Annual Reports

 
Quarterly Reports

  • 10-Q (Nov 10, 2008)
  • 10-Q (Aug 11, 2008)
  • 10-Q (May 9, 2008)
  • 10-Q (Nov 9, 2007)
  • 10-Q (Aug 9, 2007)
  • 10-Q (May 10, 2007)

 
8-K

 
Other

UCBH Holdings 10-Q 2006

Documents found in this filing:

  1. 10-Q
  2. Ex-10.8
  3. Ex-10.9
  4. Ex-31.1
  5. Ex-31.2
  6. Ex-32.0
  7. Ex-32.0
e10vq
Table of Contents

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
     
þ   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2006.
OR
     
o   Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from _______________ to _______________.
Commission File Number: 000-24947
UCBH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
     
Delaware   94-3072450
     
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
555 Montgomery Street, San Francisco, California   94111
     
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: (415) 315-2800
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer þ       Accelerated filer o       Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of July 31, 2006, the Registrant had 94,508,837 shares of common stock, par value $0.01 per share, outstanding.
 
 

 


 

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Table of Contents
             
        Page
           
  Financial Statements     1  
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     19  
  Quantitative and Qualitative Disclosures About Market Risk     47  
  Controls and Procedures     47  
 
           
           
  Legal Proceedings     48  
  Risk Factors     48  
  Unregistered Sales of Equity Securities and Use of Proceeds     48  
  Defaults Upon Senior Securities     48  
  Submission of Matters to a Vote of Security Holders     48  
  Other Information     49  
  Exhibits     50  
 
           
SIGNATURES     53  
 EXHIBIT 10.8
 EXHIBIT 10.9
 EXHIBIT 31.1
 EXHIBIT 31.2
 EXHIBIT 32.0

 


Table of Contents

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

(Dollars in Thousands, Except Share and Par Value Amounts)
(Unaudited)
                 
    June 30,     December 31,  
    2006     2005  
ASSETS
               
Noninterest bearing cash
  $ 89,089     $ 101,002  
Interest bearing cash
    94,598       99,070  
Federal funds sold
    116       2,993  
 
           
 
               
Cash and cash equivalents
    183,803       203,065  
 
           
 
               
Investment and mortgage-backed securities available for sale, at fair value
    1,240,312       1,117,724  
Investment and mortgage-backed securities held to maturity, at cost (fair value of $297,664 and $313,974 at June 30, 2006, and December 31, 2005, respectively)
    299,266       308,608  
Federal Home Loan Bank stock and other equity investments
    88,962       75,445  
Loans held for sale
    240,162       156,740  
Loans held in portfolio
    5,943,058       5,838,660  
Allowance for loan losses
    (59,035 )     (64,542 )
 
           
 
               
Loans held in portfolio, net
    5,884,023       5,774,118  
 
           
 
               
Accrued interest receivable
    41,305       37,750  
Premises and equipment, net
    97,754       98,289  
Goodwill
    107,455       106,648  
Core deposit intangibles, net
    12,745       14,981  
Mortgage servicing rights, net
    11,466       10,642  
Other assets
    83,840       61,627  
 
           
 
               
Total assets
  $ 8,291,093     $ 7,965,637  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Noninterest bearing deposits
  $ 568,336     $ 558,649  
Interest bearing deposits
    5,670,941       5,705,520  
 
           
 
               
Total deposits
    6,239,277       6,264,169  
 
           
 
               
Securities sold under agreements to repurchase
    150,000        
Short-term borrowings
    343,325       279,425  
Subordinated debentures
    150,520       150,520  
Accrued interest payable
    12,180       12,582  
Long-term borrowings
    665,844       562,033  
Other liabilities
    90,198       93,394  
 
           
 
               
Total liabilities
    7,651,344       7,362,123  
 
           
 
               
Commitments and contingencies (Note 13)
               
 
               
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued and outstanding
           
Common stock, $0.01 par value, 180,000,000 shares authorized at June 30, 2006, and December 31, 2005; 94,479,237 and 94,037,878 shares issued and outstanding at June 30, 2006, and December 31, 2005, respectively
    945       940  
Additional paid-in capital
    253,072       247,340  
Retained earnings
    418,384       375,220  
Accumulated other comprehensive loss
    (32,652 )     (19,986 )
 
           
 
               
Total stockholders’ equity
    639,749       603,514  
 
           
 
               
Total liabilities and stockholders’ equity
  $ 8,291,093     $ 7,965,637  
 
           
See accompanying notes to consolidated financial statements.

- 1 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations

(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2006     2005     2006     2005  
Interest and dividend income:
                               
Loans
  $ 111,636     $ 79,235     $ 217,174     $ 145,860  
Federal funds sold and deposits with banks
    1,223       361       2,238       999  
Investment and mortgage-backed securities:
                               
Taxable
    15,463       14,625       29,670       28,801  
Nontaxable
    2,684       2,652       5,376       5,235  
 
                       
 
                               
Total interest and dividend income
    131,006       96,873       254,458       180,895  
 
                       
 
                               
Interest expense:
                               
Deposits
    49,699       26,606       94,095       48,667  
Short-term borrowings
    4,091       2,653       7,565       2,969  
Subordinated debentures
    3,035       2,433       5,750       4,747  
Long-term borrowings
    8,131       5,535       15,418       9,500  
 
                       
 
                               
Total interest expense
    64,956       37,227       122,828       65,883  
 
                       
 
                               
Net interest income
    66,050       59,646       131,630       115,012  
Provision for loan losses
    1,249       1,775       1,556       2,965  
 
                       
 
                               
Net interest income after provision for loan losses
    64,801       57,871       130,074       112,047  
 
                       
 
                               
Noninterest income:
                               
Commercial banking fees
    3,416       2,604       7,511       4,841  
Service charges on deposits
    912       851       1,652       1,515  
Loss on sale of securities, net
          (614 )     (2 )     (5 )
Gain on sale of SBA loans, net
    1,021       839       1,602       1,923  
Gain on sale of multifamily and commercial real estate loans, net
    4,238       2,683       8,149       6,435  
Lower of cost or market adjustment on loans held for sale
    247             150        
Equity loss in other equity investments
    (50 )     (859 )     (508 )     (1,270 )
Acquisition termination fee
                5,000        
Other fees
    345       164       652       275  
 
                       
 
                               
Total noninterest income
    10,129       5,668       24,206       13,714  
 
                       
 
                               
Noninterest expense:
                               
Personnel
    20,738       15,109       46,472       29,849  
Occupancy
    3,716       3,262       7,415       5,908  
Data processing
    3,005       1,762       5,327       3,386  
Furniture and equipment
    1,775       1,567       3,435       3,096  
Professional fees and contracted services
    2,410       2,782       5,795       5,291  
Deposit insurance
    195       189       406       377  
Communication
    258       238       504       495  
Core deposit intangible amortization
    467       258       1,022       542  
Loss (gain) on extinguishment of subordinated debentures and borrowings
    (365 )     1,196       (360 )     1,196  
Other general and administrative
    4,932       4,065       9,863       7,501  
 
                       
 
                               
Total noninterest expense
    37,131       30,428       79,879       57,641  
 
                       
 
                               
Income before income tax expense
    37,799       33,111       74,401       68,120  
Income tax expense
    12,393       7,747       25,576       20,950  
 
                       
 
                               
Net income
  $ 25,406     $ 25,364     $ 48,825     $ 47,170  
 
                       
 
                               
Earnings per share:
                               
Basic
  $ 0.27     $ 0.28     $ 0.52     $ 0.52  
Diluted
  $ 0.26     $ 0.27     $ 0.50     $ 0.49  
Dividends declared per share
  $ 0.030     $ 0.025     $ 0.060     $ 0.050  
See accompanying notes to consolidated financial statements.

- 2 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income

(Dollars in Thousands, Except Share and Per Share Amounts)
(Unaudited)
                                                         
                    Additional             Accumulated Other     Total        
    Common Stock     Paid-In     Retained     Comprehensive     Stockholders’     Comprehensive  
    Shares     Amount     Capital     Earnings     Loss (1)     Equity     Income  
Balance at December 31, 2004
    91,131,824     $ 456     $ 203,432     $ 286,622     $ (6,498 )   $ 484,012          
 
Net income
                      47,170             47,170     $ 47,170  
Other comprehensive income, net of tax benefit of $55
                            75       75       75  
 
                                                     
Comprehensive income
                                      $ 47,245  
 
                                                     
Stock options exercised, including related tax benefit
    614,360       5       5,684                   5,689          
Cash dividend of $0.050 per share
                      (4,580 )           (4,580 )        
Stock split
          457       (457 )                          
 
                                           
 
                                                       
Balance at June 30, 2005
    91,746,184     $ 918     $ 208,659     $ 329,212     $ (6,423 )   $ 532,366          
 
                                           
 
                                                       
Balance at December 31, 2005
    94,037,878     $ 940     $ 247,340     $ 375,220     $ (19,986 )   $ 603,514          
 
                                                       
Net income
                      48,825             48,825     $ 48,825  
Other comprehensive income, net of tax benefit of $9,151
                            (12,666 )     (12,666 )     (12,666 )
 
                                                     
Comprehensive income
                                      $ 36,159  
 
                                                     
Stock options exercised, including related tax benefit
    441,359       5       4,869                   4,874          
APB Opinion No. 25 stock compensation charge
                12                   12          
SFAS No. 123(R) stock compensation charge
                851                   851          
Cash dividend of $0.060 per share
                      (5,661 )           (5,661 )        
 
                                           
 
                                                       
Balance at June 30, 2006
    94,479,237     $ 945     $ 253,072     $ 418,384     $ (32,652 )   $ 639,749          
 
                                           
 
(1)   Accumulated Other Comprehensive Loss arises solely from net unrealized losses on investment and mortgage-backed securities available for sale, presented net of tax.
See accompanying notes to consolidated financial statements.

- 3 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

(Dollars in Thousands)
(Unaudited)
                 
    Six Months Ended June 30,  
    2006     2005  
Cash flows from operating activities:
               
Net income
  $ 48,825     $ 47,170  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Provision for loan losses
    1,556       2,965  
Amortization of net deferred loan fees
    (4,181 )     (2,946 )
Amortization of net securities premiums and discounts
    (32 )     (128 )
Federal Home Loan Bank stock dividend
    (989 )     (530 )
Amortization of intangibles
    2,341       1,718  
Depreciation and amortization of premises and equipment
    4,363       4,004  
Gain on sale of loans held in portfolio, securities, and other assets, net
    (8,784 )     (65 )
Lower of cost or market adjustment on loans held for sale
    (150 )      
Equity loss in other equity investments
    368       1,270  
Stock compensation expense, net of tax benefit related to nonqualified stock option grants
    745        
Loss (gain) on extinguishment of subordinated debentures and borrowings
    (360 )     1,196  
Other, net
    280       110  
Changes in operating assets and liabilities:
               
Decrease in loans originated for sale
    24,272       50,438  
Increase in accrued interest receivable
    (3,555 )     (5,286 )
Increase in other assets
    (12,924 )     (859 )
Increase (decrease) in accrued interest payable
    (402 )     1,255  
Increase (decrease) in other liabilities
    (2,491 )     9,483  
 
           
 
               
Net cash provided by operating activities
    48,882       109,795  
 
           
 
               
Cash flows from investing activities:
               
Payment of acquisition related expenditures
    (377 )      
Investment and mortgage-backed securities, available for sale:
               
Principal payments and maturities
    59,436       340,411  
Purchases
    (211,003 )     (418,582 )
Sales
    7,231       91,380  
Called
    1,225       12,000  
Investment and mortgage-backed securities, held to maturity:
               
Principal payments and maturities
    8,078       13,007  
Purchases
          (9,893 )
Proceeds from redemption of Federal Home Loan Bank stock
    5,769        
Purchase of Federal Home Loan Bank stock
    (19,150 )     (15,783 )
Funding of other equity investments
    (903 )     (5,163 )
Proceeds from the sale of loans held in portfolio
    405,521       30,070  
Loans held in portfolio originated and purchased, net of principal collections
    (616,475 )     (842,347 )
Purchases of premises and other equipment
    (3,859 )     (1,691 )
Capitalization of loan servicing rights
    (2,261 )     (3,619 )
Other investing activities, net
    258       408  
 
           
 
               
Net cash used in investing activities
    (366,510 )     (809,802 )
 
           
 
               
Cash flows from financing activities:
               
Net increase in demand deposits, NOW, money market and savings accounts
    45,316       132,354  
Net increase (decrease) in time deposits
    (70,428 )     77,110  
Net increase in securities sold under agreements to repurchase
    150,000        
Net increase in short-term borrowings
    210,128       437,053  
Redemption of subordinated debentures
          (30,000 )
Proceeds from long-term borrowings
    2,753        
Principal payments of long-term borrowings
    (37,584 )      
Proceeds from stock option exercises
    3,359       2,599  
Payment of cash dividend on common stock
    (5,178 )     (4,109 )
 
           
 
               
Net cash provided by financing activities
    298,366       615,007  
 
           
 
               
Net decrease in cash and cash equivalents
    (19,262 )     (85,000 )
Cash and cash equivalents at beginning of period
    203,065       208,364  
 
           
 
               
Cash and cash equivalents at end of period
  $ 183,803     $ 123,364  
 
           
See accompanying notes to consolidated financial statements.

- 4 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1.   Basis of Presentation and Summary of Significant Accounting and Reporting Policies
 
    Basis of Presentation and Principles of Consolidation
 
    The unaudited interim consolidated financial statements include the accounts of UCBH Holdings, Inc. (“UCBH”), the bank holding company of United Commercial Bank (“UCB”), and its consolidated subsidiaries (collectively referred to as the “Company”, “we”, “us” and “our”). The consolidated results exclude seven special purpose trusts owned by UCBH, which were created for issuing guaranteed preferred beneficial interests in UCBH’s junior subordinated debentures. In accordance with Financial Accounting Standards Board (the “FASB”) Interpretation No. (“FIN”) 46R, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51, these special purpose trusts are excluded from the consolidated results as UCBH is not considered the primary beneficiary of these trusts. All significant intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, the unaudited consolidated financial statements contain all adjustments consisting only of a normal and recurring nature, which are considered necessary for a fair presentation of the financial condition and results of operations for such periods. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2005.
 
    The unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q pursuant to Rule 10-01, “Interim Financial Statements”, of Regulation S-X promulgated by the SEC. Accordingly, the unaudited consolidated financial statements do not include all of the disclosures required by GAAP for complete financial statements. The December 31, 2005, consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. Results as of and for the three and six months ended June 30, 2006, are not necessarily indicative of results that may be expected for any other interim period or the year as a whole.
 
    The results of operations for the three and six months ended June 30, 2006, include the results of operations of Pacifica Bancorp, Inc., which was acquired on October 31, 2005, and Asian American Bank & Trust Company, which was acquired on November 28, 2005. On January 27, 2005, UCBH declared a two-for-one stock split in the form of a stock dividend payable to the shareholders of record as of March 31, 2005, and distributed the stock dividend on April 12, 2005. Accordingly, the number of issued and outstanding shares of UCBH’s common stock on the consolidated statement of changes in stockholders’ equity and comprehensive income at December 31, 2004, has been adjusted to take into account the stock split.
 
    Use of Estimates in Preparation of Financial Statements
 
    The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated results.
 
    Reclassification
 
    Certain reclassifications have been made to prior periods’ consolidated financial statements to conform to the June 30, 2006, presentation.

- 5 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    Allowance for Loan Losses
 
    The allowance for loan losses represents our estimate of the losses that are inherent in the loan portfolio. UCB continuously monitors the quality of its loan portfolio and maintains an allowance for loan losses sufficient to absorb losses inherent in the portfolio.
 
    UCB’s methodology for assessing the adequacy of the allowance for loan losses includes the evaluation of two distinct components: a general allowance applied to loan portfolio categories as a whole and a specific allowance for loans deemed impaired. Loans that are determined to be impaired are excluded from the general allowance analysis of the loan portfolio allowance and are assessed individually.
 
    In determining the general allowance, UCB applies loss factors, differentiated by an internal credit risk rating system, to its major loan portfolio categories (based primarily on loan type). UCB’s risk rating system is applied at the individual loan level within each of the major loan portfolio categories. The credit quality of the loan portfolio is regularly assessed through on going review.
 
    The loss factors are developed from actual historic losses, and reflect comparative analysis with peer group loss rates and expected losses. Additionally, loss factors incorporate qualitative adjustments that reflect an assessment of internal and external influences on credit quality that have not yet been reflected in the historical loss or risk-rating data. These influences may include elements such as portfolio credit quality trends, and changes in concentrations, growth, or credit underwriting. UCB’s qualitative adjustments also include an economic surcharge factor to adjust loss factors in recognition of the impact various macro-economic factors have on portfolio performance.
 
    UCB regularly assesses the loss factors that are applied to loan portfolio categories, and as part of the assessment concluded during the three months ended June 30, 2006, UCB effected refinements in the methodologies employed in establishing appropriate loss factors. These refinements focused primarily on the application of the expected loss approach, which is in turn based on estimated probabilities of default and loss given default, and on the delineation of the quantitative and qualitative risk characteristics and macro-economic influences.
 
    The quantitative analysis resulted in a revision and lowering of the loss factors on the commercial real estate, construction and commercial portfolios. The qualitative analysis resulted in a lowering of the construction portfolio loss factor while resulting in an increase in the multi-family portfolio loss factor. The quantitative analysis also resulted in establishing a minimum loss factor for each of the major loan portfolio categories to better reflect minimum inherent loss in all portfolios including those with limited historic loss experience.
 
    The second component of the allowance for loan losses, the specific reserve, applies to loans that are deemed impaired. A loan is considered impaired when it is probable that UCB will not be able to collect all amounts due, including interest payments, in accordance with the loan’s contractual terms. Unless the loan is collateral-dependent, loan impairment is measured based on the present value of expected future cash flows that have been discounted at the loan’s effective interest rate. If the loan is collateral-dependent, either the observable market price or the current fair value of the collateral, reduced by estimated disposition costs, is used in place of the discounted cash flow analysis.
 
    UCB also estimates a reserve related to unfunded commitments and other off-balance sheet credit exposure. In assessing the adequacy of this reserve, UCB uses a similar approach used in the development of the allowance for loan losses. The reserve for unfunded commitments is included in other liabilities on the statement of financial position.

- 6 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    Stock-Based Compensation
 
    Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment. Under SFAS No. 123(R), the total fair value of the stock options awards is expensed ratably over the service period of the employees receiving the awards. In adopting SFAS No. 123(R), the Company used the modified prospective method of adoption. Under this adoption method, compensation expense recognized subsequent to adoption will include: (a) compensation costs for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation costs for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R).
 
    Prior to January 1, 2006, the Company accounted for employee stock-based compensation using the intrinsic value method in accordance with Accounting Principles Board (the “APB”) Opinion No. 25, Accounting for Stock Issued to Employees, as allowed by SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Under the intrinsic value method, no stock-based employee compensation cost is recorded, provided the stock options are granted with an exercise price equal to or greater than the market value of the underlying common stock on the date of grant. No share-based employee compensation cost has been reflected in the Company’s net income prior to the adoption of SFAS No. 123(R).
 
    In estimating the fair value of each stock option award on their respective grant dates, we use the Black-Scholes pricing model. The Black-Scholes pricing model requires us to make assumptions with regard to the options granted during a reporting period namely, expected life, stock price volatility, expected dividend yield and risk-free interest rate.
 
    The expected life of the options is based on historical data of UCBH’s actual experience with the options it has granted and represents the period of time that the options granted are expected to be outstanding. This data include employees’ expected exercise and post-vesting employment termination behaviors. The expected stock price volatility is estimated using the historical volatility of UCBH’s common stock and other factors. The historical volatility covers a period that corresponds to the expected life of the options. The expected dividend yield is based on the estimated annual dividends that we expect UCBH to pay over the expected life of the options as a percentage of the market value of UCBH’s stock as of the grant date. The risk-free interest rate for the expected life of the options granted is based on the U.S. Treasury yield curve in effect as of the grant date. See note 10 for further information on share-based compensation.
 
2.   Recent Accounting Pronouncements
 
    Accounting for Uncertainty in Income Taxes
 
    In July 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. FIN 48 clarifies the accounting for income tax uncertainties that have been recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides additional guidance on accounting for tax uncertainties, including derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening

- 7 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    retained earnings. The Company is currently evaluating the impact that adopting FIN 48 will have on its financial statements.
 
    Accounting for Servicing of Financial Assets
 
    In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140. SFAS No. 156 permits entities to choose to either measure servicing rights subsequent to initial evaluation at fair value and report changes in fair value in earnings or amortize the servicing rights in proportion to and over the estimated net servicing income or loss and assess the servicing rights for impairment or the need for an increased obligation. SFAS No. 156 also clarifies when a servicer should separately recognize servicing assets and liabilities, requires that all separately recognized assets and liabilities be initially measured at fair value, if practicable, permits a one-time reclassification of available for sales securities to trading securities by an entity with recognized servicing rights and requires additional disclosures for all separately recognized servicing assets and liabilities. SFAS No. 156 is effective as of the beginning of an entity’s fiscal year that begins after September 15, 2006. The Company does not expect the adoption of SFAS No. 156 will have a material effect on its consolidated financial position, results of operations or cash flows.
 
    Accounting for Certain Hybrid Financial Instruments
 
    In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140. SFAS No. 155 permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133; establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. The new standard is effective for all financial instruments acquired or issued after the beginning of the Company’s first fiscal year that begins after September 15, 2006. The Company does not expect the adoption of SFAS No. 155 will have a material effect on its consolidated financial position, results of operations or cash flows.
 
3.   Business Combinations
 
    Pacifica Bancorp, Inc. and Asian American Bank & Trust Company
 
    During the three months ended June 30, 2006, goodwill and core deposit intangibles were adjusted to reflect the final valuations of the net assets acquired from Pacifica Bancorp, Inc. and Asian American Bank & Trust Company.
 
    Great Eastern Bank
 
    On February 17, 2006, Great Eastern Bank (“GEB”) notified UCBH that it had decided to accept a superior third party proposal, as defined in Agreement and Plan of Merger between UCBH and GEB dated as of October 13, 2005 (the “GEB Merger Agreement”). UCBH notified GEB on February 21, 2006, that it elected not to exercise the right of further negotiation as permitted under the GEB Merger Agreement. This resulted in the termination of the GEB Merger Agreement and the payment of a breakup fee of $5.0 million from GEB to UCBH, which was received on February 21, 2006.

- 8 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
4.   Cash and Cash Equivalents
 
    UCB is required to maintain a percentage of its deposit balances as reserves either in cash or on deposit at the Federal Reserve Bank of San Francisco. At June 30, 2006, and December 31, 2005, the reserve requirement was $7.0 million and $13.1 million, respectively.
 
5.   Investment and Mortgage-Backed Securities
 
    The amortized cost and approximate market value of investment and mortgage-backed securities classified as available for sale and held to maturity at June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                                 
    June 30, 2006     December 31, 2005  
    Amortized     Market     Amortized     Market  
    Cost     Value     Cost     Value  
Investment securities available for sale:
                               
Trust preferred securities
  $ 33,444     $ 32,940     $ 33,443     $ 32,946  
U.S. Government sponsored enterprises
    242,819       235,066       159,655       155,185  
Other
    10,503       10,402       11,012       10,911  
 
                       
 
                               
Total investment securities available for sale
    286,766       278,408       204,110       199,042  
 
                       
 
                               
Mortgage-backed securities available for sale:
                               
FNMA
    381,104       362,975       355,135       344,190  
GNMA
    85,048       79,520       88,184       85,033  
FHLMC
    344,200       327,857       302,540       292,316  
Other
    199,521       191,552       202,264       197,143  
 
                       
 
                               
Total mortgage-backed securities available for sale
    1,009,873       961,904       948,123       918,682  
 
                       
 
                               
Total investment and mortgage-backed securities available for sale
    1,296,639       1,240,312       1,152,233       1,117,724  
 
                       
 
                               
Investment securities held to maturity:
                               
Municipals
    224,389       226,970       225,573       232,279  
 
                       
 
                               
Mortgage-backed securities held to maturity:
                               
FNMA
    4,565       4,277       5,112       4,923  
GNMA
    69,656       65,802       77,261       76,133  
FHLMC
    656       615       662       639  
 
                       
 
                               
Total mortgage-backed securities held to maturity
    74,877       70,694       83,035       81,695  
 
                       
 
                               
Total investment and mortgage-backed securities held to maturity
    299,266       297,664       308,608       313,974  
 
                       
 
                               
Total investment and mortgage-backed securities
  $ 1,595,905     $ 1,537,976     $ 1,460,841     $ 1,431,698  
 
                       
    As of June 30, 2006, the net unrealized loss on securities was $57.9 million. The net unrealized loss on securities that are available for sale was $56.3 million. Net of tax benefit of $23.6 million, the unrealized $32.7 million loss is included in other comprehensive loss as a reduction to stockholders’ equity. The $1.6 million net loss between the carrying value and market value of securities that are held to maturity has not been recognized in the consolidated financial statements for the three and six months ended June 30, 2006. Additionally, certain securities that UCB holds have unrealized losses that extend for periods in excess of twelve months. However, since the unrealized losses are attributable to movement in market interest rates and UCB has the intent and ability to hold these securities until recovery of such unrealized loss, UCB has concluded that the impairment on these securities is temporary.

- 9 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    As of December 31, 2005, the net unrealized loss on securities was $29.1 million. The net unrealized loss on securities that are available for sale was $34.5 million. Net of tax benefit of $14.5 million, the unrealized $20.0 million loss is included in other comprehensive income as a reduction to stockholders’ equity. The $5.4 million net 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, 2005.
 
6.   Loans Held for Sale
 
    The components of loans held for sale as of June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,     December 31,  
    2006     2005  
Commercial:
               
Secured by real estate — nonresidential
  $ 237,397     $ 154,087  
Business
    1,874       2,653  
 
           
 
               
Total commercial loans
    239,271       156,740  
 
           
 
               
Consumer:
               
Residential mortgage (one-to-four family)
    891        
 
           
 
               
Loans held for sale (1)
  $ 240,162     $ 156,740  
 
           
 
(1)   Amounts include net unamortized deferred loan fees of $438,000 and $372,000 at June 30, 2006, and December 31, 2005, respectively.
    During the six months ended June 30, 2006, UCB transferred $379.7 million of loans from held in portfolio to held for sale and $62.1 million of loans from held for sale to held in portfolio.

- 10 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
7.   Loans Held in Portfolio and Allowance for Loan Losses
 
    The components of loans held in portfolio as of June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,     December 31,  
    2006     2005  
Commercial:
               
Secured by real estate — nonresidential
  $ 1,963,087     $ 2,307,381  
Secured by real estate — multifamily
    1,475,440       1,506,848  
Construction
    709,222       494,841  
Business
    1,126,926       863,935  
 
           
 
               
Total commercial loans
    5,274,675       5,173,005  
 
           
 
               
Consumer:
               
Residential mortgage (one-to-four family)
    614,180       613,988  
Other
    54,203       51,667  
 
           
 
               
Total consumer loans
    668,383       665,655  
 
           
 
               
Loans held in portfolio (1)
    5,943,058       5,838,660  
Allowance for loan losses
    (59,035 )     (64,542 )
 
           
 
               
Loans held in portfolio, net
  $ 5,884,023     $ 5,774,118  
 
           
 
(1)   Amounts include net unamortized deferred loan fees of $7.7 million and $7.4 million at June 30, 2006, and December 31, 2005, respectively.
    The components of loans held in portfolio by interest rate type as of June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,     December 31,  
    2006     2005  
Adjustable-rate loans
  $ 2,963,528     $ 2,951,945  
Intermediate fixed-rated loans
    1,615,804       1,711,915  
Fixed-rate loans
    1,371,387       1,182,198  
 
           
 
               
Loans held in portfolio (1)
  $ 5,950,719     $ 5,846,058  
 
           
 
(1)   Amounts exclude net unamortized deferred loan fees of $7.7 million and $7.4 million at June 30, 2006, and December 31, 2005, respectively.

- 11 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    The activity in the allowance for loan losses and allowance for losses related to unfunded commitments for the three and six months ended June 30, 2006 and 2005, was as follows (dollars in thousands):
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2006     2005     2006     2005  
Balance at beginning of period :
                               
Allowance for loan losses
  $ 61,806     $ 57,547     $ 64,542     $ 56,472  
Allowance for losses — unfunded commitments
    3,713       3,948       3,402       3,940  
 
                       
 
                               
Total allowance for losses at beginning of period
    65,519       61,495       67,944       60,412  
Provision for losses
    1,249       1,775       1,556       2,965  
Loans charged off
    (2,630 )     (3 )     (5,483 )     (137 )
Recoveries of loans previously charged off
    121       48       242       75  
 
                       
 
                               
Total allowance for losses at end of period
  $ 64,259     $ 63,315     $ 64,259     $ 63,315  
 
                       
 
                               
Allowance for loan losses
  $ 59,035     $ 58,508     $ 59,035     $ 58,508  
Allowance for losses — unfunded commitments
    5,224       4,807       5,224       4,807  
 
                       
 
                               
Total allowance for losses at end of period
  $ 64,259     $ 63,315     $ 64,259     $ 63,315  
 
                       
8.   Borrowings
 
    Securities Sold Under Agreements to Repurchase
 
    Information regarding outstanding securities sold under agreements to repurchase (the “Repurchase Agreements”) as of and for the six months ended June 30, 2006, was as follows (dollars in thousands):
         
Average balance outstanding
  $ 44,751  
Maximum amount outstanding at any month end period
    150,000  
Balance outstanding at end of period
    150,000  
Weighted average interest rate during the period
    4.12 %
Weighted average interest rate at end of period
    4.14 %
Weighted average remaining term to maturity at end of period (in years)
    7.1  
    UCB entered into three Repurchase Agreements totaling $150.0 million, which mature between May 11, 2011, and March 27, 2016. Under the terms of the Repurchase Agreement, payments are due quarterly. The interest rates for the respective first years of the Repurchase Agreements ranged from a 3-month London Interbank Offered Rate (“LIBOR”) less 82 basis points to a 3-month LIBOR less 132 basis points, which adjust quarterly. Thereafter the interest rates are fixed for the remainder of the term with interest rates ranging from 4.75% to 5.00%. The initial interest rates ranged from 3.99% to 4.14%. The current interest rates at June 30, 2006, ranged from 3.99% to 4.40%. Additionally, the lender has the right to terminate the applicable Repurchase Agreement either at the first anniversary date of the Repurchase Agreement or at the first anniversary date and quarterly thereafter. The underlying collateral pledged for the repurchase agreements consists of Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”) mortgage-backed securities and Federal Home Loan Bank investment securities with a fair value of $169.1 million as of June 30, 2006. The collateral is held by a custodian and maintained under UCB’s control. At June 30, 2006, the securities sold under agreement to repurchase mature between 2010 to 2035.

- 12 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    Long-Term and Short-Term Borrowings
 
    UCB has certain loan sale transactions recorded as secured borrowings as of June 30, 2006, and December 31, 2005, since these transactions did not qualify for sales treatment under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. The secured borrowings amounted to $2.8 million at June 30, 2006, and $19.1 million at December 31, 2005.
 
9.   Earnings Per Share
 
    The reconciliation of the numerators and denominators of basic and diluted earnings per share for the three and six months ended June 30, 2006 and 2005, is as follows (dollars in thousands, except shares and per share amounts):
                                                 
    Income     Shares     Per Share     Income     Shares     Per Share  
    (Numerator)     (Denominator)     Amount     (Numerator)     (Denominator)     Amount  
    Three Months Ended June 30, 2006     Three Months Ended June 30, 2005  
Net income — basic
  $ 25,406       94,429,086     $ 0.27     $ 25,364       91,624,156     $ 0.28  
Effect of stock options
          3,619,680                     3,597,036          
 
                                       
Net income — diluted
  $ 25,406       98,048,766     $ 0.26     $ 25,364       95,221,192     $ 0.27  
 
                                       
 
                                               
    Six Months Ended June 30, 2006
  Six Months Ended June 30, 2005
         
 
                                               
Net income — basic
  $ 48,825       94,272,826     $ 0.52     $ 47,170       91,427,204     $ 0.52  
Effect of stock options
          3,699,307                     4,062,664          
 
                                       
 
                                               
Net income — diluted
  $ 48,825       97,972,133     $ 0.50     $ 47,170       95,489,868     $ 0.49  
 
                                       
    The antidilutive outstanding stock options of UCBH common stock that were excluded from the computation of diluted earnings per share for the three months ended June 30, 2006 and 2005, were 6,618,712 shares and 5,952,507 shares, respectively, and for the six months ended June 30, 2006 and 2005, were 6,618,712 shares and 2,784,800 shares, respectively. The stock options of UCBH common stock are considered antidilutive if assumed proceeds per share exceed the average market price of UCBH’s common stock during the relevant periods. Assumed proceeds include proceeds from the exercise of stock options of UCBH common stock, as well as unearned compensation and certain deferred tax benefits related to stock options.
 
10.   Employee Benefit Plans
 
    Stock Option Plan
 
    On May 18, 2006, UCBH adopted the UCBH Holdings, Inc. 2006 Equity Incentive Plan (the “Plan”), which was formerly known as the UCBH Holdings, Inc. 1998 Stock Option Plan, as amended. The Plan was approved by its shareholders and provides for the granting of stock-based compensation awards, including options, to eligible officers, employees and directors of the Company. Stock option awards are approved by the Board of Directors and are granted at the fair market value of the Company’s common stock on the date of the grant. The options vest over a period determined at the time the options are granted, generally three years of continuous service, and have a maximum term of ten years. Certain options awards provide for accelerated vesting if there is a change in control, as defined in the Plan. As of June 30, 2006, the Company had 989,573 shares of common stock reserved for the issuance of options under the Plan.
 
    Prior to January 1, 2006, the Company accounted for employee stock-based compensation using the intrinsic value method in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, as allowed by SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based

- 13 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    Compensation — Transition and Disclosure. Under the intrinsic value method, no stock-based employee compensation cost is recorded, provided the stock options are granted with an exercise price equal to or greater than the market value of the underlying common stock on the date of grant.
 
    Effective January 1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R) eliminates the ability for companies to account for share-based compensation transactions using the intrinsic value method and requires that companies measure and recognize compensation expense for all share-based payments at fair value. Under SFAS No. 123(R), the total fair value of the stock options awards is expensed ratably over the service period of the employees receiving the awards. In adopting SFAS No. 123(R), the Company used the modified prospective method of adoption. Under this adoption method, compensation expense recognized subsequent to adoption will include: (a) compensation costs for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation costs for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R). No share-based employee compensation cost has been reflected in the Company’s net income prior to the adoption of SFAS No. 123(R) and results for prior periods have not been restated.
 
    The adoption of SFAS No. 123(R) reduced income before income tax expense for the three and six months ended June 30, 2006, by approximately $546,000 and $851,000, respectively, and reduced net income for the same periods by approximately $466,000 and $733,000, respectively. Basic and diluted earnings per common share for the three and six months ended June 30, 2006, were reduced by less than $0.01 as a result of the amounts expensed. In addition, as of June 30, 2006, total unrecognized compensation cost related to nonvested stock option awards was approximately $6.6 million and the related weighted-average period over which it is expected to be recognized is approximately 2.64 years. Further, for the three and six months ended June 30, 2006, the total income tax benefit recognized in the statement of operations for share-based compensation arrangements was $80,000 and $118,000, respectively.
 
    Prior to the adoption of SFAS No. 123(R), the Company presented all tax benefits for deductions resulting from the exercise of stock options as operating cash flows in the consolidated statements of cash flows. SFAS No. 123(R) requires that the cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) be classified as financing cash flows. However, for the three and six months ended June 30, 2006, there were no such excess tax benefits.
 
    In estimating the fair value of each stock option award on their respective grant dates, we use the Black-Scholes pricing model. The following are the assumptions that were incorporated in the model for the three and six months ended June 30, 2006 and 2005:
                                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2006   2005   2006   2005
Dividend yield
    0.60 %     0.60 %     0.63 %     0.58 %
Volatility
    29.72 %     42.65 %     29.90 %     32.36 %
Risk-free interest rate
    5.03 %     4.10 %     4.70 %     4.13 %
Expected lives (years)
    7.71       7.48       7.58       7.54  
    The expected life of the options is based on historical data of UCBH’s actual experience with the options it has granted and represents the period of time that the options granted are expected to be outstanding. This data include employees’ expected exercise and post-vesting employment termination behaviors. The expected stock price volatility is estimated using the historical volatility of UCBH’s common stock and other factors. The historical volatility covers a period that corresponds to the expected life of the options. The expected dividend yield is based on the estimated annual dividends that we expect UCBH to pay over the expected life of the options as a percentage

- 14 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    of the market value of UCBH’s stock as of the grant date. The risk-free interest rate for the expected life of the options granted is based on the U.S. Treasury yield curve in effect as of the grant date.
 
    The following is a summary of the stock option activity for the three and six months ended June 30, 2006 (dollars in thousands, except weighted average exercise price):
                                                                 
                    Weighted                             Weighted        
            Weighted     Average                     Weighted     Average        
            Average     Remaining     Aggregate             Average     Remaining     Aggregate  
    Number of     Exercise     Contractual     Intrinsic     Number of     Exercise     Contractual     Intrinsic  
    Shares     Price     Term     Value     Shares     Price     Term     Value  
    Three Months Ended June 30, 2006     Six Months Ended June 30, 2006  
Options outstanding, beginning of period
    14,821,177     $ 12.52                       14,436,020     $ 12.23                  
 
                                                               
Granted
    314,000       18.77                       916,000       18.11                  
Exercised
    (241,550 )     7.84                       (441,359 )     7.61                  
Forfeited
    (29,500 )     17.65                       (46,000 )     17.66                  
Expired
    (5,803 )     18.55                       (6,337 )     18.40                  
 
                                                           
 
                                                               
Options outstanding, end of period
    14,858,324     $ 12.71       6.31     $ 56,860       14,858,324     $ 12.71       6.31     $ 56,860  
 
                                                           
 
                                                               
Shares exercisable end of period
    13,836,324     $ 12.32       6.07     $ 58,406       13,836,324     $ 12.32       6.07     $ 58,406  
 
                                                           
    The weighted-average grant date fair value of options granted was $7.86 and $8.51 during the three months ended June 30, 2006 and 2005, respectively, and $7.37 and $7.54, during the six months ended June 30, 2006 and 2005, respectively. The total intrinsic value of options exercised was $2.7 million and $3.7 million during the three months ended June 30, 2006 and 2005, respectively, and $4.8 million and $8.9 million during the six months ended June 30, 2006 and 2005, respectively. The total fair value of options that vested was $6.9 million and $8.4 million during the three and six months ended June 30, 2005, respectively. No options vested during the three and six months ended June 30, 2006.
 
    The range of exercise prices for options outstanding at June 30, 2006, was as follows:
                                         
            Weighted-     Weighted-             Weighted-  
            Average     Average             Average  
    Options     Exercise     Remaining     Options     Exercise  
Exercise Price   Outstanding     Price     Life     Exercisable     Price  
$1.88-$2.25
    1,497,566     $ 1.88       2.49       1,497,566     $ 1.88  
$2.26-$4.51
    163,956       2.93       3.71       163,956       2.93  
$4.52-$6.77
    3,921,392       6.15       4.80       3,921,392       6.15  
$6.78-$9.03
    273,412       7.21       5.40       273,412       7.21  
$9.04-$11.29
    687,933       10.01       5.47       687,933       10.01  
$11.30-$13.55
    325,355       12.38       6.57       325,355       12.38  
$13.56-$15.81
    404,164       14.82       7.12       404,164       14.82  
$15.82-$18.07
    1,361,334       17.33       8.96       631,334       16.96  
$18.08-$20.33
    5,483,412       18.84       7.88       5,191,412       18.82  
$20.34-$22.59
    739,800       21.25       6.70       739,800       21.25  
 
                                   
 
                                       
Total/Average
    14,858,324     $ 12.71       6.31       13,836,324     $ 12.32  
 
                                   
    The following table sets forth the effect on net income and net income per common share as if the Company had applied the fair value recognition provisions of SFAS No. 123 to all outstanding stock option awards for the three

- 15 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    and six months ended June 30, 2005, prior to the Company’s adoption of SFAS No. 123(R) (amounts in thousands, except per share amounts):
                 
    Three Months     Six Months  
    Ended     Ended  
    June 30, 2005     June 30, 2005  
Net income, as reported
  $ 25,364     $ 47,170  
Deduct: Total stock-based employee compensation expense determined under fair value based method of all awards, net of related tax effects
    (2,251 )     (4,413 )
 
           
 
               
Net income, pro forma
  $ 23,113     $ 42,757  
 
           
 
               
Basic earnings per share:
               
As reported
  $ 0.28     $ 0.52  
Pro forma
  $ 0.25     $ 0.47  
 
               
Diluted earnings per share:
               
As reported
  $ 0.27     $ 0.49  
Pro forma
  $ 0.24     $ 0.45  
    During the fourth quarter of 2005, UCBH’s Board of Directors approved the accelerated vesting of all outstanding unvested stock options awarded to employees, officers and directors that had been granted on or before October 26, 2005, under its stock option plan. The decision to accelerate the vesting was made primarily to reduce the impact of recording noncash compensation expense upon the adoption of SFAS No. 123(R). Stock options covering approximately 5.1 million shares of UCBH’s common stock were affected by this action, including approximately 1.9 million shares that were held by the Company’s executive officers and directors. The number of shares, exercise prices and all of the other relevant terms and conditions applicable to the accelerated options remained unchanged. By accelerating the vesting of the options, the Company estimated that approximately $16.4 million of future compensation expense, net of taxes, has been eliminated.
 
11.   Related Party Transactions
 
    Several members of the Board of Directors and executive officers of the Company have deposits with UCB that are made in the ordinary course of business with the same terms and conditions, including interest rates, as those prevailing at the same time for comparable transactions with other customers. The total deposits for these related parties were $6.3 million and $7.2 million at June 30, 2006, and December 31, 2005, respectively. Additionally, UCB has adopted a policy that prohibits loans or extensions of credit to Directors and affiliated persons of the Company, and their related interests.

- 16 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
12.   Derivative Financial Instruments and Financial Instruments with Off-Balance-Sheet Risk
 
    The contractual or notional amounts of derivative financial instruments and financial instruments with off-balance-sheet risk as of June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,   December 31,
    2006   2005
Financial instruments whose contract amounts represent credit risk:
               
Commitments to extend credit:
               
Consumer (including residential mortgage)
  $ 82,062     $ 88,407  
Commercial (excluding construction)
    829,868       672,662  
Construction
    669,200       539,955  
Letters of credit
    121,346       90,595  
Foreign exchange contracts receivable
    (372,966 )     (217,827 )
Foreign exchange contracts payable
    223,662       216,892  
Put options to buy
    9,468       11,269  
Put options to sell
    (9,472 )     (11,269 )
Unfunded CRA investment commitments
    4,469       4,760  
13. 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 results of operations or financial condition.
14. Supplemental Cash Flow Information
     The supplemental cash flow information for the six months ended June 30, 2006 and 2005, was as follows (dollars in thousands):
                 
    2006   2005
Cash paid during the period for:
               
Interest
  $ 123,230     $ 64,627  
Income taxes
    33,260       17,159  
 
               
Noncash investing and financing activities:
               
Stock warrants acquired with issuance of commercial loans
  $ (129 )   $  
Income tax benefit from stock options exercised
    1,515       3,090  
Transfer of loans from held for sale to held in portfolio
    (62,095 )      
Transfer of loans to held for sale from held in portfolio
    379,748        
15.   Segment Information
 
    The Company designates the internal organization that is used by management for making operating decisions and assessing performance as the source of its reportable segments. The Company has determined that its reportable segments are those that are based on the Company’s method of internal reporting. The Company has determined that it has two reportable segments, “Domestic Banking” and “Other”. “Other” segment consists of the Company’s Hong Kong operations and UCB Investment Services, Inc. The “UCBH Holdings, Inc.” column in the following table consists of UCBH, which reflects the holding company activities. The intersegment column consists of the UCBH and UCB elimination units and reflects the elimination of intersegment transactions.

- 17 -


Table of Contents

UCBH HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - Continued
(unaudited)
    The following is segment information for the three and six months ended June 30, 2006 and 2005 (dollars in thousands):
                                                 
                            UCBH        
    Domestic           Total   Holdings,        
    Banking   Other   Segments   Inc.   Intersegment   Consolidated
Three months ended June 30, 2006:
                                               
Total interest and dividend income
  $ 127,084     $ 6,244     $ 133,328     $     $ (2,322 )   $ 131,006  
Net interest income (expense)
    67,341       1,769       69,110       (3,060 )           66,050  
Net income (loss)
    28,975       (407 )     28,568       25,409       (28,571 )     25,406  
 
                                               
Three months ended June 30, 2005:
                                               
Total interest and dividend income
  $ 96,124     $ 1,246     $ 97,370     $     $ (497 )   $ 96,873  
Net interest income (expense)
    60,893       1,192       62,085       (2,439 )           59,646  
Net income (loss)
    29,661       (611 )     29,050       25,364       (29,050 )     25,364  
 
                                               
Six months ended June 30, 2006:
                                               
Total interest and dividend income
  $ 247,582     $ 10,694     $ 258,276     $     $ (3,818 )   $ 254,458  
Net interest income (expense)
    134,371       3,051       137,422       (5,792 )           131,630  
Net income (loss)
    55,106       (1,893 )     53,213       48,825       (53,213 )     48,825  
 
                                               
Six months ended June 30, 2005:
                                               
Total interest and dividend income
  $ 179,394     $ 2,431     $ 181,825     $     $ (930 )   $ 180,895  
Net interest income (expense)
    117,538       2,232       119,770       (4,758 )           115,012  
Net income (loss)
    55,262       (1,084 )     54,178       47,170       (54,178 )     47,170  

- 18 -


Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
This document, including information included or incorporated by reference in this document, contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events and include, among others:
  statements with respect to UCBH Holdings, Inc. and its consolidated subsidiaries’ (collectively the “Company”) beliefs, plans, objectives, goals, guidelines, expectations, anticipations, and future financial condition, results of operations and performance;
 
  statements preceded or identified by words, such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “should,” “could,” “projects,” “may,” or words of similar import.
These forward-looking statements are based upon management’s current beliefs and expectations and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These forward-looking statements are also inherently subject to significant business, economic and competitive uncertainties, risks and contingencies, many of which are difficult to predict and generally beyond management’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change and actual results, performance or achievements may be materially different from the anticipated results, performance or achievements discussed, expressed or implied by these forward-looking statements. Factors that might cause such differences include, but are not limited to the following:
  the Company’s ability to successfully execute its business plans and achieve its objectives;
 
  changes in political and economic conditions, including the economic effects of terrorist attacks against the United States and related events;
 
  changes in financial market conditions, either nationally or locally in areas in which the Company conducts its operations;
 
  fluctuations in the equity and fixed-income markets;
 
  changes in interest rates;
 
  acquisitions and integration of acquired businesses;
 
  increases in the levels of losses, customer bankruptcies, claims and assessments;
 
  changes in fiscal, monetary, regulatory, trade and tax policies and laws;
 
  continuing consolidation in the financial services industry;
 
  new litigation or changes in existing litigation;
 
  success in gaining regulatory approvals, when required;
 
  changes in consumer spending and savings habits;
 
  increased competitive challenges and expanding product and pricing pressures among financial institutions, whether banks, investment banks, insurance companies or others, in the Company’s markets;
 
  technological changes;
 
  demographic changes;
 
  legislation or regulatory changes which adversely affect the Company’s operations and businesses;
 
  the Company’s ability to comply with applicable laws and regulations; and
 
  changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document or the date of any document incorporated by reference in this document. All subsequent written and oral forward-looking statements concerning matters addressed in this document and attributable to the Company or any person acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect events, developments or circumstances after the date of this document or to reflect the occurrence of future events.

- 19 -


Table of Contents

MANAGEMENT OVERVIEW
UCBH Holdings, Inc. (“UCBH”) and its consolidated subsidiaries (collectively referred to as the “Company”, “we”, “us” or “our”) are an $8.29 billion bank with headquarters in San Francisco, California. Its operations are conducted primarily through its banking subsidiary, United Commercial Bank (“UCB”). UCB operates through sixty offices and branches in the United States and Asia and is a leader in providing financial services to the ethnic Chinese in the United States. At June 30, 2006, we had fifty-seven domestic branches and offices; twenty-seven in Northern California, twenty in Southern California, two in the Seattle metropolitan area, three in the Boston metropolitan area and five in the New York metropolitan area. UCB also has a branch in Hong Kong and representative offices in Shenzhen, China and Taipei, Taiwan.
The Company’s primary or “core” business consists of providing commercial and retail banking services to both individuals and companies in markets with high concentrations of ethnic Chinese. We believe that our core banking business performed satisfactorily in the six months ended June 30, 2006, given the challenging interest rate environment that continues to impact the financial services industry.
The Company reported earnings for the three months ended June 30, 2006, of $25.4 million or $0.26 per diluted share. This compares with $25.4 million or $0.27 per diluted share for the three months ended June 30, 2005, and $23.4 million or $0.24 per diluted share for the three months ended March 31, 2006. Return on average equity (“ROE”) was 16.20% and return on average assets (“ROA”) was 1.25% for the three months ended June 30, 2006, compared with a ROE of 19.74% and ROA of 1.50% for the three months ended June 30, 2005, and 15.36% and 1.18% for the three months ended March 31, 2006, respectively.
For the six months ended June 30, 2006, the Company reported earnings of $48.8 million or $0.50 per diluted share, compared with $47.2 million or $0.49 per diluted share for the six months ended June 30, 2005, respectively. ROE was 15.79% and ROA was 1.22% for the six months ended June 30, 2006, compared with a ROE of 18.75% and ROA of 1.44% for the six months ended June 30, 2005.
CORPORATE DEVELOPMENTS
Election of New Director. At UCBH’s Annual Meeting of Stockholders on May 18, 2006, Mr. David S. Ng was elected as a new member to the Boards of Directors of UCBH and UCB. Mr. Ng has over 20 years of experience in accounting, investment management and residential development. Since 2001, Mr. Ng has been the President and Managing Member of Greenwood Equities Group, LLC, a firm that manages and directs investments in stocks, bonds, options, mutual funds, derivatives, private equity placements and venture capital offerings. He has also been the President of Golden Gateway Associates, a real estate property investment firm, since 1992. Previously, he was the President and Managing Member of Wolf Development Co., LLC, a residential development firm. From 1975 to 1981, Mr. Ng served as an Associate and Assistant Professor of Accounting at the Graduate School of Business, Stanford University. Mr. Ng holds an A.B. in Mathematics, a B.S. in Economics, an M.B.A. and a Ph.D. in Business Administration from the University of California, Berkeley.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
Other than as discussed below, the Company has made no significant changes in its critical accounting policies and significant estimates from those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
Allowance for Loan Losses
The allowance for loan losses represents our estimate of the losses that are inherent in the loan portfolio. UCB continuously monitors the quality of its loan portfolio and maintains an allowance for loan losses sufficient to absorb losses inherent in the loan portfolio. At June 30, 2006, UCB’s total allowance for loan losses was $59.0 million, which represented 0.99% of gross loans held in portfolio.

- 20 -


Table of Contents

UCB’s methodology for assessing the adequacy of the allowance for loan losses includes the evaluation of two distinct components: a general allowance applied to loan portfolio categories as a whole and a specific allowance for loans deemed impaired. Loans that are determined to be impaired are excluded from the general allowance analysis of the loan portfolio and are assessed individually.
In determining the general allowance, UCB applies loss factors, differentiated by an internal credit risk rating system, to its major loan portfolio categories (based primarily on loan type). UCB’s risk rating system is applied at the individual loan level within each of the major loan portfolio categories. The credit quality of the loan portfolio is regularly assessed through on going review.
The loss factors are developed from actual historic losses, and reflect comparative analysis with peer group loss rates and expected losses. Additionally, loss factors incorporate qualitative adjustments that reflect an assessment of internal and external influences on credit quality that have not yet been reflected in the historical loss or risk-rating data. These influences may include elements such as portfolio credit quality trends, and changes in concentrations, growth, or credit underwriting. UCB’s qualitative adjustments also include an economic surcharge factor to adjust loss factors in recognition of the impact various macro-economic factors have on portfolio performance.
UCB regularly assesses the loss factors that are applied to loan portfolio categories, and as part of the assessment concluded during the three months ended June 30, 2006, UCB effected refinements in the methodologies employed in establishing appropriate loss factors. These refinements focused primarily on the application of the expected loss approach, which is in turn based on estimated probabilities of default and loss given default, and on the delineation of the quantitative and qualitative risk characteristics and macro-economic influences.
The quantitative analysis resulted in a revision and lowering of the loss factors on the commercial real estate, construction and commercial portfolios. The qualitative analysis resulted in a lowering of the construction portfolio loss factor while resulting in an increase in the multi-family portfolio loss factor. The quantitative analysis also resulted in establishing a minimum loss factor for each of the major loan portfolio categories to better reflect minimum inherent loss in all portfolios including those with limited historic loss experience.
The second component of the allowance for loan losses, the specific reserve, applies to loans that are deemed impaired. A loan is considered impaired when it is probable that UCB will not be able to collect all amounts due, including interest payments, in accordance with the loan’s contractual terms. Unless the loan is collateral-dependent, loan impairment is measured based on the present value of expected future cash flows that have been discounted at the loan’s effective interest rate. If the loan is collateral-dependent, either the observable market price or the current fair value of the collateral, reduced by estimated disposition costs, is used in place of the discounted cash flow analysis.
The effect of all general allowance and specific reserve changes during the three months ended June 30, 2006, resulted in a net reduction of $2.8 million in the allowance for loan losses, including a $6.3 million reduction in the allowance for loan losses from changes in loss factors and a $4.4 million increase from loan growth. The allowance for loan losses was also reduced by $2.6 million from loan charge-offs, which was partially offset by increases to the allowance associated with the migration of loan quality and increases in specific reserves. The effect of all general allowance and specific reserve changes during the six months ended June 30, 2006, resulted in a net reduction of $5.5 million in the allowance for loan losses, including an $8.7 million reduction in the allowance for loan losses from changes in loss factors and a $4.3 million increase from loan growth. The allowance for loan losses was also reduced by $5.5 million for loan charge-offs, which was partially offset by increases to the allowance associated with the migration of loan quality and increases in specific reserves.
UCB also estimates a reserve related to unfunded commitments and other off-balance sheet credit exposure. In assessing the adequacy of this reserve, UCB uses a similar approach used in the development of the allowance for loan losses. The reserve for unfunded commitments is included in other liabilities on the statement of financial position.
There are numerous components that enter into the evaluation of the allowance for loan losses. Some are quantitative while others require UCB to make qualitative judgments. Although UCB believes that its processes for

- 21 -


Table of Contents

determining an appropriate level for the allowance for loan losses adequately address all of the components to estimate inherent credit losses, the processes and their elements include features that may be susceptible to significant change. Any unfavorable differences between the actual outcome of credit-related events and UCB’s estimates and projections could require an additional allowance for credit losses, which would negatively impact the Company’s results of operations in future periods. UCB continually evaluates its allowance for loan losses methodology, seeking to refine and enhance this process as appropriate.
Stock-Based Compensation
Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment. Under SFAS No. 123(R), the total fair value of the stock options awards is expensed ratably over the service period of the employees receiving the awards. In adopting SFAS No. 123(R), the Company used the modified prospective method of adoption. Under this adoption method, compensation expense recognized subsequent to adoption will include: (a) compensation costs for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation costs for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R).
Prior to January 1, 2006, the Company accounted for employee stock-based compensation using the intrinsic value method in accordance with Accounting Principles Board (the “APB”) Opinion No. 25, Accounting for Stock Issued to Employees, as allowed by SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure. Under the intrinsic value method, no stock-based employee compensation cost is recorded, provided the stock options are granted with an exercise price equal to or greater than the market value of the underlying common stock on the date of grant. No share-based employee compensation cost has been reflected in the Company’s net income prior to the adoption of SFAS No. 123(R).
In estimating the fair value of each stock option award on their respective grant dates, we use the Black-Scholes pricing model. The following are the assumptions that were incorporated in the model for the three and six months ended June 30, 2006 and 2005:
                                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2006   2005   2006   2005
Dividend yield
    0.60 %     0.60 %     0.63 %     0.58 %
Volatility
    29.72 %     42.65 %     29.90 %     32.36 %
Risk-free interest rate
    5.03 %     4.10 %     4.70 %     4.13 %
Expected lives (years)
    7.71       7.48       7.58       7.54  
The expected life of the options is based on historical data of UCBH’s actual experience with the options it has granted and represents the period of time that the options granted are expected to be outstanding. This data include employees’ expected exercise and post-vesting employment termination behaviors. The expected stock price volatility is estimated using the historical volatility of UCBH’s common stock and other factors. The historical volatility covers a period that corresponds to the expected life of the options. The expected dividend yield is based on the estimated annual dividends that we expect UCBH to pay over the expected life of the options as a percentage of the market value of UCBH’s stock as of the grant date. The risk-free interest rate for the expected life of the options granted is based on the U.S. Treasury yield curve in effect as of the grant date.
The fair values assigned to UCBH’s stock options are based upon estimates and assumptions. In accordance with SFAS No. 123(R), once established, the fair value does not change unless the option grant is modified subsequent to its issuance. If actual results are not consistent with our estimates and assumptions, we may be required to record additional stock-based compensation expense or income tax expense, which could affect our results of operations. However, we believe that given the procedures that we have followed in determining the assumptions used in the estimation process, the fair values of the options are appropriate.

- 22 -


Table of Contents

Effective December 27, 2005, UCBH’s Board of Directors authorized UCBH to accelerate the vesting of all unvested options associated with grants issued on or prior to October 26, 2005. The decision to accelerate the vesting of the options, which UCBH believes is in the best interests of its stockholders, was made primarily to reduce the impact of recording approximately $22.7 million of noncash compensation expense over the period of 2006 through 2008 upon the implementation of SFAS No. 123(R). The options acceleration was treated as a modification of the terms of the existing option grants, thereby requiring a new value measurement as of the acceleration date. Any increase between the newly measured value and the original grant price is viewed as additional intrinsic value and may need to be included in future compensation expense under certain conditions related to prospective employee terminations. For the three and six months ended June 30, 2006, the expense associated with the increase in intrinsic value was $9,000 and $12,000, respectively.
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.
Recent Accounting Pronouncements
Accounting for Uncertainty in Income Taxes
In July 2006, the Financial Accounting Standards Board (the “FASB”) issued FASB Interpretation No. (“FIN”) 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. FIN 48 clarifies the accounting for income tax uncertainties that have been recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires that the Company recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides additional guidance on accounting for tax uncertainties, including derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company is currently evaluating the impact that adopting FIN 48 will have on its financial statements.
Accounting for Servicing of Financial Assets
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140. SFAS No. 156 permits entities to choose to either measure servicing rights subsequent to initial valuation at fair value and report changes in fair value in earnings or amortize the servicing rights in proportion to and over the estimated net servicing income or loss and assess the servicing rights for impairment or the need for an increased obligation. SFAS No. 156 also clarifies when a servicer should separately recognize servicing assets and liabilities, requires that all separately recognized assets and liabilities be initially measured at fair value, if practicable, permits a one-time reclassification of available for sales securities to trading securities by an entity with recognized servicing rights and requires additional disclosures for all separately recognized servicing assets and liabilities. SFAS No. 156 is effective as of the beginning of an entity’s fiscal year that begins after September 15, 2006. The Company does not expect the adoption of SFAS No. 156 will have a material effect on its consolidated financial position, results of operations or cash flows.

- 23 -


Table of Contents

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

- 24 -


Table of Contents

RESULTS OF OPERATIONS
Financial Highlights (Dollars in Thousands, Except Per Share Amounts)
                                                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
                    Increase (Decrease)                     Increase (Decrease)  
    2006     2005     Amount     %     2006     2005     Amount     %  
Operating Data:
                                                               
Total interest and dividend income
  $ 131,006     $ 96,873     $ 34,133       35.23     $ 254,458     $ 180,895     $ 73,563       40.67  
Total interest expense
    64,956       37,227       27,729       74.49       122,828       65,883       56,945       88.43  
 
                                                   
Net interest income
    66,050       59,646       6,404       10.74       131,630       115,012       16,618       14.45  
Provision for loan losses
    1,249       1,775       (526 )     (29.63 )     1,556       2,965       (1,409 )     (47.52 )
 
                                                   
Net interest income after recovery of (provision for) loan losses
    64,801       57,871       6,930       11.97       130,074       112,047       18,027       16.09  
Total noninterest income
    10,129       5,668       4,461       78.71       24,206       13,714       10,492       76.51  
Total noninterest expense
    37,131       30,428       6,703       22.03       79,879       57,641       22,238       38.58  
 
                                                   
Income before income tax expense
    37,799       33,111       4,688       14.16       74,401       68,120       6,281       9.22  
Income tax expense
    12,393       7,747       4,646       55.97       25,576       20,950       4,626       22.08  
 
                                                   
Net income
  $ 25,406     $ 25,364     $ 42       0.17     $ 48,825     $ 47,170     $ 1,655       3.51  
 
                                                   
 
                                                               
Per Share Data:
                                                               
Basic earnings per share
  $ 0.27     $ 0.28     $ (0.01 )     (3.57 )   $ 0.52     $ 0.52     $        
Diluted earnings per share
    0.26       0.27       (0.01 )     3.70       0.50       0.49       0.01       2.04  
Dividends declared per share
    0.030       0.025       0.005       20.00       0.060       0.050       0.010       20.00  
 
                                                               
Select Operating Ratios:
                                                               
Return on average assets
    1.25 %     1.50 %   (25 ) bp*     (16.67 )     1.22 %     1.44 %   (22 ) bp*     (15.28 )
Return on average equity
    16.20       19.74       (354 )     (17.93 )     15.79       18.75       (296 )     (15.79 )
Efficiency ratio (1)
    48.74       46.59       215       4.61       51.26       44.78       648       14.47  
Noninterest expense to average assets
    1.83       1.80       3       1.67       1.99       1.76       23       13.07  
Average equity to average assets
    7.74       7.62       12       1.57       7.71       7.69       2       0.26  
Dividend payout ratio (2)
    11.54       9.26       228       24.62       12.00       10.20       180       17.65  
Net loan charge-offs to average loans
    0.16             16             0.17             17        
                                 
    June 30,   December 31,   Increase (Decrease)
    2006   2005   Amount   %
Financial Condition and Other Data:
                               
Investments and mortgage-backed securities available for sale
  $ 1,240,312     $ 1,117,724     $ 122,588       10.97  
Investments and mortgage-backed securities held to maturity
    299,266       308,608       (9,342 )     (3.03 )
Loans held for sale
    240,162       156,740       83,422       53.22  
Loans held in portfolio, net
    5,884,023       5,774,118       109,905       1.90  
Total assets
    8,291,093       7,965,637       325,456       4.09  
Deposits
    6,239,277       6,264,169       (24,892 )     (0.40 )
Securities sold under agreements to repurchase
    150,000             150,000        
Short-term borrowings
    343,325       279,425       63,900       22.87  
Long-term borrowings
    665,844       562,033       103,811       18.47  
Subordinated debentures
    150,520       150,520              
Stockholders’ equity
    639,749       603,514       36,235       6.00  
Nonperforming assets
    16,104       19,133       (3,029 )     (15.83 )
 
                               
Selected Ratios:
                               
Loan delinquency ratio
    0.24 %     0.48 %   (24) bp*     (50.00 )
Nonperforming assets to total assets
    0.19       0.24       (5 )     (20.83 )
Nonperforming loans to total loans
    0.26       0.32       (6 )     (18.75 )
Allowance for loan losses to nonperforming loans
    366.58       337.33       2,925       8.67  
Allowance for loan losses to loans held in portfolio
    0.99       1.11       (12 )     (10.81 )
Total loan to deposit ratio
    99.10       95.71       339       3.54  
Stockholders’ equity to total assets
    7.72       7.58       14       1.85  
Bank Regulatory Capital Ratios:
                               
United Commercial Bank:
                               
Total risk-based capital
    11.12 %     10.98 %   14 bp*     1.28  
Tier 1 risk-based capital
    10.15       9.91       24       2.42  
Tier 1 leverage ratio (3)
    8.48       8.26       22       2.66  
UCBH Holdings, Inc. and subsidiaries:
                               
Total risk-based capital
    11.40 %     11.33 %   7 bp*     0.62  
Tier 1 risk-based capital
    10.44       10.26       18       1.75  
Tier 1 leverage ratio (3)
    8.72       8.56       16       1.87  
 
(1)   Represents noninterest expense divided by the total of our net interest income before provision for loan losses and our noninterest income.
 
(2)   Represents dividends declared per share as a percentage of diluted earnings per share.
 
(3)   Represents Tier 1 capital to total average assets.
 
*   Basis point.

- 25 -


Table of Contents

Three Months Ended June 30, 2006, Compared to Three Months Ended June 30, 2005
The consolidated net income of the Company was $25.4 million for both the three months ended June 30, 2006 and 2005. The annualized ROE and ROA ratios for the three months ended June 30, 2006, were 16.20% and 1.25%, respectively. These amounts compare with a ROE of 19.74% and ROA of 1.50% for the three months ended June 30, 2005. A tax benefit of $3.9 million associated with the repatriation of earnings from a foreign subsidiary contributed to a higher ROE and ROA for 2005. Additionally, the declines in the ratios are reflective of the growth rates of assets and equity that exceeded the growth in net income, primarily as a result of the Company’s acquisitions that were consummated in the latter part of 2005. The efficiency ratio was 48.74% for the three months ended June 30, 2006, compared with 46.59% for the same period in 2005. The efficiency ratio increased primarily due to higher personnel expenses, occupancy expenses and data processing expenses in 2006 compared with 2005. Diluted earnings per share were $0.26 for the three months ended June 30, 2006, compared with $0.27 for the same period in 2005.
Net Interest Income and Net Interest Margin. The increase in net interest income for the second quarter of 2006 compared to 2005 was principally due to a $1.22 billion increase in average interest-earning assets, which resulted primarily from organic loan growth along with the Pacifica Bancorp, Inc. (“Pacifica”) and Asian American Bank & Trust Company (“AABT”) acquisitions. The average cost of deposits increased 123 basis points as a result of increased market interest rates during the past twelve months, the change in the composition of deposits and the procurement of certificates of deposit from brokers, which typically carry higher interest rates. These factors were partially offset by an 87 basis point increase in average loan yields reflecting the repricing of adjustable-rate loans as market interest rate indices continued to rise. The yield on taxable securities also increased in the second quarter of 2006 compared to 2005 as a result of the purchase of higher-yielding securities during the latter half of 2005.

- 26 -


Table of Contents

The following table reflects the distribution of average assets, liabilities and stockholders’ equity, as well as the amounts of interest income and resultant yields earned from average interest-earning assets, and the amounts of interest expense and resultant rates paid on average interest-bearing liabilities for the three months ended June 30, 2006 and 2005 (dollars in thousands):
                                                 
    2006     2005  
                    Average                     Average  
            Interest     Yields             Interest     Yields  
    Average     Income/     Earned/     Average     Income/     Earned/  
    Balance     Expense     Rates Paid     Balance     Expense     Rates Paid  
Nontaxable equivalent basis:
                                               
Interest-earning assets
                                               
Loans (1)(2)
  $ 6,111,151     $ 111,636       7.31 %   $ 4,918,500     $ 79,235       6.44 %
Taxable securities (3)
    1,284,824       15,463       4.81       1,323,832       14,625       4.42  
Nontaxable securities (3)
    224,973       2,684       4.77       221,942       2,652       4.78  
Other
    100,149       1,223       4.88       33,063       361       4.37  
 
                                       
 
                                               
Total interest-earning assets
    7,721,097       131,006       6.79       6,497,337       96,873       5.96  
Noninterest-earning assets
    378,590                     246,733                
 
                                       
 
                                               
Total assets
  $ 8,099,687     $ 131,006             $ 6,744,070     $ 96,873          
 
                                       
 
                                               
Interest-bearing liabilities:
                                               
Deposits:
                                               
NOW, checking and money market accounts
  $ 1,301,889     $ 9,919       3.05     $ 1,042,570     $ 4,401       1.69  
Savings accounts
    696,545       2,113       1.21       837,437       2,258       1.08  
Time deposits
    3,651,787       37,667       4.13       3,036,827       19,947       2.63  
 
                                       
 
                                               
Total interest-bearing deposits
    5,650,221       49,699       3.52       4,916,834       26,606       2.16  
Short-term borrowings
    343,341       4,091       4.77       293,420       2,653       3.62  
Long- term borrowings
    685,733       8,131       4.74       375,353       5,535       5.90  
Subordinated debentures
    150,520       3,035       8.07       135,701       2,433       7.17  
 
                                       
 
                                               
Total interest-bearing liabilities
    6,829,815       64,956       3.80       5,721,308       37,227       2.60  
Noninterest-bearing deposits
    530,621                     427,181                
Other noninterest-bearing liabilities
    111,959                     81,535                
Stockholders’ equity
    627,292                     514,046                
 
                                       
 
                                               
Total liabilities and stockholders’ equity
  $ 8,099,687     $ 64,956             $ 6,744,070     $ 37,227          
 
                                       
 
                                               
Net interest-earning assets/net interest income/net interest rate spread (4)
  $ 891,282     $ 66,050       2.99 %   $ 776,029     $ 59,646       3.36 %
 
                                   
 
                                               
Net interest margin (5)
                    3.42 %                     3.67 %
 
                                           
 
                                               
Ratio of interest-earning assets to interest-bearing liabilities
    1.13 x                     1.14 x                
 
                                           
 
                                               
Tax equivalent basis:
                                               
Total interest-earning assets (6)
  $ 7,721,097     $ 132,451       6.86 %   $ 6,497,337     $ 98,013       6.03 %
Total interest-bearing liabilities
    6,829,815       64,956       3.80       5,721,308       37,227       2.60  
 
                                       
 
                                               
Net interest-earning assets/net interest income/net interest rate spread (4)
  $ 891,282     $ 67,495       3.06 %   $ 776,029     $ 60,786       3.43 %
 
                                   
 
                                               
Net interest margin (5)
                    3.50 %                     3.74 %
 
                                           
 
                                               
Average cost of deposits:
                                               
Total interest-bearing deposits
  $ 5,650,221     $ 49,699       3.52 %   $ 4,916,834     $ 26,606       2.16 %
Noninterest-bearing deposits
    530,621                     427,181                
 
                                       
 
                                               
Total deposits
  $ 6,180,842     $ 49,699       3.22 %   $ 5,344,015     $ 26,606       1.99 %
 
                                   
 
(1)   Nonaccrual loans are included in the table for computation purposes; however, interest for such loans is recognized on a cash basis.
 
(2)   Average loans include loans held for sale.
 
(3)   Average yield on investment securities is computed using historical cost balances; the yield information does not give effect to changes in fair value that are reflected as a component of stockholders’ equity.
 
(4)   Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
 
(5)   Net interest margin represents net interest income divided by average interest-earning assets.
 
(6)   Interest income from nontaxable securities has been adjusted to a tax equivalent basis using a statutory federal income tax rate of 35.0%. Interest income from nontaxable investment securities calculated on a tax equivalent basis was $1.4 million and $1.1 million for the three months ended June 30, 2006 and 2005, respectively.

- 27 -


Table of Contents

The net interest margin is calculated on a tax equivalent basis, which takes into account the tax benefits associated with certain interest-earning assets of the Company qualify for federal tax exemptions or credits. The decline in the net interest margin in the second quarter of 2006 compared to 2005 reflects the impact of increased costs of money market accounts and certificates of deposit resulting from higher market interest rates, the change in the composition of deposits and the procurement of costlier certificates of deposit from brokers, all of which were partially offset by higher loan yields.
Provision for Loan Losses. The provision for loan losses amounted to $1.2 million for the three months ended June 30, 2006, as compared to $1.8 million for the three months ended June 30, 2005. The lower provision for the second quarter of 2006 compared to the same period of 2005 is reflective of the refinement of the methodology used to determine certain historical, qualitative and economic surcharge loss factors. See “Credit Risk Management” for more information on how we determine the appropriate level for the allowances for loan losses and unfunded lending commitments.
Noninterest Income. Noninterest income increased by $4.5 million, or 78.7%, for the three months ended June 30, 2006, compared to the three months ended June 30, 2005. The increase was primarily attributable to the increase in commercial banking fees, increase in gain on sale of multifamily and commercial real estate loans and a smaller equity loss in other equity investments. UCB increased its commercial banking fees to $3.4 million for the three months ended June 30, 2006, compared to $2.6 million for the same period in 2005. The increase reflects the growth in trade finance activity and other commercial banking fees and an increase in fees from UCB Investment Services, Inc. Gain on sale of multifamily and commercial real estate loans increased to $4.2 million for the three months ended June 30, 2006, from $2.6 million for the same period in 2005 as a result of increased sales volume and higher interest rate spreads. Additionally, UCB had a reduction of equity losses in other equity investments to $50,000 for the three months ended June 30, 2006, from $859,000 for the same period in 2005 primarily attributable to $525,000 of equity income from a Community Reinvestment Act (“CRA”) qualified investment. There were no losses on sale of securities for the three months ended June 30, 2006, as compared to a $614,000 loss on sale of securities for the same period in 2005, which was primarily the result of the sale of $65.7 million in securities.
Noninterest Expense. Noninterest expense increased $6.7 million, or 22.0%, for the three months ended June 30, 2006, compared with the same period in 2005. The increase resulted principally from increases in personnel expenses, occupancy expenses and data processing. For the three months ended June 30, 2006, personnel expenses increased $5.6 million, or 37.2%, from the three months ended June 30, 2005, due to additional staffing required to support the growth of UCB’s commercial banking business, the opening of new branches in California and New York, the additional staffing resulting from the Pacifica and AABT acquisitions and the expansion of UCB’s infrastructure to support a larger and growing organization. Additionally, severance and retention bonuses related to the Pacifica and AABT acquisitions and other incentive bonuses totaling $838,000 were recognized during the three months ended June 30, 2006. Personnel expenses also included $546,000 in stock compensation expense related to the adoption of SFAS No. 123(R). Occupancy expenses increased by $454,000, or 13.9%, for the three months ended June 30, 2006, compared to the three months ended June 30, 2005, as a result of the opening of new branches in California and New York and the additional branches resulting from the Pacifica and AABT acquisitions. Data processing expenses increased $1.2 million, or 70.5%, for the three months ended June 30, 2006, compared to three months ended June 30, 2005, primarily as a result of $570,000 related to the conversion of the loan and deposit systems at Pacifica and AABT. Other general and administrative expenses increased by $867,000, or 21.3%, for the three months ended June 30, 2006, compared to the three months ended June 30, 2005, primarily as a result of increased advertising expenses related to the expansion of UCB and foreign exchange losses. All of these increases were partially offset by a decrease in professional fees and contracted services of $372,000, or 13.4%, for the three months ended June 30, 2006, compared to the three months ended June 30, 2005, primarily as a result of a decrease of $127,000 in Sarbanes-Oxley related costs and a gain on extinguishment of borrowings of $365,000 for the three months ended June 30, 2006, as compared to a loss on extinguishment of the subordinated debentures of $1.2 million for the three months ended June 30, 2005.
Income Tax Expense. The effective tax rate for the three months ended June 30, 2006, was 32.8%, compared with 23.4% for the three months ended June 30, 2005. The effective tax rate for the three months ended June 30, 2005, included a tax benefit of $3.9 million related to UCB’s decision to repatriate earnings from a foreign subsidiary.

- 28 -


Table of Contents

The effective tax rate for the three months ended June 30, 2006, includes increased Enterprise Zone tax credits. These rates are generally lower than the combined federal and state statutory rate of 42.0%, primarily due to federal and state tax credits and incentives, and tax-exempt income.
Six Months Ended June 30, 2006, Compared to Six Months Ended June 30, 2005
The consolidated net income of the Company for the six months ended June 30, 2006, increased by $1.7 million, or 3.5%, to $48.8 million, compared to $47.2 million for the same period in 2005. The annualized ROE and ROA ratios for the six months ended June 30, 2006, were 15.79% and 1.22%, respectively. These amounts compare with 18.75% and 1.44% for the six months ended June 30, 2005. The declines in the ratios are reflective of the growth rates of assets and equity that exceeded the growth in net income, primarily as a result of the Company’s acquisitions that were consummated in the latter part of 2005. Additionally, a tax benefit of $3.9 million associated with the repatriation of earnings from a foreign subsidiary contributed to a higher ROE and ROA for 2005. The efficiency ratio was 51.26% for the six months ended June 30, 2006, compared with 44.78% for the same period in 2005. The efficiency ratio increased primarily due to higher personnel expenses, occupancy expenses and data processing expenses in 2006 compared with 2005. Diluted earnings per share were $0.50 for the six months ended June 30, 2006, compared with $0.49 for the same period in 2005.
Net Interest Income and Net Interest Margin. The increase in net interest income for the first six months of 2006 compared to 2005 was principally due to a $1.35 billion increase in average interest-earning assets, which resulted primarily from organic loan growth and the previously discussed Pacifica and AABT acquisitions. The average cost of deposits increased 122 basis points from 1.84% for the six months ended June 30, 2005, to 3.06% for the six months ended June 30, 2006, as a result of an increase in market interest rates during the past twelve months, the change in the composition of deposits and the procurement of certificates of deposit from brokers, which typically carry higher interest rates. These factors were partially offset by a 97 basis point increase in average loan yields reflecting the repricing of adjustable-rate loans as market interest rate indices continued to rise. The yield on taxable securities yield also increased in the first six months of 2006 compared to 2005 as a result of the purchase of higher-yielding securities during 2005.

- 29 -


Table of Contents

The following table reflects the distribution of average assets, liabilities and stockholders’ equity, as well as the amounts of interest income and resultant yields earned from average interest-earning assets, and the amounts of interest expense and resultant rates paid on average interest-bearing liabilities for the six months ended June 30, 2006 and 2005 (dollars in thousands):
                                                 
    2006     2005  
                    Average                     Average  
            Interest     Yields             Interest     Yields  
    Average     Income/     Earned/     Average     Income/     Earned/  
    Balance     Expense     Rates Paid     Balance     Expense     Rates Paid  
Nontaxable equivalent basis:
                                               
Interest-earning assets
                                               
Loans (1)(2)
  $ 6,074,549     $ 217,174       7.15 %   $ 4,717,214     $ 145,860       6.18 %
Taxable securities (3)
    1,254,399       29,670       4.73       1,309,936       28,801       4.40  
Nontaxable securities (3)
    225,275       5,376       4.77       218,789       5,235       4.79  
Other
    98,493       2,238       4.54       60,411       999       3.31  
 
                                       
 
                                               
Total interest-earning assets
    7,652,716       254,458       6.65       6,306,350       180,895       5.74  
Noninterest-earning assets
    368,557                     239,533                
 
                                       
 
                                               
Total assets
  $ 8,021,273     $ 254,458             $ 6,545,883     $ 180,895          
 
                                       
 
                                               
Interest-bearing liabilities:
                                               
Deposits:
                                               
NOW, checking and money market accounts
  $ 1,257,330     $ 17,693       2.81     $ 1,011,073     $ 7,847       1.55  
Savings accounts
    737,635       4,391       1.19       893,533       4,723       1.06  
Time deposits
    3,636,978       72,011       3.96       2,954,066       36,097       2.44  
 
                                       
 
                                               
Total interest-bearing deposits
    5,631,943       94,095       3.34       4,858,672       48,667       2.00  
Short-term borrowings
    353,183       7,565       4.28       189,481       2,969       3.13  
Long- term borrowings
    633,205       15,418       4.87       355,244       9,500       5.35  
Subordinated debentures
    148,298       5,750       7.75       135,850       4,747       6.99  
 
                                       
 
                                               
Total interest-bearing liabilities
    6,766,629       122,828       3.63       5,539,247       65,883       2.38  
Noninterest-bearing deposits
    521,086                     422,911                
Other noninterest-bearing liabilities
    114,992                     80,546                
Stockholders’ equity
    618,566                     503,179                
 
                                       
 
                                               
Total liabilities and stockholders’ equity
  $ 8,021,273     $ 122,828             $ 6,545,883     $ 65,883          
 
                                       
 
                                               
Net interest-earning assets/net interest income/net interest rate spread (4)
  $ 886,087     $ 131,630       3.02 %   $ 767,103     $ 115,012       3.36 %
 
                                   
 
                                               
Net interest margin (5)
                    3.44 %                     3.65 %
 
                                           
 
                                               
Ratio of interest-earning assets to interest-bearing liabilities
    1.13 x                     1.14 x                
 
                                           
 
                                               
Tax equivalent basis:
                                               
Total interest-earning assets (6)
  $ 7,652,716     $ 257,353       6.73 %   $ 6,306,350     $ 183,477       5.82 %
Total interest-bearing liabilities
    6,766,629       122,828       3.63       5,539,247       65,883       2.38  
 
                                       
 
                                               
Net interest-earning assets/net interest income/net interest rate spread (4)
  $ 886,087     $ 134,525       3.10 %   $ 767,103     $ 117,594       3.44 %
 
                                   
 
                                               
Net interest margin (5)
                    3.52 %                     3.73 %
 
                                           
 
                                               
Average cost of deposits:
                                               
Total interest-bearing deposits
  $ 5,631,943     $ 94,095       3.34 %   $ 4,858,672     $ 48,667       2.00 %
Noninterest-bearing deposits
    521,086                     422,911                
 
                                       
 
                                               
Total deposits
  $ 6,153,029     $ 94,095       3.06 %   $ 5,281,583     $ 48,667       1.84 %
 
                                   
 
(1)   Nonaccrual loans are included in the table for computation purposes; however, interest for such loans is recognized on a cash basis.
 
(2)   Average loans include loans held for sale.
 
(3)   Average yield on investment securities is computed using historical cost balances; the yield information does not give effect to changes in fair value that are reflected as a component of stockholders’ equity.
 
(4)   Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
 
(5)   Net interest margin represents net interest income divided by average interest-earning assets.
 
(6)   Interest income from nontaxable securities has been adjusted to a tax equivalent basis using a statutory federal income tax rate of 35.0%. Interest income from nontaxable investment securities calculated on a tax equivalent basis was $2.9 million and $2.6 million for the six months ended June 30, 2006 and 2005, respectively.

- 30 -


Table of Contents

The decline in the net interest margin for the first six months of 2006 compared to 2005 reflects the impact of increased costs of money market accounts and certificates of deposit resulting from higher market interest rates, the change in the composition of deposits and the procurement of costlier certificates of deposit from brokers, all of which were partially offset by higher loan yields.
Provision for Loan Losses. The provision for loan losses amounted to $1.6 million for the six months ended June 30, 2006, as compared to $3.0 million for the six months ended June 30, 2005. The lower provision for 2006 compared to 2005 is reflective of the refinement of the methodology used to determine certain historical, qualitative and economic surcharge loss factors. See “Credit Risk Management” for more information on how we determine the appropriate level for the allowances for loan losses and unfunded lending commitments.
Noninterest Income. Noninterest income increased by $10.5 million, or 76.5%, for the six months ended June 30, 2006, compared to the six months ended June 30, 2005. Explanations previously provided for the quarterly changes also apply to the year-to-date changes. Additional explanations of variances follow.
The six month increase in noninterest income also included the $5.0 million acquisition termination fee from GEB that was received in the first quarter of 2006. Commercial banking fees increased to $7.5 million for the six months ended June 30, 2006, compared to $4.8 million for the same period in 2005. The increase reflects the growth in trade finance activity and other commercial banking fees and an increase in fees from UCB Investment Services, Inc. Gain on sale of multifamily and commercial real estate loans increased to $8.1 million for the six months ended June 30, 2006, from $6.4 million for the same period in 2005 as a result of increased sales volume and higher interest rate spreads. Additionally, UCB had a reduction of equity losses in other equity investments to $508,000 for the six months ended June 30, 2006, from $1.3 million for the same period in 2005 primarily attributable to the $525,000 of equity income from a CRA qualified investment. These increases were partially offset by a gain on sale of SBA loans of $1.6 million for the six months ended June 30, 2006, compared to $1.9 million for the same period in 2005.
Noninterest Expense. Noninterest expense increased $22.2 million, or 38.6%, for the six months ended June 30, 2006, compared to the six months ended June 30, 2005. Explanations previously provided for the quarterly changes also apply to the year-to-date changes. Additional explanations of variances follow.
For the six months ended June 30, 2006, personnel expenses increased $16.6 million, or 55.7%, from the six months ended June 30, 2005, due to additional staffing required to support the growth of UCB’s commercial banking business, the opening of new branches in California and New York, the additional staffing resulting from the Pacifica and AABT acquisitions and the expansion of UCB’s infrastructure to support a larger and growing organization. Additionally, severance and retention bonuses related to the Pacifica and AABT acquisitions and other incentive bonuses totaling $5.3 million were recognized during the six months ended June 30, 2006. Personnel expenses also included $851,000 in stock compensation expense related to the adoption of SFAS No. 123(R). Professional fees and contracted services increased by $504,000, or 9.5%, for the six months ended June 30, 2006, compared to the same period in 2005, primarily as a result of the $1.2 million write-off of legal and investment banking fees related to the GEB merger activity, which was partially offset by a decrease of $613,000 in Sarbanes-Oxley related costs. Other general and administrative expenses increased by $2.4 million, or 31.5%, for the six months ended June 30, 2006, compared to the six months ended June 30, 2005, primarily as a result of increased advertising expenses related to the expansion of UCB and foreign exchange losses.
Income Tax Expense. The effective tax rate for the six months ended June 30, 2006, was 34.4%, compared with 30.8% for the six months ended June 30, 2005. The effective tax rate for the six months ended June 30, 2005, included a tax benefit of $3.9 million related to UCB’s decision to repatriate earnings from a foreign subsidiary. The effective tax rate for the six months ended June 30, 2006, includes increased Enterprise Zone tax credits. These rates are generally lower than the combined federal and state statutory rate of 42.0%, primarily due to federal and state tax credits and incentives, and tax-exempt income.

- 31 -


Table of Contents

BALANCE SHEET ANALYSIS
Investment Securities
The amortized cost and market value of the Portfolio at June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                                 
    June 30, 2006     December 31, 2005  
    Amortized     Market     Amortized     Market  
    Cost     Value     Cost     Value  
Investment securities available for sale:
                               
Trust preferred securities
  $ 33,444     $ 32,940     $ 33,443     $ 32,946  
U.S. Government sponsored enterprises
    242,819       235,066       159,655       155,185  
Other
    10,503       10,402       11,012       10,911  
 
                       
 
                               
Total investment securities available for sale
    286,766       278,408       204,110       199,042  
 
                       
 
                               
Mortgage-backed securities available for sale:
                               
FNMA
    381,104       362,975       355,135       344,190  
GNMA
    85,048       79,520       88,184       85,033  
FHLMC
    344,200       327,857       302,540       292,316  
Other
    199,521       191,552       202,264       197,143  
 
                       
 
                               
Total mortgage-backed securities available for sale
    1,009,873       961,904       948,123       918,682  
 
                       
 
                               
Total investment and mortgage-backed securities available for sale
    1,296,639       1,240,312       1,152,233       1,117,724  
 
                       
 
                       
Investment securities held to maturity:
                               
Municipals
    224,389       226,970       225,573       232,279  
 
                       
 
                               
Mortgage-backed securities held to maturity:
                               
FNMA
    4,565       4,277       5,112       4,923  
GNMA
    69,656       65,802       77,261       76,133  
FHLMC
    656       615       662       639  
 
                       
 
                               
Total mortgage-backed securities held to maturity
    74,877       70,694       83,035       81,695  
 
                       
 
                               
Total investment and mortgage-backed securities held to maturity
    299,266       297,664       308,608       313,974  
 
                       
 
                               
Total investment and mortgage-backed securities
  $ 1,595,905     $ 1,537,976     $ 1,460,841     $ 1,431,698  
 
                       
The investment portfolio increased by $113.2 million from December 31, 2005. UCB intends to continue restructuring its balance sheet by accelerating the organic growth of its loan portfolio and decreasing its securities concentration.
As of June 30, 2006, the carrying value and the market value of the available for sale investment portfolio were $1.30 billion and $1.24 billion, respectively. The total net of tax unrealized loss on these securities was $32.7 million and is reflected as accumulated other comprehensive loss in stockholders’ equity. The difference between the carrying value and market value of securities that are held to maturity, aggregating a loss of $1.6 million, has not been recognized in the financial statements as of June 30, 2006. Additionally, certain securities that UCB holds have unrealized losses that extend for periods in excess of twelve months. However, since the unrealized losses are solely attributable to movement in market interest rates and UCB has the intent and ability to hold these securities until recovery of such unrealized loss, UCB has concluded that the impairment on these securities is temporary.

- 32 -


Table of Contents

Loans
The components of UCB’s loans held in portfolio by amount for each major loan category at June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,     December 31,  
    2006     2005  
Commercial:
               
Secured by real estate — nonresidential
  $ 1,963,087     $ 2,307,381  
Secured by real estate — multifamily
    1,475,440       1,506,848  
Construction
    709,222       494,841  
Business
    1,126,926       863,935  
 
           
 
               
Total commercial
    5,274,675       5,173,005  
 
           
 
               
Consumer:
               
Residential mortgage (one-to-four family)
    614,180       613,988  
Other
    54,203       51,667  
 
           
 
               
Total consumer
    668,383       665,655  
 
           
 
               
Loans held in portfolio (1)
    5,943,058       5,838,660  
Allowance for loan losses
    (59,035 )     (64,542 )
 
           
 
               
Loans held in portfolio, net
  $ 5,884,023     $ 5,774,118  
 
           
 
(1)   Amounts include net unamortized deferred loan fees of $7.7 million and $7.4 million at June 30, 2006, and December 31, 2005, respectively.
During the six months ended June 30, 2006, total loans held in portfolio increased by $104.4 million. This increase resulted primarily from organic growth in commercial construction and business loans offset by a transfer of commercial real estate loans of $379.3 million from held in portfolio to held for sale. Commercial loans at June 30, 2006, increased 2.0% from the December 31, 2005, balance. Consumer loans increased 0.4% at June 30, 2006, from the December 31, 2005, balance.
UCB periodically identifies loans that it intends to sell, and when such a determination is made, the loans are classified as held for sale. For the six months ended June 30, 2006, UCB transferred $379.7 million of loans from held in portfolio to held for sale. UCB also transferred $62.1 million of loans that were either determined to lack market interest or did not meet our pricing requirements from held for sale to held in portfolio. The components of the loans held for sale by amount for each major loan category at June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,     December 31,  
    2006     2005  
Commercial:
               
Secured by real estate — nonresidential
  $ 237,397     $ 154,087  
Business
    1,874       2,653  
 
           
 
               
Total commercial
    239,271       156,740  
 
           
 
               
Consumer:
               
Residential mortgage (one-to-four family)
    891        
 
           
 
               
Loans held for sale (1)
  $ 240,162     $ 156,740  
 
           
 
(1)   Amounts include net unamortized deferred loan fees of $438,000 and $372,000 at June 30, 2006, and December 31, 2005, respectively.
Consistent with UCB’s stated long-term objectives for the next five years, UCB will be systematically reducing its concentration in commercial real estate loans, while increasing its concentration in commercial business loans.

- 33 -


Table of Contents

Loan commitments related to loans held for sale and held in portfolio for the three and six months ended June 30, 2006 and 2005, were as follows (dollars in thousands):
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2006     2005     2006     2005  
Loans held for sale:
                               
Commercial:
                               
Secured by real estate — nonresidential
  $ 10,600     $ 19,269     $ 32,925     $ 39,103  
Secured by real estate — multifamily
          223,340             398,979  
 
                       
 
                               
Total commercial loans
    10,600       242,609       32,925       438,082  
 
                       
 
                               
Consumer:
                               
Residential mortgage (one-to-four family)
    1,251       325       1,251       325  
 
                       
 
                               
Total loans held for sale commitments (1)
    11,851       242,934       34,176       438,407  
 
                       
 
                               
Loans held in portfolio:
                               
Commercial:
                               
Secured by real estate — nonresidential
    186,971       391,419       372,052       584,567  
Secured by real estate — multifamily
    49,114       167,180       134,236       244,559  
Construction
    306,967       166,013       485,858       308,945  
Business
    332,246       166,602       562,765       306,026  
 
                       
 
                               
Total commercial loans
    875,298       891,214       1,554,911       1,444,097  
 
                       
 
                               
Consumer:
                               
Residential mortgage (one-to-four family)
    27,495       42,726       46,360       88,075  
Other
    9,289       12,449       16,545       20,348  
 
                       
 
                               
Total consumer loans
    36,784       55,175       62,905       108,423  
 
                       
 
                               
Total loans held in portfolio commitments (1)
    912,082       946,389       1,617,816       1,552,520  
 
                       
 
                               
Total loan commitments (1)
  $ 923,933     $ 1,189,323     $ 1,651,992     $ 1,990,927  
 
                       
 
(1)   Excludes commitments related to loan participations.

- 34 -


Table of Contents

As a result of changing the loan origination focus to commercial business loans, UCB is originating more loans that reprice in shorter periods. Construction loans, commercial business loans and SBA loans generally have monthly repricing terms. Commercial real estate loans generally reprice monthly or are intermediate fixed, meaning that the loans have interest rates that are fixed for a period, typically five years, after which the loans generally reprice monthly or become due and payable. Multifamily real estate loans are generally intermediate fixed rate loans. Residential mortgage (one-to-four family) loans may carry an adjustable rate that reprice semiannually or annually; fixed rate, meaning that the loans have interest rates that are fixed over the term of the loans, typically 15 or 30 years; or have interest rates that are fixed for a period, typically five years, and then generally reprice semiannually or annually, thereafter. The components of gross loans held in portfolio by interest type for each major loan category at June 30, 2006, were as follows (dollars in thousands):
                                 
            Intermediate              
    Adjustable     Fixed     Fixed     Total  
Commercial:
                               
Secured by real estate — nonresidential
  $ 855,186     $ 411,044     $ 702,855     $ 1,969,085  
Secured by real estate — multifamily
    345,330       974,767       151,970       1,472,067  
Construction
    655,948             58,058       714,006  
Business
    1,012,659       3,199       111,437       1,127,295  
 
                       
 
                               
Total commercial
    2,869,123       1,389,010       1,024,320       5,282,453  
 
                       
 
                               
Consumer:
                               
Residential mortgage (one-to-four family)
    47,547       226,794       339,723       614,064  
Other
    46,858             7,344       54,202  
 
                       
 
                               
Total consumer
    94,405       226,794       347,067       668,266  
 
                       
 
                               
Gross loans held in portfolio (1)
  $ 2,963,528     $ 1,615,804     $ 1,371,387     $ 5,950,719  
 
                       
 
(1)   Amounts exclude net deferred loan fees of $7.7 million at June 30, 2006.
Deposits
The balances and rates paid for categories of deposits at June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                                 
    June 30, 2006     December 31, 2005  
            Weighted             Weighted  
            Average             Average  
    Amount     Rate     Amount     Rate  
NOW, checking and money market accounts
  $ 1,847,555       2.07 %   $ 1,784,065       1.65 %
Savings accounts
    928,540       2.02       946,714       1.85  
Time deposits:
                               
Less than $100,000
    1,184,102       3.97       1,203,001       2.69  
$100,000 or greater
    2,279,080       4.43       2,330,389       3.98  
 
                           
 
                               
Total time deposits
    3,463,182       4.27       3,533,390       3.54  
 
                           
 
                               
Total deposits
  $ 6,239,277       3.28 %   $ 6,264,169       2.75 %
 
                           
Deposits have traditionally been UCB’s primary source of funding to use in its lending and investment activities. At June 30, 2006, 55.5% of UCB’s deposits were time deposits, 29.6% were negotiable order of withdrawal (“NOW”) accounts, demand deposits and money market accounts, and 14.9% were savings accounts. By comparison, at December 31, 2005, 56.4% of UCB’s deposits were time deposits, 28.5% were NOW accounts, demand deposits and money market accounts, and 15.1% were savings accounts. With the exception of state and federal government entities contributing 6.6% to total deposits at June 30, 2006, no other material portion of UCB’s deposits were from or were dependent upon any one customer, source or industry.

- 35 -


Table of Contents

Included in time deposits at June 30, 2006, is $2.28 billion of deposits of $100,000 or greater, compared to $2.33 billion at December 31, 2005. Such deposits made up 36.5% of total deposits at June 30, 2006, compared to 37.2% at December 31, 2005. Also included in time deposits are $94.3 million and $156.8 million of brokered deposits at June 30, 2006, and December 31, 2005, respectively.
Borrowings
Borrowings as of and for the six months ended June 30, 2006, and the year ended December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,   December 31,
    2006   2005
Securities sold under agreements to repurchase:
               
Average balance outstanding
  $ 44,751     $  
Maximum amount outstanding at any month end period
    150,000        
Balance outstanding at end of period
    150,000        
Weighted average interest rate during the period
    4.12 %     %
Weighted average interest rate at end of period
    4.14 %     %
Weighted average remaining term to maturity at end of period (in years)
    7.1        
 
               
Short-term borrowings:
               
FHLB of San Francisco and Seattle advances and other short-term borrowings:
               
Average balance outstanding
  $ 307,210     $ 301,400  
Maximum amount outstanding at any month end period
    482,317       566,169  
Balance outstanding at end of period
    343,325       279,425  
Weighted average interest rate during the period
    4.30 %     3.51 %
Weighted average interest rate at end of period
    5.27 %     4.09 %
Weighted average remaining term to maturity at end of period (in years)
           
 
               
Long-term borrowings:
               
FHLB of San Francisco, Seattle and Boston advances:
               
Average balance outstanding
  $ 633,205     $ 361,677  
Maximum amount outstanding at any month end period
    699,980       562,033  
Balance outstanding at end of period
    665,844       562,033  
Weighted average interest rate during the period
    4.87 %     5.15 %
Weighted average interest rate at end of period
    4.73 %     4.76 %
Weighted average remaining term to maturity at end of period (in years)
    5.0       5.2  
UCB maintains borrowing lines with numerous correspondent banks and brokers and with the Federal Home Loan Bank of San Francisco, Seattle and Boston (collectively referred to as the “FHLB”) to supplement its supply of lendable funds and to manage liquidity. Such borrowings are generally secured with mortgage loans and/or securities with a market value at least equal to outstanding balances. In addition to loans and securities, advances from the FHLB are typically secured by a pledge of UCB’s stock in the FHLB. UCB had $972.6 million of FHLB advances outstanding at June 30, 2006, and $788.0 million outstanding at December 31, 2005. At June 30, 2006, UCB had $1.54 billion of additional FHLB borrowings available for future borrowing capacity.
UCB recorded certain loan sale transactions as secured borrowings as of June 30, 2006, and December 31, 2005, since these transactions did not qualify for sales treatment under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. The secured borrowings amounted to $2.8 million at June 30, 2006, and $19.1 million at December 31, 2005. During the six months ended June 30, 2006, $7.2 million of the loans related to the December 31, 2005, secured borrowings qualified for sales treatment, resulting in a gain on sale of loans of $222,000. Additionally during the six months ended June 30, 2006, UCB repurchased the remaining $11.9 million of the loans as a result of the purchaser electing to remove the loans from the sale transaction.

- 36 -


Table of Contents

Subordinated Debentures
UCBH established special purpose trusts in 1997, 2001, 2002 and 2005 for the sole purpose of issuing guaranteed preferred beneficial interests in its junior subordinated debentures (the “Capital Securities”) and investing the proceeds thereof in the junior subordinated debentures issued by UCBH. Payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts or the redemption of the Capital Securities are guaranteed by UCBH to the extent the trusts have funds available. The obligations of UCBH under the guarantees and the junior subordinated debentures are subordinate and junior in right of payment to all indebtedness of UCBH and will be structurally subordinated to all liabilities and obligations of UCBH’s subsidiaries. UCBH had $150.5 million of subordinated debentures outstanding at June 30, 2006, and December 31, 2005.

- 37 -


Table of Contents

RISK ELEMENTS
Since risk is inherent in substantially all of the Company’s operations, management of risk is integral to its successful operations and is also a key determinant of its overall performance. We manage all major aspects of our business through an integrated risk infrastructure that includes planning and review processes. We evaluate our risk and returns to produce sustainable revenue, to reduce earnings volatility and increase shareholder value. As part of this evaluation, we apply various strategies to identify, manage and reduce the risks to which the Company’s operations are exposed, namely credit, operational, market and interest rate, and liquidity risks.
We evaluate risk through various management committees with the oversight of the Board of Directors. The key risk management committees of the Company are:
  Enterprise Risk Management Committee, which reviews credit, operational, market and liquidity risk.
  Credit Risk Management Committee, which reviews credit policies, products, and problem assets risk.
  Market Risk Management Committee, which reviews securities, loans and borrowings to assess yield, market and interest rate risk.
  Operational Risk Management Committee, which reviews those risks not covered by the Credit Risk Management and the Market Risk Management Committees.
Management has established control processes and procedures to align risk-taking and risk management throughout our organization. Each of our business groups is responsible for identifying, quantifying, mitigating and managing all risks associated with their operations. In addition, each business unit prepares and executes business plans, which must address the changing nature of these risks making them best able to take actions to manage and mitigate those risks.
Credit Risk Management
Credit risk is the possibility of loss from the failure of a borrower or contractual counterparty to fully perform under the terms of a credit-related contract. Credit risk arises primarily from UCB’s lending activities, as well as from other on- and off-balance-sheet credit instruments.
Effective management of credit risk is essential in maintaining a safe and sound financial institution. We have in place a set of formal loan policies and procedures, which provide UCB with a framework for consistent loan underwriting and a basis for sound credit decisions. In addition, UCB has a well-defined set of standards for evaluating its loan portfolio and management utilizes a comprehensive loan grading system to identify the risk potential in the portfolio. Loans are periodically reviewed with regard to the borrower’s ability to repay the loan during which a risk grade is assigned to the loan. The reviews include evaluations of various factors, including the borrower’s debt capacity and financial flexibility, the borrower’s earnings, the sources of repayment, the level and nature of any contingencies, the quality of any collateral, and the industry in which the borrower operates. The reviews also address an evaluation of historical information as well as subjective assessments and interpretations. Further, an independent internal credit review function periodically conducts reviews of UCB’s lending operations and loan portfolios. These reviews are designed to place an emphasis on the early detection of problem credits so that action plans can be developed and implemented on a timely basis to mitigate any potential losses.
We also assign a loss rating to each credit facility. These loss ratings are determined by borrower and by type of collateral, based principally upon our own historical loss experience or on independent verifiable data that help to estimate these ratings. The ratings are used as a tool to monitor a loan’s performance and also in estimating any potential loss associated with it.

- 38 -


Table of Contents

Another aspect of UCB’s credit risk management strategy is to maintain diversification in the loan portfolio. The components of UCB’s loans held in portfolio by amount and percentage of gross loans held in portfolio for each major loan category at June 30, 2006, and December 31, 2005, were as follows (dollars in thousands):
                                 
    June 30, 2006     December 31, 2005  
    Amount     %     Amount     %  
Commercial:
                               
Secured by real estate — nonresidential
  $ 1,963,087       33.03     $ 2,307,381       39.52  
Secured by real estate — multifamily
    1,475,440       24.83       1,506,848       25.81  
Construction
    709,222       11.93       494,841       8.47  
Business
    1,126,926       18.96       863,935       14.80  
 
                       
 
                               
Total commercial
    5,274,675       88.75       5,173,005       88.60  
 
                       
 
                               
Consumer:
                               
Residential mortgage (one-to-four family)
    614,180       10.33       613,988       10.52  
Other
    54,203       0.92       51,667       0.88  
 
                       
 
                               
Total consumer
    666,383       11.25       665,655       11.40  
 
                       
 
                               
Loans held in portfolio (1)
  $ 5,943,058       100.00     $ 5,838,660       100.00  
 
                       
 
(1)   Amounts include net unamortized deferred loan fees of $7.7 million and $7.4 million at June 30, 2006, and December 31, 2005, respectively.
UCB actively monitors the levels of loans as a percentage of its portfolio and of its risk-based capital. Consistent with our planned long-term objectives, UCB will continue to systematically reduce the concentration in commercial and multifamily real estate loans while increasing the portfolio of commercial business loans. During the six months ended June 30, 2006, $114.4 million in commercial real estate loans were sold. Additionally, $379.3 million of commercial real estate loans were transferred from held in portfolio to held for sale, in an effort to further reduce UCB’s concentration of commercial real estate loans.
UCB also manages its loan portfolio to avoid the risk of undue concentration of credits in a particular industry, trade group or property type. UCB has no significant exposure to highly leveraged transactions or to any individual customer or counterparty.
Nonperforming Assets
Nonperforming assets include nonaccrual and restructured loans and other real estate owned (“OREO”). Loans are generally placed on nonaccrual status when a loan becomes 90 days past due as to principal and interest, unless the loan is both well secured and in the process of collection. Loans may be placed on nonaccrual earlier if, in management’s opinion, the full and timely collection of principal or interest becomes uncertain. When a loan is placed on nonaccrual status, any accrued but unpaid interest is reversed and charged against interest income. UCB charges off loans when it determines that collection becomes unlikely. OREO, of which UCB had none at June 30, 2006, is acquired primarily through or in lieu of foreclosure on loans secured by real estate.

- 39 -


Table of Contents

UCB’s nonperforming assets as of June 30, 2006 and December 31, 2005, were as follows (dollars in thousands):
                 
    June 30,     December 31,  
    2006     2005  
Commercial loans:
               
Secured by real estate — nonresidential
  $ 9,104     $ 12,792  
Business
    6,622       5,903  
 
           
 
               
Total commercial loans
    15,726       18,695  
 
           
 
               
Consumer loans:
               
Residential mortgage (one-to-four family)
    378       388  
Other
          50  
 
           
 
               
Total consumer loans
    378       438  
 
           
 
               
Total nonaccrual loans
    16,104       19,133  
Other real estate owned (OREO)
           
 
           
 
               
Total nonperforming assets
  $ 16,104     $ 19,133  
 
           
 
               
Nonperforming assets to total assets
    0.19 %     0.24 %
Nonaccrual loans to total loans
    0.26       0.32  
Nonperforming assets to total loans and OREO
    0.26       0.32  
 
               
Total loans
  $ 6,183,635     $ 5,995,400  
Gross income not recognized on nonaccrual loans
    1,279       790  
Accruing loans contractually past due 90 days or more
    4,374       5,374  
Loans classified as troubled debt restructurings and not included above
    8,494       10,827  
The level of UCB’s nonperforming assets decreased as of June 30, 2006, compared to December 31, 2005. The decrease was a result of the payoff of one nonaccrual commercial real estate loan and various loan charge-offs, partially offset by three additional commercial business loans being moved to nonaccrual loans.
Loans classified as troubled debt restructurings reflected in the table above at June 30, 2006, represents one commercial real estate loan, which is a nonresidential loan secured by real estate. This loan has been classified as a performing restructured loan as a result of UCB making interest rate concessions on a separate loan for $1.3 million to the same obligor and is secured by the same property. The separate loan of $1.3 million is included in the nonaccrual commercial real estate in the table above.
Included in nonaccrual loans are loans that we have determined to be impaired. Loans, other than those included in large groups of smaller-balance homogeneous loans, are considered to be impaired when, based on current information and events, it is probable that UCB will be unable to collect all amounts due in accordance with the contractual terms of the loan agreement, including scheduled interest payments. The amount of a loan’s impairment is measured based on either the present value of expected cash flows, the observable market price of the loan, or the fair value of the collateral securing the loan.
At June 30, 2006, and December 31, 2005, UCB’s investment in loans that were considered impaired was $17.8 million and $24.5 million, respectively. Estimated losses on impaired loans are added to the allowance for loan losses through the provision for loan losses. At June 30, 2006, the allowance for loan losses included $4.4 million for impaired loans with an $8.2 million recorded investment. At December 31, 2005, the allowance included $3.2 million for impaired loans with a recorded investment of $16.3 million.
Management cannot predict the extent to which economic conditions in UCB’s market areas may change or the full impact that such changes may have on UCB’s loan portfolio. Accordingly, there can be no assurances that additional loans will not become 90 days or more past due, be placed on nonaccrual status, or become impaired or restructured loans or OREO in the future.

- 40 -


Table of Contents

Allowances for Credit Losses
Allowance for Loan Losses. The allowance for loan losses represents our estimate of the losses that are inherent in the loan portfolio. UCB continuously monitors the quality of its loan portfolio and maintains an allowance for loan losses sufficient to absorb losses inherent in the portfolio.
UCB’s methodology for assessing the adequacy of the allowance for loan losses includes the evaluation of two distinct components: a general allowance applied to loan portfolio categories as a whole and a specific allowance for loans deemed impaired. Loans that are determined to be impaired are excluded from the general allowance analysis of the loan portfolio and are assessed individually.
In determining the general allowance, UCB applies loss factors, differentiated by an internal credit risk rating system, to its major loan portfolio categories (based primarily on loan type). UCB’s risk rating system is applied at the individual loan level within each of the major loan portfolio categories. The credit quality of the loan portfolio is regularly assessed through on going review.
The loss factors are developed from actual historic losses and reflect comparative analysis with peer group loss rates and expected losses. Additionally, loss factors incorporate qualitative adjustments that reflect an assessment of internal and external influences on credit quality that have not yet been reflected in the historical loss or risk-rating data. These influences may include elements such as portfolio credit quality trends and changes in concentrations, growth, or credit underwriting. UCB’s qualitative adjustments also include an economic surcharge factor to adjust loss factors in recognition of the impact various macro-economic factors have on portfolio performance.
UCB regularly assesses the loss factors that are applied to loan portfolio categories, and as part of the assessment concluded during the three months ended June 30, 2006, UCB effected refinements in the methodologies employed in establishing appropriate loss factors. These refinements focused primarily on the application of the expected loss approach, which is in turn based on estimated probabilities of default and loss given default, and on the delineation of the quantitative and qualitative risk characteristics, and macro-economic influences.
The quantitative analysis resulted in a revision and lowering of the loss factors on the commercial real estate, construction and commercial portfolios. The qualitative analysis resulted in a lowering of the construction portfolio loss factor while resulting in an increase in the multi-family portfolio loss factor. The quantitative analysis also resulted in establishing a minimum loss factor for each of the major loan portfolio categories to better reflect minimum inherent loss in all portfolios including those with limited historic loss experience.
The second component of the allowance for loan losses, the specific reserve, applies to loans that are deemed impaired. A loan is considered impaired when it is probable that UCB will not be able to collect all amounts due, including interest payments, in accordance with the loan’s contractual terms. Unless the loan is collateral-dependent, loan impairment is measured based on the present value of expected future cash flows that have been discounted at the loan’s effective interest rate. If the loan is collateral-dependent, either the observable market price or the current fair value of the collateral, reduced by estimated disposition costs, is used in place of the discounted cash flow analysis.

- 41 -


Table of Contents

The components of the allowance for loan losses and the allowance for losses related to unfunded commitments for the three and six months ended June 30, 2006 and 2005, were as follows (dollars in thousands):
                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2006     2005     2006     2005  
Balance at beginning of period:
                               
Allowance for loan losses
  $ 61,806     $ 57,547     $ 64,542     $ 56,472  
Allowance for losses — unfunded commitments
    3,713       3,948       3,402       3,940  
 
                       
 
                               
Total allowance for losses at beginning of year
    65,519       61,495       67,944       60,412  
Acquired allowance for loan losses
                       
Provision for loan losses
    1,249       1,775       1,556       2,965  
Charge-offs:
                               
Commercial:
                               
Secured by real estate — nonresidential
                (452 )      
Business
    (2,630 )     (3 )     (4,981 )     (137 )
 
                       
 
                               
Total commercial
    (2,630 )     (3 )     (5,433 )     (137 )
 
                       
 
                               
Consumer:
                               
Other
                (50 )      
 
                       
 
                               
Total charge-offs
    (2,630 )     (3 )     (5,483 )     (137 )
 
                       
 
                               
Recoveries:
                               
Commercial:
                               
Secured by real estate — nonresidential
    47             128        
Business
    70       39       100       58  
 
                       
 
                               
Total commercial
    117       39       228       58  
 
                       
 
                               
Consumer:
                               
Residential mortgage (one-to-four family)
                       
Other
    4       9       14       17  
 
                       
 
                               
Total consumer
    4       9       14       17  
 
                       
 
                               
Total recoveries
    121       48       242       75  
 
                       
 
                               
Net recoveries (charge-offs)
    (2,509 )     45       (5,241 )     (62 )
 
                       
 
                               
Total allowance for losses at end of period
    64,259       63,315       64,259       63,315  
 
                       
 
                               
Allowance for loan losses
    59,035       58,508       59,035       58,508  
Allowance for losses — unfunded commitments
    5,224       4,807       5,224       4,807  
 
                       
 
                               
Total allowance for losses at end of period
  $ 64,259     $ 63,315     $ 64,259     $ 63,315  
 
                       
 
                               
Allowance for loan losses to loans held in portfolio
    0.99 %     1.19 %     0.99 %     1.19 %
Net charge-offs to average loans outstanding (1)
    0.16             0.17        
 
(1)   Average loans balance includes loans held for sale.
The decrease in the allowance for loan losses at June 30, 2006, compared to December 31, 2005, primarily reflect the net loan charge-offs of $5.2 million for the six months ended June 30, 2006. In addition, UCB recognized a $1.2 million and $1.6 million provision for loan losses for the three and six months ended June 30, 2006, respectively. The effect of all general allowance and specific reserve changes during the three months ended June 30, 2006, resulted in a net reduction of $2.8 million in the allowance for loan losses, including a $6.3 million reduction in the allowance for loan losses from changes in loss factors and a $4.4 million increase from loan growth. The allowance for loan losses was also reduced by $2.6 million for loan charge-offs, which was partially offset by increases to the allowance associated with the migration of loan quality and increases in specific reserves. The effect of all general allowance and specific reserve changes during the six months ended June 30, 2006, resulted in a net reduction of $5.5 million in the allowance for loan losses, including an $8.7 million reduction in the allowance for loan losses from changes in loss factors and a $4.3 million increase from loan growth. The allowance

- 42 -


Table of Contents

for loan losses was also reduced by $5.5 million for loan charge-offs, which was partially offset by increases to the allowance associated with the migration of loan quality and increases in specific reserves.
The Federal Reserve has consistently raised interest rates during 2005 and the six months ended June 30, 2006, and has communicated its intention to continue this practice if it perceives the risk of inflation to be elevated or rising. As interest rates rise, additional pressure may be placed on our borrowers’ abilities to meet their contractual loan obligations, which may result in future increases to the allowance for loan losses and, in turn, higher provisions for loan losses. In addition, it is probable that the allowance for loan losses may increase in future quarters if we are successful in implementing our strategies for loan growth and for changing the mix of the commercial loan portfolio to reduce multi-family and commercial real estate loans and increase construction and commercial business loans. These latter two loan types generally contain higher credit risk attributes.
Allowance for Unfunded Commitments. UCB also estimates a reserve related to unfunded commitments and other off-balance sheet credit exposure. In assessing the adequacy of this reserve, UCB uses a similar approach used in the development of the allowance for loan losses. The reserve for unfunded commitments is included in other liabilities on the statement of financial position. Commitments to extend credit at June 30, 2006, and December 31, 2005, were $1.58 billion and $1.30 billion, respectively.
Operational Risk Management
Operational risk is the potential for unexpected losses attributable to human error, systems failures, fraud, or inadequate internal controls and procedures. Successful operational risk management is particularly important to a diversified financial services company like ours because of the nature, volume and complexity of our various businesses.
We classify operational risk into two major categories: business-specific and company-wide affecting all business lines. Management of operational risk requires a different strategy for each category. For business-specific risks, the Operational Risk Management Group works with the divisions to ensure consistency in policies, processes and assessments. With respect to company-wide risks, such as information security, business recovery, legal and compliance, the Operational Risk Management Group assesses the risks, develops a consolidated company view and communicates that view to the business groups.
In addition, to help manage company-wide risks, we have specialized support groups, such as the Legal Department, Information Security, Business Recovery, Corporate Finance, Corporate Compliance, and Technology and Operations. These groups assist the lines of business in the development and implementation of risk management practices specific to the needs of the business groups.
Interest Rate and Market Risk Management
Interest rate risk is the potential for loss resulting from adverse changes in the level of interest rates on UCB’s net interest income. Market risk is the potential for loss arising from adverse changes in the prices of UCB’s financial instruments as a result of changes in interest rates or other factors. As a financial institution that engages in transactions involving an array of financial products, UCB is constantly exposed to both interest rate risk and market risk.
Interest rate risk is one of the most significant risks to which UCB is regularly exposed and is managed centrally in the Corporate Treasury function. It is the primary driver behind our market risk exposure and affects both the values of our financial assets and the interest we earn and pay out. A sudden and substantial change in interest rates could negatively affect our earnings if the rates of interest UCB earns on its loans and investments do not change at the same speed, to the same extent, or on the same basis as the interest rates UCB pays on its deposits and borrowings.
One of UCB’s highest priorities is to actively monitor and manage its exposure to interest rate risk. UCB accomplishes this by first evaluating the interest rate risk and, in turn, market risk that is inherent in the makeup of its assets and liabilities. UCB then determines an appropriate level of risk that it is willing to assume considering its

- 43 -


Table of Contents

business strategy, current operating environment, capital and liquidity requirements as well as our current performance objectives.
Interest rate risk is managed in a number of ways. UCB actively manages the rates on the various types of loans and deposits that it offers its customers. These offering rates are a primary tool for encouraging or discouraging the production of loans with specific characteristics such as repricing frequency, amortization term and maturity; certificates of deposits with longer or shorter terms; and the mix of deposits. Nevertheless, banking is a competitive industry and although we endeavor to influence the types of loans and deposits that we produce, market conditions ultimately govern the outcome of those efforts.
UCB also manages market risk through changing the composition of its assets by selling loans with specific repricing characteristics, adjusting the relative size of its investment securities portfolio, which are predominately fixed-rate, and replenishing the investment securities portfolio with securities of specific durations and final maturities. UCB also changes the composition of its liabilities by choosing borrowings with longer or shorter expected maturities.
UCB monitors its interest rate and market sensitivities through the use of a model, which estimates the change in our net portfolio value (“NPV”) and net interest income in the event of a range of assumed changes in market interest rates. NPV is defined as the current market value of our assets, less the current market value of our liabilities, plus or minus the current value of off-balance-sheet items. As market interest rates decline, the average expected lives of our fixed-rate loans and investment securities shorten due to quicker prepayments, causing a relatively moderate increase in their value. The value of our deposit portfolio exhibits only relatively minor movements in a declining interest rate environment, since they are primarily short term in nature. This results in the value of deposits increasing less quickly than the value of assets increasing. As market interest rates rise, the average expected life of our fixed-rate loans and securities lengthens as prepayments decrease, causing a decline in value. The value of our deposits decreases slowly in a rising rate environment, due to the concentration of time deposits in our deposit base, which have terms of one year or less.
UCB may use certain derivative financial instruments for hedging purposes, such as interest rate swaps, caps and floors as part of our hedging program, to help mitigate our interest rate risk. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount that is presented on our balance sheet. See the Contractual Obligation and Off-Balance-Sheet Arrangements section for additional information.
The percentage change in UCB’s NPV and net interest income, assuming an immediate change in interest rates of plus or minus 100 and 200 basis points, at June 30, 2006, has not changed substantially from December 31, 2005. See Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Elements” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, for the percentage change and UCB’s NPV and net interest income table.
Liquidity Risk Management
Liquidity Management. Liquidity is managed centrally for both UCBH and UCB. UCBH’s cash requirements consist primarily of debt service, operating expenses, income taxes and dividends to its stockholders. UCBH’s cash needs are routinely met through dividends from UCB, investment income and debt issuances. UCB’s primary source of funding is its deposits.
Operational cash flows, while constituting a potential funding source for the Company, are typically not large enough to provide funding in the amounts that fulfill the needs of UCBH and UCB. As a result, the Company utilizes other sources at its disposal to manage its liquidity needs.
For the six months ended June 30, 2006, UCBH received no dividends from UCB. At June 30, 2006, $244.9 million of dividend capacity was available for UCB to pay UCBH without obtaining regulatory approval. The dividend capacity is dependent upon the continued profitability of UCB and on no significant changes taking place in the current regulatory environment. While we have no current expectation that these two conditions will change,

- 44 -


Table of Contents

should a change take place to either in the future, this source of funding to UCBH may become more limited or even unavailable.
As mentioned earlier, UCB’s primary source of funding is its deposits. For the six months ended June 30, 2006, deposit decreases resulted in net cash outflows of $25.1 million. Our liquidity may be adversely affected by unexpected withdrawals of deposits, which would require us to seek alternative funding sources, such as federal funds and other borrowings.
UCB maintains borrowing lines with numerous correspondent banks and brokers to supplement its supply of lendable funds and to manage liquidity. In addition, the FHLB allows member banks to borrow against their eligible loans to help meet liquidity requirements. These borrowing lines are generally secured with mortgage loans and/or securities with a market value at least equal to outstanding balances. In addition to loans and securities, advances from the FHLB are typically secured by a pledge of FHLB stock that UCB holds. UCB had $972.6 million and $788.0 million of FHLB advances outstanding at June 30, 2006, and December 31, 2005, respectively. At June 30, 2006, UCB had $1.54 billion of additional FHLB borrowings available for future borrowing capacity. The Company also has a $20.0 million unsecured borrowing line with Wells Fargo Bank. As of June 30, 2006, no advances had been drawn against this line.
Included in the $972.6 million of FHLB advances outstanding as of June 30, 2006, were $309.5 million of short-term, fixed-rate advances that mature within one year. The remaining $663.1 million in long-term advances mature between July 12, 2006 and November 30, 2020. As of June 30, 2006, $516.5 million of these advances may be terminated at the option of the FHLB. For the six months ended June 30, 2006, the activity in short-term FHLB borrowings resulted in a net cash inflow of $222.5 million, while activity in long-term borrowings resulted in net cash outflows of $37.9 million. Borrowings from the FHLB may increase in the future depending on availability of funds from other sources. However, UCB must maintain its FHLB membership to continue to access this source of funding. In addition, the FHLB may terminate the advances at quarterly intervals at specified periods ranging from three to five years beyond the original advance dates. In the event the FHLB decides to exercise this option, UCB would need to repay the advances using other funding sources.
UCB periodically sells loans that it has originated, which sales may provide an alternative source of funding. During the six months ended June 30, 2006, loan sales provided $431.3 million in cash inflows. We expect that loan sales will continue to be a tool that we use for liquidity management purposes.
While not considered a primary source of funding, the Company’s investment activities can also provide or use cash, depending on the investment strategy being used for the portfolio. During the six months ended June 30, 2006, investment securities activities resulted in an increase in investment holdings and a net cash outflow of $135.0 million. Our current strategy is to continue reducing our investment portfolio, which will result in continued cash flows.
Maturing balances in the various loan portfolios also provide additional flexibility in managing cash flows. In most situations, however, loan growth has resulted in cash outflows from a funding standpoint. For the six months ended June 30, 2006, loan growth resulted in a net cash outflow of $631.1 million. With the loan growth that we have experienced over the past year, we expect that our lending operations will continue to be a user of funds rather than a source.

- 45 -


Table of Contents

CAPITAL MANAGEMENT
The Board of Directors is responsible for approving the policies associated with capital management. The ultimate goal of our capital management program is to maintain UCB (on a consolidated basis) and the Company at the “well capitalized” level as defined by the federal banking regulators. As of June 30, 2006, both UCB and the Company exceeded the minimum risk-based capital ratios to be considered well capitalized.
Total stockholders’ equity at June 30, 2006, was $639.7 million, an increase of 6.0% over the $603.5 million at December 31, 2005. The Company’s and UCB’s risk-based capital ratios at June 30, 2006, and December 31, 2005, were as follows:
                 
    June 30,   December 31,
    2006   2005
United Commercial Bank:
               
Tier 1 leverage
    8.48 %     8.26 %
Tier 1 risk-based capital
    10.15       9.91  
Total risk-based capital
    11.12       10.98  
 
               
UCBH Holdings, Inc. and subsidiaries:
               
Tier 1 leverage
    8.72 %     8.56 %
Tier 1 risk-based capital
    10.44       10.26  
Total risk-based capital
    11.40       11.33  
UCBH has continuously paid quarterly dividends on its common stock since 2000. For the six months ended June 30, 2006, dividends paid by UCBH totaled $5.2 million. Dividends declared on January 26, 2006, had the effect of reducing the Company’s Tier 1 leverage ratio by 7 basis points and the total risk-based capital ratio by 8 basis points.

- 46 -


Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures regarding market risks in our portfolio, see the discussion under “Market Risk Management” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.
Item 4. Controls and Procedures
At the end of the period covered by this report, UCBH Holdings, Inc. (“UCBH”; UCBH, United Commercial Bank and United Commercial Bank’s wholly owned subsidiaries are collectively referred to as the “Company”) carried out an evaluation, under the supervision and with the participation of the Company’s management, including UCBH’s Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended. Based on this evaluation, UCBH’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. There have been no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 47 -


Table of Contents

PART II — OTHER INFORMATION
Item 1. Legal Proceedings
UCBH Holdings, Inc.’s wholly owned subsidiary, United Commercial Bank, has been a party to litigation incidental to various aspects of its operations in the ordinary course of business. Management is not currently aware of any litigation that will have a material adverse impact on UCBH Holdings, Inc. and subsidiaries consolidated financial condition or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, which could materially affect our business, financial condition and/or future operating results.
As of June 30, 2006, there have been no material changes to the risk factors presented in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. However, the risks described therein are not necessarily the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse affect on our business, financial condition and/or future operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The following proposals and the related votes thereon were made at UCBH Holdings, Inc.’s (“UCBH”) annual stockholders’ meeting held on May 19, 2006:
                                             
        Votes   Votes   Votes   Votes   Brokers
Description of Proposal   For   Against   Withheld   Abstained   Non-Votes
1.
  To elect three Class II directors to serve                                        
 
  until the 2009 Annual Meeting of Stockholders:                                        
 
                                           
 
  Joseph J. Jou     79,174,956             4,656,602              
 
  James Kwok     83,394,445             437,113              
 
  David S. Ng     83,392,644             438,914              
 
                                           
2.
  To approve UCBH senior executive annual                                        
 
  incentive plan     72,060,992       1,770,924             107,161       9,892,481  
 
                                           
3.
  To approve the amended and restated UCBH 2006                                        
 
  equity incentive plan     61,798,965       12,036,710             103,399       9,892,484  
 
                                           
4.
  To ratify the Audit Committee’s selection of                                        
 
  PricewaterhouseCoopers LLP as UCBH’s                                        
 
  independent auditors     83,651,711       98,033             81,814        

- 48 -


Table of Contents

In addition to the Directors elected in Proposal 1 above, the following are Directors whose terms of office continued after the meeting:
     
Term Ending in 2007 (Class III)
  Term Ending in 2008 (Class I)
 
   
Anthony Y. Chan
  Li-Lin Ko
Dr. Godwin Wong
  Richard Li-Chung Wang
Thomas S. Wu
  Dennis Wu
Item 5. Other Information
    None.

- 49 -


Table of Contents

Item 6. Exhibits
Index to Exhibits
                                 
                         
Exhibit       Incorporated by Reference   Filed
Number   Exhibit Description   Form   File No.   Exhibit   Filing Date   Herewith
2.1
  Agreement and Plan of Merger by and among UCBH Holdings, Inc. (“Buyer”), UCBH Merger Sub, Inc., a wholly owned subsidiary of Buyer, and Pacifica Bancorp, Inc. dated May 23, 2005   10-Q   000-24947     2.1     August 9, 2005        
 
                               
2.2
  Agreement and Plan of Merger by and among UCBH Holdings, Inc. (“Buyer”), United Commercial Bank, a wholly owned subsidiary of Buyer, and Asian American Bank & Trust Company dated August 2, 2005   10-Q   000-24947     2.2     November 9, 2005        
 
                               
2.3
  Agreement and Plan of Merger by and among UCBH Holdings, Inc. (“Buyer”), United Commercial Bank, a wholly owned subsidiary of Buyer, and Great Eastern Bank dated October 13, 2005   S-4   000-24947     2.1     December 12, 2005        
 
                               
3.1
  Second Amended and Restated Certificate of Incorporation of UCBH Holdings, Inc.   10-Q   000-24947     3.1     May 10, 2004        
 
                               
3.2
  Amended and Restated Bylaws of UCBH Holdings, Inc., as amended and restated   10-Q   000-24947     3.2     May 10, 2004        
 
                               
3.3
  Certificate of Designation, Preferences and Rights of Series A Participating Preferred Stock (filed as Exhibit A to Exhibit 4.7 hereto)   8-K   000-24947     1     January 29, 2003        
 
                               
4.0
  Form of Stock Certificate of UCBH Holdings, Inc.   S-1   333-58325     4.0     July 1, 1998        
 
                               
4.1
  Indenture of UCBH Holdings, Inc., dated April 17, 1998, between UCBH Holdings, Inc. and Wilmington Trust Company, as trustee   S-4   333-58335     4.1     July 1, 1998        
 
                               
4.2
  Form of Certificate of Series B Junior Subordinated Debenture   S-4   333-58335     4.2     July 1, 1998        
 
                               
4.3
  Certificate of Trust of UCBH Trust Co.   S-4   333-58335     4.3     July 1, 1998        
 
                               
4.4
  Amended and Restated Declaration of Trust of UCBH Trust Co.   S-4   333-58335     4.4     July 1, 1998        
 
                               
4.5
  Form of Series B Capital Security Certificate for UCBH Trust Co.   S-4   333-58335     4.5     July 1, 1998        
 
                               
4.6
  Form of Series B Guarantee of the Company relating to the Series B Capital Securities   S-4   333-58335     4.6     July 1, 1998        
 
                               
4.7
  Rights Agreement dated as of January 28, 2003   8-K   000-24947     1     January 29, 2003        

- 50 -


Table of Contents

Index to Exhibits
                                 
                         
Exhibit       Incorporated by Reference   Filed
Number   Exhibit Description   Form   File No.   Exhibit   Filing Date   Herewith
4.8
  Indenture of UCBH Holdings, Inc., dated September 22, 2005, between UCBH Holdings, Inc. and Wilmington Trust Company, as trustee   10-Q   000-24947     2.2     November 9, 2005        
 
                               
10.1
  Employment Agreement between UCBH Holdings, Inc., United Commercial Bank and Thomas S. Wu   10-Q   000-24947     10.1     November 9, 2004        
 
                               
10.2
  Form of Change in Control Agreement among UCBH Holdings, Inc., United Commercial Bank and Jonathan H. Downing   8-K   000-24947     10.2     June 13, 2005        
 
                               
10.3
  Form of Change in Control Agreement among UCBH Holdings, Inc., United Commercial Bank and Sylvia Loh as well as certain other Executive Vice Presidents of UCBH Holdings, Inc. or United Commercial Bank   10-Q   000-24947     10.3     November 9, 2004        
 
                               
10.4
  Form of Change in Control Agreement among UCBH Holdings, Inc., United Commercial Bank and Ka Wah (Tony) Tsui as well as certain other Senior Vice Presidents of UCBH Holdings, Inc. or United Commercial Bank   10-Q   000-24947     10.4     November 9, 2004        
 
                               
10.5
  Form of Change in Control Agreement among UCBH Holdings, Inc., United Commercial Bank and Daniel Gautsch   8-K   000-24947     10.1     June 8, 2005        
 
                               
10.6
  Form of Change in Control Agreement among UCBH Holdings, Inc., United Commercial Bank and Dennis Wu   8-K   000-24947     10.1     June 13, 2005        
 
                               
10.7
  Form of Change in Control Agreement among UCBH Holdings, Inc., United Commercial Bank and certain Senior Vice Presidents of UCBH Holdings, Inc. or United Commercial Bank   10-Q   000-24947     10.1     April 27, 2006        
 
                               
10.8
  UCBH Holdings, Inc. 2006 Equity Incentive Plan, (formerly known as UCBH Holdings, Inc. 1998 Stock Option Plan)                       P
 
                               
10.9
  UCBH Holdings, Inc. Senior Executive Annual Incentive Plan                       P
 
                               
10.10
  Executive Deferred Compensation Plan,
as amended
  8-K   000-24947     10.1     December 20, 2005        
 
                               
10.11
  Director Deferred Compensation Plan   10-K   000-24947     10.7     March 17, 2005        
 
                               
10.12
  Form of Indemnification Agreement of UCBH Holdings, Inc.   8-K   000-24947     10.1     May 18, 2006        

- 51 -


Table of Contents

Index to Exhibits
                                 
                         
Exhibit       Incorporated by Reference   Filed
Number   Exhibit Description   Form   File No.   Exhibit   Filing Date   Herewith
10.13
  Form of Indemnification Agreement of United Commercial Bank.   8-K   000-24947     10.2     May 18,2006        
 
                               
14.1
  Code of Conduct, as amended on August 14, 2004.   8-K   000-24947     14.1     September 1, 2004        
 
                               
21.0
  Subsidiaries of UCBH Holdings, Inc.   10-K   000-24947     21.0     March 16, 2006        
 
                               
31.1
  Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended, signed and dated by Thomas S. Wu.                       P
 
                               
31.2
  Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended, signed and dated by Dennis Wu.                       P
 
                               
32.0
  Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Thomas S. Wu and Dennis Wu.                         (1 )
 
(1)   Furnished herewith

- 52 -


Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
     
 
  UCBH HOLDINGS, INC.
 
   
Date: August 9, 2006
  /s/ Thomas S. Wu
 
   
 
  Thomas S. Wu
 
  Chairman, President and
 
  Chief Executive Officer
 
  (Principal Executive Officer)
 
   
Date: August 9, 2006
  /s/ Dennis Wu
 
   
 
  Dennis Wu
 
  Director, Executive Vice President and
 
  Chief Financial Officer
 
  (Principal Financial and Accounting Officer)

- 53 -

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki