UCBH HOLDINGS INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q


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


For the quarterly period ended		September 30, 2002


[ ]		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		94-3072450

(State or other jurisdiction of incorporation or organization)		(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 October 22, 2002, the Registrant had 19,667,720 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
	ITEM 4. CONTROLS AND PROCEDURES
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	4-7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7-17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	18
PART II -	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 2.	Changes in Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
Item 5.	Other Information	18
Item 6.	Exhibits and Reports on Form 8-K	19
SIGNATURES		20
CERTIFICATIONS		21-22

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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


		At September 30,			At December 31,
		2002			2001

		(unaudited)
Assets
Cash and due from banks		$	55,343		$	32,606
Investment and mortgage-backed securities available for sale, at fair value			725,045			541,921
Investment and mortgage-backed securities, at cost (fair value $67,046 at September 30, 2002 and $50,695 at December 31, 2001)			63,624			51,472
Federal Home Loan Bank Stock			24,434			22,989
Loans			2,440,961			2,264,303
Allowance for loan losses			(38,966	)		(34,550	)

Net loans			2,401,995			2,229,753

Accrued interest receivable			16,426			16,593
Premises and equipment, net			18,891			19,669
Other assets			20,307			17,040

	Total assets	$	3,326,065		$	2,932,043

Liabilities
Deposits		$	2,749,661		$	2,466,152
Borrowings			258,000			238,000
Guaranteed preferred beneficial interests in junior subordinated debentures			71,000			36,000
Accrued interest payable			4,541			4,080
Other liabilities			27,060			13,687

	Total liabilities		3,110,262			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 September 30, 2002 and at December 31, 2001, shares issued and outstanding 19,661,120 at September 30, 2002 and 19,359,282 at December 31, 2001			197			194
Additional paid-in capital			72,567			66,685
Accumulated other comprehensive income (loss)			6,029			(6,481	)
Retained earnings-substantially restricted			137,010			113,726

	Total stockholders’ equity		215,803			174,124

	Total liabilities and stockholders’ equity	$	3,326,065		$	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				For the Nine Months Ended
				September 30,				September 30,

				2002		2001		2002		2001

Interest income:
	Loans			$	38,669	$	41,338	$	114,942	$	124,776
	Funds sold and securities purchased under agreements to resell				25		349		87		1,101
	Investment and mortgage-backed securities				11,236		9,628		30,724		27,827

		Total interest income			49,930		51,315		145,753		153,704

Interest expense:
	Deposits				13,919		21,786		43,491		68,920
	Short-term borrowings				136		141		338		772
	Guaranteed preferred beneficial interests in junior subordinated debentures				949		703		2,688		2,109
	Long-term borrowings				3,405		3,318		10,083		9,845

		Total interest expense			18,409		25,948		56,600		81,646

		Net interest income			31,521		25,367		89,153		72,058
Provision for loan losses					2,742		2,084		6,516		3,789

		Net interest income after provision for loan losses			28,779		23,283		82,637		68,269

Noninterest income:
	Commercial banking fees				1,262		882		3,403		2,442
	Service charges on deposits				404		344		1,230		960
	Gain on sale of loans, securities and servicing rights				803		569		3,621		1,311
	Miscellaneous income				125		58		294		94

		Total noninterest income			2,594		1,853		8,548		4,807

Noninterest expense:
	Personnel				6,627		5,920		21,075		18,586
	Occupancy				1,488		1,361		4,206		3,917
	Data processing				813		704		2,433		2,140
	Furniture and equipment				527		710		1,766		1,952
	Professional fees and contracted services				1,077		971		4,684		2,576
	Deposit insurance				109		101		323		289
	Communication				176		146		495		437
	Foreclosed assets				—		—		—		3
	Litigation settlement				6,750		—		6,750		—
	Miscellaneous expense				2,235		2,225		6,335		6,165

			Total noninterest expense		19,802		12,138		48,067		36,065

Income before taxes					11,571		12,998		43,118		37,011
Income tax expense					4,243		5,200		16,895		14,756

		Net income		$	7,328	$	7,798	$	26,223	$	22,255

Basic earnings per share				$	0.37	$	0.41	$	1.34	$	1.17

Diluted earnings per share				$	0.36	$	0.39	$	1.28	$	1.12

Dividends declared per share				$	0.05	$	0.04	$	0.15	$	0.12

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 Nine Months Ended
					September 30,

