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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended   June 30, 2003

For the transition period from    ________   to   ________

Commission file number 0-24947

UCBH Holdings, Inc.

711 Van Ness Avenue, San Francisco, California  94102

(415) 928-0700

     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 August 11, 2003, the Registrant had 44,927,408 shares of common stock outstanding.

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UCBH HOLDINGS, INC.
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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

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

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

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

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

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

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UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.

Basis of Presentation and Summary of Significant Accounting and Reporting Policies

     Organization

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

     Basis of Presentation

     The Consolidated Balance Sheets as of June 30, 2003; the Consolidated Statements of Income for the three and six months ended June 30, 2003, and 2002; and the Consolidated Statements of Cash Flows for the six months ended June 30, 2003, and 2002, have been prepared by 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, 2002. 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, 2003, 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. The wholly-owned subsidiaries include special purpose trusts established for the purpose of issuing Guaranteed Preferred Beneficial Interests in the Company’s Junior Subordinated Debentures. These trusts are consolidated in the Company’s financial statements.

     All significant intercompany balances and transactions have been eliminated in consolidation.

     Recent Accounting Pronouncements

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

     The Company elects to continue accounting for stock-based compensation in accordance with APB Opinion No. 25.

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

     Most of the guidance in SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003.

     We do not believe that the provisions of this statement will have an impact on our consolidated financial statements.

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

     We are currently evaluating the impact of FIN 46. The impact of FIN 46 on the treatment of the trust preferred securities we have issued is currently being evaluated by the accounting community. Under one potential interpretation of FIN 46, the trusts which have issued our trust preferred securities would no longer be consolidated. Conversely, SFAS No. 150 requires the consolidation of these subsidiaries and the presentation of the related debt instruments as a liability. The accounting community is currently working to resolve this contradictory guidance. Our current presentation is in compliance with SFAS No. 150. One potential impact of not including these trusts in our consolidated liabilities is that the trust preferred securities may no longer count toward Tier 1 capital. The Federal Reserve has issued regulations allowing for the inclusion of these instruments in Tier 1 capital regardless of the FIN 46 interpretation, although such a determination could potentially be changed at a later date. We do not expect the adoption of FIN 46 to have any significant impact on our financial condition or operating results.

     Derivative Instruments and Hedging Activities. In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS No. 149”). The provisions of SFAS No. 149 that relate to SFAS No. 133 and No. 138 implementation issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, provisions of SFAS No. 149 which relate to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003. The changes in SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. In particular, SFAS No. 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative discussed in paragraph 6(b) of SFAS No. 133 and No. 138, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to language used in FIN 45, and (4) amends certain other existing pronouncements. Those changes will result in more consistent reporting of contracts as either derivatives or hybrid instruments.

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

     We do not believe that the provisions of this statement will have an impact on our consolidated financial statements.

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2.

Earnings Per Share

(1)	Effective April 8, 2003, the Company completed a two-for-one stock split. Accordingly, the financial statements for the three and six months ended June 30, 2002 presented have been restated to reflect the effect of the stock split.

3.

Comprehensive Income

     Statement of Financial Accounting Standards (“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 June 30, 2003, total comprehensive income was $11.7 million, a decrease of $6.9 million compared to the three months ended June 30, 2002. Net income for the three months ended June 30, 2003, was $15.4 million, and unrealized gains on available-for-sale securities decreased by $3.8 million. For the corresponding period of 2002, net income was $9.8 million, and unrealized losses on available-for-sale securities decreased by $8.7 million.

     For the six months ended June 30, 2003, total comprehensive income was $27.7 million, an increase of $2.6 million compared to the six months ended June 30, 2002. Net income for the six months ended June 30, 2003, was $29.4 million, and unrealized gains on available-for-sale securities decreased by $1.6 million. For the corresponding period of 2002, net income was $18.9 million, and unrealized losses on available-for-sale securities decreased by $6.2 million.

4.

