UCBH HOLDINGS INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to _______________________

Commission file number 0-24947

UCBH Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		94-3072450 (I.R.S. Employer Identification No.)

711 Van Ness Avenue, San Francisco, California 94102

(Address of principal executive offices) (Zip Code)

(415) 928-0700

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 18, 2002, the Registrant had 19,634,615 shares of common stock outstanding.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 3. Defaults Upon Senior Securities
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES

UCBH HOLDINGS, INC.
TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	Item 1.	Financial Statements	1-3
		Notes to Consolidated Financial Statements	4-6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7-16
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
PART II — OTHER INFORMATION
	Item 1.	Legal Proceedings	17
	Item 2.	Changes in Securities and Use of Proceeds	17
	Item 3.	Defaults Upon Senior Securities	17
	Item 4.	Submission of Matters to a Vote of Security Holders	17
	Item 5.	Other Information	17
	Item 6.	Exhibits and Reports on Form 8-K	18
SIGNATURES			19

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UCBH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)


		At June 30,			At December 31,
		2002			2001

		(unaudited)
Assets
Cash and due from banks		$	40,885		$	32,606
Federal funds sold			40,000			—
Investment and mortgage-backed securities available for sale, at fair value			665,545			541,921
Investment and mortgage-backed securities, at cost (fair value $59,888 at June 30, 2002 and $50,695 at December 31, 2001)			59,053			51,472
Federal Home Loan Bank Stock			23,674			22,989
Loans			2,343,381			2,264,303
Allowance for loan losses			(36,221	)		(34,550	)

Net loans			2,307,160			2,229,753

Accrued interest receivable			15,819			16,593
Premises and equipment, net			19,047			19,669
Other assets			22,954			17,040

	Total assets	$	3,194,137		$	2,932,043

Liabilities
Deposits		$	2,651,383		$	2,466,152
Borrowings			258,000			238,000
Guaranteed preferred beneficial interests in junior subordinated debentures			46,000			36,000
Accrued interest payable			4,141			4,080
Other liabilities			32,162			13,687

	Total liabilities		2,991,686			2,757,919

Commitments and contingencies			—			—
Stockholders’ Equity
Preferred stock, $.01 par value, authorized 10,000,000 shares, none issued and outstanding			—			—
Common stock, $.01 par value, authorized 90,000,000 shares at June 30, 2002 and at December 31, 2001, shares issued and outstanding 19,632,615 at June 30, 2002 and 19,359,282 at December 31, 2001			196			194
Additional paid-in capital			71,832			66,685
Accumulated other comprehensive loss			(243	)		(6,481	)
Retained earnings-substantially restricted			130,666			113,726

	Total stockholders’ equity		202,451			174,124

	Total liabilities and stockholders’ equity	$	3,194,137		$	2,932,043

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

Page 1

UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited: Dollars in Thousands, Except for Per Share Data)


				For the Three Months Ended June 30,				For the Six Months Ended June 30,

				2002		2001		2002		2001

Interest income:
	Loans			$	38,268	$	41,432	$	76,273	$	83,438
	Funds sold and securities purchased under agreements to resell				36		600		62		752
	Investment and mortgage-backed securities				10,136		9,428		19,488		18,199

		Total interest income			48,440		51,460		95,823		102,389

Interest expense:
	Deposits				14,171		23,373		29,572		47,134
	Short-term borrowings				105		209		203		631
	Guaranteed preferred beneficial interests in junior subordinated Debentures				937		703		1,739		1,406
	Long-term borrowings				3,368		3,282		6,678		6,527

		Total interest expense			18,581		27,567		38,192		55,698

		Net interest income			29,859		23,893		57,631		46,691
Provision for loan losses					2,887		952		3,774		1,706

		Net interest income after provision for loan losses			26,972		22,941		53,857		44,985

Noninterest income:
	Commercial banking fees				1,145		786		2,142		1,560
	Service charges on deposits				456		365		827		616
	Gain on sale of loans, securities and servicing rights				2,368		504		2,818		741
	Miscellaneous income				68		33		168		37

		Total noninterest income			4,037		1,688		5,955		2,954

Noninterest expense:
	Personnel				6,884		6,277		14,448		12,666
	Occupancy				1,380		1,289		2,718		2,556
	Data processing				844		734		1,621		1,436
	Furniture and equipment				601		606		1,238		1,242
	Professional fees and contracted services				2,379		824		3,608		1,605
	Deposit insurance				108		96		214		188
	Communication				165		151		319		291
	Foreclosed assets				—		3		—		3
	Miscellaneous expense				2,161		2,196		4,099		3,939

			Total noninterest expense		14,522		12,176		28,265		23,926

Income before taxes					16,487		12,453		31,547		24,013
Income tax expense					6,659		5,025		12,652		9,556

		Net income		$	9,828	$	7,428	$	18,895	$	14,457

Basic earnings per share				$	0.50	$	0.39	$	0.97	$	0.77

Diluted earnings per share				$	0.48	$	0.37	$	0.92	$	0.73

Dividends declared per share				$	0.05	$	0.04	$	0.10	$	0.08

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

Page 2

UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited: Dollars in Thousands)


					For the Six Months Ended
					June 30,

					2002			2001

Operating activities:
	Net income				$	18,895		$	14,457
	Adjustments to reconcile net income to net cash provided by (used for) operating activities:
			Provision for loan losses			3,774			1,706
			Decrease in accrued interest receivable			774			186
			Depreciation and amortization of premises and equipment			1,240			1,280
			Increase in other assets			(10,647	)		(7,422	)
			Increase in other liabilities			20,996			320
			Increase (decrease) in accrued interest payable			61			(184	)
			Gain on sale of loans, securities and other assets			(2,818	)		(741	)
			Other, net			147			115