					2002			2001

Operating activities:
	Net income				$	26,223		$	22,255
	Adjustments to reconcile net income to net cash provided by (used for) operating activities:
			Provision for loan losses			6,516			3,789
			Decrease (increase) in accrued interest receivable			167			(126	)
			Depreciation and amortization of premises and equipment			1,839			1,930
			Increase in other assets			(12,655	)		(4,459	)
			Increase in other liabilities			16,199			3,251
			Increase in accrued interest payable			461			43
			Gain on sale of loans, securities and other assets			(3,621	)		(1,311	)
			Other, net			906			489

				Net cash provided by operating activities		36,035			25,861

Investing activities:
	Investments and mortgage-backed securities, available for sale:
			Principal payments and maturities			173,795			127,848
			Purchases			(275,140	)		(278,038	)
			Sales			160,784			102,506
			Called			23,334			—
	Investments and mortgage-backed securities, held to maturity:
			Principal payments and maturities			78			1,783
			Purchases			(13,139	)		(9,962	)
	Loans originated and purchased, net of principal collections					(473,159	)		(307,154	)
	Proceeds from the sale of loans					52,253			37,488
	Purchases of premises and other equipment					(732	)		(1,201	)
	Proceeds from sale of other assets					—			115

			Net cash used in investing activities			(351,926	)		(326,615	)

Financing activities:
	Net increase in demand deposits, NOW, money market and savings accounts					191,387			181,714
	Net increase in time deposits					92,122			125,428
	Net increase (decrease) in borrowings					20,000			(22,558	)
	Proceeds from issuance of common stock					2,850			4,524
	Payment of cash dividend on common stock					(2,731	)		(1,888	)
	Proceeds from issuance of guaranteed preferred beneficial interest in junior subordinated debentures					35,000			—

		Net cash provided by financing activities				338,628			287,220

Net increase (decrease) in cash and cash equivalents						22,737			(13,534	)
Cash and cash equivalents at beginning of period						32,606			38,213

Cash and cash equivalents at end of period					$	55,343		$	24,679

Supplemental disclosure of cash flow information:
			Cash paid during the period for interest		$	56,140		$	81,603
			Cash paid during the period for income taxes			17,090			17,070
Supplemental schedule of noncash investing and financing activities:
			Securities transferred to available for sale securities ⁽¹⁾			—			116,387
			Loans securitized			242,554			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 Sheet as of September 30, 2002, the Consolidated Statements of Income for the three and nine months ended September 30, 2002 and 2001, and the Consolidated Statements of Cash Flows for the nine months ended September 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 nine months ended September 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.

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

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

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 September 30, 2002						Three Months Ended September 30, 2001

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

		(Dollars in Thousands, Except Per Share Amounts)
Basic:
	Net income	$	7,328		19,650,230	$	0.37	$	7,798		19,237,642	$	0.41
	Dilutive potential common shares		—		930,190				—		928,575

Diluted:
	Net income and assumed conversion	$	7,328		20,580,420	$	0.36	$	7,798		20,166,217	$	0.39


		Nine Months Ended September 30, 2002						Nine Months Ended September 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	$	26,223		19,567,937	$	1.34	$	22,255		18,979,478	$	1.17
	Dilutive potential common shares		—		913,447				—		945,084

Diluted:
	Net income and assumed conversion	$	26,223		20,481,384	$	1.28	$	22,255		19,924,562	$	1.12

⁽¹⁾

Effective April 11, 2001, the Company completed a two-for-one stock split.

Page 5

3. Comprehensive Income

SFAS No. 130, “Reporting Comprehensive Income,” establishes presentation and disclosure requirements for comprehensive income. 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 September 30, 2002, total comprehensive income was $13.6 million, an increase of $618,000 compared to the three months ended September 30, 2001. Net income for the three months ended September 30, 2002 was $7.3 million and unrealized gains on available-for-sale securities increased by $1.1 million. For the corresponding period of 2001, net income was $7.8 million and unrealized losses on available-for-sale securities decreased by $5.2 million.

For the nine months ended September 30, 2002, total comprehensive income was $38.7 million, an increase of $7.6 million, or 24.5%, compared to the nine months ended September 30, 2001. Net income for the nine months ended September 30, 2002 was $26.2 million and unrealized gains on available-for-sale securities increased by $3.6 million. For the corresponding period of 2001, net income was $22.3 million and unrealized losses on available-for-sale securities decreased by $8.9 million.

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 serve businesses and consumers, primarily in the state of California. 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 months and the nine months ended September 30, 2002 and 2001:


		Commercial		Consumer		Total

		(Dollars in Thousands)
For the Three Months Ended
September 30, 2002:
	Net interest income (before provision for loan losses)	$	21,906	$	9,615	$	31,521
	Segment net income		5,297		2,031		7,328
	Segment total assets		2,185,210		1,140,855		3,326,065
September 30, 2001:
	Net interest income (before provision for loan losses)	$	15,280	$	10,087	$	25,367
	Segment net income		5,846		1,952		7,798
	Segment total assets		1,650,836		1,172,920		2,823,756
For the Nine Months Ended
September 30, 2002:
	Net interest income (before provision for loan losses)	$	58,423	$	30,730	$	89,153
	Segment net income		18,003		8,220		26,223
	Segment total assets		2,185,210		1,140,855		3,326,065
September 30, 2001:
	Net interest income (before provision for loan losses)	$	41,830	$	30,228	$	72,058
	Segment net income		16,300		5,955		22,255
	Segment total assets		1,650,836		1,172,920		2,823,756

Page 6

5. Subsequent Events

On October 17, 2002, the Company announced that it had completed issuance of a total of $38 million in trust preferred securities through two separate private placements. An initial $20 million in trust preferred securities were issued through a newly-formed special purpose trust, UCBH Capital Trust II, and an additional $18 million in trust preferred securities were issued through another newly-formed special purpose trust, UCBH Capital Trust III. The net proceeds from the sale of the trust preferred securities will be used to fund a portion of UCBH’s acquisition of the Bank of Canton of California (BCC) as announced on August 28, 2002.

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 nine months ended September 30, 2002 and 2001 and financial condition at September 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 September 30, 2002 decreased by $470,000, or 6.0%, to $7.3 million, compared to $7.8 million for the corresponding period of the preceding year. Included in net income for the three months ended September 30, 2002, is a one-time, pre-tax charge of $6.75 million from settlement of legal proceedings and a one-time $350,000 tax benefit resulting from a change in the state of California tax law. The litigation charge reflects the settlement agreement reached between the Bank and the plaintiff, which, among other things, provided for the Bank to pay the plaintiff $6.75 million in full settlement of the suit. The after-tax effect of the charge is $3.9 million, or $0.19 per diluted share. Excluding these one-time items, the increase in net income of $3.1 million to $10.9 million for the three months ended September 30, 2002 was 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 September 30, 2002 were 14.12% and 0.91%, respectively. This compares with annualized ROE and ROA ratios of 19.96% and 1.12%, respectively, for the three

Page 7

months ended September 30, 2001. The decrease in ROE results primarily from the one-time litigation settlement charge. The resulting efficiency ratios were 58.04% for the three months ended September 30, 2002 compared with 44.59% for the corresponding period of the preceding year. Diluted earnings per common share were $0.36 for the three months ended September 30, 2002 compared with $0.39 for the comparable period of the preceding year.

The consolidated net income of the Company during the nine months ended September 30, 2002 increased by $4.0 million, or 17.8%, to $26.2 million, compared to $22.3 million for the corresponding period of the preceding year. Included in net income for the nine months ended September 30, 2002, is a one-time, pre-tax charge of $6.75 million from settlement of legal proceedings, as discussed above, and a one-time $350,000 tax benefit resulting from a change in the state of California tax law. Excluding these one-time items, the increase in net income of $7.5 million to $29.8 million for the nine months ended September 30, 2002 was primarily from an increase in net interest income. The annualized return on average equity and average assets ratios for the nine months ended September 30, 2002 were 18.06% and 1.13%, respectively. This compares with annualized ROE and ROA ratios of 20.24% and 1.12%, respectively, for the nine months ended September 30, 2001. The decrease in ROE results from the one-time litigation charge discussed above offset by increased net interest income resulting from net interest margin expansion and a larger balance sheet. The resulting efficiency ratios were 49.20% for the nine months ended September 30, 2002 compared with 46.92% for the corresponding period of the prior year. Diluted earnings per common share were $1.28 for the nine months ended September 30, 2002 compared with $1.12 for the comparable period of the preceding year.

Net Interest Income. Net interest income before provision for loan losses of $31.5 million for the three months ended September 30, 2002 represented a $6.2 million, or 24.3%, increase over net interest income of $25.4 million for the three months ended September 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 6.27% for the three months ended September 30, 2002 from 7.46% for the corresponding period of 2001, primarily due to the decrease in the prime rate on which the majority of our commercial loans are based. The average cost of deposits decreased to 2.08% for the three months ended September 30, 2002 from 3.73% for the three months ended September 30, 2001, primarily due to growth in core deposits and reductions in the interest rate on certificates of deposit, which resulted from a decrease in market interest rates. Interest on earning assets decreased $1.4 million to $50.0 million for the three months ended September 30, 2002, from $51.3 million for the three months ended September 30, 2001. This decrease resulted primarily from decreases in interest earned on commercial loans, partially offset by a $436.4 million increase in average interest-earning assets. This compares with a decrease of $7.5 million in interest expense, to $18.4 million for the three months ended September 30, 2002 from $25.9 million for the three months ended September 30, 2001. This decrease is primarily a result of reductions in market interest rates on interest-bearing deposits, partially offset by a $287.0 million increase in average interest-bearing deposits.

Net interest income before provision for loan losses of $89.2 million for the nine months ended September 30, 2002 represented a $17.1 million, or 23.7%, increase over net interest income of $72.1 million for the nine months ended September 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 6.35% for the nine months ended September 30, 2002 from 7.84% for the corresponding period of 2001, primarily due to the decrease in the prime rate on which the majority of our commercial loans are based. The average cost of deposits decreased to 2.25% for the nine months ended September 30, 2002 from 4.17% for the nine months ended September 30, 2001, primarily due to growth in core deposits and reductions in market interest rates. Interest on earning assets decreased $8.0 million to $145.8 million for the nine months ended September 30, 2002, from $153.7 million for the nine months ended September 30, 2001. This decrease resulted primarily from decreases in interest earned on commercial loans, partially offset by a $446.5 million increase in average interest-earning assets. This compares with a decrease of $25.0 million in interest expense, to $56.6 million for the nine months ended September 30, 2002 from $81.6 million for the nine months ended September 30, 2001. This decrease is primarily a result of reductions in market interest rates on interest-bearing deposits, partially offset by a $329.7 million increase in average interest-bearing deposits.

Average outstanding loans increased to $2.33 billion for the nine months ended September 30, 2002 from $2.01 billion for the corresponding period of 2001, an increase of $316.4 million, or 15.7%, as a result of the Bank’s continued focus on commercial lending activities. Loan growth during the nine months ended September 30, 2002 was significantly offset by the internal securitizations of residential mortgage (one to four family) and multifamily

Page 8

loans as discussed below. Average commercial loans increased $525.8 million to $2.00 billion for the nine months ended September 30, 2002, from $1.48 billion for the nine months ended September 30, 2001 while average consumer loans decreased $209.4 million to $323.3 million for the nine months ended September 30, 2002, from $532.7 million for the nine months ended September 30, 2001, due primarily to the Company’s internal securitizations of loans discussed below and loan runoff. Average securities increased to $727.1 million for the nine months ended September 30, 2002 from $568.9 million for the same period of 2001, an increase of $158.2 million, or 27.8%, primarily due to the internal securitizations of $188.4 million of residential mortgage (one to four family) loans and $54.1 million of multifamily loans during the nine months ended September 30, 2002. Average interest-bearing deposits increased to $2.43 billion for the nine months ended September 30, 2002 from $2.10 billion in the corresponding period of the prior year. Average noninterest-bearing deposits increased to $146.3 million for the nine months ended September 30, 2002 from $103.3 million for the corresponding period of the prior year, representing an increase of $43.0 million, or 41.6%, 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 3.94% for the nine months ended September 30, 2002, up from 3.73% for the corresponding period of 2001. The increase in the net interest margin is a result of ongoing balance sheet restructuring represented by continuing growth in commercial loans and continuing growth in lower-costing core deposits.

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
			September 30,			For the Nine Months Ended								For the Nine Months Ended
			2002			September 30, 2002								September 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⁾			6.09	%	$	2,326,248		$	114,942		6.59	%	$	2,009,890		$	124,776		8.28	%
	Securities			5.69			727,075			30,724		5.63			568,854			27,827		6.52
	Other			—			6,919			87		1.67			34,991			1,101		4.20

Total interest-earning assets				5.99			3,060,242			145,753		6.35			2,613,735			153,704		7.84
Noninterest-earning assets				—			46,067					—			43,622			—		—

Total assets				5.86		$	3,106,309		$	145,753		6.26		$	2,657,357		$	153,704		7.71

Interest-bearing liabilities:
	Deposits:
		NOW, checking, and money market accounts		1.50		$	355,443		$	4,146		1.56		$	219,299		$	3,803		2.31
		Savings accounts		1.19			484,686			4,618		1.27			391,628			6,524		2.22
		Time deposits		2.62			1,590,471			34,727		2.91			1,489,981			58,593		5.24

	Total deposits			2.17			2,430,600			43,491		2.39			2,100,908			68,920		4.37
	Borrowings			5.34			259,553			10,421		5.35			256,053			10,617		5.53
	Guaranteed preferred beneficial interests in junior subordinated debentures			7.05			43,341			2,688		8.27			30,000			2,109		9.38

Total interest-bearing liabilities				2.57			2,733,494			56,600		2.76			2,386,961			81,646		4.56

Noninterest-bearing deposits							146,270								103,291
Other noninterest-bearing liabilities							32,971								20,469
Stockholders’ equity							193,574								146,636

Total liabilities and stockholders’ equity						$	3,106,309							$	2,657,357

Net interest income/net interest rate spread ⁽²⁾				3.43	%				$	89,153		3.59	%				$	72,058		3.28	%

Net interest-earning assets/net interest margin ⁽³⁾				3.70	%	$	326,748					3.88	%	$	226,774					3.68	%

Ratio of interest-earning assets to interest-bearing liabilities				1.12	x		1.12	x							1.10	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.

Page 9

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 $2.7 million for the three months ended September 30, 2002 is an increase of $658,000 compared to a provision of $2.1 million for the corresponding period of 2001. There were no net charge-offs for the three months ended September 30, 2002, compared with net recoveries of $22,000 for the corresponding period in 2001.

The provision for loan losses of $6.5 million for the nine months ended September 30, 2002 represented an increase of $2.7 million as compared to a provision of $3.8 million for the corresponding period of the preceding year. At September 30, 2002, the allowance for loan losses was $39.0 million. Net loan charge-offs were $2.1 million for the nine months ended September 30, 2002, compared with net loan recoveries of $109,000 for the corresponding period of 2001.

Noninterest Income. Noninterest income for the three months ended September 30, 2002 was $2.6 million compared to $1.9 million for the corresponding quarter of 2001, an increase of $741,000, or 40.0%, primarily as a result of an increase in commercial banking fees and gain from sale of SBA loans and securities. Commercial banking fees increased 43.1% to $1.3 million for the three months ended September 30, 2002 as compared to $882,000 for the corresponding period of 2001, as a result of increased commercial banking activities, primarily trade finance business. Gain on sale of loans and securities increased by 41.1% to $803,000 for the three months ended September 30, 2002 compared with $569,000 for the corresponding period of 2001, primarily as a result of the increase in the origination and related sale of SBA loans.

Noninterest income for the nine months ended September 30, 2002 was $8.5 million compared to $4.8 million for the corresponding period of 2001, an increase of $3.7 million or 77.8%, primarily as a result of an increase in commercial banking fees and gain from sale of SBA loans and securities. Commercial banking fees increased 39.4% to $3.4 million for the nine months ended September 30, 2002 as compared to $2.4 million for the corresponding period of 2001, as a result of increased commercial banking activities, primarily trade finance business. Included in noninterest income for the nine months ended is $2.4 million representing gain on sale of securities. Gain on sale of loans for the nine months ended September 30, 2002 was $1.2 million compared to $1.1 million for the corresponding period of the preceding year.

Noninterest Expense. Noninterest expense of $19.8 million for the three months ended September 30, 2002 increased $7.7 million, or 63.1%, compared with $12.1 million for the corresponding quarter of 2001. Included in noninterest expense for the three months ended September 30, 2002 is a one-time pre-tax charge of $6.75 million for settlement of legal proceedings. Personnel expenses increased to $6.6 million for the three months ended September 30, 2002, from $5.9 million for the corresponding period of 2001, an increase of $707,000, or 11.9%, 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.

Noninterest expense of $48.1 million for the nine months ended September 30, 2002 increased $12.0 million, or 33.3%, compared with $36.1 million for the corresponding period of 2001. Included in noninterest expense for the nine months ended September 30, 2002 is a one-time pre-tax charge of $6.75 million for settlement of legal proceedings and $1.8 million of related legal expenses associated with the lawsuit for which the settlement is discussed above. As a result of the increase in legal fees, professional fees of $4.7 million for the nine months ended September 30, 2002 increased $2.1 million, compared with $2.6 million for the corresponding period of 2001. Personnel expenses increased to $21.1 million for the nine months ended September 30, 2002, from $18.6 million for the corresponding period of 2001, an increase of $2.5 million, or 13.4%, 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.

Page 10

Provision for Income Taxes. The provision for income taxes was $4.2 million and $5.2 million on the income before taxes of $11.6 million and $13.0 million for the three months ended September 30, 2002 and 2001, respectively. The effective tax rate for the quarter ended September 30, 2002 was 36.67%, compared with 40.01% for the quarter ended September 30, 2001. The reduction in the effective tax rate in the third quarter of 2002 results primarily from a $350,000 tax benefit resulting from a California state tax law change in which one-half of the cumulative loan losses through December 31, 2001 taken for income tax purposes were forgiven. The Company has recorded this benefit as a permanent difference in calculating its tax provision for the third quarter of 2002.

The provision for income taxes of $16.9 million and $14.8 million on the income before taxes of $43.1 million and $37.0 million for the nine months ended September 30, 2002 and 2001, respectively, represents effective tax rates of 39.18% and 39.87%, respectively. The reduction in the effective tax rate results primarily from a $350,000 tax benefit resulting from a California state tax law change discussed above.

FINANCIAL CONDITION

The Company experienced continued asset and core deposit growth during the third quarter of 2002. Total assets at September 30, 2002 were $3.33 billion, an increase of $394.0 million, or 13.4%, 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 nine months ended September 30, 2002, total loans increased by $176.7 million, or 7.8%, to $2.44 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 and $54.1 million of multifamily loans during the nine months ended September 30, 2002. Total commercial loans grew to $2.21 billion at September 30, 2002, from $1.82 billion at December 31, 2001, as a result of new commercial loan commitments of $932.1 million, offset by principal repayments and the internal securitization of multifamily loans. Residential mortgage (one to four family) loans decreased to $219.5 million at September 30, 2002 from $430.1 million at December 31, 2001, primarily due to principal repayments and internal securitizations. New loan commitments of $1.05 billion for the nine months ended September 30, 2002 were comprised of $932.1 million of commercial loans and $114.0 million of consumer loans. Securities (including available-for-sale and held-to-maturity) totaled $788.7 million at September 30, 2002, an increase of $195.3 million, or 32.9%, from $593.4 million at December 31, 2001, as a result of the internal securitization of loans and purchases of additional securities for liquidity purposes.

Total past due loans were 0.84% of total loans at September 30, 2002, compared with 0.64% at December 31, 2001. Nonperforming assets were $3.2 million, or 0.09%, of total assets at September 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 $39.0 million at September 30, 2002, an increase of $4.4 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 nine months ended September 30, 2002 and increased concentration in commercial loans.

Page 11

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 September 30, 2002						At December 31, 2001

		Amount			%			Amount			%

					(Dollars in Thousands)
Commercial:
	Secured by real estate-nonresidential	$	915,926			37.45	%	$	798,882			35.22	%
	Secured by real estate-multifamily		892,424			36.49			677,271			29.86
	Construction		180,242			7.37			182,558			8.05
	Commercial business		218,148			8.92			163,628			7.21

	Total commercial loans		2,206,740			90.23			1,822,339			80.34

Consumer:
	Residential mortgage (one to four family)		219,498			8.97			430,057			18.96
	Other		19,525			0.80			16,003			0.70

	Total consumer loans		239,023			9.77			446,060			19.66

Total gross loans			2,445,763			100.00	%		2,268,399			100.00	%

Net deferred loan origination fees			(4,802	)					(4,096	)

Loans			2,440,961						2,264,303
Allowance for loan losses			(38,966	)					(34,550	)

Net loans		$	2,401,995					$	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. The Company also sells from time-to-time portions of the unguaranteed SBA loans but always retains a minimum of 5% of the loan amount, in accordance with the SBA guidelines.

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 which are fixed for a period, typically five years, and then generally reprice monthly or become due and payable. Multifamily loans are generally adjustable-rate repricing semiannually. 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 semiannually or annually.

As a result of the change of focus to commercial lending, adjustable-rate loans increased to $2.03 billion, an increase of $325.2 million, or 19.1%, from $1.70 billion at December 31, 2001. Fixed-rate loans decreased $147.8 million, or 26.2%, to $417.1 million, or 17.1% of gross loans at September 30, 2002, compared with $564.9 million, or 24.9% of the gross loans at December 31, 2001. At September 30, 2002, total gross loans included $192.2 million of intermediate fixed-rate loans compared with $221.6 million at December 31, 2001, a decrease of $29.4 million, or 13.3%.

Page 12

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


			For the Nine Months Ended
			September 30,

			2002		2001

			(Dollars in Thousands)
Commercial:
	Secured by real estate-nonresidential ⁽¹⁾		$	258,830	$	210,078
	Secured by real estate-multifamily⁽¹⁾			369,068		167,117
	Construction			145,580		146,227
	Commercial business			158,592		181,024

		Total commercial loans		932,070		704,446

Consumer:
	Residential mortgage (one to four family)⁽¹⁾			89,031		69,104
	Home equity and other			25,010		12,823

		Total consumer loans		114,041		81,927

	Total new commitments		$	1,046,111	$	786,373

(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 $3.2 million at September 30, 2002 compared to $991,000 at December 31, 2001.

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


					At September 30,			At December 31,
					2002			2001

					(Dollars in Thousands)
Nonaccrual loans:
	Commercial
		Secured by real estate — nonresidential			$	—		$	—
		Secured by real estate-multifamily				—			210
		Construction loans				2,389			—
		Commercial business				554			—

			Total commercial			2,943			210

	Consumer
		Residential mortgage (one to four family)				214			781

			Total consumer			214			781

				Total nonaccrual loans		3,157			991

Other real estate owned (“OREO”)						—			—

Total nonperforming assets					$	3,157		$	991

Nonperforming assets to total assets						0.09	%		0.03	%
Nonaccrual loans to loans						0.13			0.04
Nonperforming assets to loans and OREO						0.13			0.04
Loans					$	2,440,961		$	2,264,303

Gross income not recognized on nonaccrual loans					$	225		$	24
Accruing loans contractually past due 90 days or more					$	852		$	1,269

Page 13

Total nonperforming assets were $3.2 million at September 30, 2002, an increase of $2.2 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 September 30, 2002 or December 31, 2001.

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 Nine Months Ended
	September 30,

	2002			2001

	(Dollars in Thousands)
Balance at beginning of period	$	34,550		$	28,901
Provision for loan losses		6,516			3,789
Loans charged off		(2,126	)		(30	)
Recoveries		26			139

Balance at end of period	$	38,966		$	32,799

Allowance for loan losses to loans		1.60	%		1.53	%
Annualized net charge-offs (recoveries) to average loans		0.12	%		(0.01	)%

Page 14

Securities. Securities (including available-for-sale and held-to-maturity) increased during the nine months of 2002 by $195.3 million, or 32.9%, to $788.7 million at September 30, 2002 from $593.4 million at December 31, 2001. The increase in securities resulted primarily from purchases for liquidity purposes and internal securitization of residential mortgage (one to four family) and multifamily loans for capital management purposes.

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


			At September 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		$	62,350	$	57,272	$	100,327	$	89,929
	Federal Agency Notes			12,235		12,246		36,507		36,378
	Asset-backed Securities			4,186		4,185		12,018		12,012

		Total investment securities available for sale		78,771		73,703		148,852		138,319

Mortgage-backed securities available for sale:
	FNMA			341,326		350,287		206,902		206,777
	GNMA			193,358		199,757		145,091		145,395
	FHLMC			52,996		52,508		47,747		46,928
	Other			48,200		48,790		4,504		4,502

		Total mortgage-backed securities available for sale		635,880		651,342		404,244		403,602

Total investment and mortgage-backed securities available for sale			$	714,651	$	725,045	$	553,096	$	541,921

Investment securities held to maturity:
	Municipals		$	62,674	$	66,096	$	50,444	$	49,667

Mortgage-backed securities held to maturity:
	Other			950		950		1,028		1,028

	Total investment and mortgage-backed securities held to maturity		$	63,624	$	67,046	$	51,472	$	50,695

As of September 30, 2002, the carrying value of the securities was $778.3 million and the market value was $792.1 million. The total unrealized gain on these securities was $13.8 million. Of this total, $10.4 million relates to securities, which are available for sale on which the unrealized gain, net of tax, is included as an addition to stockholders’ equity. The difference between the carrying value and market value of securities which are held to maturity, aggregating a gain of $3.4 million, has not been recognized in the financial statements as of September 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 $2.75 billion at September 30, 2002, which represented an increase of $283.5 million, or 11.5%, from $2.47 billion at December 31, 2001. Core deposit balances increased by $191.4 million, or 21.8%, and time deposits increased by $92.1 million, or 5.8%, 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 September 30, 2002, 61.1% of our deposits were time deposits, 19.0% were savings accounts, and 19.9% 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 September 30, 2002, less than 2% 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% of the Bank’s total deposits. The Bank accepts deposits in excess of $100,000 from customers. Included in time deposits as of September 30, 2002, is $855.2 million of deposits of $100,000 or greater. Such deposits comprise 31.1% of total deposits. At September 30, 2002, the Bank had no brokered deposits. The majority of the time deposits as of September 30, 2002 mature in one year or less.

Page 15

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


		At September 30, 2002					At December 31, 2001

				Weighted					Weighted
		Balance		Average Rate			Balance		Average Rate

		(Dollars in Thousands)
NOW, demand deposits and money market accounts		$	547,894		1.04	%	$	427,338		1.19	%
Savings accounts			520,566		1.19			449,735		1.41
Time deposits:
	Less than $100,000		826,024		2.50			871,754		3.62
	$100,000 or greater		855,177		2.75			717,325		3.80

	Total time deposits		1,681,201		2.62			1,589,079		3.70

Total deposits		$	2,749,661		2.04	%	$	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 September 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 September 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 September 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 16

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 Nine Months Ended
		September 30,

		2002			2001

		(Dollars in Thousands)
Short-term borrowings:
FHLB of San Francisco advances:
	Average balance outstanding	$	10,656		$	17,106
	Maximum amount outstanding at any month end		42,500			39,177
	Balance outstanding at end of period		9,000			—
	Weighted average interest rate during the period		4.23	%		6.64	%
	Weighted average interest rate at end of period		4.63	%		—	%
	Weighted average remaining term to maturity at end of period (in years)		—			—
FRB direct investment borrowings:
	Average balance outstanding	$	—		$	947
	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	$	248,896		$	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		5.40	%		5.52	%
	Weighted average interest rate at end of period		5.36	%		5.46	%
	Weighted average remaining term to maturity at end of period (in years)		5			7

Guaranteed Preferred Beneficial Interests in Junior Subordinated Debentures. Through September 30, 2002, the Company has issued a total of $71.0 million of junior subordinated debentures, including $25.0 million issued in the third quarter of 2002. Additionally, $38.0 million was issued subsequent to September 30, 2002. A portion of the proceeds from the issuances were used primarily to provide additional capital for the Bank and for general business purposes. In addition, a portion of the proceeds have been set aside to fund a portion of the Company’s acquisition of the Bank of Canton of California (BCC). (See Item 5. Other Information.)

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 September 30, 2002, the Bank met the “Well Capitalized” requirements under these guidelines. The total risk-based capital ratio of the Bank at September 30, 2002 was 11.25%, 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 September 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 17

ITEM 4. CONTROLS AND PROCEDURES

Within 90 days of the filing of this report, the Chief Executive Officer and Chief Financial Officer of the Company, under the supervision and with the participation of the Company's management, have evaluated the disclosure controls and procedures of the Company as defined in Exchange Act Rule 13(a)-14 and have determined that such controls and procedures are effective. Since the date of the evaluations, there have been no significant changes in the Company's internal controls or other factors that could significantly affect these controls.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company’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 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

None.

Item 5. Other Information

Corporate Developments. On July 3, 2002, the Company announced receipt of definitive agreements from certain Bank of Canton of California (BCC) shareholders for it to acquire 25% of the outstanding shares of BCC. On August 28, 2002, the Company announced that it had entered into stock purchase agreements with certain BCC shareholders to acquire substantially all of the remaining 75% of the outstanding shares of BCC. The acquisition of substantially all of the outstanding shares of BCC has been approved by the Board of Directors of the Company and is subject to approval by applicable bank regulatory agencies. The Company has received approval from the Federal Deposit Insurance Corporation (FDIC). Bank of Canton of California had total assets of $1.45 billion at June 30, 2002. BCC will merge into the Company’s subsidiary, United Commercial Bank, immediately upon the completion of the acquisition. The Company anticipates issuing approximately 1.3 million shares to close the purchase of the 25% portion of BCC. Under the terms of the agreements, the Company will purchase substantially all of the remaining 75% of the outstanding shares of BCC for approximately $169 million in cash. The total transaction is anticipated to close in the fourth quarter of 2002.

On September 23, 2002, the Company announced that it had signed a definitive agreement to acquire a branch of Broadway National Bank in Brooklyn, N.Y. Under the terms of the agreement, the Company would acquire the deposit portfolio of the branch, which totaled $12.8 million as of June 30, 2002. In addition, the Company would purchase certain fixed assets, including the branch facility. The closing of this acquisition is anticipated to occur in the fourth quarter of 2002.

Page 18

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 March 31, 2001, filed with the Securities and Exchange Commission on May 3, 2001 (SEC File No. 0-24947).

Page 19

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: October 23, 2002		/s/ Thomas S. Wu

		Thomas S. Wu Chairman, President and Chief Executive Officer (principal executive officer)


Date: October 23, 2002		/s/ Jonathan H. Downing

		Jonathan H. Downing Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer)

Page 20

CERTIFICATIONS

I, Thomas S. Wu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of UCBH Holdings, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: October 23, 2002


				/s/ Thomas S. Wu

				Thomas S. Wu Chairman, President and Chief Executive Officer

Page 21

CERTIFICATIONS

I, Jonathan H. Downing, certify that:

1. I have reviewed this quarterly report on Form 10-Q of UCBH Holdings, Inc.;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: October 23, 2002


				/s/ Jonathan H. Downing

				Jonathan H. Downing Executive Vice President, Chief Financial Officer and Treasurer

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