Goodwill and Intangible Assets

     On October 28, 2002, the Company acquired all of the outstanding shares of Bank of Canton of California, a California banking corporation (“BCC”), and on December 13, 2002, the Company acquired certain assets and assumed certain liabilities of a branch of Broadway National Bank in Brooklyn, New York. The acquisitions were accounted for using the purchase method of accounting in accordance with SFAS No. 147 “Acquisition of Certain Financial Institutions, an amendment to FAS No. 72, FAS No. 144, and FIN No 9” (“SFAS No. 147”), which states that business combinations, other than mutual enterprises of financial institutions, should be accounted for under SFAS No. 141 “Business Combinations” (“SFAS No. 141”) and SFAS No. 142 “Goodwill and Intangible Assets” (“SFAS No. 142”).

     In accordance with SFAS No. 141, the assets acquired and liabilities assumed were recorded by the Company at their fair values at the acquisition date. Intangible assets are recorded on the balance sheet at June 30, 2003, in the amount of $55.4 million, consisting of goodwill of $45.9 million and a core deposit intangible of $9.5 million.

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     In accordance with SFAS No. 142, goodwill will not be expensed over a fixed period of time, but will be tested for impairment on a regular basis. None of the goodwill is expected to be deductible for income tax purposes. Identifiable intangible assets, namely core deposit intangibles of $9.5 million, are amortized over their estimated period of benefit determined to be seven years. At June 30, 2003, core deposit intangible gross carrying amount was $10.9 million and the associated accumulated amortization was $1.4 million.

     In accordance with SFAS No 142, intangible assets, including goodwill, will be reviewed annually to determine if circumstances related to their valuation have been materially affected. In the event that the current market values are determined to be less than the current book values (impairment), a charge against current earnings will be recorded. No such impairment existed at June 30, 2003, or at December 31, 2002.

5.

Segment Information

     The Company defines its reportable segments to reflect 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 Greater 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 and 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 following is segment information of the Company for the three and six months ended June 30, 2003, and 2002:

     The $45.9 million goodwill was assigned to the consumer segment in the amount of $33.5 million and the commercial segment in the amount of $12.4 million for the three and six month periods ending June 30, 2003.

6.

Stock Option Plans

     In May 1998, the Company adopted a Stock Option Plan (“Plan”) that provides for the granting of stock options to eligible officers, employees and directors of the Company and the Bank. The Plan was amended in April 1999 and April 2001 to increase the number of shares reserved for issuance pursuant to the Plan from 2,613,332 shares to 7,466,664 shares on a post-split basis. The Plan was amended in April 2003 to increase the number of shares reserved for issuance pursuant to the Plan from 7,466,664 shares to 9,567,600 shares, on a post-split basis.

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     In October 1995, the FASB issued SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”). This statement establishes a new fair value based accounting method for stock-based compensation for plans and encourages, but does not require, employers to adopt the new method in place of the provisions of Accounting Principles Board Release No. 25 (“APB No. 25”). Companies may continue to apply the accounting provisions of APB No. 25 in determining net income. However, they must apply the disclosure requirements of SFAS No. 123 for all grants issued after 1994. In December 2002, the FASB issued SFAS No. 148 “Accounting for Stock-Based Compensations – Transition and Disclosure” (“SFAS No 148”) which provides guidance on alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provision of that statement to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, this statement amends APB Opinion No. 28, “Interim Financial Reporting,” to require disclosure about those effects on interim financial information.

     The Company elected to apply the provisions of APB No. 25 in accounting for the employee stock plan described above. Accordingly, no compensation cost has been recognized for stock options granted under the Plan.

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

     These calculations require the use of option pricing models, even though such models were developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which significantly differ from the Company’s stock option awards. These models also require subjective assumptions, including future stock price volatility, dividend yield, and expected time to exercise, which greatly affect the calculated values. The following weighted average assumptions were used in the Black-Scholes option pricing model for options granted during the six months ended June 30, 2003, and 2002:

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7.

Guarantees

     In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness to Others” (“FIN 45”), which requires us to disclose information about obligations under certain guarantee arrangements. FIN 45 defines a guarantee as a contract that contingently requires us to pay a guaranteed party based on:

	1.		Changes in the underlying asset, liability or equity security of the guaranteed party or
	2.		A third party’s failure to perform under an obligating guarantee (performance guarantee).

     We consider the following off-balance sheet lending arrangements to be guarantees under FIN 45:

     Financial Standby Letters of Credit and Financial Guarantees are conditional lending commitments issued by us to guarantee the performance of a customer to a third party in borrowing arrangements. At June 30, 2003, the maximum undiscounted future payments that could be required to be made were $6.8 million. All of these arrangements mature within one year. We generally have recourse to recover from the customer any amounts paid under these guarantees.

     Premiums that are received for the referral of loans are refundable in the event of delinquency or early payoff of the underlying loans. At June 30, 2003, the maximum undiscounted future payments that could be required to be made totaled $290,000 and the maximum guarantee period was six months.

8.

Variable Interest Entities

     FASB Interpretation No. 46 “Consolidation of Variable Interest Entities” (“FIN 46”) defines variable interest entities as a corporation, partnership, trust or legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivable, real estate or other property. A variable interest entity may be essentially passive or it may engage in research and development or activities on behalf of another company. FIN 46 requires that a variable interest entity be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that we are not required to consolidate but in which we have significant variable interest. As of June 30, 2003, we did not have any interest in any unconsolidated variable interest entities.

     FIN 46 may have an impact on the treatment of the trust preferred securities we have issued and ability for those instruments to provide us with Tier 1 capital. The impact of FIN 46 on these instruments is currently being evaluated by the accounting community. The impact of FIN 46 is further discussed in the recent accounting pronouncements section of Note 1 of the financial statements.

9.

Subsequent Events

     On July 14, 2003, the Company announced the completion of its acquisition of privately-held First Continental Bank (“FCB”), a full-service commercial bank headquartered in Rosemead, California, with four branches serving the San Gabriel Valley in southern California. Under the terms of the agreement announced on April 3, 2003, FCB was merged into the Company’s subsidiary, UCB, and the Company issued approximately 2.3 million shares in exchange for the outstanding shares of FCB. As of June 30, 2003, FCB had total assets of $343.6 million, loans of $243.4 million and deposits of $312.4 million.

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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, 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: the ability of the Company and the Bank to integrate Bank of Canton of California and First Continental Bank with their current operations and to achieve the efficiencies anticipated; the ability of the Company and the Bank to assimilate a bank branch in New York and to meet the competitive challenges of a new market; general economic and business conditions in those areas in which the Company or the Bank operates; demographic changes; competition; fluctuations in market conditions, including interest rates; changes in business strategies; changes in governmental regulations; 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, 2002, 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, 2003, and 2002 and financial condition at June 30, 2003, and at December 31, 2002. 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.

CORPORATE DEVELOPMENT

     On July 14, 2003, the Company announced the completion of its acquisition of privately-held First Continental Bank (“FCB”), a full-service commercial bank headquartered in Rosemead, California, with four branches serving the San Gabriel Valley in southern California. Under the terms of the agreement announced on April 3, 2003, FCB was merged into the Company’s subsidiary, UCB, and the Company issued approximately 2.3 million shares in exchange for the outstanding shares of FCB. As of June 30, 2003, FCB had total assets of $343.6 million, loans of $243.4 million and deposits of $312.4 million. The FCB acquisition strengthens the Company’s competitive position and franchise in southern California and is expected to be slightly accretive to earnings in 2003.

CRITICAL ACCOUNTING POLICIES

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

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

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

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

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

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

     Notwithstanding the judgment required in assessing the allowance for loan losses, the Company believes its estimate for the allowance for loan losses was reasonable.

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

	Available for Sale Securities: The fair values of most securities classified as available for sale are based on quoted market prices. If quoted market prices are not available, fair values are extrapolated from the quoted prices of similar instruments.
	Goodwill and Other Intangibles Assets: As discussed in Note 4 to the Consolidated Financial Statements, which this discussion accompanies, the Company must assess goodwill and other intangible assets each year for impairment. This assessment involves estimating cash flows for future periods. If the future cash flows are materially less than the estimates, the Company would be required to take a charge against earnings to write down the asset to the lower fair value.

     Alternative Methods of Accounting. The accounting and reporting policies of the Company are in accordance with GAAP and conform to practices within the banking industry. As such, there are few alternatives available to the Company in its accounting for items of income or expense or for assets and liabilities. The main area where choices are available is as follows:

Stock Options: When the Company adopted SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”) in 1996, it elected to continue to use the method of accounting for stock options which did not recognize compensation expense at the time options were granted. As required by SFAS No. 123, pro forma amounts of compensation expense and the pro forma effect on net income and earnings per share are disclosed each year as if the Company had instead elected to use the accounting method that recognizes compensation expense. The pro forma compensation expense is computed using the Black-Scholes model for pricing options. Effective with this interim reporting, pro forma amounts of compensation expense and the pro forma effect on net income and earnings per share

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are disclosed in Note 6 on an interim basis as required by SFAS No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure” (“SFAS No. 148”).

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 Small Business Administration (“SBA”) loans, the gain on sale of securities, and other transactional fees. The Company’s source of noninterest income has increasingly been derived from its commercial banking business. 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 the actions of regulatory agencies.

     Net Income. The consolidated net income of the Company during the three months ended June 30, 2003, increased by $5.6 million, or 57.0%, to $15.4 million, compared to $9.8 million for the corresponding period of the preceding year. The annualized return on average equity (“ROE”) and average assets (“ROA”) ratios for the three months ended June 30, 2003, were 20.12 % and 1.25%, respectively. These amounts compare with annualized ROE and ROA ratios of 20.37% and 1.27%, respectively, for the three months ended June 30, 2002. The decrease in ROE is primarily attributable to a decreased net interest margin which was impacted by the assets and liabilities acquired in the October 28, 2002 acquisition of Bank of Canton of California (“BCC”). BCC had a significantly lower net interest margin than the Company. The Company plans to continue restructuring the acquired BCC assets by reducing the concentration of securities and increasing the amount of commercial loans. The resulting efficiency ratios were 39.19% for the three months ended June 30, 2003, compared with 42.84% for the corresponding period of the preceding year. Diluted earnings per common share on a post-split basis were $0.35 for the three months ended June 30, 2003, compared with $0.24 for the comparable period of the preceding year. The increase in earnings per common share reflects both the organic loan growth within the Bank and the acquisition of BCC.

     The consolidated net income of the Company during the six months ended June 30, 2003, increased by $10.5 million, or 55.4%, to $29.4 million, compared to $18.9 million for the corresponding period of the preceding year. The annualized ROE and ROA ratios for the six months ended June 30, 2003, were 19.68% and 1.21%, respectively. These figures compare with annualized ROE and ROA ratios of 20.25% and 1.24%, respectively, for the six months ended June 30, 2002. The decrease in ROE is attributable to a decreased net interest margin which was impacted by the assets and liabilities acquired in the October 28, 2002 acquisition of BCC. BCC had a significantly lower net interest margin than the Company. The Company plans to continue restructuring the BCC assets acquired by reducing the concentration of securities and increasing the amount of commercial loans. The resulting efficiency ratios were 42.50% for the six months ended June 30, 2003, compared with 44.45% for the corresponding period of the preceding year. Diluted earnings per common share on a post-split basis were $0.66 for the six months ended June 30, 2003, compared with $0.46 for the comparable period of the preceding year. The increase in earnings per common share reflects both the organic loan growth and the acquisition of BCC.

     Net Interest Income. Net interest income before provision for loan losses of $39.6 million for the three months ended June 30, 2003, represented a $9.8 million, or 32.7% increase over net interest income of $29.9 million for the three months ended June 30, 2002. This increase was primarily due to an increase in balance sheet size, which was driven by the securities portfolio growth from the BCC acquisition and the growth of our commercial loan portfolio through organic loan generation. The loan yield decreased from 6.62% for the three months ended June 30, 2002, to 5.74%, and the cost of deposits also decreased from 2.20% to 1.70% for the three months ended June 30, 2003. The decline in loan yield reflects repricing of adjustable-rate loans as a result of reductions in market interest rate indices, and the accelerated prepayment of the higher-yielding loans due to the lower market interest rates. The securities yield decreased from 5.54% for the three months ended June 30, 2002 to 4.37%. The decline in the securities yield reflects the prepayment of higher-yielding securities resulting from the low market interest rate environment.

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     Net interest income before provision for loan losses of $78.9 million for the six months ended June 30, 2003, represented a $21.3 million, or 37.0%, increase over net interest income of $57.6 million for the six months ended June 30, 2002. This increase was primarily due to an increase in balance sheet size, which was driven by the securities portfolio growth from the BCC acquisition and the growth of our commercial loan portfolio through organic loan generation. The loan yield decreased from 6.66% for the six months ended June 30, 2002, to 5.75%. The cost of deposits also decreased from 2.34% to 1.75% for the six months ended June 30, 2003. The decline in loan yield reflects repricing of adjustable-rate loans as a result of reductions in market interest rate indices, and the accelerated prepayment of the higher-yielding loans due to the lower market interest rates. The securities yield decreased from 5.59% for the six months ended June 30, 2002 to 4.60%. The decline in the securities yield reflects the prepayment of higher-yielding securities resulting from the low market interest rate environment.

     Interest on earning assets increased $29.7 million to $125.5 million for the six months ended June 30, 2003, up from $95.8 million for the six months ended June 30, 2002. This increase resulted primarily from increases in average interest-earning assets in connection with the BCC acquisition and organic commercial loan growth. The Company had an $8.4 million increase in interest expense, to $46.6 million for the six months ended June 30, 2003, up from $38.2 million for the six months ended June 30, 2002. This reflects an increase of $1.38 billion in average interest-bearing deposits resulting from the acquisition of deposits acquired in the BCC acquisition and organic deposit generation, partially offset by reductions in market interest rates on interest-bearing deposits.

     Average outstanding loans increased to $3.13 billion for the six months ended June 30, 2003, from $2.29 billion for the corresponding period of 2002, an increase of $837.5 million, or 36.6%, as a result of the Bank’s continued focus on commercial lending activities and the addition of loans from the BCC acquisition in 2002. New loan commitments of $849.7 million for the six months ended June 30, 2003, comprised of $768.9 million in commercial loans and $81.0 million in consumer loans fuelled the growth in the loan portfolio. Loan growth during the six months ended June 30, 2003, was offset by the internal securitization of multifamily loans as discussed below. Average commercial loans increased $852.1 million to $2.78 billion for the six months ended June 30, 2003, up from $1.92 billion for the six months ended June 30, 2002. Average consumer loans decreased $14.6 million to $352.6 million for the six months ended June 30, 2003, down from $367.2 million for the six months ended June 30, 2002, due to the acceleration of principal prepayments resulting from the low market interest rate environment.

     Average securities increased to $1.55 billion for the six months ended June 30, 2003, up from $697.6 million for the same period of 2002, an increase of $ 848.9 million, or 121.7%. This increase was primarily due to the addition of securities from the BCC acquisition, internal securitizations of loans during the second half of 2002, and the securitization of $107.6 million of multifamily loans during the six months ended June 30, 2003. This increase was partially offset by securities sales and principal payments during the six months ended June 30, 2003.

     Average interest-bearing deposits increased to $3.77 billion for the six months ended June 30, 2003, up from $2.39 billion in the corresponding period of the prior year as a result of organic deposit generation and the addition of deposits from the BCC acquisition. Average noninterest-bearing deposits increased to $259.7 million for the six months ended June 30, 2003, up from $137.7 million for the corresponding period of the prior year. This increase of $122.0 million, or 88.6%, was a result of the Company’s ongoing focus on the generation of commercial and consumer demand deposit accounts and from the acquisition of BCC.

     Net Interest Margin. The net interest margin, calculated on a tax equivalent basis, was 3.45% for the six months ended June 30, 2003, as compared to 3.89% for the corresponding period of 2002. Certain interest-earning assets of the Company qualify for state or federal tax exemptions or credits. The net interest margin, calculated on a tax equivalent basis, considers the tax benefit derived from these assets. The decrease in the net interest margin was primarily a result of the impact of the assets and liabilities acquired in the October 28, 2002 acquisition of BCC, which had a significantly lower net interest margin than the Company. The decrease in the net interest margin was partially offset by the continuing growth in commercial loans and in lower-costing core deposits.

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Table of Contents

     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: