------------------------- | ------ | ------------- |  | ------ | ------ | ----- |  | ------ | ------ | ----- |  | ------ | ------ | ----- |  | - | ------ | ---- |  | - | ------ | ---- |  | - | ------ | ---- |  | - | ------ | ---- | 
|                            |                       |                                                   |        |              
|                            |                       | 2003 Quarters                                     |        | 2002 Quarters
|                            |                       |                                                   |        |              
|                            |                       | Fourth                                            |        | Third         |  | Second |        | First |  | Fourth |        | Third |  | Second |        | First
|                            |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |      
|                            |                       |                                                  
|                            |                       | (Dollars in Thousands, Except Earnings Per Share)
|Interest income             |                       | $                                                 | 68,419 |               |  | $      | 66,299 |       |  | $      | 62,762 |       |  | $      | 62,782 |       |  | $ | 59,425 |      |  | $ | 49,930 |      |  | $ | 48,440 |      |  | $ | 47,382 |     
|Interest expense            |                       |                                                   | 21,873 |               |  |        | 23,227 |       |  |        | 23,131 |       |  |        | 23,483 |       |  |   | 23,631 |      |  |   | 18,409 |      |  |   | 18,581 |      |  |   | 19,610 |     
|                            |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |       |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |     
|Net interest income         |                       |                                                   | 46,546 |               |  |        | 43,072 |       |  |        | 39,631 |       |  |        | 39,299 |       |  |   | 35,794 |      |  |   | 31,521 |      |  |   | 29,859 |      |  |   | 27,772 |     
|                            |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |       |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |     
|Provision for credit losses |                       |                                                   | 3,323  |               |  |        | 2,820  |       |  |        | 2,834  |       |  |        | 990    |       |  |   | 3,157  |      |  |   | 2,742  |      |  |   | 2,887  |      |  |   | 887    |     
|Noninterest income          |                       |                                                   | 6,880  |               |  |        | 6,531  |       |  |        | 6,080  |       |  |        | 3,712  |       |  |   | 3,594  |      |  |   | 2,594  |      |  |   | 4,037  |      |  |   | 1,919  |     
|Noninterest expense         |                       |                                                   | 22,713 |               |  |        | 19,783 |       |  |        | 17,912 |       |  |        | 19,800 |       |  |   | 16,284 |      |  |   | 19,802 |      |  |   | 14,522 |      |  |   | 13,743 |     
|                            |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |       |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |     
|Income before income taxes  |                       |                                                   | 27,390 |               |  |        | 27,000 |       |  |        | 24,965 |       |  |        | 22,221 |       |  |   | 19,947 |      |  |   | 11,571 |      |  |   | 16,487 |      |  |   | 15,061 |     
|Income tax expense          |                       |                                                   | 8,876  |               |  |        | 10,232 |       |  |        | 9,537  |       |  |        | 8,293  |       |  |   | 7,243  |      |  |   | 4,243  |      |  |   | 6,659  |      |  |   | 5,993  |     
|                            |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |       |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |     
|Net income                  |                       | $                                                 | 18,514 |               |  | $      | 16,768 |       |  | $      | 15,428 |       |  | $      | 13,928 |       |  | $ | 12,704 |      |  | $ | 7,328  |      |  | $ | 9,828  |      |  | $ | 9,068  |     
|                            |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |       |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |     
|Net income per common share |                       |                                                   |        |               |  |        |        |       |  |        |        |       |  |        |        |       |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |     
|                            | Basic net income(1)   |                                                   | $      | 0.41          |  |        | $      | 0.37  |  |        | $      | 0.36  |  |        | $      | 0.33  |  |   | $      | 0.31 |  |   | $      | 0.19 |  |   | $      | 0.25 |  |   | $      | 0.23 | 
|                            | Diluted net income(1) |                                                   |        | 0.39          |  |        |        | 0.36  |  |        |        | 0.35  |  |        |        | 0.32  |  |   |        | 0.29 |  |   |        | 0.18 |  |   |        | 0.24 |  |   |        | 0.22 | 



---



|    |                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Effective April 8, 2003, the Company
    completed a two-for-one stock split. Accordingly, for quarters
    ended March 31, 2003 through December 31, 2002, basic
    earnings per share and diluted earnings per share have been
    restated to reflect the effect of the stock split.

89