				Net cash provided by operating activities		32,422			9,717

Investing activities:
	Investments and mortgage-backed securities, available for sale:
			Principal payments and maturities			130,207			44,007
			Purchases			(216,758	)		(84,010	)
			Sales			140,574			505
			Called			23,334			—
	Investments and mortgage-backed securities, held to maturity:
			Principal payments and maturities			73			1,777
			Purchases			(7,807	)		(2,262	)
	Loans originated and purchased, net of principal collections					(303,541	)		(143,976	)
	Proceeds from the sale of loans					34,275			12,232
	Purchases of premises and other equipment					(403	)		(1,034	)
	Proceeds from sale of other assets					—			115

			Net cash used in investing activities			(200,046	)		(172,646	)

Financing activities:
	Net increase in demand deposits, NOW, money market and savings accounts					148,456			134,409
	Net increase in time deposits					36,775			96,110
	Net increase (decrease) in borrowings					20,000			(2,558	)
	Proceeds from issuance of common stock					2,420			1,663
	Payment of cash dividend on common stock					(1,748	)		(1,129	)
	Proceeds from issuance of guaranteed preferred beneficial interests in junior subordinated debentures					10,000			—

		Net cash provided by financing activities				215,903			228,495

Net increase in cash and cash equivalents						48,279			65,566
Cash and cash equivalents at beginning of period						32,606			38,213

Cash and cash equivalents at end of period					$	80,885		$	103,779

Supplemental disclosure of cash flow information:
			Cash paid during the period for interest		$	38,131		$	55,882
			Cash paid during the period for income taxes			3,647			15,940
Supplemental schedule of noncash investing and financing activities:
			Loans transferred to foreclosed property			—			—
			Securities transferred to available for sale securities⁽¹⁾			—			116,387
			Loans securitized			188,378			52,916

⁽¹⁾

Such securities were transferred from held to maturity securities when SFAS No. 133 was adopted in 2001.

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

Page 3

UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Basis of Presentation

The Consolidated Balance Sheets as of June 30, 2002, the Consolidated Statements of Income for the three and six months ended June 30, 2002 and 2001, and the Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001 have been prepared by UCBH Holdings, Inc. (the “Company”) and are not audited.

The unaudited financial statement information presented was prepared on the same basis as the audited financial statements for the year ended December 31, 2001. In the opinion of management such unaudited financial statements reflect all adjustments necessary for a fair statement of the results of operations and balances for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended June 30, 2002 are not necessarily indicative of the results to be expected for the full year.

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Impact of Recently Issued Accounting Standards

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that all business combinations initiated after June 30, 2001 be accounted for by a single method — the purchase method. SFAS No. 141 also specifies the criteria required for intangible assets be recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.

The Company is required to adopt the provisions of SFAS No. 141 immediately and SFAS No. 142 effective January 1, 2002. The Company does not expect adoption of SFAS No. 141 and 142 to have a material impact on the financial condition or operating results of the Company.

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

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

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 establishes a single accounting model for the impairment or disposal of long-lived assets, including discontinued operations. SFAS No. 144 superseded SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and APB Opinion No. 30, Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The provision of SFAS No. 144 are effective in fiscal years beginning after December 15, 2001, with early adoption permitted, and in general are to be applied prospectively.

Page 4

This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2001. The Company does not expect adoption of SFAS No. 144 to have a material impact on the financial condition or operating results of the Company.

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

This Statement is effective for fiscal years beginning after May 15, 2002. We do not expect the adoption of SFAS 145 to have a material impact on our financial position or results of operations.

2. Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share:


		Three Months Ended June 30, 2002						Three Months Ended June 30, 2001

		Income		Shares		Per Share		Income		Shares⁽¹⁾		Per Share
		(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount

		(Dollars in Thousands, Except Per Share Amounts)
Basic:
	Net income	$	9,828		19,604,525	$	0.50	$	7,428		18,893,705	$	0.39
	Dilutive potential common shares		—		948,809				—		975,309

Diluted:
	Net income and assumed conversion	$	9,828		20,553,334	$	0.48	$	7,428		19,869,014	$	0.37


		Six Months Ended June 30, 2002						Six Months Ended June 30, 2001

		Income		Shares		Per Share		Income		Shares⁽¹⁾		Per Share
		(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount

		(Dollars in Thousands, Except Per Share Amounts)
Basic:
	Net income	$	18,895		19,526,791	$	0.97	$	14,457		18,850,397	$	0.77
	Dilutive potential common shares		—		905,076				—		953,338

Diluted:
	Net income and assumed conversion	$	18,895		20,431,867	$	0.92	$	14,457		19,803,735	$	0.73

⁽¹⁾

Effective April 11, 2001, the Company completed a two-for-one stock split. Accordingly, the financial statements for the three months ended June 30, 2001 period presented have been restated to reflect the effect of the stock split.

3. Comprehensive Income

SFAS No. 130, “Reporting Comprehensive Income,” establishes presentation and disclosure requirements for comprehensive income; however, it does not affect existing recognition or measurement standards. For the Company, comprehensive income consists of net income and the change in unrealized gains and losses on available-for-sale securities. For the three months ended June 30, 2002, total comprehensive income was $18.6 million, an increase of $10.5 million, or 129.1%, compared to the three months ended June 30, 2001. Net income for the three months ended June 30, 2002 was $9.8 million and unrealized losses on available-for-sale securities decreased by $8.7 million. For the corresponding period of 2001, net income was $7.4 million and unrealized losses on available-for-sale securities decreased by $677,000.

For the six months ended June 30, 2002, total comprehensive income was $25.1 million, an increase of $7.0 million, or 38.6%, compared to the six months ended June 30, 2001. Net income for the six months ended June 30, 2002 was $18.9 million and unrealized losses on available-for-sale securities decreased by $6.2 million. For the corresponding period of 2001, net income was $14.5 million and unrealized losses on available-for-sale securities decreased by $3.7 million.

Page 5

4. Segment Information

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

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

The table below presents information about the Company’s operating segments for the three and six months ended June 30, 2002 and 2001:


		Commercial		Consumer		Total

		(Dollars in Thousands)
For the Three Months Ended
June 30, 2002:
	Net interest income (before provision for loan losses)	$	19,301	$	10,558	$	29,859
	Segment net income		5,693		4,135		9,828
	Segment total assets		2,091,159		1,102,978		3,194,137
June 30, 2001:
	Net interest income (before provision for loan losses)	$	14,334	$	9,560	$	23,893
	Segment net income		5,558		1,871		7,428
	Segment total assets		1,508,957		1,241,547		2,750,504
For the Six Months Ended
June 30, 2002:
	Net interest income (before provision for loan losses)	$	36,517	$	21,114	$	57,631
	Segment net income		12,706		6,189		18,895
	Segment total assets		2,091,159		1,102,978		3,194,137
June 30, 2001:
	Net interest income (before provision for loan losses)	$	26,550	$	20,141	$	46,691
	Segment net income		10,454		4,003		14,457
	Segment total assets		1,508,957		1,241,547		2,750,504

5. Subsequent Events

On July 3, 2002, the Company announced that it had received definitive agreements to purchase 25% of the outstanding shares of the Bank of Canton of California and was pursuing agreements to acquire the remaining 75% of the outstanding shares. At March 31, 2002, the Bank of Canton of California, based in San Francisco, had total assets of approximately $1.4 billion.

Page 6


ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q may include projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the Company or the Company’s wholly-owned subsidiary, United Commercial Bank (the “Bank”). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or the Bank to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things: general economic and business conditions in those areas in which the Company or the Bank operates; demographic changes; competition; fluctuations in market interest rates; changes in business strategies; changes in credit quality; and other risks and uncertainties including those detailed in the documents the Company files from time to time with the Securities and Exchange Commission. Further description of the risks and uncertainties are included in detail in the Company’s most recent quarterly and annual reports, including the Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the Securities and Exchange Commission.

The following discussion and analysis is intended to provide details of the results of operations of the Company for the three and six months ended June 30, 2002 and 2001 and financial condition at June 30, 2002 and at December 31, 2001. The following discussion should be read in conjunction with the information set forth in the Company’s Consolidated Financial Statements and notes thereto and other financial data included.

RESULTS OF OPERATIONS

General. The Company’s primary source of income is net interest income, which is the difference between interest income from interest-earning assets and interest paid on interest-bearing liabilities, such as deposits and other borrowings used to fund those assets. The Company’s net interest income is affected by changes in the volume of interest-earning assets and interest-bearing liabilities as well as by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds. The Company also generates noninterest income, including commercial banking fees, gain on sale of SBA loans, and the sale of securities, and other transactional fees and seeks to generate additional fees in connection with the shift in its business focus to commercial banking. The Company’s noninterest expenses consist primarily of personnel, occupancy, professional fees, and other operating expenses. The Company’s results of operations are affected by its provision for loan losses and may also be significantly affected by other factors including general economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory agencies.

Net Income. The consolidated net income of the Company during the three months ended June 30, 2002 increased by $2.4 million, or 32.3%, to $9.8 million, compared to $7.4 million for the corresponding period of the preceding year. The increase resulted primarily from an increase in net interest income. The annualized return on average equity (“ROE”) and average assets (“ROA”) ratios for the three months ended June 30, 2002 were 20.37% and 1.27%, respectively. This compares with annualized ROE and ROA ratios of 20.57% and 1.12%, respectively, for the three months ended June 30, 2001. The decrease in ROE results from increases in market valuations of our available for sale securities, which is recognized, net of tax, as other accumulated comprehensive loss in stockholders’ equity. The resulting efficiency ratios were 42.84% for the three months ended June 30, 2002 compared with 47.60% for the corresponding period of the preceding year. Diluted earnings per common share were $0.48 for the three months ended June 30, 2002 compared with $0.37 for the comparable period of the preceding year.

The consolidated net income of the Company during the six months ended June 30, 2002 increased by $4.4 million, or 30.7%, to $18.9 million, compared to $14.5 million for the corresponding period of the preceding year. The increase resulted primarily from an increase in net interest income. The annualized return on average equity (“ROE”) and average assets (“ROA”) ratios for the six months ended June 30, 2002 were 20.25% and 1.24%, respectively. This compares with annualized ROE and ROA ratios of 20.39% and 1.12%, respectively, for the six months ended June 30, 2001. The decrease in ROE results from increases in market valuations of our available for sale securities, which is recognized, net of tax, as other accumulated comprehensive loss in stockholders’ equity. The resulting efficiency ratios were 44.45% for the six months ended June 30, 2002 compared with 48.19% for the

Page 7

corresponding period of the preceding year. Diluted earnings per common share were $0.92 for the six months ended June 30, 2002 compared with $0.73 for the comparable period of the preceding year.

Net Interest Income. Net interest income before provision for loan losses of $29.9 million for the three months ended June 30, 2002 represented a $6.0 million, or 25.0%, increase over net interest income of $23.9 million for the three months ended June 30, 2001. This increase was primarily due to the increase in commercial loans and growth in core deposits. The yield on interest-earning assets decreased to 6.34% for the three months ended June 30, 2002 from 7.91% for the corresponding period of 2001, primarily due to the decrease in the prime rate for which our commercial loans are based. The average cost of deposits decreased to 2.20% for the three months ended June 30, 2002 from 4.25% for the three months ended June 30, 2001, primarily due to growth in core deposits and reductions in market interest rates. Interest on earning assets decreased $3.0 million to $48.4 million for the three months ended June 30, 2002, from $51.5 million for the three months ended June 30, 2001. This decrease resulted primarily from decreases in interest earned on commercial loans, partially offset by a $451.6 million increase in average interest-earning assets. This compares with a decrease of $9.0 million in interest expense, to $18.6 million for the three months ended June 30, 2002 from $27.6 million for the three months ended June 30, 2001. This decrease is primarily a result of reductions in market interest rates on interest-bearing deposits, partially offset by a $333.9 million increase in average interest-bearing deposits.

Net interest income before provision for loan losses of $57.6 million for the six months ended June 30, 2002 represented a $10.9 million, or 23.4%, increase over net interest income of $46.7 million for the six months ended June 30, 2001. This increase was primarily due to the increase in commercial loans and growth in core deposits. The yield on interest-earning assets decreased to 6.40% for the six months ended June 30, 2002 from 8.05% for the corresponding period of 2001, primarily due to the decrease in the prime rate for which our commercial loans are based. The average cost of deposits decreased to 2.34% for the six months ended June 30, 2002 from 4.41% for the six months ended June 30, 2001, primarily due to growth in core deposits and reductions in market interest rates. Interest on earning assets decreased $6.6 million to $95.8 million for the six months ended June 30, 2002, from $102.4 million for the six months ended June 30, 2001. This decrease resulted primarily from decreases in interest earned on commercial loans, partially offset by a $451.6 million increase in average interest-earning assets. This compares with a decrease of $17.5 million in interest expense, to $38.2 million for the six months ended June 30, 2002 from $55.7 million for the six months ended June 30, 2001. This decrease is primarily a result of reductions in market interest rates on interest-bearing deposits, partially offset by a $351.1 million increase in average interest-bearing deposits.

Average outstanding loans increased to $2.29 billion for the six months ended June 30, 2002 from $1.97 billion for the corresponding period of 2001, an increase of $316.4 million, or 16.0%, as a result of the Bank’s continued focus on commercial lending activities. Loan growth during the six months ended June 30, 2002 was significantly offset by the internal securitizations of residential mortgage (one to four family) loans as discussed below. Average commercial loans increased $504.8 million to $1.92 billion for the six months ended June 30, 2002, from $1.42 billion for the six months ended June 30, 2001 while average consumer loans decreased $188.3 million to $367.2 million for the six months ended June 30, 2002, from $555.6 million for the six months ended June 30, 2001, due primarily to the Company’s internal securitizations of loans discussed below and loan runoff. Average securities increased to $697.6 million for the six months ended June 30, 2002 from $536.4 million for the same period of 2001, an increase of $161.3 million, or 30.1%, primarily due to the internal securitizations of $188.4 million of residential mortgage (one to four family) loans during the first six months of 2002 and purchases net of repayments. Average interest-bearing deposits increased to $2.39 billion for the six months ended June 30, 2002 from $2.04 billion in the corresponding period of the prior year. Average noninterest-bearing deposits increased to $137.7 million for the six months ended June 30, 2002 from $98.4 million for the corresponding period of the prior year, representing an increase of $39.3 million, or 39.9%, as a result of the Company’s ongoing focus on the generation of commercial and consumer demand deposit accounts.

Net Interest Margin. The net interest margin, calculated on a tax equivalent basis, was 3.89% for the six months ended June 30, 2002, up from 3.72% for the corresponding period of 2001. The increase in the net interest margin resulted primarily from a change in the mix of interest-earning assets due to continued growth in our commercial loan portfolio and the significant increase in core deposits.

Page 8

The following table presents condensed average balance sheet information for the Company, together with interest rates earned and paid on the various sources and uses of funds for each of the periods indicated:


			At
			June 30,			For the Six Months Ended								For the Six Months Ended
			2002			June 30, 2002								June 30, 2001

									Interest								Interest
						Average			Income or		Average			Average			Income or		Average
			Yield/cost			Balance			Expense		Yield/Cost			Balance			Expense		Yield/Cost

			(Dollars in Thousands)
Interest-earning assets:
	Loans⁽¹⁾			6.46	%	$	2,290,936		$	76,273		6.66	%	$	1,974,494		$	83,438		8.45	%
	Securities			5.84			697,642			19,488		5.59			536,359			18,199		6.79
	Other			1.75			8,118			62		1.52			34,272			752		4.39

Total interest-earning assets				6.25			2,996,696			95,823		6.40			2,545,125			102,389		8.05
Noninterest-earning assets				—			45,529			—		—			43,341			—		—

Total assets				6.13		$	3,042,225		$	95,823		6.30		$	2,588,466		$	102,389		7.91

Interest-bearing liabilities:
	Deposits:
		NOW, checking, and money market accounts		1.56		$	342,174		$	2,695		1.58		$	201,079		$	2,342		2.33
		Savings accounts		1.20			475,228			3,093		1.30			374,643			4,415		2.36
		Time deposits		2.80			1,573,887			23,784		3.02			1,464,511			40,377		5.51

	Total deposits			2.30			2,391,289			29,572		2.47			2,040,233			47,134		4.62
	Borrowings			5.34			257,001			6,881		5.35			260,906			7,158		5.49
	Guaranteed preferred beneficial interests in junior subordinated debentures			8.06			41,333			1,739		8.41			30,000			1,406		9.38

Total interest-bearing liabilities				2.67			2,689,623			38,192		2.84			2,331,139			55,698		4.78

Noninterest-bearing deposits							137,716								98,413
Other noninterest-bearing liabilities							28,288								17,082
Stockholders’ equity							186,598								141,832

Total liabilities and stockholders’ equity						$	3,042,225							$	2,588,466

Net interest income/net interest rate spread⁽²⁾				3.58	%				$	57,631		3.56	%				$	46,691		3.27	%

Net interest-earning assets/net interest margin⁽³⁾				3.86	%	$	307,073					3.85	%	$	213,987					3.67	%

Ratio of interest-earning assets to interest-bearing liabilities				1.12	x		1.11	x							1.09	x

⁽¹⁾		Nonaccrual loans are included in the table for computation purposes, but the foregone interest on such loans is excluded.




⁽²⁾		Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.




⁽³⁾		Net interest margin represents net interest income divided by average interest-earning assets.

Provision for Loan Losses. The provision for loan losses reflects management’s judgment of the current period cost associated with credit risk inherent in the Company’s loan portfolio. Specifically, the provision for loan losses represents the amount charged against current period earnings to achieve an allowance for loan losses that, in management’s judgment, is adequate to absorb losses inherent in the Company’s loan portfolio.

The provision for loan losses of $2.9 million for the three months ended June 30, 2002 is an increase of $1.9 million compared to a provision of $952,000 for the corresponding period of 2001. Net chargeoffs were $1.8 million for the three months ended June 30, 2002, compared with net recoveries of $58,000 for the corresponding period of 2001.

The provision for loan losses of $3.8 million for the six months ended June 30, 2002 represented an increase of $2.1 million as compared to a provision of $1.7 million for the corresponding period of the preceding year. At June 30, 2002, the allowance for loan losses was $36.2 million. Net loan charge-offs were $2.1 million for the six months ended June 30, 2002, compared with net loan recoveries of $86,000 for the corresponding period of 2001.

Noninterest Income. Noninterest income for the three months ended June 30, 2002 was $4.0 million compared to $1.7 million for the corresponding quarter of 2001, an increase of $2.3 million, or 139.2%. Included in noninterest income for the three months ended is $2.0 million representing gain on sale of securities. Commercial banking fees increased 45.7% to $1.1 million for the three months ended June 30, 2002 as compared to $786,000 for the corresponding period of 2001, as a result of increased commercial banking activities, primarily trade finance

Page 9

business. Gain on sale of loans decreased to $323,000 in the three months ended June 30, 2002 from $504,000 in the three months ended June 30, 2001. The reduction in the gain on sales of SBA loans for the three months ended June 30, 2002 results from the timing of SBA loan sales and settlements.

Noninterest income for the six months ended June 30, 2002 was $6.0 million compared to $3.0 million for the corresponding period of 2001, an increase of $3.0 million, or 101.6%. Included in noninterest income for the six months ended is $2.0 million representing gain on sale of securities. Commercial banking fees increased 37.3% to $2.1 million for the six months ended June 30, 2002 as compared to $1.6 million for the corresponding period of 2001, as a result of increased commercial banking activities, primarily trade finance business. Gain on sale of loans of $774,000 in the first six months of 2002 was relatively consistent with the gain of $736,000 for the corresponding period of the preceding year.

Noninterest Expense. Noninterest expense of $14.5 million for the three months ended June 30, 2002 increased $2.3 million, or 19.3%, compared with $12.2 million for the corresponding quarter of 2001. Personnel expenses increased to $6.9 million for the three months ended June 30, 2002, from $6.3 million for the corresponding period of 2001, an increase of $607,000, or 9.7%, primarily due to the additional staffing required to support continued growth of the Bank’s commercial banking business, the opening of the Hong Kong Representative Office in the first quarter of 2002, and increased incentive accruals related to the loan and deposit growth. Professional fees increased to $2.4 million for the three months ended June 30, 2002, from $824,000 for the corresponding period of 2001, an increase of $1.6 million, primarily due to increased legal fees.

Noninterest expense of $28.3 million for the six months ended June 30, 2002 increased $4.3 million, or 18.1%, compared with $23.9 million for the corresponding period of 2001. Personnel expenses increased to $14.4 million for the six months ended June 30, 2002, from $12.7 million for the corresponding period of 2001, an increase of $1.8 million, or 14.1%, primarily due to the additional staffing required to support continued growth of the Bank’s commercial banking business, the opening of the Asia Banking and International Divisions during the latter part of 2001, the opening of the Hong Kong Representative Office in the first quarter of 2002, and increased incentive accruals related to the loan and deposit growth. Professional fees of $3.6 million for the six months ended June 30, 2002 increased $2.0 million, compared with $1.6 million for the corresponding period of 2001, primarily due to increased legal fees.

Provision for Income Taxes. The provision for income taxes was $6.7 million and $5.0 million on the income before taxes of $16.5 million and $12.5 million for the three months ended June 30, 2002 and 2001, respectively. The effective tax rate for the quarter ended June 30, 2002 was 40.39%, compared with 40.35% for the quarter ended June 30, 2001.

The provision for income taxes was $12.7 million and $9.6 million on the income before taxes of $31.5 million and $24.0 million for the six months ended June 30, 2002 and 2001, respectively. The effective tax rates were 40.11% for the six months ended June 30, 2002 and 39.80% for the six months ended June 30, 2001.

FINANCIAL CONDITION

The Company experienced continued asset growth during the second quarter of 2002. Total assets at June 30, 2002 were $3.19 billion, an increase of $262.1 million, or 8.9%, from $2.93 billion at December 31, 2001. The growth resulted primarily from increases in the loan portfolio and in securities and investments.

During the six months ended June 30, 2002, total loans increased by $79.1 million, or 3.5%, to $2.34 billion, from $2.26 billion at December 31, 2001. This growth was led by an increase in commercial loans due to the Bank’s continuing focus on originating such loans. The growth was offset by the internal securitizations of $188.4 million of residential mortgage (one to four family) loans during the first six months of 2002. Total commercial loans grew to $2.11 billion at June 30, 2002, from $1.82 billion at December 31, 2001. Residential mortgage (one to four family) loans decreased to $221.1 million at June 30, 2002 from $430.1 million at December 31, 2001, primarily due to principal repayments and internal securitizations. New loan commitments of $687.0 million for the six months ended June 30, 2002 were comprised of $603.6 million of commercial loans and $83.4 million of consumer loans. Securities (including available-for-sale and held-to-maturity) totaled $724.6 million at June 30, 2002, an increase of $131.2 million, or 22.1%, from $593.4 million at

Page 10

December 31, 2001, as a result of the internal securitizations of loans and purchases of additional securities for liquidity purposes.

Total past due loans were 0.72% of total loans at June 30, 2002, compared with 0.64% at December 31, 2001. Nonperforming assets were $4.9 million, or 0.15%, of total assets at June 30, 2002, compared with nonperforming assets of $991,000, or 0.03%, of total assets at December 31, 2001. The allowance for loan losses was $36.2 million at June 30, 2002, an increase of $1.7 million from $34.6 million at December 31, 2001. The increase in the allowance for loan losses reflected the growth in the loan portfolio during the six months ended June 30, 2002 and increased concentration in commercial loans.

The following table shows the composition of the Bank’s loan portfolio by amount and percentage of gross loans in each major loan category at the dates indicated:


		At June 30, 2002						At December 31, 2001

		Amount			%			Amount			%

		(Dollars in Thousands)
Commercial:
	Secured by real estate—nonresidential	$	885,177			37.70	%	$	798,882			35.22	%
	Secured by real estate—multifamily		859,253			36.60			677,271			29.86
	Construction		170,530			7.26			182,558			8.05
	Commercial business		194,595			8.29			163,628			7.21

	Total commercial loans		2,109,555			89.85			1,822,339			80.34

Consumer:
	Residential mortgage (one to four family)		221,129			9.42			430,057			18.96
	Other		17,205			0.73			16,003			0.70

	Total consumer loans		238,334			10.15			446,060			19.66

Total gross loans			2,347,889			100.00	%		2,268,399			100.00	%

Net deferred loan origination fees			(4,508	)					(4,096	)

Loans			2,343,381						2,264,303
Allowance for loan losses			(36,221	)					(34,550	)

Net loans		$	2,307,160					$	2,229,753

The Company continues to emphasize production of commercial real estate and commercial business loans and to place reduced emphasis on the origination volume of residential mortgage (one to four family) loans. The Bank holds substantially all of its loan originations in portfolio, except for the guaranteed portion of Small Business Administration (“SBA”) loans which are generally sold in the secondary market.

Due to its change in the loan origination focus to commercial loans, the Bank is originating more loans, which reprice in our shorter time periods than the traditional repricing terms of residential mortgage (one to four family) loans. Construction loans, commercial business loans and SBA loans generally have monthly repricing terms. Commercial real estate loans generally reprice each month or are intermediate fixed, meaning that the loans have interest rates which are fixed for a period, typically five years, and then generally reprice monthly or become due and payable. Residential mortgage (one to four family) loans may be adjustable-rate repricing semiannually or annually, fixed rate for terms of 15 or 30 years, or have interest rates that are fixed for a period, typically five years, and then generally reprice semi-annually or annually.

As a result of the change of focus to commercial lending, adjustable-rate loans increased to $1.88 billion, an increase of $172.6 million, or 10.1%, from $1.70 billion at December 31, 2001. Fixed-rate loans decreased $93.1 million, or 16.5%, to $471.8 million, or 20.1% of gross loans at June 30, 2002, compared with $564.9 million, or 24.9% of the gross loans at December 31, 2001. At June 30, 2002, total gross loans included $194.4 million of intermediate fixed-rate loans compared with $221.6 million at December 31, 2001, a decrease of $27.2 million, or 12.3%.

Page 11

The following table shows the Bank’s new loan commitments during the periods indicated:


			For the Six Months Ended
			June 30,

			2002		2001

			(Dollars in Thousands)
Commercial:
	Secured by real estate—nonresidential⁽¹⁾		$	178,655	$	132,304
	Secured by real estate—multifamily⁽¹⁾			242,250		100,518
	Construction			78,755		101,103
	Commercial business			103,984		95,379

		Total commercial loans		603,644		429,304

Consumer:
	Residential mortgage (one to four family)⁽¹⁾			68,065		31,819
	Home equity and other			15,315		8,365

		Total consumer loans		83,380		40,184

	Total new commitments		$	687,024	$	469,488

⁽¹⁾

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

Nonperforming Assets and OREO. Management generally places loans on nonaccrual status when they become 90 days past due, unless they are both well secured and in the process of collection. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed from income. Nonaccrual loans were $4.9 million at June 30, 2002 compared to $991,000 at December 31, 2001.

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


					At June 30,			At December 31,
					2002			2001

					(Dollars in Thousands)
Nonaccrual loans:
	Commercial
		Secured by real estate—nonresidential			$	1,628		$	—
		Secured by real estate—multifamily				379			210
		Construction loans				2,389			—
		Commercial business				519			—

			Total commercial			4,915			210

	Consumer
		Residential mortgage (one to four family)				—			781
		Other				—			—

			Total consumer			—			781

				Total nonaccrual loans		4,915			991

Other real estate owned (“OREO”)						—			—

Total nonperforming assets					$	4,915		$	991

Nonperforming assets to total assets						0.15	%		0.03	%
Nonaccrual loans to loans						0.21			0.04
Nonperforming assets to loans and OREO						0.21			0.04
Loans					$	2,343,381		$	2,264,303

Gross income not recognized on nonaccrual loans					$	174		$	24
Accruing loans contractually past due 90 days or more					$	—		$	1,269

Total nonperforming assets were $4.9 million at June 30, 2002, an increase of $3.9 million, from $991,000 at December 31, 2001. The Bank records OREO at the lower of carrying value or fair value less estimated disposal costs. Any write-down of OREO is charged to earnings. There were no OREOs at June 30, 2002 or December 31, 2001.

Page 12

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

Allowance for Loan Losses. The Bank has established a formal process for determining an adequate allowance for loan losses. This process results in an allowance that consists of two components, allocated and unallocated. The allocated component includes allowance estimates that result from analyzing certain individual loans (including impaired loans), and includes the results of analyzing loans in groups. For loans that are analyzed individually, third party information, such as appraisals, may be used to supplement management’s analysis. For loans that are analyzed in groups, such as residential mortgage (one to four family) loans, management’s analysis consists of reviewing delinquency trends, charge-off experience, current economic conditions, composition of the loan portfolio, regional collateral value trends, and other factors. The unallocated component of the allowance for loan losses is intended to compensate for the subjective nature of estimating an adequate allowance for loan losses, economic uncertainties, and other factors. In addition to the assessment performed by management, the Bank’s loan portfolio is subject to an internal asset review function and is examined by the Bank’s regulators. The results of these examinations are incorporated into management’s assessment of the allowance for loan losses.

The allowance for loan losses is increased by provisions for loan losses, which are charged against earnings, and reduced by charge-offs, net of any recoveries. Loans are charged off when they are classified as loss, as defined by bank regulations. For any loan that is past due more than 90 days, management will generally charge off the amount by which the recorded loan amount exceeds the value of the underlying collateral, unless the loan is both well secured and in the process of collection. Recoveries of amounts that have previously been charged off are generally recorded only to the extent that cash is received.

While management uses all available evidence in assessing the adequacy of the allowance for loan losses, future additions to the allowance for loan losses will be subject to continuing evaluations of the inherent risk in the portfolio. In times of economic downturn, asset quality may deteriorate and additional provisions for loan losses could be required. Additionally, the Bank’s regulators review the adequacy of the allowance for loan losses as part of their examination process and may require the Bank to record additional provisions for loan losses based on their judgment or information available to them at the time of their examinations. Management believes that the allowance for loan losses is adequate to provide for estimated losses inherent in the Bank’s loan portfolio.

The following table sets forth information concerning the Bank’s allowance for loan losses for the dates indicated:


	For the Six Months Ended
	June 30,

	2002			2001

	(Dollars in Thousands)
Balance at beginning of period	$	34,550		$	28,901
Provision for loan losses		3,774			1,706
Loans charged off		(2,126	)		(30	)
Recoveries		23			116

Balance at end of period	$	36,221		$	30,693

Allowance for loan losses to loans		1.55	%		1.53	%
Annualized net charge-offs (recoveries) to average loans		0.18	%		(0.01	)%

Securities. Securities (including available-for-sale and held-to-maturity) increased during the first six months of 2002 by $131.2 million, or 22.1%, to $724.6 million at June 30, 2002 from $593.4 million at December 31, 2001. The increase in securities resulted primarily from internal securitizations of $188.4 million of residential mortgage (one to four family) loans for risk-based capital management purposes.

Page 13

The following table presents the Bank’s securities portfolio on the dates indicated:


			At June 30, 2002				At December 31, 2001

			Amortized		Market		Amortized		Market
			Cost		Value		Cost		Value

			(Dollars in Thousands)
Investment securities available for sale:
	Trust Preferred Securities		$	62,398	$	54,443	$	100,327	$	89,929
	Federal Agency Notes			12,180		12,300		36,507		36,378
	Asset-backed Securities			5,510		5,510		12,018		12,012

		Total investment securities available for sale		80,088		72,253		148,852		138,319

Mortgage-backed securities available for sale:
	FNMA			307,951		313,791		206,902		206,777
	GNMA			201,616		203,792		145,091		145,395
	FHLMC			50,424		49,825		47,747		46,928
	Other			25,883		25,884		4,504		4,502

		Total mortgage-backed securities available for sale		585,874		593,292		404,244		403,602

Total investment and mortgage-backed securities available for sale			$	665,962	$	665,545	$	553,096	$	541,921

Investment securities held to maturity:
	Municipals		$	58,098	$	58,933	$	50,444	$	49,667

Mortgage-backed securities held to maturity:
	Other			955		955		1,028		1,028

		Total investment and mortgage-backed securities held to maturity	$	59,053	$	59,888	$	51,472	$	50,695

As of June 30, 2002, the carrying value of the securities was $725.0 million and the market value was $725.4 million. The total unrealized gain on these securities was $418,000. This total unrealized gain is composed of $417,000 unrealized loss on available for sale securities and $835,000 unrealized gain on held to maturity securities. The $417,000 unrealized loss on available for sale securities, net of tax, is included as a reduction of stockholders’ equity. The difference between the carrying value and market value of securities which are held to maturity, aggregating a gain of $835,000, has not been recognized in the financial statements as of June 30, 2002. The unrealized net gains are the result of movements in market interest rates.

Deposits. Deposits are the Bank’s primary source of funds to use in lending and investment activities. Deposit balances were $2.65 billion at June 30, 2002, which represented an increase of $185.2 million, or 7.5%, from $2.47 billion at December 31, 2001. Core deposit balances increased by $148.5 million, or 16.9%, and time deposits increased by $36.8 million, or 2.3%, during this period. Core deposits include NOW, demand deposit, money market and savings accounts. The growth in core deposits resulted primarily from the Bank’s continued focus on developing new and expanding existing commercial and consumer relationships in the ethnic Chinese community, its retail niche market. At June 30, 2002, 61.3% of deposits were time deposits, 18.4% were savings accounts, and 20.3% were NOW, demand deposit and money market accounts. By comparison, at December 31, 2001, 64.4% of deposits were time deposits, 18.3% were savings accounts, and 17.3% were NOW, demand deposit and money market accounts.

The Bank obtains deposits primarily from the communities it serves. No material portion of its deposits are from or are dependent on any one person or industry. At June 30, 2002, less than 2.0% of the Bank’s deposits were held by customers with addresses located outside the United States. Additionally, at that date, the 100 depositors with the largest aggregate deposit balances comprised less than 20.0% of the Bank’s total deposits. The Bank accepts deposits in excess of $100,000 from customers. Included in time deposits as of June 30, 2002, is $791.4 million of deposits of $100,000 or greater. Such deposits comprise 29.9% of total deposits. At June 30, 2002, the Bank had no brokered deposits. Substantially all of the time deposits as of June 30, 2002 mature in one year or less.

Page 14

The following table presents the balances and rates paid for categories of deposits at the dates indicated:


		At June 30, 2002					At December 31, 2001

				Weighted					Weighted
		Balance		Average Rate			Balance		Average Rate

		(Dollars in Thousands)
NOW, demand deposits and money market accounts		$	536,804		1.10	%	$	427,338		1.19	%
Savings accounts			488,725		1.20			449,735		1.41
Time deposits:
	Less than $100,000		834,481		2.61			871,754		3.62
	$100,000 or greater		791,373		3.00			717,325		3.80

	Total time deposits		1,625,854		2.80			1,589,079		3.70

Total deposits		$	2,651,383		2.16	%	$	2,466,152		2.85	%

Other Borrowings. The Bank maintains borrowing lines with numerous correspondent banks and brokers and with the Federal Home Loan Bank (“FHLB”) of San Francisco to supplement our supply of lendable funds. Such borrowings are generally secured with mortgage loans and/or securities with a market value at least equal to outstanding balances. In addition to loans and securities, advances from the FHLB of San Francisco are typically secured by a pledge of our stock in the FHLB of San Francisco. At June 30, 2002, the Bank had $258.0 million of advances outstanding and $238.0 million outstanding at December 31, 2001.

Included in the $258.0 million of FHLB advances as of June 30, 2002 were $9.0 million of short-term advances, which mature within one year. Of the $249.0 million in long-term advances, $33.0 million mature between 2004 and 2008. An additional $216.0 million mature in 2008 with provisions which allow the FHLB of San Francisco, at their option, to terminate the advances at quarterly intervals at specified periods ranging from three to five years beyond the original advance dates. As of June 30, 2002, $136.0 million of these advances may be terminated at the option of the FHLB.

In December of 1998, the Bank entered into the Treasury Investment Program with the Federal Reserve Bank of San Francisco (“FRB”). This borrowing line allowed the Bank to utilize deposits made to the U.S. Treasury for federal tax payments until the Treasury needed the funds. This borrowing line had to be fully collateralized at all times. In March of 2001, the Bank discontinued its participation in the Treasury Investment Program.

Page 15

The following table sets forth certain information regarding short and long-term borrowings of the Bank at or for the dates indicated:


		At or For the Six Months Ended
		June 30,

		2002			2001

		(Dollars in Thousands)
Short-term borrowings:
FHLB of San Francisco advances:
	Average balance outstanding	$	8,156		$	21,485
	Maximum amount outstanding at any month end		18,220			39,177
	Balance outstanding at end of period		9,000			20,000
	Weighted average interest rate during the period		4.97	%		6.61	%
	Weighted average interest rate at end of period		4.63	%		6.74	%
	Weighted average remaining term to maturity at end of period (in years)		—			—
FRB direct investment borrowings:
	Average balance outstanding	$	—		$	1,421
	Maximum amount outstanding at any month end		—			10,000
	Balance outstanding at end of period		—			—
	Weighted average interest rate during the period		—	%		5.56	%
	Weighted average interest rate at end of period		—	%		—	%
	Weighted average remaining term to maturity at end of period (in years)		—			—
Long-term borrowings:
FHLB of San Francisco advances:
	Average balance outstanding	$	248,845		$	238,000
	Maximum amount outstanding at any month end		253,000			238,000
	Balance outstanding at end of period		249,000			238,000
	Weighted average interest rate during the period		5.37	%		5.48	%
	Weighted average interest rate at end of period		5.36	%		5.46	%
	Weighted average remaining term to maturity at end of period (in years)		6			6

Guaranteed Preferred Beneficial Interests in Junior Subordinated Debentures. The Company has issued a total of $46.0 million of junior subordinated debentures. The proceeds from the issuances were used primarily to provide additional capital for the Bank and for general business purposes.

Regulatory Capital. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines as calculated under regulatory accounting practices. As of June 30, 2002, the Bank met the “Well Capitalized” requirements under these guidelines. The total risk-based capital ratio of the Bank at June 30, 2002 was 11.28%, as compared with 10.91% at December 31, 2001. The ratio of Tier I capital (as defined in the regulations) to average assets (as defined) of the Bank at June 30, 2002 was 7.32% as compared with 7.26% at December 31, 2001. The Company’s capital ratios are approximately those of the Bank, and similarly the Company is categorized as “Well Capitalized.”

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the Company’s exposure to market risk since the information was disclosed in the Company’s Annual Report dated December 31, 2001 on file with the Securities and Exchange Commission (SEC File No. 0-24947).

Page 16

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The Company’s wholly-owned subsidiary, United Commercial Bank, has been and currently is a party to litigation incidental to various aspects of its operations, in the ordinary course of business. In the opinion of management, such litigation will not have a material adverse impact on the Company’s consolidated financial condition, or the results of operations.

Item 2. Changes in Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

On April 25, 2002, the Company held its annual meeting of stockholders for the purpose of the election of directors of the Company and for the ratification of PricewaterhouseCoopers LLP as the Company’s independent accountants.


		Number		Number
		of Votes		of Votes		Broker
		For		Withheld		Non-Votes

1. Election of Directors of the Company
	For three-year terms:
	Li-Lin Ko		16,860,297		709,890		—
	Ronald S. McMeekin		16,860,048		710,139		—
	Joseph S. Wu		16,860,042		710,145		—

Ms. Ko and Messrs. McMeekin and J. Wu were elected for terms which expire in 2005. The continuing directors on the Board consist of Mr. Jonathan H. Downing whose term expires in 2003 and Messrs. Godwin Wong and Thomas S. Wu whose terms expire in 2004.

Number

Number of

of Votes

Votes

Broker

For

Against

Abstaining

Non-Votes

2. Ratification of PricewaterhouseCoopers LLP as the Company’s independent accountants

16,849,544

717,943

2,700

—

Item 5. Other Information

None.

Page 17

Item 6. Exhibits and Reports on Form 8-K

(a) List of Exhibits (Filed herewith unless otherwise noted)


			3.1			Amended and Restated Certificate of Incorporation of UCBH Holdings, Inc.*

			3.2			Bylaws of UCBH Holdings, Inc.*

			3.3			Certificate of Amendment to the Amended and Restated Certificate of Incorporation of UCBH Holdings, Inc.**

			4.0			Form of Stock Certificate of UCBH Holdings, Inc.*

			10.1			Employment Agreement between United Commercial Bank and Thomas S. Wu*

			10.2			Employment Agreement between UCBH Holdings, Inc. and Thomas S. Wu*

			10.3			Form of Termination and Change in Control Agreement between United Commercial Bank and certain executive officers*

			10.4			Form of Termination and Change in Control Agreement between UCBH Holdings, Inc. and certain executive officers*

			10.5			Amended UCBH Holdings, Inc. 1998 Stock Option Plan**

(b) Reports on Form 8-K

None.

*		Incorporated by reference to the exhibit of the same number from the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on July 1, 1998 (SEC File No. 333-58325).




**		Incorporated by reference to the exhibit of the same number from the Company’s Form 10-Q for the quarter ended June 30, 2001, filed with the Securities and Exchange Commission on May 3, 2001 (SEC File No. 0-24947).

Page 18

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: July 19, 2002		/s/ Thomas S. Wu Thomas S. Wu Chairman, President and Chief Executive Officer (principal executive officer)


Date: July 19, 2002		/s/ Jonathan H. Downing Jonathan H. Downing Executive Vice President and Chief Financial Officer (principal financial officer)

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