UCBH HOLDINGS INC, 424B3, 1998-10-19

UCBH HOLDINGS INC
424B3, 1998-10-19
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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Filed pursuant to Rule 424(b)(3)
SEC File No. 333-58897

PROSPECTUS

[LOGO]

9,333,333 SHARES OF COMMON STOCK
UCBH HOLDINGS, INC.

This Prospectus relates to the public offer and sale of up to 9,333,333
shares of common stock, par value $0.01 per share (the 'Common Stock'), of UCBH
Holdings, Inc., a Delaware corporation (the 'Company'). For additional
information with respect to the terms of the Common Stock, see 'Description of
Common Stock.' The Common Stock was issued and sold in the Private Offerings (as
defined herein) exempt from the registration requirements of the Securities Act
of 1933, as amended (the 'Securities Act'), to persons reasonably believed by
the Company to be 'qualified institutional buyers' (as defined by Rule 144A
under the Securities Act) or other 'accredited investors' (as defined in Rule
501(a) of Regulation D under the Securities Act). In connection with the Private
Offerings, the Company executed and delivered for the benefit of the holders of
the Common Stock a Registration Rights Agreement dated April 13, 1998 (the
'Registration Rights Agreement'), providing for, among other things, the filing
with the Securities and Exchange Commission (the 'Commission') of the
Registration Statement of which this Prospectus forms a part. The Common Stock
offered hereby may be offered and sold from time to time (the 'Offering') by the
holders named herein or, if required, by holders named in an accompanying
supplement (a 'Prospectus Supplement') or by their respective transferees,
pledgees, donees, or their successors (collectively, the 'Selling Holders')
pursuant to this Prospectus and a Prospectus Supplement, if required.

The Common Stock may be sold by the Selling Holders from time to time
directly to purchasers or through underwriters, dealers or agents at market
prices or negotiated prices. See 'Plan of Distribution.' As there is no public
market for the Common Stock as of the date of this Prospectus, no market price
for the Common Stock is available. If required, the names of any such
underwriters, dealers or agents involved in the sale of the Common Stock in
respect of which this Prospectus is being delivered and the applicable
underwriter's discount, dealer's purchaser price or agent's commission, if any,
will be set forth in a Prospectus Supplement. The Selling Holders will receive
all of the net proceeds from the sale of the Common Stock and will pay all
underwriting discounts and selling commissions, if any, applicable to the sale
of the Common Stock. The Company is responsible for payment of all other
expenses incident to the offer and sale of the Common Stock. The Company will
not receive any proceeds from the sale of shares of the Common Stock in the
Offering.

The Selling Holders and any underwriters, dealers or agents which
participate in the distribution of the Common Stock may be deemed to be
'underwriters' within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Common Stock purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act. See 'Plan of Distribution' for a description of indemnification
arrangements.

The Company has received approval to have the Common Stock quoted on the
Nasdaq National Market under the symbol 'UCBH.' Prior to this Offering, there
has not been a public market for the Common Stock and there can be no assurance
that an active public trading market for the Common Stock will develop or be
sustained. Sandler O'Neill & Partners, L.P., has advised the Company that it
intends to make a market in the Common Stock following commencement of trading,
but is under no obligation to do so. See 'Risk Factors--No Prior Public Market
for the Common Stock' and 'Dividends and Market for Common Stock.'

SEE 'RISK FACTORS' COMMENCING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
SAVINGS ASSOCIATION INSURANCE FUND, THE BANK INSURANCE FUND OR ANY
GOVERNMENT AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS OCTOBER 13, 1998
<PAGE>

SUMMARY

The following is a summary of certain information contained elsewhere in
this Prospectus. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information and the Company's Consolidated
Financial Statements, including the Notes thereto, appearing elsewhere in this
Prospectus.

The Company is a Delaware corporation and conducts business as a bank
holding company, the sole subsidiary of which is United Commercial Bank (the
'Bank'), a California state-chartered commercial bank. The Company's assets
consist primarily of all of the issued and outstanding common stock of the Bank.

Since its founding in 1974, the Company has grown to total assets of $1.91
billion, total deposits of $1.47 billion and stockholders' equity of $98.1
million at June 30, 1998. The Bank currently has 25 retail banking offices in
the state of California, located in areas with high concentrations of ethnic
Chinese, including the San Francisco Bay area (which includes Oakland), and the
Sacramento/Stockton and Los Angeles metropolitan areas. The Bank is the largest
financial institution focused on serving the ethnic Chinese market within
California.

Substantially all of the Bank's loans are secured by real property. At June
30, 1998, approximately $712.3 million, or 56% of the Bank's gross loan
portfolio was secured by residential properties (1-4 family), approximately
$334.2 million, or 26% of the Bank's gross loans were secured by commercial real
estate-multi-family mortgages, and $142.7 million, or 11% of the Bank's gross
loans were secured by commercial real estate-non-residential. The Bank's
deposits are obtained primarily from ethnic Chinese individuals and small and
medium sized businesses, business executives and professionals. As a result of
its focus on these deposit sources, at June 30, 1998, the Bank was able to
achieve a cost of funds approximately 60 basis points below the Eleventh
District Cost of Funds Index ('COFI'). Based upon June 30, 1997, FDIC deposit
market share data, the Bank believes it has the leading deposit market share in
the principal ethnic Chinese market within Oakland and is among the leaders in
deposit market share in the principal ethnic Chinese markets within the San
Francisco Bay area.

Through its network of banking offices, the Bank provides a wide range of
personal and commercial banking services to small and medium sized businesses,
business executives, professional and other individuals in the financial
services, professional services, real estate construction, computer and
semi-conductor manufacturing, and wholesale and retail trade industries. The
Bank offers a variety of deposit products, from traditional savings and business
accounts to the specialized services designed to serve the personal banking
needs of its customers. The Bank also engages in a full complement of lending
activities, including residential and commercial real estate, construction,
commercial and consumer credit facilities and working capital loans. The Bank
offers Chinese multilingual services to all of its customers.

Historically, the Bank operated as a traditional thrift engaged primarily
in mortgage banking activities and the origination of residential mortgages (1-4
family) which were generally pooled and sold in the secondary market, with loan
servicing rights retained. From time to time, the Bank sold its loan servicing
rights and also purchased agency servicing rights in connection with its
mortgage banking activities. Since 1993, the Bank has also specialized in the
origination of limited documentation residential mortgages (1-4 family). The
Bank has historically maintained a heavy concentration of assets with interest
rates based on COFI, which generally lags market interest rate changes and which
can suppress net interest margins during periods of rapidly escalating interest
rates. From 1993 to 1995, the Bank experienced a decline in earnings primarily
as a result of (i) depressed net interest margins due to COFI-indexed assets and
a larger volume of LIBOR-based borrowings; (ii) an increase in the Bank's
allowance for loan losses; and (iii) the competitive pressures in the mortgage
banking business. In addition, in 1996, the Bank's earnings were reduced by the
payment of a onetime $7.7 million Savings Association Insurance Fund ('SAIF')
recapitalization assessment.

From 1995 to June 1998, the Company experienced steady growth in its net
interest income. Notwithstanding this improvement in net interest income, the
Company's net income was adversely impacted by a $7.7 million SAIF
recapitalization assessment in 1996 and an $8.8 million provision for loan
losses during 1995. The $8.8 million provision for loan losses was $4.1 million
greater than the five year average provision for loan losses of $4.7 million and
was recorded to address the continued depressed California economy and real
estate market and to significantly increase the Company's overall level of
allowance for loan losses to over

3
<PAGE>
1.00% of gross loans. Without giving effect to the SAIF recapitalization
assessment, in 1996, the Company's net income would have amounted to $4.3
million as compared to the $306,000 actual net loss.

BALANCE SHEET RESTRUCTURING

In recent years, the mortgage banking industry became highly competitive
and, combined with the availability of more efficient delivery systems through
brokers and the Internet, the industry has experienced shrinking profit margins
and reduced loan servicing values. Higher levels of prepayment activity
resulting from the lower interest rate environment and the willingness of
lenders to offer mortgage loans with no points and, in many cases, no fees, have
reduced servicing values. To respond to these market factors and to improve its
long-term prospects, the Bank since 1995 has taken the following measures:

COFI Asset Reduction. In the fourth quarter of 1996, the Bank ceased all
COFI-based mortgage lending and began to reduce the Bank's COFI-based
mortgage-backed securities portfolio. From December 31, 1996 to June 30, 1998,
COFI-based loans have been reduced from 60.2% of the Bank's total gross loan
portfolio to 39.8%. From December 31, 1996 to June 30, 1998, total COFI exposure
has been reduced from 64.9% of the Bank's interest-earning assets to 40.2%.

Closure of Mortgage Banking Division. In 1997, the Bank closed its
mortgage banking division and ceased the origination of nonconventional mortgage
loans (i.e., loans insured by the Federal Housing Administration or partially
guaranteed by the Veterans Administration) for sale in the secondary market and
sold its agency loan servicing portfolio. While the Bank no longer engages in
the origination of nonconventional mortgage loans, the Bank continues to
originate conventional residential mortgage loans for portfolio retention and
conforming mortgage loans for resale in the secondary market through its retail
branching networks. See 'Business--Lending Activities.'

Reduced Non-Performing Assets. The Bank reduced its non-performing assets
from $22.3 million as of December 31, 1995, to $9.3 million as of June 30, 1998.

Reduced Mismatched Borrowings. The Bank reduced its predominantly high
cost LIBOR-based borrowings (which were mismatched with COFI-based assets) from
$265.3 million at the beginning of 1995 to zero at December 31, 1996 and 1997.
As a result of the proceeds received by the Company and made available to the
Bank following the Private Offerings (as described herein), the Bank implemented
a plan to leverage such proceeds through purchases of investment grade
securities and municipal bonds and to fund such purchases with Federal Home Loan
Bank ('FHLB') advances and cash made available from the proceeds. At June 30,
1998, the Bank had entered into $298 million of borrowings to fund such asset
purchases. Included in these borrowings were $96 million of short-term
borrowings and $202 million of long-term borrowings. The Bank also entered into
certain interest rate cap agreements to reduce the Bank's exposure to rising
interest rates. See 'Management's Discussion and Analysis of Financial Condition
and Results of Operations--Financial Condition.'

IMPLEMENTATION OF STRATEGY

In conjunction with the implementation of the balance sheet restructuring
described above which returned the Bank to profitability in 1996, excluding the
one-time SAIF recapitalization assessment, to further improve the Bank's
long-term prospects and to take advantage of the Bank's significant deposit
market share and the potential cross selling opportunities to the ethnic Chinese
and Asian communities within its market area, the Board of Directors adopted a
business strategy to shift the primary business focus of the Bank from a
traditional thrift to a full service commercial banking operation. To implement
its business strategy, the Bank took the actions and adopted the initiatives
outlined below.

Management. The Bank realigned senior management responsibilities, and
hired commercial banking officers and Small Business Administration ('SBA')
business banking officers with lending experience in the Bank's market area. See
'Management of the Company and the Bank.'

4
<PAGE>

commitments and had $98.7 million in outstanding loans as of June 30, 1998. As
of June 30, 1998, the division had a current committed pipeline of approximately
$129 million. To support its commercial banking activities, the Bank installed a
commercial banking data processing system to replace a system designed for
thrift institutions. The new system provides customer profitability reports,
account analysis and other commercial banking management tracking and reporting
mechanisms. The installation of this new system was completed in February 1998.
The Bank installed software to enhance commercial real estate loan marketing and
development. The PC based system provides key information on substantially all
commercial real estate transactions in the Bank's market area in California. The
software provides information instrumental to identifying lending and
refinancing opportunities, screening potential credit opportunities and
evaluating collateral values to facilitate efficient solicitation of borrowers
and related depository relationships from commercial and multi-family property
owners. The Bank opened a commercial, construction and SBA lending office in
Pasadena, California during the second quarter of 1998. In addition to other
personnel, the Bank has hired a team of three experienced SBA business banking
officers to staff the Pasadena office. These officers were previously affiliated
with one of the leading lenders focusing on SBA lending to Asians.

Core Deposit Solicitation. To further develop the Bank's core deposit
base, the Bank is evaluating the establishment of mini-branches in or adjacent
to Asian supermarkets in selected target market areas. By continuing to
emphasize multilingual services at its automated teller machines ('ATMs'),
through its telephone banking system and by its customer service and loan
officers, the Bank expects to continue to further expand its presence in the
Asian, and specifically the ethnic Chinese, markets in California. At June 30,
1998, less than 2% of the Bank's deposits were held by customers located outside
the United States. In addition, as of such date, the 100 depositors with the
largest aggregate average deposit balances comprised less than 10% of the Bank's
total deposits. The Bank also expects to increase its business accounts as the
commercial lending portfolio grows and correspondent account relationships are
established.

Capital Enhancement. On April 17, 1998, the Company completed a $140.0
million placement of its Common Stock and a $30.0 million placement of 9.375%
Capital Securities through UCBH Trust Co. (together the 'Private Offerings').
The Private Offerings were consummated pursuant to Rule 506 of Regulation D,
Regulation S and Rule 144A under the Securities Act. At March 31, 1998, the
Company's stockholders' equity was $64.6 million, or 4.2% of total assets. Prior
to the Private Offerings, management of the Company entered into an agreement to
buy out the interests of the two owners of the Company, in conjunction with the
private placement of Common Stock. Chief Investments Limited and United Holdings
Int'l, Ltd. (the 'Selling Shareholders') owned in the aggregate, prior to the
buyout, 100% of the Common Stock of the Company and 100% of the Company's Senior
Debt (the 'Notes') totaling $20.6 million, including accrued interest. In
connection with the Private Offerings, the Company exchanged 329 shares of its
common stock (1,974,000 shares giving effect to the 6000:1 stock split on April
17, 1998) for the Notes and subsequently used $120.0 million of the proceeds of
the Private Offerings to redeem all shares of common stock then outstanding,
including those shares of common stock issued to the Selling Shareholders in
exchange for the Notes (the 'Redemption'). As a result of the Redemption, the
Selling Shareholders are no longer affiliated with the Company or the Bank. The
Company then issued 9,333,333 shares of Common Stock to purchasers in the
Private Offering. Following the Private Offerings and the Redemption, the
Company's stockholders' equity increased to $98.1 million at June 30, 1998 and
the Company's consolidated Tier 1 capital increased from $63.9 million at
December 31, 1997 to $128.2 million at June 30, 1998. See 'Supervision and
Regulation--Bank Holding Company and Bank Regulation--the Bank--Capital
Requirements.'

Charter Conversion. In the first quarter of 1998, the Bank changed its
name to United Commercial Bank to reflect the Bank's new emphasis on providing
commercial banking services to its customers. As part of its strategy to shift
its business focus from mortgage banking to commercial banking, the Bank
converted to a California-chartered commercial bank and the Company became a
bank holding company on July 31, 1998.

As a result of the measures taken to effect the Bank's shift in its primary
business focus from mortgage banking to commercial banking, and the
implementation of its strategic initiatives, management believes that the Bank
is and will continue to be well positioned to take advantage of the
opportunities in its market area and particularly in the growing ethnic Chinese
market in California.

5
<PAGE>
The Company, as a bank holding company, is subject to examination and
regulation by the Federal Reserve Bank of San Francisco. The Bank, as a
state-chartered commercial bank, is subject to comprehensive regulation and
examination by the Department of Financial Institutions ('DFI') as its primary
regulator and by the Federal Deposit Insurance Corporation ('FDIC'), which
administers the Savings Association Insurance Fund ('SAIF') which insures the
Bank's deposits to the maximum extent permitted by law. The Bank is a member of
the FHLB of San Francisco, which is one of the 12 regional banks which comprise
the FHLB system. The Bank is further subject to regulations of the Board of
Governors of the Federal Reserve System ('Federal Reserve Board') governing
reserves required to be maintained against deposits and certain other matters.
See 'Supervision and Regulation.'

The Company's executive offices are located at 711 Van Ness Avenue, San
Francisco, California 94102 and its main telephone number is (415) 928-0700.

THE OFFERING

The Private Placement........ The Common Stock issued to investors in the
Private Placement was sold by the Company on April
17, 1998. An aggregate of 9.3 million shares of
Common Stock were sold to 246 purchasers. In
connection therewith, the Company executed and
delivered for the benefit of the holders of the
Common Stock the Registration Rights Agreement,
providing for, among other things, the filing of
the Registration Statement of which this
Prospectus forms a part. See 'The Private
Offerings and the Redemption Transactions' and
'Selling Holders.'

Securities Offered........... 9,333,333 shares of Common Stock.

Market for Common Stock...... The Company has received approval to have the
Common Stock quoted on the Nasdaq National Market
under the symbol 'UCBH.' Prior to the Offering,
there has not been a public market for the Common
Stock and there can be no assurance that an active
public trading market for the Common Stock will
develop or be sustained.

Use of Proceeds.............. The Selling Holders will receive all of the
proceeds from the Common Stock sold pursuant to
this Prospectus. See 'Use of Proceeds' for a
discussion of the use of the net proceeds from the
Private Offerings.

Risk Factors................. See 'Risk Factors--Increased Lending Risks
Associated with Expansion into Commercial Banking
Activities,' '--Interest Rate Risk,' '--Risks
Associated with Leveraging Strategy,' '--Potential
Adverse Credit Quality,' '--Risks Associated with
Limited Documentation Lending,' '--No Assurances
as to the Adequacy of Allowance for Loan Losses,'
'--External Factors with Potential to Adversely
Affect Asset Quality,' '--Risks Related to
Government Regulation and Monetary Policy,'
'--Competition,' '--Dependence on Economic
Conditions and Geographic Concentration in Market
Areas,' '--Risk of Adverse Accounting Treatment of
Private Offerings,' '--Dependence on Key
Management Personnel,' '--Ability of Company to
Execute its Business Strategy and Generate
Earnings,' '--Year 2000 Risks,' '--Risk of Adverse
Tax Determination,' '--Lack of Market for Common
Stock,' '--No Present Intention to Pay Dividends'
and '--Certain Provision and Agreements Which May
Discourage Takeover Attempts' for a discussion of
certain factors that should be considered by
prospective investors.

6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data with respect to the
consolidated financial position of the Company as of December 31, 1997 and 1996,
and operating data for the fiscal years ended December 31, 1997, 1996 and 1995
have been derived from, and should be read in conjunction with, and is qualified
in its entirety by, the audited Consolidated Financial Statements and Notes
thereto of the Company presented elsewhere in this Prospectus. The selected
consolidated financial data with respect to the Company's consolidated financial
position as of December 31, 1995, 1994 and 1993 and operating data for the years
ended December 31, 1994 and 1993 have been derived from the audited Consolidated
Financial Statements of the Company, which are not presented herein. The data
presented at June 30, 1998 and for the six months ended June 30, 1998 and 1997
were derived from unaudited consolidated financial statements and reflect, in
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) which are necessary to present fairly the results for such interim
periods. The results of operations for the six months ended June 30, 1998 are
not necessarily indicative of the results of operations that may be expected for
the year ended December 31, 1998.

<TABLE>
<CAPTION>
AT JUNE AT DECEMBER 31,
30, --------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL CONDITION AND OTHER DATA:
Total assets.................................... $1,910,379 $1,561,650 $1,474,617 $1,521,699 $1,522,412 $1,456,892
Net loans....................................... 1,258,944 1,202,095 1,054,686 1,011,909 965,668 878,001
Securities(1)................................... 575,310 270,103 343,739 429,005 467,426 491,278
Deposits........................................ 1,474,270 1,468,987 1,393,125 1,311,604 1,168,031 1,032,868
Borrowings...................................... 298,000 -- -- 128,600 265,341 309,975
Long-term debt to affiliates.................... -- 20,060 16,736 13,000 13,500 14,000
Stockholders' equity............................ 98,109 62,552 54,344 55,457 59,350 58,440
Non-performing assets........................... 9,296 10,266 21,096 22,287 16,347 29,006
Ratio of equity to assets....................... 5.14% 4.01% 3.69% 3.64% 3.90% 4.01%
</TABLE>

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Interest income................................. $ 58,191 $ 52,106 $107,591 $102,964 $ 99,034 $ 87,079 $ 90,203
Interest expense................................ 33,759 30,690 64,252 63,955 70,196 53,621 48,724
-------- -------- -------- -------- -------- -------- --------
Net interest income............................. 24,432 21,416 43,339 39,009 28,838 33,458 41,479
Provision for loan losses....................... 1,401 132 1,154 1,476 8,777 3,206 8,898
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision for loan
losses....................................... 23,031 21,284 42,185 37,533 20,061 30,252 32,581
Noninterest income.............................. 1,732 1,165 3,094 3,397 3,767 8,603 17,897
SAIF recapitalization assessment................ -- -- -- 7,716(2) -- -- --
Noninterest expense............................. 17,294 15,945 32,190 33,697 30,142 35,603 38,677
-------- -------- -------- -------- -------- -------- --------
Income (loss) before taxes..................... 7,469 6,504 13,089 (483) (6,314) 3,252 11,801
Income tax expense (benefit).................... 3,070 2,677 5,790 (177) (3,406) 772 5,281
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............................... $ 4,399 $ 3,827 $ 7,299 $ (306)(2) $ (2,908)(2) $ 2,480 $ 6,520
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
OPERATING RATIOS AND OTHER DATA:
Return (loss) on average assets................. 0.54% 0.51% 0.47% (0.02)% (0.19)% 0.17% 0.45%
Return (loss) on average equity................. 11.50 13.15 12.33 (0.48) (4.89) 3.45 9.50
Interest rate spread............................ 2.95 2.78 2.71 2.58 1.85 2.29 3.17
Net interest margin............................. 3.13 2.93 2.89 2.68 1.96 2.36 2.85
Efficiency ratio(3)(4).......................... 66.10 70.61 69.33 79.46(3) 92.45 84.65 65.14
Noninterest expense to average assets(4)........ 2.14 2.11 2.08 2.23 1.98 2.40 2.69
ASSET QUALITY DATA:
Non-performing assets to total assets........... 0.49% 0.66% 0.66% 1.43% 1.46% 1.07% 1.99%
Non-performing loans to total gross loans....... 0.71 0.84 0.81 1.83 2.00 1.17 1.79
Allowance for loan losses to total gross
loans.......................................... 1.04 1.05 1.00 1.10 1.34 0.78 0.90
Allowance for loan losses to non-performing
loans.......................................... 145.84 124.36 123.22 59.98 66.88 66.67 54.83
Net charge-offs to average gross loans.......... 0.05 0.06 0.06 0.34 0.26 0.41 0.96
BANK REGULATORY CAPITAL RATIOS:
Tier 1 risk-based capital....................... 12.35% 9.85% 9.90% 9.41% 9.21% 9.95% 9.84%
Total risk-based capital........................ 13.61 11.11 11.15 10.67 10.47 10.95 10.93
Core (leverage)................................. 6.56 5.12 5.37 4.90 4.50 4.80 4.72
Tangible........................................ 6.56 5.12 5.37 4.90 4.50 4.77 4.68
</TABLE>

- ------------------
(1) Includes available-for-sale securities and held-to-maturity securities.
(2) During 1996, the Company's net income was adversely affected by the one-time
SAIF recapitalization assessment which was recognized by the Bank during the
third quarter of the year. Without giving effect to the SAIF
recapitalization assessment, the Company's net income would have amounted to
$4.3 million for 1996.
(3) Represents noninterest expense divided by the aggregate of net interest
income before provision for loan losses and noninterest income.
(4) During the year ended December 31, 1996, such ratios exclude the one-time
SAIF recapitalization assessment. Including the SAIF recapitalization
assessment, the Bank's efficiency ratio and noninterest expense to average
assets would amount to 97.66% and 2.74%, respectively.

7
<PAGE>
RISK FACTORS

Prospective investors should carefully review the information contained
elsewhere in this Prospectus and should particularly consider the following
matters. Information contained in this Prospectus contains 'forward-looking
statements' which can be identified by the use of forward-looking terminology
such as 'believes,' 'expects,' 'may,' 'will,' 'should,' 'projected,'
'contemplates' or 'anticipates' or the negative thereof or other variations
thereon or comparable terminology. No assurance can be given that the future
results covered by the forward-looking statements will be achieved. The
following matters constitute cautionary statements identifying important factors
with respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to vary materially from the
future results covered in such forward-looking statements. Other factors, such
as the general state of the economy, could also cause actual results to vary
materially from the future results covered in such forward-looking statements.

INCREASED LENDING RISKS ASSOCIATED WITH EXPANSION INTO COMMERCIAL BANKING
ACTIVITIES

At June 30, 1998, $334.2 million, or 26.3% of the Bank's gross loans
consisted of multi-family loans. In addition, with the change in the Bank's
business strategy and focus on commercial banking activities, the Bank's
commercial real estate loans, construction loans and commercial business loans
are expected to increase. Loans secured by apartment buildings and other
multi-family properties and loans secured by commercial real estate properties
are generally larger and involve a greater degree of risk than residential
mortgage (1-4 family) loans. Because payments on loans secured by multi-family
and commercial real estate properties are often dependent on successful
operation or management of the properties, repayment of such loans may be
subject to a greater extent to the then prevailing conditions in the real estate
market or the economy. Moreover, construction financing is generally considered
to involve a higher degree of credit risk than long-term financing on improved,
owner-occupied real estate. Risk of loss on a construction loan is dependent
largely upon the accuracy of the initial estimate of the property's value at
completion of construction or development compared to the estimated cost
(including interest) of construction. If the estimate of value proves to be
inaccurate, the Bank may be confronted with a project, when completed, having a
value which is insufficient to assure full repayment.

Unlike mortgage loans, which generally are made on the basis of the
borrower's ability to make repayment from his or her employment or other income,
and which are secured by real property whose value tends to be more readily
ascertainable, commercial business loans are of higher risk and typically are
made on the basis of the borrower's ability to make repayment from the cash flow
of the borrower's business. As a result, the availability of funds for the
repayment of commercial business loans may be substantially dependent on the
success of the business itself. Furthermore, any collateral securing such loans
may depreciate over time, may be difficult to appraise and may fluctuate in
value based on the success of the business.

Although the Bank seeks to minimize the above risks through its
underwriting and credit administration policies, there can be no assurance that
such risks would not materialize, in which event the Company's result of
operations, financial condition and prospects could be materially adversely
affected.

INTEREST RATE RISK

The Bank's earnings depend largely on the relationship between its cost of
funds, primarily deposits, and the yield on earning assets. This relationship,
known as the interest spread, is subject to fluctuation and is affected by
economic and competitive factors which influence market interest rates, the
volume and mix of interest-earning assets and interest-bearing liabilities, and
the level of non-performing assets. Fluctuations in market interest rates affect
the demand of customers for the Bank's products and services. The Bank is
subject to interest rate risk to the degree that its interest-bearing
liabilities reprise or mature more slowly or more rapidly or on a different
basis than its interest-earning assets. Given the Bank's current volume and mix
of interest-bearing liabilities and interest-earning assets, the Bank's interest
rate spread could be expected to decrease during periods of rising and falling
interest rates. Although the Bank believes its current level of interest rate
sensitivity is reasonable, significant fluctuations in interest rates may have
an adverse effect on the Bank's results of operations. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations--Market
Risk and Net Portfolio Value.'

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RISKS ASSOCIATED WITH LEVERAGING STRATEGY

As a result of the proceeds received by the Company and made to be
available to the Bank following the Private Offerings, the Bank implemented a
plan to leverage such proceeds through the purchase of U.S. Government agency
mortgage-backed securities, investment grade securities, investment grade
municipal bonds and investment grade residential mortgage (1-4 family)
securities and to fund such purchases through short- and long-term secured
borrowings, advances from the FHLB and from cash made available from the
proceeds. Such plan is consistent with the Bank's asset and liability management
policy and was approved by the Bank's Credit Policy and Investment Committee. In
connection with this strategy, the Bank will remain classified as a 'well
capitalized' institution for regulatory capital purposes. If market rates of
interest fluctuate in such a manner that the Company is unable to earn a
positive spread as a result of its leverage strategy, the Company's net interest
margin and net earnings will be adversely affected in future periods. Through
June 30, 1998, the Bank purchased approximately $325 million of such assets and
entered into $202 million of long-term borrowings.

POTENTIAL ADVERSE CREDIT QUALITY

A significant source of risk for the Company arises from the possibility
that losses will be sustained because borrowers, guarantors and related parties
may fail to perform in accordance with the terms of their loan agreements. The
Company has adopted underwriting and credit monitoring procedures and credit
policies, including the establishment and review of the allowance for loan
losses, that management believes are appropriate to minimize this risk by
assessing the likelihood of nonperformance, tracking loan performance and
diversifying the Bank's credit portfolio. Such policies and procedures, however,
may not prevent unexpected losses that could materially adversely affect the
Company's results of operations. Maintenance of a high credit quality of new
commercial loans is also key in achieving its strategic goals.

The Bank's loan portfolio is predominantly secured by real estate.
Conditions in the real estate markets in which the collateral for the Bank's
mortgage loans are located strongly influence the level of the Bank's non-
performing loans and its results of operations. Real estate values are affected
by, among other things, changes in general or local economic conditions, changes
in governmental rules or policies, the availability of loans to potential
purchasers, and acts of nature. Declines in real estate markets have in the past
and may continue to negatively impact the value of the collateral securing the
loans and the Company's results of operations. See 'Business--Lending
Activities--Loan Portfolio.' As of June 30, 1998, the Bank had $9.3 million in
non-performing assets.

RISKS ASSOCIATED WITH LIMITED DOCUMENTATION LENDING

The Bank specializes in a limited documentation mortgage loan product for
loans secured by single family residential properties. This product serves a
particular niche of borrowers willing to pay a premium, in the form of higher
interest rates and larger down payments, in exchange for more expedient loan
processing by virtue of providing less income and less asset information. These
limited documentation mortgage loans, however, involve a higher degree of risk
as there is limited verified knowledge of the borrower's level of income or
ability to service the indebtedness which, in turn, may result in a higher rate
of default. As of June 30, 1998, $502.8 million, or 70.6% of the residential
mortgages (1-4 family) were low documentation loans. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Financial Condition--Loan Portfolio.'

NO ASSURANCES AS TO THE ADEQUACY OF ALLOWANCE FOR LOAN LOSSES

The Bank's allowance for loan losses is maintained at a level considered
adequate by management to absorb inherent losses in its loan portfolio. The
amount of inherent loan losses which could be ultimately realized is susceptible
to changes in economic, operating and other conditions, including changes in
interest rates, that could be beyond the Bank's control. Such losses could
exceed current estimates. Although management believes that the Bank's allowance
for loan losses is adequate, there can be no assurance that the allowance will
prove sufficient to cover actual loan losses should such losses be realized. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'

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EXTERNAL FACTORS WITH POTENTIAL TO ADVERSELY AFFECT ASSET QUALITY

The economy in the Bank's primary market area and the real estate market in
particular have suffered from the effects of a recession in the first half of
this decade. Some of the effects of the recession were declines in property
values and decreased demand for goods and services. These conditions may have
had an adverse impact on the ability of certain borrowers to perform under the
original terms of their obligations to the Bank. The Bank's loan portfolio is
predominantly secured by real estate. The Bank's properties and substantially
all of the real and personal property securing loans in the Bank's portfolio are
located in California. The real estate securing loans has been in the past and
may in the future be adversely affected by market conditions in California. In
addition to market fluctuations, California is prone to earthquakes, flooding
and other natural disasters. The Bank faces the risk that many of its borrowers
may experience uninsured property damage, sustained interruption of their
businesses or loss of their jobs from earthquakes, floods or other disasters. As
a result, these borrowers may be unable to repay their loans in accordance with
their original terms and the collateral for such loans may decline significantly
in value. There can be no assurance that the allowance for loan losses will be
adequate to cover losses resulting from such external factors.

RISKS RELATED TO GOVERNMENT REGULATION AND MONETARY POLICY

The banking business is subject to extensive federal and state supervision
and regulation. Such regulations limit the manner in which the Company and the
Bank conduct their respective businesses, undertake new investments and
activities and obtain financing. These regulations are designed primarily for
the protection of the deposit insurance funds and consumers, and not to benefit
holders of the Company's securities. As a result of the conversion of the
Company to a bank holding company and the Bank to a state-chartered bank, the
scope and degree of regulatory oversight changed. Among other things are
statutory and regulatory limitations on the amount of dividends which could be
paid to the Company by the Bank which are different from the restrictions which
applied to the Bank under the Office of Thrift Supervision (the 'OTS')
regulations. Bank regulatory agencies also have authority to prohibit banks from
engaging in activities that, in their respective opinions, constitute unsafe or
unsound practices in conducting its business. It is possible, depending upon the
financial condition of the Bank and other factors, that the FDIC or the DFI
could assert that the payment of dividends or other payments by the Bank might,
under some circumstances, be such an unsafe or unsound practice.

Financial institution regulation has been the subject of significant
legislation in recent years, and may be the subject of further significant
legislation in the future, none of which is in the control of the Company or the
Bank. Significant new laws or changes in, or repeals of, existing laws may cause
the Company's results of operations to differ materially. Further, federal
monetary policy, particularly as implemented through the Federal Reserve Board
significantly affects credit conditions for the Company, primarily through open
market operations in United States government securities, the discount rate for
bank borrowings and reserve requirements. A material change in any of these
conditions would have a material impact on the Bank, and therefore the Company's
results of operations.

COMPETITION

The banking and financial services industry in California generally, and in
the Bank's market areas specifically, is highly competitive. The increasingly
competitive environment results from changes in regulation, changes in
technology and product delivery systems, and the consolidation among financial
services providers. The Bank competes for loans, deposits and customers for
financial services with other commercial banks, savings and loan associations,
securities and brokerage companies, mortgage companies, insurance companies,
finance companies, money market funds, credit unions, and other nonbank
financial service providers. Many of these competitors are much larger in total
assets and capitalization, have greater access to capital markets and offer a
broader array of financial services than the Bank. To compete with the other
financial services providers, the Bank relies on local promotional activities,
personal relationships established by officers, directors and employees with its
customers, and specialized services tailored to meet its customers' needs.

The Bank competes for deposits from the ethnic Chinese markets with other
banks catering to the Asian community. The Bank believes that it has two major
competitors that are targeting the ethnic Chinese markets. Such institutions
have branch locations in many of the same neighborhoods as the Bank, provide
similar loan, savings and financial services, and market their services in
similar Asian publications and media in California.

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DEPENDENCE ON ECONOMIC CONDITIONS AND GEOGRAPHIC CONCENTRATION IN MARKET AREA

The Bank's operations are located in Northern and Southern California and
are concentrated primarily in the San Francisco Bay area (including Oakland) and
the Sacramento/Stockton and Los Angeles metropolitan areas, with specific
emphasis on communities with a high concentration of ethnic Chinese individuals
and businesses. As a result of these geographic concentrations, the Bank's
results depend largely upon economic conditions in these areas. A deterioration
in economic conditions in the Bank's market could have a material adverse impact
on the quality of the Bank's loan portfolio and the demand for its products and
services, and accordingly, the Company's results of operations. See
'Business--Market Area.'

RISK OF ADVERSE ACCOUNTING TREATMENT OF PRIVATE OFFERINGS

Based upon the representations of each offeree in the Private Offerings
('Offeree') that such Offeree was not acting in concert with any other Offeree,
it is the Company's understanding that as a result of the Private Offerings and
the Redemption, generally accepted accounting principles will not require the
Company to revalue the assets and liabilities of the Company in the Company's
Consolidated Financial Statements to reflect consummation of the Private
Offerings and the Redemption. In the event that some or all of the Offerees were
deemed to be acting in concert, there is a substantial likelihood that generally
accepted accounting principles would require a step-up in accounting basis
(analogous to the purchase method of accounting for business combinations) with
respect to the Private Offerings and the Redemption. If a change in accounting
basis were required, the Company's assets and liabilities would be reflected on
the Company's consolidated financial statements based on their estimated fair
values at the consummation date and goodwill would be recorded to the extent
that the consideration paid to the Selling Shareholders in the Redemption
exceeds the aggregate net fair value of the Company's net assets. In addition,
if a step-up in accounting basis were required, it is likely that generally
accepted accounting principles, the Commission's requirements and the Bank's
primary regulator would likely require such adjustments to be 'pushed down' and
reflected in the Bank's financial statements. The requirement for push-down of
accounting basis could have a material adverse effect on the ability of the Bank
to pay dividends to the Company. In addition, the amortization of any goodwill
recorded as a result of such accounting treatment would significantly reduce the
earnings of the Bank in future periods and could adversely impact the ability of
the Bank to pay dividends to the Company. The Company received a report from its
independent accountants, PricewaterhouseCoopers LLP, as to the application of
accounting principles which concludes that consummation of the Private Offerings
and Redemption as described herein did not require the Company to revalue the
assets and liabilities of the Company in the Company's Consolidated Financial
Statements and, therefore, did not trigger the recognition of goodwill by the
Company or the Bank. The Company recorded no gains or losses in its financial
records as a result of the consummation of the Private Offerings and the
Redemption.

It is uncertain whether, notwithstanding the Company's understanding of
generally accepted accounting principles and receipt of the report from
PricewaterhouseCoopers LLP referenced above, the Bank's primary regulator would
require the push-down of accounting basis with respect to the Bank's financial
statements. The Company has not discussed with the Bank's primary regulator
whether it would require such treatment. If such regulator were to require the
push-down of accounting basis with respect to the Bank's financial statements,
such accounting treatment could have the effects described above. Accordingly,
in considering an investment in the Company, potential purchasers should take
into account the possibility that the push-down of accounting basis with respect
to the Bank's financial statements may be required.

DEPENDENCE ON KEY MANAGEMENT PERSONNEL

The Company's success depends substantially on certain members of its
senior management, in particular the following officers of the Bank: Thomas S.
Wu, President and Chief Executive Officer; Jonathan H. Downing, Senior Vice
President, Chief Financial Officer and Treasurer; Sylvia Loh, Senior Vice
President and Director of Commercial Banking; Louis E. Barbarelli, Senior Vice
President and Director of Operations and Systems; Cecilia Lai, Senior Vice
President and Director of Retail Banking; and William T. Goldrick, Senior Vice
President and Chief Credit Officer. The Company's business and financial
condition could be materially adversely affected by the loss of the services of
any such individuals. Ms. Loh joined the Bank as the head of commercial banking
in February 1996. The success of her department is vital to the success of the
shift in the Bank's business focus to commercial banking. The Company does not
maintain key man life insurance with respect to any of the foregoing officers.
See 'Management of the Company and the Bank.'

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ABILITY OF THE COMPANY TO EXECUTE ITS BUSINESS STRATEGY AND GENERATE EARNINGS

The Bank's ability to achieve its strategic goal and shift its business
focus to commercial banking largely depends on its ability to: fund a
significant amount of commercial real estate loans and commercial business
loans, including SBA loans; originate intermediate fixed-rate residential
mortgage loans (1-4 family); and significantly increase the Bank's commercial
deposit and demand accounts. During the year ended December 31, 1997, the Bank
originated $23.7 million of commercial real estate loans, $28.7 million of
commercial business loans and $3.3 million of SBA loans. During the six months
ended June 30, 1998, the Bank originated $35.3 million of commercial real estate
loans, $23.3 million of commercial business loans, and $2.5 million of SBA
loans. At June 30, 1998 the Bank had in its pipeline $98.4 million of commercial
real estate loans, $21.1 million of commercial business loans and $9.4 million
of SBA loans. Given the competitive environment for loan originations, consumer
demand for fixed-rate 30-year loans and the array of alternative cash
investments available to consumers, there are no assurances that the Bank will
be able to achieve its strategic business goals.

The implementation of the Bank's strategic goals places demands on the
Bank's management personnel as well as its systems, other personnel control
systems, asset quality, earnings, policies and procedures. There can be no
assurance that the Bank will be able to make all adjustments necessary or to
employ and retain personnel with adequate training and experience to achieve its
strategic goals or to manage the Bank's growth and expansion. The failure to
achieve its strategic goals could have a material adverse effect on the
Company's results of operations, financial condition and prospects.

YEAR 2000 COMPLIANCE RISKS

The Federal Financial Institutions Examination Council (the 'FFIEC'),
through the bank regulatory agencies, has issued compliance guidelines requiring
financial institutions to develop and implement plans for addressing Year 2000
issues relevant to their operations. The Bank has implemented a detailed Year
2000 plan, as required by the FFIEC guidelines, to evaluate Year 2000 compliance
of its computer systems and the equipment which supports the operations of the
Bank. Also included in this Year 2000 plan is a detailed review of the readiness
of the Bank's service providers, vendors, major fund providers, major borrowers
and companies with which the Bank has material investments for Year 2000 issues.
As of September 13, 1998, the Bank has met all current target objectives of the
Year 2000 plan, and management believes that it will continue to meet all future
target objectives in accordance with the terms of the plan.

To date, the Bank has not identified any system which presents a material
risk of not being Year 2000 ready in a timely fashion or for which a suitable
alternative cannot be implemented. However, as the Bank progresses with its Year
2000 conversion, the Bank may identify systems which do present a material risk
of Year 2000 disruption. Such disruption may include, among other things, the
inability to process and underwrite loan applications, to credit deposits and
withdrawals from customer accounts, to credit loan payments or track
delinquencies, to properly reconcile and record daily activity or to engage in
similar normal banking activities. Additionally, if the Bank's commercial
customers are not Year 2000 compliant and suffer adverse effects on their
operations, their ability to meet their obligations to the Bank could be
adversely affected.

The failure of the Bank to identify systems which require Year 2000
conversion that are critical to the Bank's operations or the failure of the Bank
or others with which the Bank does business to become Year 2000 ready in a
timely manner could have a material adverse impact on the Bank's financial
condition and results of operations. Moreover, to the extent that the risks
posed by the Year 2000 problem are pervasive in data processing and transmission
and communications services worldwide, the Bank cannot predict with any
certainty that its operations will remain materially unaffected after January 1,
2000 or on dates preceding this date at which time post-January 1, 2000 dates
become significant within the Bank's systems. For further discussion of the
Bank's Year 2000 compliance efforts, see 'Management's Discussion and Analysis
of Financial Condition and Results of Operations--Year 2000.'

RISK OF ADVERSE TAX DETERMINATION

In 1997, the IRS concluded an examination of the income tax returns of the
Company for the tax years 1993 through 1995. The audit resulted in the Company
making cash payments and writing down the deferred tax assets of the Company.
Such cash payments and write-downs amounted to $500,000 in the aggregate, which
approximated the book allowances provided by the Company for this eventuality.
The IRS audit focused generally on the Company's Notes, which, until canceled in
the Redemption, were held by the Selling

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Shareholders (who were then affiliates of the Company and the Bank) and, more
specifically, on the appropriateness of the Company's interest expense
deductions during 1993, 1994 and 1995. Notwithstanding the conclusion of the
IRS's audit and the resulting cash payments and write-downs, no assurance can be
made that the IRS will not reexamine the Company's tax returns and further
challenge the validity of the Notes and the related interest expense deductions
which could result in additional income tax payments and/or write-downs.
Although the settlement with the IRS confirmed the treatment of the Notes as
debt rather than equity, there can be no assurance that the IRS will not
reexamine the appropriateness of the characterization of the Notes as debt with
respect to the tax years subsequent to 1995. The Notes were retired in April
1998 in conjunction with the consummation of the Redemption. As of June 30,
1998, the Company's consolidated financial statements reflect deferred tax
assets of approximately $2.6 million which represent interest expense deductions
that the Company will take in its 1998 tax return. During the first quarter of
1998, the California Franchise Tax Board ('FTB') notified the Company of its
intention to review the consolidated tax returns of the Company and the Bank for
the four years ended December 31, 1996. As of July 31, 1998, the FTB had begun
the review but had made no disclosures to the Company regarding the scope of the
examination nor time frames in which they believed the examination would be
completed. In the opinion of management, any additional assessments that may
result from such examination will not have a material effect on the financial
condition of the Company.

NO PRIOR PUBLIC MARKET FOR THE COMMON STOCK

Since the consummation of the Private Offerings, transactions in the Common
Stock have been limited, and there is no established market for the Common Stock
at this time. The Company has received approval to have the Common Stock quoted
on the Nasdaq National Market under the symbol 'UCBH.' In determining to approve
the Company's application for inclusion, the Nasdaq National Market granted the
Company an exemption from the 400 round-lot shareholder requirement for initial
inclusion in the Nasdaq National Market. Accordingly, the Company must
demonstrate compliance with the 400 round-lot shareholder requirement on or
before December 7, 1998, or be subject to delisting from the Nasdaq National
Market. At September 30, 1998, the Company had 217 holders of record. There
generally can be no assurance that an established and liquid trading market for
the Common Stock will develop or that it will continue if it does develop. In
addition, if the Common Stock is delisted from the Nasdaq National Market, any
established trading market is likely to be adversely impacted. See 'Dividends
and Market for Common Stock.'

NO PRESENT INTENTION TO PAY DIVIDENDS

The Company does not anticipate initially paying dividends on the Common
Stock. It is the Company's present intention to retain earnings to enhance
capital and future growth.

CERTAIN PROVISIONS AND AGREEMENTS WHICH MAY DISCOURAGE TAKEOVER ATTEMPTS

The Bank and the Company have entered into employment agreements with Mr.
Wu and change in control agreements with certain executive officers of the
Company and the Bank, which agreements provide for severance payments if their
respective employment is terminated in connection with a change in control of
the Company or the Bank. These provisions may have the effect of increasing the
cost of acquiring the Company, thereby discouraging future attempts to take over
the Company or the Bank. In addition, these agreements provide for certain
severance payments in the event of the executive officer's termination for any
reason other than resignation, cause, death or permanent disability. See
'Restrictions on Acquisition--Restrictions in the Company's Certificate of
Incorporation and Bylaws,' 'Management of the Company and the Bank-- Employment
and Change in Control Agreements.'

Certain provisions of the Company's Certificate of Incorporation and
Bylaws, particularly a provision limiting voting rights, as well as certain
federal regulations, assist the Company in maintaining its status as an
independent publicly owned corporation. These provisions provide for, among
other things, supermajority voting on certain matters, staggered boards of
directors, non-cumulative voting for directors, limits on the calling of special
meetings, limits on voting shares in excess of 10% of the outstanding shares,
and certain uniform price provisions for certain business combinations. These
provisions in the Company's governing instruments may discourage potential proxy
contests and other potential takeover attempts, particularly those which have
not been negotiated with the Board of Directors, and thus, generally may serve
to perpetuate current management. For a more detailed discussion of these
provisions, see 'Restrictions on Acquisition.'

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THE PRIVATE OFFERINGS AND THE REDEMPTION TRANSACTIONS

The Redemption Agreement. Prior to the Private Offerings, on March 31,
1998, management of the Company entered into an Exchange and Redemption
Agreement (the 'Redemption Agreement') to buy out the interests of the Selling
Shareholders, at that time the owners of all of the Common Stock of the Company,
in conjunction with the Private Offerings. Pursuant to the terms of the
Redemption Agreement, $20.6 million of the Notes, which were payable to the
Selling Shareholders, was exchanged for 329 shares of common stock (1,974,000
shares giving effect to the 6000:1 stock split on April 17, 1998). Subsequently,
the Company used approximately $120.0 million of the proceeds raised in the
Private Offerings to redeem all of the shares of common stock then owned by the
Selling Shareholders, which included the shares of common stock exchanged for
the Notes. The Company did not record any gains or losses in its financial
records as a result of the Private Offerings and the Redemption. As a result of
the Private Offerings and the Redemption, the Selling Shareholders are no longer
affiliated with the Company and the Bank. The Company then issued 9,333,333
shares of Common Stock to purchasers in the Private Offerings, some of whom are
Selling Holders.

Pursuant to the Redemption Agreement, the Selling Stockholders have made
certain customary representations and warranties to the Company, relating to the
capital structure of the Company, the authority of the Selling Shareholders, the
due execution of the Redemption Agreement, the absence of conflicts with or
breaches of corporate governance documents or obligations of the Selling
Shareholders, the financial statements of the Company, the absence of any
material adverse liabilities, tax matters, litigation, fees and expenses, the
absence of other debt and the status as exempt private offerings of the Private
Offerings, which representations and warranties generally will survive for one
year after the date of the Redemption Agreement.

The Purchase Agreement. On April 13, 1998, the Company entered into the
Purchase Agreement with the various purchasers of the Common Stock issued
pursuant to the Private Offerings, which provided, among other things, for the
purchase on such date of an aggregate of $140.0 million of Common Stock. A
closing was held on April 17, 1998 at which the Redemption and the Private
Offerings were consummated.

In connection with the consummation of the transactions contemplated by the
Purchase Agreement and the Redemption Agreement, all of the persons then serving
as directors of the Company and the Bank resigned, and Sau-wing Lam, Thomas S.
Wu, Jonathan H. Downing, Robert Fell and Godwin Wong, all formerly directors of
the Company and/or the Bank, were elected as the directors of the Company and
the Bank. See 'Management of the Company and the Bank.'

The obligations of the purchasers of the Common Stock issued pursuant to
the Purchase Agreement were subject to the satisfaction or waiver, prior to the
closing of the transaction, of various conditions, including, among other
things: (a) the continued accuracy of all representations and warranties made by
the Company in the Purchase Agreement and the performance in all material
respects of all covenants and agreements to be performed by the Company prior to
the closing of the transaction; (b) the execution by the Company and both of the
Selling Stockholders of the Redemption Agreement and the consummation of the
transaction contemplated thereby; and (c) the Company obtaining the requisite
stockholder approval of an amendment to its Certificate of Incorporation to
increase its authorized Common Stock to 25,000,000 shares, to revise the par
value per share of the Common Stock to $0.01 per share and to authorize
Preferred Stock of 10,000,000 shares and filing with the Secretary of State of
the State of Delaware the appropriate documentation in order to effect such
amendment.

The Agency Agreement provided for the Company to pay Sandler O'Neill &
Partners, L.P. (the 'Placement Agent') a fee equal to, in the aggregate, 7% of
the gross proceeds raised with respect to the placement of the Common Stock and
4% of the gross proceeds raised with respect to the placement of the Capital
Securities in the Private Offerings. In addition, the Company reimbursed the
Placement Agent for its actual out-of-pocket expenses pertaining to its
engagement, including legal fees and expenses and indemnified the Placement
Agent against certain liabilities arising out of its engagement, including
certain liabilities under the securities laws.

In connection with the Private Offerings, the Company on April 13, 1998
also entered into the Registration Rights Agreement with the initial purchasers
of the Common Stock, pursuant to which, among other things, the Company agreed
to file within 120 days a shelf registration statement with the Commission
providing for the offer and sale of the Common Stock. The Registration Statement
of which this Prospectus forms a part has been filed in satisfaction of such
requirement. See 'Registration Rights.'

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USE OF PROCEEDS

The Selling Holders will receive all of the proceeds from the Common Stock
sold pursuant to this Prospectus.

Net proceeds from the Private Offerings were approximately $157.7 million
after deducting the commission of the Placement Agent and estimated offering and
other expenses payable by the Company. The Company used $120.0 million on the
net proceeds to repurchase all of the then outstanding common stock, including
those shares of Common Stock received by the Selling Shareholders in exchange
for the Notes, and is using the remainder of the net proceeds for other general
corporate purposes. All of the proceeds from the sale of the Capital Securities
were invested by the Trust in the Junior Subordinated Debentures.

DIVIDENDS AND MARKET FOR COMMON STOCK

The Board of Directors of the Company does not presently intend to
implement a policy of paying dividends on the Common Stock. Rather, the Company
expects to retain earnings to increase capital. The initiation of a cash
dividend policy will depend upon a number of factors, including investment
opportunities available to the Company or the Bank, capital requirements, the
Company's and the Bank's financial condition and results of operations, tax
considerations, statutory and regulatory limitations, and general economic
conditions. No assurances can be given that any dividends will be paid or that,
if paid, will not be reduced or eliminated in future periods. See 'Supervision
and Regulation--Bank Holding Company and Bank Regulation.'

Dividends from the Company will depend principally on the ability of the
Bank to pay dividends to the Company. Under the California Financial Code, the
Bank is limited in the amount of distributions (including dividends) it may make
to its shareholder to an amount which equals the lesser of (a) the Bank's
retained earnings or (b) the Bank's net income for the last three fiscal years,
less the amount of any distributions made by the Bank to its shareholder during
such period. With prior regulatory approval, the Bank may make a distribution to
its shareholder in an amount not exceeding the greatest of (a) the Bank's
retained earnings, (b) its net income for the last fiscal year, or (c) its net
income for the current fiscal year. As of June 30, 1998, under applicable
regulations of the State of California, the total amount available for the
payment of dividends by the Bank to the Company was approximately $9.5 million.
See 'Supervision and Regulation--Bank Holding Company and Bank Regulation.'

Notwithstanding the foregoing, the California Commissioner of the
Department of Financial Institutions may prohibit the Bank from paying any
dividends or making any other capital distribution, if the Commissioner finds
that the shareholder's equity of the Bank is inadequate or that such dividend or
other distribution would be unsafe or unsound for the Bank. Federal law also
prohibits any insured depository institution, such as the Bank, from making
capital distributions, including the payment of dividends, if, after making such
distribution, the institution would become 'undercapitalized.'

Unlike the Bank, the Company is not subject to the aforementioned
regulatory restrictions on the payment of dividends to its stockholders;
although, as noted, the source of such dividends is dependent primarily upon
dividends from the Bank. The Company is subject, however, to the requirements of
Delaware law which generally limit dividends to an amount equal to the excess of
the net assets of the Company (the amount by which total assets exceed total
liabilities) over its statutory capital, or if there is no such excess, to its
net profits for the current and/or immediately preceding fiscal year. In
addition, the Federal Reserve Bank of San Francisco could oppose a distribution
by the Company if it determines that such a distribution would harm the
Company's ability to support its bank subsidiaries.

Since consummation of the Private Offerings, transactions in the Common
Stock have been limited, and there is no established market for the Common Stock
at this time. The Company has received approval to have the Common Stock quoted
on the Nasdaq National Market under the symbol 'UCBH.' In determining to approve
the Company's application for inclusion, the Nasdaq National Market granted the
Company an exemption from the 400 round-lot shareholder requirement for initial
inclusion in the Nasdaq National Market. Accordingly, the Company must
demonstrate compliance with the 400 round-lot shareholder requirement on or
before December 7, 1998, or be subject to delisting from the Nasdaq National
Market. At September 30, 1998, the Company had 217 holders of record. The
Company is also subject to compliance with certain conditions,

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<PAGE>
including the presence of at least three registered and active market makers.
The Company will seek to encourage and assist at least three market makers to
make a market in the Common Stock. Making a market involves maintaining bid and
ask quotations and being able, as principal, to effect transactions in
reasonable quantities at those quoted prices, subject to various securities laws
and other regulatory requirements. Sandler O'Neill & Partners, L.P., has advised
the Company that it intends to make a market in the Common Stock following
commencement of trading, but it is under no obligation to do so. The development
of a liquid public market depends on the existence of willing buyers and
sellers, the presence of which is not within the control of the Company.
Accordingly, the number of active buyers and sellers of the Common Stock at any
particular time may be limited. Under such circumstances, investors in the
Common Stock could have difficulty disposing of their securities and should not
view the Common Stock as a short-term investment. Accordingly, there generally
can be no assurance that an active and liquid trading market for the Common
Stock will develop or that, if developed, it will continue, nor is there any
assurance that persons purchasing shares of Common Stock will be able to sell
them at or above the purchase price therefor. In addition, if the Common Stock
is delisted from the Nasdaq National Market, any established trading market is
likely to be adversely impacted. See 'Risk Factors--No Prior Public Market for
the Common Stock.'

RATIOS OF EARNINGS TO COMBINED FIXED CHARGES

The following table sets forth the ratios of earnings to combined fixed
charges of the Company on a consolidated basis for the respective periods
indicated.

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------- ----------------------------------------------------
1998 1997 1997 1996 1996(1) 1995 1994 1993
----- ----- ----- ----- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Combined Fixed
Charges:
Excluding interest on deposits.......... 3.98x 4.85x 6.59x 1.25x 2.90x 0.68x 1.30x 1.97x
Including interest on deposits.......... 1.22x 1.21x 1.24x 1.02x 1.14x 0.93x 1.09x 1.28x
</TABLE>

- ------------------
(1) Represents the respective fixed charge ratios excluding the SAIF
recapitalization assessment.

For purposes of computing the ratios of earnings to combined fixed charges,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, include gross interest expense
other than on deposits. Fixed charges, including gross interest on deposits,
include all interest expense.

16
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS

The following consolidated statement of operations with respect to the
Company's operations for the years ended December 31, 1997, 1996 and 1995 have
been derived from the audited Consolidated Financial Statements and notes
thereto of the Company appearing elsewhere in this Prospectus. This information
should be read in conjunction with such Consolidated Financial Statements and
the notes thereto. The following consolidated statements of operation with
respect to the Company's operations for the six months ended June 30, 1998 and
1997 have been derived from unaudited financial data, and, in the opinion of
management, reflect all adjustments, consisting of normal recurring adjustments,
which are necessary to present fairly the results for such interim periods. The
results of operations for the six months ended June 30, 1998 are not necessarily
indicative of the results of operations that may be expected for the year ending
December 31, 1998.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEARS ENDED
ENDED JUNE 30, DECEMBER 31,
------------------ -----------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest income:
Interest on loans.......................................... $47,954 $41,197 $86,141 $78,711 $72,742
Interest on funds sold and securities purchased under
agreements to resell..................................... 471 1,081 2,760 1,417 398
Interest on investment and mortgage-backed securities...... 9,766 9,828 18,690 22,836 25,894
------- ------- ------- ------- -------
Total interest income.................................... 58,191 52,106 107,591 102,964 99,034
------- ------- ------- ------- -------
Interest expense:
Interest on deposits....................................... 31,254 28,999 61,513 59,273 56,038
Interest on short-term borrowings.......................... 66 798 294 998 6,550
Interest on guaranteed preferred beneficial interests in
junior subordinated debentures........................... 570 -- -- -- --
Interest on long-term borrowings........................... 1,270 -- 620 2,044 5,867
Interest on long-term debt to affiliates................... 599 893 1,825 1,640 1,741
------- ------- ------- ------- -------
Total interest expense................................... 33,759 30,690 64,252 63,955 70,196
------- ------- ------- ------- -------
Net interest income...................................... 24,432 21,416 43,339 39,009 28,838
Provision for loan losses.................................... 1,401 132 1,154 1,476 8,777
------- ------- ------- ------- -------
Net interest income after provision for loan losses...... 23,031 21,284 42,185 37,533 20,061
------- ------- ------- ------- -------
Noninterest income:
Commercial banking fees.................................... 565 429 977 421 92
Service charges on deposit accounts........................ 544 482 888 615 566
Gain on sale of loans, securities and servicing rights..... 307 (530) 155 1,200 1,137
Loan servicing income...................................... 292 526 601 680 272
Miscellaneous income....................................... 24 258 473 481 1,700
------- ------- ------- ------- -------
Total noninterest income................................. 1,732 1,165 3,094 3,397 3,767
------- ------- ------- ------- -------
Noninterest expenses:
Personnel.................................................. 8,247 7,169 14,087 14,875 12,000
Occupancy.................................................. 2,447 2,306 4,811 4,754 4,355
Data processing............................................ 1,180 979 2,059 1,859 1,696
Furniture and equipment.................................... 1,170 852 1,902 1,814 1,357
Deposit insurance.......................................... 457 1,142 1,798 3,519 3,051
SAIF recapitalization assessment........................... -- -- -- 7,716 --
Communication.............................................. 201 172 400 383 317
Professional fees and contracted services.................. 902 882 2,342 1,551 1,303
Foreclosed assets expense.................................. (3) 393 671 686 2,785
Miscellaneous expense...................................... 2,693 2,050 4,220 4,256 3,278
------- ------- ------- ------- -------
Total noninterest expense................................ 17,294 15,945 32,190 41,413 30,142
------- ------- ------- ------- -------
Income (loss) before taxes................................... 7,469 6,504 13,089 (483) (6,314)
Income tax expense (benefit)................................. 3,070 2,677 5,790 (177) (3,406)
------- ------- ------- ------- -------
Net income (loss)........................................ $ 4,399 $ 3,827 $ 7,299 $ (306) $(2,908)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>

(See notes to the consolidated financial statements appearing elsewhere herein)

17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the section entitled 'Risk Factors' and
elsewhere in this Prospectus. The following discussion and analysis is intended
to provide details of the results of operations of the Company for the six
months ended June 30, 1998 and 1997 and for the years ended December 31, 1997,
1996 and 1995 and financial condition at June 30, 1998 and at December 31, 1997
and 1996. 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 elsewhere in this Prospectus.

RESULTS OF OPERATIONS

General. Currently, 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 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, and furniture and equipment expenses 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. For the six months ended June 30, 1998, net income was $4.4
million, an increase of $572,000, or 14.9% from the six months ended June 30,
1997. The increase in earnings during the six months ended June 30, 1998
resulted primarily from the increased net interest income which resulted from
the larger average balance sheet, the improved loan yield, and the increase in
noninterest income. The improvement in noninterest income resulted primarily
from the Bank recording no loss on the sale of securities and loans in the six
months ended June 30, 1998 compared with a loss of $530,000 in the same period
of the preceding year. Partially offsetting these improvements in net income was
the increased provision for loan losses which was made as a result of the growth
in the loan portfolio and the increase in personnel expenses primarily related
to the expansion of the commercial banking division and incentive accruals
recorded during the first half of 1998 and nonrecurring expenses related to the
computer system conversion. For the year ended December 31, 1997, net income was
$7.3 million, an increase of $7.6 million from a net loss of $306,000 for the
year ended December 31, 1996. For the year ended December 31, 1995, the
Company's operations resulted in a loss of $2.9 million. The Company's
annualized return on average assets was 0.54% for the six months ended June 30,
1998, compared with 0.51% for the six months ended June 30, 1997. Annualized
return on average assets was 0.47% for the year ended December 31, 1997,
compared to (0.02%) and (0.19%) for the years ended December 31, 1996 and 1995,
respectively. The Company's annualized return on average equity was 11.50% and
13.15% for the six months ended June 30, 1998 and 1997, respectively and 12.33%,
(0.48%) and (4.89%) for the years ended December 31, 1997, 1996 and 1995,
respectively.

From 1995 to June 30, 1998, the Company experienced steady growth in its
net interest income. Notwithstanding this improvement in net interest income,
the Company's net income was adversely impacted by a $7.7 million SAIF
recapitalization assessment in 1996 and an $8.8 million provision for loan
losses during 1995. The $8.8 million provision for loan losses in 1995 was $4.1
million greater than the five year average provision for loan losses of $4.7
million and was recorded to address the continued depressed California economy
and real estate market and to significantly increase the Company's overall level
of allowance for loan losses to over 1.00% of gross loans. Without giving effect
to the SAIF recapitalization assessment, in 1996, the Company's net income would
have amounted to $4.3 million as compared to the $306,000 actual net loss.

18
<PAGE>
The increase in net income for the six months ended June 30, 1998 from the
six months ended June 30, 1997 was partially due to the increase in net interest
income which resulted from an increase in the average loans outstanding and an
increase in the average yield on loans resulting from the growth in the
commercial loan portfolio. The net income also increased during this period due
to the Bank not incurring any losses on the disposition of loans or securities
whereas the Bank realized a loss of $530,000 for the disposition of such assets
in the six months ended June 30, 1997 in conjunction with its COFI reduction
program and the write-down of impaired loans. Partially offsetting the increases
to net income resulting from the foregoing were increases in the provision for
loan losses and increases in noninterest expense.

The provision for loan losses increased from $132,000 in the first six
months of 1997 to $1.4 million in the same period of 1998. The increased
provision in 1998 related to the increased growth in the loan portfolio during
the first half of 1998 and the increase in the commercial loan portfolio during
this period. As of June 30, 1998, the $13.2 million allowance for loan losses
represented 1.04% of gross loans. Noninterest expenses were $17.3 million for
the first six months of 1998, an increase of $1.4 million, or 8.5%, from the
corresponding period of the prior year. Personnel expenses increased to $8.2
million during the first six months of 1998 compared with $7.2 million for the
corresponding period of the previous year due to the addition of commercial
banking personnel during 1997 and incentive accruals recorded during the first
half of 1998. Included in the expenses for the first half of 1998 were $400,000
of expenses associated with the name change of the Bank to United Commercial
Bank and $200,000 of severance pay accruals for an outsourced audit function.

The increase in net income for the year ended December 31, 1997 from the
year ended December 31, 1996 was due to an increase in net interest income to
$43.3 million from $39.0 million, as discussed below, and a reduction in deposit
insurance expense to $1.8 million from $11.2 million, which includes the SAIF
assessment discussed below. In 1996, the Company paid a $7.7 million onetime
SAIF recapitalization assessment levied by the FDIC on SAIF-insured deposits to
fully capitalize the SAIF. During 1997, the Company's deposit insurance premium
was reduced to 9.4 basis points of deposits as a result of the Bank reaching the
'well capitalized' core capital ratio of 5.0%. Effective January 1, 1998, the
deposit insurance premium was further reduced to 6.4 basis points of deposits.

The reduction in the net loss for the year ended December 31, 1996 from the
year ended December 31, 1995 was due to the increase in net interest income to
$39.0 million from $28.8 million, as discussed below, and a reduction in the
provision for loan losses. In 1995, management increased the allowance for loan
losses from 0.78% of gross loans to 1.34% of gross loans to address the
continued depressed California economy and real estate market and to
significantly increase the Company's overall allowance for loan losses to over
1.00% of gross loans. The total provision for loan losses of $1.5 million in
1996 compares with a provision of $8.8 million in 1995. As a result of the
increase in net interest income and the reduction in the provision for loan
losses, the net loss of the Company was $306,000 for the year ended December 31,
1996 compared to a loss of $2.9 million for the year ended December 31, 1995,
notwithstanding the $7.7 million SAIF recapitalization assessment recognized in
1996.

Net Interest Income and Net Interest Margin. The net interest margin
improved to 3.13% for the six months ended June 30, 1998 as compared to 2.93%
for the six months ended June 30, 1997. At June 30, 1998, the net interest
margin was 2.90%, reflecting the impact of the new assets acquired in
conjunction with the leverage strategy. While the leverage strategy reduces this
ratio, the strategy is accretive to net income and earnings per share. For the
six months ended June 30, 1998, net interest income was $24.4 million, an
increase of $3.0 million, or 14.1%, from $21.4 million for the six months ended
June 30, 1997.

Net interest income increased in the first six months of 1998 primarily as
a result of (i) the increase in average loans outstanding to $1.23 billion from
$1.08 billion, (ii) the increase in the average yield on loans to 7.80% in the
first half of 1998 from 7.66% for the same period in the preceding year, (iii)
the reduction in the average balance of lower yielding COFI securities to $280.9
million from $352.0 million and their replacement with higher yielding loans,
and (iv) the purchase of $321 million of securities in conjunction with the
leveraging strategy during the second quarter of 1998, with an average yield of
6.91%.

The net interest margin improved to 2.89% for the year ended December 31,
1997, compared to 2.68% for the year ended December 31, 1996 and 1.96% for the
year ended December 31, 1995. For the year ended December 31, 1997, net interest
income was $43.3 million, an increase of $4.3 million, or 11.0% from

19
<PAGE>
$39.0 million for the year ended December 31, 1996. Net interest income for the
year ended December 31, 1996 increased $10.2 million, or 35.3% from $28.8
million for the year ended December 31, 1995.

Net interest income increased in 1997 primarily as a result of (i) the
increase in average loans outstanding to $1.12 billion from $1.04 billion, (ii)
the reduction in the average balance of lower yielding securities to $326.7
million from $390.4 million and their replacement with higher yielding loans,
(iii) the reduction of average borrowings to $16.6 million from $49.8 million
and their replacement with lower costing deposits, and (iv) a reduction in
non-interest-earning assets to $45.7 million from $60.0 million partially due to
the sale or reclassification of non-performing assets.

Net interest income increased to $39.0 million in 1996 from $28.8 million
in 1995, or 35.3%, primarily as a result of (i) the increase in average loans
outstanding to $1.04 billion from $1.0 billion, (ii) an increase in the average
yield on loans to 7.60% from 7.25% as a result of upward repricing of the Bank's
COFI-based loan portfolio, (iii) the reduction of average borrowings to $49.8
million from $194.4 million and their replacement with lower costing deposits,
and (iv) a decrease in the average rate paid on deposit accounts from 4.57% to
4.37%.

20
<PAGE>
The following tables present 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.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------
AT 1998 1997
JUNE 30, -------------------------------- --------------------------------
1998 INTEREST AVERAGE INTEREST AVERAGE
---------- AVERAGE INCOME OR YIELD/ AVERAGE INCOME OR YIELD/
YIELD/COST BALANCE EXPENSE COST BALANCE EXPENSE COST
---------- ---------- --------- ------- ---------- --------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans(1)....................... 7.82% $1,228,933 $47,954 7.80% $1,075,423 $41,197 7.66%
Securities..................... 6.31 312,287 9,766 6.25 345,272 9,828 5.69
Other.......................... -- 16,825 471 5.60 40,026 1,081 5.40
---------- --------- ---------- ---------
Total interest-earning assets.... 7.34 1,578,375 58,191 7.47 1,460,720 52,106 7.13
Noninterest-earning assets....... -- 61,557 -- -- 50,790 -- --
---------- --------- ---------- ---------
Total assets..................... 7.16 $1,619,602 58,191 7.19 $1,511,510 52,106 6.89
----- ---------- --------- ------- ---------- --------- -------
---------- ----------
Interest-bearing liabilities:
Deposits:
NOW and checking............ 1.09 $ 79,691 433 1.09 $ 77,570 411 1.06
Money market accounts....... 3.31 21,398 286 2.67 21,953 260 2.36
Passbook accounts........... 2.26 211,834 2,391 2.26 214,892 2,472 2.30
Time deposits............... 5.11 1,108,121 28,144 5.08 1,048,346 25,856 4.93
---------- --------- ---------- ---------
Total deposits................. 4.41 1,421,045 31,254 4.40 1,362,761 28,999 4.26
---------- --------- ---------- ---------
Borrowings..................... 5.64 47,022 1,336 5.68 29,077 798 5.49
Guaranteed preferred beneficial
interests in junior
subordinated debentures..... 9.38 12,160 570 9.38 -- -- --
Long-term debt to affiliates... -- 11,970 599 10.01 17,868 893 10.00
---------- --------- ---------- ---------
Total interest-bearing
liabilities.................... 4.71 1,492,021 33,759 4.52 1,409,582 30,690 4.35
----- ---------- --------- ------- ---------- --------- -------
Noninterest-bearing deposits..... 37,180 32,041
Other noninterest-bearing
liabilities.................... 13,725 11,567
Stockholders' equity............. 76,501 58,196
---------- ----------
Total liabilities and
stockholders' equity........... $1,619,602 $1,511,510
---------- ----------
---------- ----------
Net interest income/net interest
rate spread(2)................. 2.63% $24,432 2.95% $21,416 2.78%
------- --------- ----- --------- -----
------- --------- ----- --------- -----
Net interest-earning assets/net
interest margin(3)............. 2.90% $86,354 3.13% $51,138 2.93%
------- -------- ----- -------- -----
------- -------- ----- -------- -----
Ratio of interest-earning assets
to interest-bearing
liabilities.................... 1.06x 1.06x 1.04x
------- ---- ----
------- ---- ----
</TABLE>

- ------------------

(1) Non-accrual 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.

21
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1997 1996 1995
-------------------------------- -------------------------------- --------------------------------
INTEREST AVERAGE INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME OR YIELD/ AVERAGE INCOME OR YIELD/ AVERAGE INCOME OR YIELD/
BALANCE EXPENSE COST BALANCE EXPENSE COST BALANCE EXPENSE COST
---------- --------- ------- ---------- --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans(1)................. $1,123,356 $86,141 7.67% $1,036,025 $ 78,711 7.60% $1,002,662 $72,742 7.25%
Securities............... 326,728 18,690 5.72 390,381 22,836 5.85 460,165 25,894 5.63
Other.................... 48,944 2,760 5.64 26,516 1,417 5.34 6,864 398 5.80
---------- --------- ---------- --------- ---------- ---------
Total interest-earning
assets................... 1,499,028 107,591 7.18 1,452,922 102,964 7.09 1,469,691 99,034 6.74
Noninterest-earning
assets................... 45,664 -- 60,014 -- 56,164 --
---------- --------- ---------- --------- ---------- ---------
Total assets............... $1,544,692 107,591 6.97 $1,512,936 102,964 6.81 $1,525,855 99,034 6.49
---------- --------- ------- ---------- --------- ------- ---------- --------- -------
---------- ---------- ----------
Interest-bearing
liabilities:
Deposits:
NOW and checking....... $ 78,737 875 1.11 $ 77,710 826 1.06 $ 75,285 781 1.04
Money market
accounts............. 21,397 517 2.42 23,583 561 2.38 27,732 654 2.36
Passbook accounts...... 212,943 4,834 2.27 207,512 4,772 2.30 215,604 4,797 2.22
Time deposits.......... 1,090,320 55,287 5.07 1,047,019 53,114 5.07 908,783 49,806 5.48
---------- --------- ---------- --------- ---------- ---------
Total deposits........... 1,403,397 61,513 4.28 1,355,824 59,273 4.37 1,227,404 56,038 4.57
---------- --------- --------- ---------
Borrowings............... 16,551 914 55.2 49,813 3,042 6.11 194,365 12,417 6.39
Long-term debt to
affiliates............. 18,398 1,825 9.92 14,868 1,640 11.03 13,250 1,741 13.14
---------- --------- ---------- --------- ---------- ---------
Total interest-bearing
liabilities............ 1,438,346 64,252 4.47 1,420,505 63,955 4.53 1,435,019 70,196 4.89
--------- ------- --------- ------- ---------- --------- -------
Noninterest-bearing
deposits................. 33,780 23,981 16,191
Other noninterest-bearing
liabilities.............. 13,358 13,638 15,358
Stockholders' equity....... 59,208 54,812 59,287
---------- ---------- ----------
Total liabilities and
stockholders' equity..... $1,544,692 $1,512,936 $1,525,855
---------- ---------- ----------
---------- ---------- ----------
Net interest income/net
interest rate
spread(2)................ $43,339 2.71% $ 39,009 25.8% $28,838 1.85%
--------- ------- --------- ------- --------- -------
--------- ------- --------- ------- --------- -------
Net interest-earning
assets/net interest
margin(3)................ $ 60,682 2.89% $ 32,417 2.68% $ 34,672 1.96%
---------- ------- ---------- ------- ---------- -------
---------- ------- ---------- ------- ---------- -------
Ratio of interest-earning
assets to
interest-bearing
liabilities.............. 1.04x 1.02x 1.02x
--- --- ---
--- --- ---
</TABLE>

- ------------------
(1) Non-accrual 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.

22
<PAGE>
The following table represents the extent to which changes in interest
rates and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and expense during the
periods indicated. Information is provided for each major component of
interest-earning assets and interest-bearing liabilities with respect to: (i)
changes in volume (changes in volume multiplied by prior rate); (ii) changes
attributable to rate (changes in rate multiplied by prior volume); and (iii) the
net change. The changes attributable to both volume and rate have been allocated
proportionately to the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO
JUNE 30, 1998 COMPARED TO THE THE
SIX MONTHS ENDED JUNE 30, 1997 YEAR ENDED DECEMBER 31, 1996
-------------------------------- -------------------------------
INCREASE INCREASE
(DECREASE) (DECREASE)
DUE TO DUE TO
------------------- -------------------
VOLUME RATE NET VOLUME RATE NET
------ ------- ------- ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans......................................... $5,977 $ 780 $ 6,757 $6,690 $ 740 $7,430
Securities.................................... 1,901 (1,963) (62) (3,651) (495) (4,146)
Other......................................... (651) 41 (610) 1,261 82 1,343
------ ------- ------- ------ ------- ------
Total interest income on interest-earning
assets........................................ 7,228 (1,143) 6,086 4,300 327 4,627
------ ------- ------- ------ ------- ------
Interest expense:
Deposits
NOW and checking accounts................... 11 11 23 11 38 49
Money market accounts....................... (6) 32 26 (53) 9 (44)
Passbook accounts........................... (35) (46) (81) 122 (60) 62
Time deposits............................... 1,503 784 2,288 2,196 (23) 2,173
Borrowings.................................... 509 29 538 (1,861) (267) (2,128)
Guaranteed preferred beneficial interests in
junior subordinated debentures.............. 570 -- 570 -- -- --
Long-term debt to affiliates.................. (295) 1 (294) 264 (79) 185
------ ------- ------- ------ ------- ------
Total interest expense on interest-bearing
liabilities................................... 2,258 813 3,070 679 382 297
------ ------- ------- ------ ------- ------
Increase in net interest income................. $4,970 $(1,955) $ 3,016 $3,621 $ 709 $4,330
------ ------- ------- ------ ------- ------
------ ------- ------- ------ ------- ------

<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1996 COMPARED TO
THE
YEAR ENDED DECEMBER 31, 1995
--------------------------------
INCREASE
(DECREASE)
DUE TO
-------------------
VOLUME RATE NET
------ ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest income:
Loans......................................... $2,468 $ 3,501 $ 5,96
Securities.................................... (4,137) 1,079 (3,058)
Other......................................... 1,049 (30) 1,019
------ ------- -------
Total interest income on interest-earning
assets........................................ (620 ) 4,550 3,930
------ ------- -------
Interest expense:
Deposits
NOW and checking accounts................... 26 19 4
Money market accounts....................... (99 ) 6 (93)
Passbook accounts........................... (249 ) 224 (25)
Time deposits............................... 6,473 (3,165) 3,308
Borrowings.................................... (8,850) (525) (9,375)
Long-term debt to affiliates.................. 126 (227) (101)
------ ------- -------
Total interest expense on interest-bearing
liabilities................................... (2,573) (3,668) (6,241)
------ ------- -------
Increase in net interest income................. $1,953 $ 8,218 $10,171
------ ------- -------
------ ------- -------
</TABLE>

23
<PAGE>
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.

For the six months ended June 30, 1998, the provision for loan losses was
$1.4 million, an increase of $1.3 million from the $132,000 provision for the
six months ended June 30, 1997. The allowance for loan losses as of June 30,
1998, as a percentage of total gross loans and as a percentage of non-performing
loans, was 1.04% and 145.8%, respectively, compared to 1.05% and 124.4%,
respectively at June 30, 1997. The Bank experienced a significant improvement in
asset quality during 1997 as improvements in the California economy occurred.
For example, the Bank experienced a 50% reduction in nonaccrual loans in 1997.
As management monitors the Bank's loan portfolio on a continuous basis, the
provisions for loan losses in the 1997 periods reflected this portfolio
improvement as it occurred and was identified. In 1998, provisions for loan
losses were increased to keep pace with the growth in the Bank's loan portfolio,
and in particular, growth in commercial loan products. The Bank's allowance
methodology provides higher loss factors for commercial loan products than for
residential mortgage (1-4 family) loans.

For the year ended December 31, 1997, the provision for loan losses was
$1.2 million, a decrease of $303,000, or 20.0% from the $1.5 million provision
for the year ended December 31, 1996. The allowance for loan losses at December
31, 1997, as a percentage of total gross loans and as a percentage of
non-performing loans was 1.00% and 123.2%, respectively, compared to 1.10% and
60.0%, respectively, at December 31, 1996. The provision for loan losses for the
year ended December 31, 1996, was $1.5 million, which represents a decrease of
$7.3 million, or 83.2% from the $8.8 million provision for loan losses for the
year ended December 31, 1995. In 1995, management increased the allowance for
loan losses to address the continued depressed California economy and real
estate market and to significantly increase the Company's overall level of
allowance for loan losses to over 1.00% of gross loans.

Noninterest Income. The following table sets forth the components of
noninterest income for the periods indicated.

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS FOR THE YEARS
ENDED JUNE 30, ENDED DECEMBER 31,
---------------- --------------------------
1998 1997 1997 1996 1995
------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Service charges on deposit accounts.................................. $ 544 $ 482 $ 888 $ 615 $ 566
Commercial banking fees.............................................. 565 429 977 421 92
Gain on sale of servicing rights..................................... 175 214 1,165 672 755
Gain (loss) on loan sales............................................ 132 (355) (204) 528 382
Loss on sale of securities........................................... -- (389) (806) (335) --
Gain on branch sale.................................................. -- -- -- -- 656
Loan servicing income................................................ 292 526 601 680 272
Miscellaneous income................................................. 24 258 473 816 1,044
------ ------ ------ ------ ------
Total noninterest income........................................... $1,732 $1,165 $3,094 $3,397 $3,767
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

For the six months ended June 30, 1998, noninterest income was $1.7
million, an increase of $567,000, or 48.7% from $1.2 million for the same period
of the preceding year. For the year ended December 31, 1997, noninterest income
was $3.1 million, a decrease of $303,000, or 8.9% from the year ended December
31, 1996. Noninterest income in 1996 of $3.4 million decreased $370,000, or 9.8%
from the $3.8 million recognized during the year ended December 31, 1995.

The increase in noninterest income for the first six months of 1998
primarily reflects the Bank not having incurred any losses on the sale of
COFI-based securities during the first half of 1998, compared with having
incurred $530,000 of such losses in the corresponding period of 1997.

The decrease in noninterest income for the year ended December 31, 1997,
reflects the $806,000 loss incurred in connection with the sale of COFI-based
securities pursuant to the Company's business strategy to reduce its assets tied
to COFI. The $1.2 million gain on sale of servicing rights is a non-recurring
gain recognized

24
<PAGE>
as a result of the disposition of such servicing rights in conjunction with the
Bank's decision to close its mortgage banking division. Additionally, the
$601,000 of loan servicing income is substantially non-recurring since
substantially all of the related servicing portfolio was sold during 1997.
Commercial banking fees increased to $977,000 in 1997, or 132.1% from $421,000
in 1996 as a result of the Company's business focus shift to commercial banking.

Noninterest income for the year ended December 31, 1996 of $3.4 million is
$370,000, or 9.8% less than the $3.8 million of noninterest income for the year
ended December 31, 1995. The noninterest income for the year ended December 31,
1996 included $335,000 of losses incurred in conjunction with the disposal of
COFI-based securities. Included in noninterest income for the year ended
December 31, 1995, was a gain of $656,000 recognized in connection with the sale
of a retail branch.

Noninterest Expense. The following table sets forth the components of
noninterest expense for the periods indicated.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEARS
ENDED JUNE 30, ENDED DECEMBER 31,
------------------ -----------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Personnel...................................................... $ 8,247 $ 7,169 $14,087 $14,875 $12,000
Occupancy...................................................... 2,447 2,306 4,811 4,754 4,355
Data processing................................................ 1,180 852 2,059 1,859 1,696
Furniture and equipment........................................ 1,170 979 1,902 1,814 1,357
Deposit insurance.............................................. 457 1,142 1,798 3,519 3,051
SAIF recapitalization assessment............................... -- -- -- 7,716 --
Communication.................................................. 201 172 400 383 317
Professional fees and contracted services...................... 902 882 2,242 1,551 1,303
Foreclosed assets expense...................................... (3) 393 671 686 2,785
Miscellaneous expense.......................................... 2,693 2,050 4,220 4,256 3,278
------- ------- ------- ------- -------
Total noninterest expense.................................... $17,294 $15,945 $32,190 $41,413 $30,142
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Efficiency ratio............................................... 66.10% 70.61% 69.33% 97.66% 92.45%
Efficiency ratio excluding SAIF recapitalization assessment.... N/A N/A N/A 79.46 N/A
Noninterest expenses to average assets(1)...................... 2.14% 2.11% 2.08 2.74 1.98
</TABLE>

- ------------------
(1) Annualized for the six months ended June 30, 1998 and 1997.

Noninterest expense increased by $1.4 million, or 8.5%, to $17.3 million
for the six months ended June 30, 1998 from $15.9 million for the six months
ended June 30, 1997, primarily as a result of increases in the Commercial
Banking Division staffing level, the recordation of incentive compensation
accruals, and the expenses associated with the computer conversion and the name
change of the Bank. Personnel expenses of $8.2 million for the first half of
1998 are $1.0 million, or 15% higher than the $7.2 million of personnel expenses
for the first half of 1997. This increase resulted primarily from the additional
staff which was hired to execute the commercial banking business plan and
incentive compensation accruals.

During the first half of 1998, the Bank successfully completed a core
computer conversion to a system which is guaranteed to be year 2000 compliant.
Total nonrecurring conversion expenses for the six months ended June 30, 1998
were $333,000.

Noninterest expense decreased to $32.2 million, or 22.3%, for the year
ended December 31, 1997 from $41.4 million for the year ended December 31, 1996,
primarily as a result of the $7.7 million SAIF recapitalization assessment
recognized in 1996. Deposit insurance premiums of $1.8 million for the year
ended December 31, 1997 compares with $3.5 million for the year ended December
31, 1996, a decrease of 48.9% due to the Bank reaching the 'well capitalized'
level. As a result of reaching this capital level, the deposit insurance premium
was reduced from 16.4 basis points to 9.4 basis points on July 1, 1997. The
average deposit insurance premium for 1997 was 12.9 basis points. The deposit
insurance premium was further reduced to 6.4 basis points effective January 1,
1998. During 1997, the Bank began a core computer conversion to a system which
provides the necessary support for the Bank's new commercial banking activities.
Computer conversion related expenses were $390,000 for the year ended December
31, 1997. New equipment purchases for this conversion totaled

25
<PAGE>
$1.2 million which will be amortized over a four year term commencing in 1998.
As a result of the foregoing and the improved net interest margin, the
efficiency ratio decreased to 69.3% in 1997 from 97.7% in 1996.

Noninterest expense increased to $41.4 million for the year ended December
31, 1996 from $30.1 million for the year ended December 31, 1995 as a result of
(i) the $7.7 million SAIF recapitalization assessment, (ii) a $2.9 million
increase in personnel expenses which was primarily the result of the
establishment of the commercial banking division and three new retail branches,
(iii) an increase of $457,000 in furniture and equipment expense and $399,000 in
occupancy expenses, both primarily in conjunction with the establishment of
three new retail branches in 1996, and (iv) a $1.0 million increase of
miscellaneous expense primarily due to additional printing and advertising
expenses relating to the establishment of the commercial banking division and
the establishment of merchant card services. The increase in the foregoing
categories of noninterest expense during 1996 was partially offset by a $2.1
million decline in foreclosed assets expense due, in part, to the reduction in
the Company's non-performing assets.

Provision for Income Taxes. The provision for income taxes of $3.1 million
and $2.7 million on the income before taxes of $7.5 million and $6.5 million for
the six months ended June 30, 1998 and 1997, respectively, represents an
effective tax rate of 41.1%.

For the year ended December 31, 1997, the provision for income taxes of
$5.8 million on the income before taxes of $13.1 million represents an effective
tax rate of 44.2%. For the year ended December 31, 1996, the Company had a tax
benefit of $177,000 on the loss before taxes of $483,000. For the year ended
December 31, 1995, the Company's tax benefit was $3.4 million on the loss before
taxes of $6.3 million.

In 1997, the IRS concluded an examination of the income tax returns of the
Company for the years 1993 through 1995. The audit resulted in a cash payment of
$500,000, and the partial reversal of previously deferred tax assets which
approximated the allowances provided by the Company for this eventuality.

FINANCIAL CONDITION

At June 30, 1998, the Company had total assets of $1.91 billion, an
increase of $348.7 million, or 22.2%, compared with $1.56 billion at December
31, 1997. At June 30, 1998, the Company had investment securities of $575.3
million, an increase of $305.2 million, or 113.0%, from December 31, 1997. At
June 30, 1998, the Company had net loans of $1.26 billion, an increase of $56.8
million, or 4.73%, from $1.20 billion at December 31, 1997. Total deposits of
$1.47 billion at June 30, 1998 were consistent with the balances at December 31,
1997. Borrowings at June 30, 1998 were $298 million whereas the Company had no
borrowings at December 31, 1997. At June 30, 1998, the Company had guaranteed
preferred beneficial interests in junior subordinated debentures of $30 million,
whereas none were outstanding at December 31, 1997. At June 30, 1998, the
Company had equity of $98.1 million, an increase of $35.6 million, or 56.8%,
from $62.6 million at December 31, 1997.

At December 31, 1997, the Company had total assets of $1.56 billion and
total deposits of $1.47 billion. Total assets increased from $1.47 billion at
December 31, 1996, and total deposits increased from $1.39 billion at December
31, 1996. At December 31, 1997, the Company had net loans of $1.2 billion, a
14.3% increase from net loans of $1.05 billion at December 31, 1996. At December
31, 1997, the Company had investment securities totaling $270.1 million compared
to $343.7 million at December 31, 1996. At December 31, 1997, the Company had no
borrowings while the stockholders' equity increased to $62.6 million at December
31, 1997 from $54.3 million at December 31, 1996.

Loan Portfolio. In connection with the Bank's balance sheet restructuring,
the Bank closed its mortgage banking division and ceased the origination of
nonconforming mortgages for sale in the secondary market, but continued to
originate conforming residential mortgages (1-4 family) primarily for portfolio
retention. Residential mortgages (1-4 family) originated for sale in the six
months ended June 30, 1998 aggregated $9.3 million as compared to $8.0 million,
$22.4 million, $83.4 million and $87.7 million in the six months ended June 30,
1997 and the years ended December 31, 1997, 1996 and 1995, respectively. In
addition, with the creation of its commercial banking division in 1996, new
emphasis was placed on the origination of commercial real estate loans and
commercial business loans. Total new commitments for commercial loans originated
in the six months ended June 30, 1998 were $25.8 million as compared to $15.6
million, $31.9 million and $9.9 million for the six months ended June 30, 1997
and the years ended December 31, 1997 and 1996, respectively.

26
<PAGE>
The following table shows the composition of the Bank's loan portfolio by
amount and percentage of total gross loans in each major loan category at the
dates indicated.
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------
AT JUNE 30,
1998 1997 1996 1995
------------------- ------------------- ------------------- -------------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT %
---------- ------ ---------- ------ ---------- ------ ---------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consumer:
Residential mortgage
(1-4 family)(1)................... $ 712,357 56.03% $ 691,167 56.98% $ 541,156 50.79% $ 507,121 49.45%
Home equity......................... 15,851 1.25 16,743 1.38 10,673 1.00 1,193 0.12
Other............................... 2,321 0.18 2,732 0.23 2,642 0.25 2,981 0.29
---------- ------ ---------- ------ ---------- ------ ---------- ------
Total consumer.................. 730,529 57.46 710,642 58.59 554,471 52.04 511,295 49.86
---------- ------ ---------- ------ ---------- ------ ---------- ------
Commercial:
Secured by real estate--
multi-family...................... 334,228 26.29 339,257 27.97 361,591 33.93 376,398 36.70
Secured by real estate--
nonresidential(2)................. 142,740 11.23 115,366 9.51 123,003 11.54 131,259 12.80
Construction........................ 35,810 2.82 26,603 2.19 19,892 1.87 6,612 0.64
Commercial business................. 28,024 2.20 21,146 1.74 6,595 0.62 -- --
---------- ------ ---------- ------ ---------- ------ ---------- ------
Total commercial................ 540,802 42.54 502,372 41.41 511,081 47.96 514,269 50.14
---------- ------ ---------- ------ ---------- ------ ---------- ------
Total gross loans..................... 1,271,331 100.00% 1,213,014 100.00% 1,065,552 100.00% 1,025,564 100.0%
------ ------ ------ ------
------ ------ ------ ------
Net deferred loan origination costs... 820 1,223 816 44
Allowance for loan losses............. (13,207) (12,142) (11,682) (13,699)
---------- ---------- ---------- ----------
Net loans............................. $1,258,944 $1,202,095 $1,054,686 $1,011,909
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

1994 1993
------------------- -------------------
AMOUNT % AMOUNT %
---------- ------ ---------- ------

<S> <C> <C> <C> <C>
Consumer:
Residential mortgage
(1-4 family)(1)................... $ 432,045 44.33% $ 380,570 42.85%
Home equity......................... -- -- -- --
Other............................... 1,474 0.15 1,929 0.22
---------- ------ ---------- ------
Total consumer.................. 433,519 44.48 382,499 43.07
---------- ------ ---------- ------
Commercial:
Secured by real estate--
multi-family...................... 391,509 40.17 329,401 37.09
Secured by real estate--
nonresidential(2)................. 141,995 14.57 151,061 17.01
Construction........................ 7,597 0.78 25,115 2.83
Commercial business................. -- -- -- --
---------- ------ ---------- ------
Total commercial................ 541,101 55.52 505,577 56.93
---------- ------ ---------- ------
Total gross loans..................... 974,620 100.00% 888,076 100.0%
------ ------
------ ------
Net deferred loan origination costs... (1,402) (2,075)
Allowance for loan losses............. (7,550) (8,000)
---------- ----------
Net loans............................. $ 965,668 $ 878,001
---------- ----------
---------- ----------
</TABLE>

- ------------------
(1) Includes $502.8 million of limited documentation loans at June 30, 1998. See
'Business--Lending Activities--Residential Mortgages (1-4 family).
(2) Includes $72.3 million, $87.5 million, $123.0 million, $131.3 million,
$142.0 million, and $151.0 million of primarily COFI-based loans at June 30,
1998 and at December 31, 1997, 1996, 1995, 1994 and 1993, respectively,
which were originated by the Bank during 1988 through 1992.

27
<PAGE>
The following table shows the Bank's loan originations during the periods
indicated.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
-------------------- --------------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Consumer:
Residential mortgage (1-4 family)
For sale:
GNMA.......................................... $ -- $ 759 $ 759 $ 33,066 $ 33,875
FHLMC and FNMA................................ 9,327 8,033 21,675 50,319 53,819
For portfolio:
Fully documented loans........................ 8,456 4,700 7,867 10,675 8,932
Limited documentation loans................... 117,714 77,930 244,523 131,548 114,251
Home equity loans.................................. 2,819 8,748 13,552 24,703 4,748
Other.............................................. 1,714 -- -- -- --
-------- -------- -------- -------- --------
Total consumer loans....................... 140,030 100,170 288,376 250,311 215,625
-------- -------- -------- -------- --------
Commercial:
Secured by real estate--multi-family............... 15,580 4,189 7,461 7,318 842
Secured by real estate--non-residential............ 35,266 10,606 23,743 2,655 864
Construction (1)................................... 41,693 27,217 59,569 42,166 15,737
Commercial business................................ 25,834 15,615 31,933 9,901 --
-------- -------- -------- -------- --------
Total commercial loans..................... 118,373 57,627 122,706 62,040 17,443
-------- -------- -------- -------- --------
Total loan originations.................... $258,403 $157,797 $411,082 $312,351 $233,068
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

- ------------------

(1) Includes loans in process.

Included in the Bank's residential mortgages (1-4 family) as of June 30,
1998 and December 31, 1997, respectively, were $502.8 million and $450.5
million, or 70.6% and 65.2% of limited documentation loans. Beginning in 1993,
the Bank has specialized in this loan product. Because of the less than full
documentation required for such loans, the Bank has emphasized relatively small
average loan size and low average loan-to-value ratios for these loans, as
evidenced by an average loan balance of $166,000 and average loan-to-value
ratios of 59% as of June 30, 1998.

Since it began originating limited documentation loans, the Bank has
experienced no net charge-offs with respect to such loans. At June 30, 1998, the
Bank had two loans more than three payments delinquent with an aggregate
principal balance of $199,000. Moreover, during the third quarter of 1997, the
Bank sold $17.2 million of the limited documentation loans to test the market
reception for this product. The Bank received a price in excess of par value on
the sale of such loans. Notwithstanding the historical performance of this type
of loan, there can be no assurance that such performance will continue.

Total gross loans increased $57.9 million, or 4.77%, to $1.27 billion at
June 30, 1998 from $1.21 billion at December 31, 1997 and 13.9%, from $1.07
billion at December 31, 1996, which was a 3.9% increase from $1.03 billion at
December 31, 1995. Increases in gross loans were the result of increases in
residential (1-4 family) loan production for portfolio retention and commercial
business loan generation resulting from the creation of the Bank's commercial
banking division in 1996.

28
<PAGE>
The following table sets forth the Bank's loan originations, purchases,
sales and principal repayments and changes in deferred fees and allowance for
loan losses for the periods indicated.

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
------------------------ --------------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net loans:
Balance at beginning of period............. $1,202,095 $1,054,686 $1,054,686 $1,011,909 $ 965,668
---------- ---------- ---------- ---------- ----------
Originations............................. 258,403 157,797 411,082 312,351 233,068
Purchases................................ 217 361 44,416 7,642 16,677
Sales.................................... (11,961) (940) (44,667) (478) (8,412)
Principal repayments..................... (187,950) (123,379) (259,109) (275,084) (185,016)
Increase (decrease) in premiums,
discounts and deferred fees........... (403) (156) 407 772 1,446
Net (increase) decrease in allowance for
loan losses........................... (1,065) 204 (460) 2,017 (6,149)
Transfers to real estate owned........... (392) (3,363) (4,260) (4,443) (5,373)
---------- ---------- ---------- ---------- ----------
Balance at end of period................... $1,258,944 $1,085,210 $1,202,095 $1,054,686 $1,011,909
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

In 1996, management made a strategic decision to reduce its COFI-based
assets and in the fourth quarter of 1996 ceased COFI-based lending. In addition,
the Bank began to reduce its COFI-based loan portfolio through amortization and
sales and replace it with current-index products including adjustable-rate
mortgage loans and loans with an initial rate of interest for a fixed term
(generally 3 to 5 years), the interest rates on which adjust annually thereafter
('intermediate fixed-rate loans'). As a result of this initiative, the Bank's
COFI-based loans declined to $505.9 million at June 30, 1998 from $554.4
million, $641.9 million, and $670.7 million at December 31, 1997, 1996 and 1995,
respectively.

At June 30, 1998, total gross loans included $307.4 million of intermediate
fixed-rate loans compared with $291.5 million at December 31, 1997, an increase
of $15.9 million or 5.5% which was the result of the Bank continuing to
emphasize the origination of intermediate fixed-rate mortgages (1-4 family).
Fixed-rate loans at June 30, 1998 were $277.4 million compared with $241.5
million at December 31, 1997, an increase of 15.0% which was the result of the
origination of primarily fifteen year mortgages.

As of December 31, 1997, total gross loans included $291.5 million of
intermediate fixed-rate loans compared with $224.3 million as of December 31,
1996, an increase of 30.0% which was the result of the Bank emphasizing the
origination of intermediate fixed-rate residential mortgages (1-4 family) during
1997. Fixed-rate loans as of December 31, 1997 were $241.5 million compared with
$176.8 million as of December 31, 1996, an increase of 36.6% which was the
result of the origination of fifteen and thirty year fixed-rate loans during
1997. To better manage its interest rate risk, the Bank has ceased the
origination of thirty year fixed-rate loans for portfolio retention, except on a
customer accommodation basis.

As of December 31, 1996, total gross loans included $224.3 million of
intermediate fixed-rate loans, compared with $213.4 million as of December 31,
1995, an increase of 5.1%. As of December 31, 1996, total fixed-rate loans were
$176.8 million as compared to $143.9 million as of December 31, 1995. As of
December 31, 1996, the ARM loan portfolio was $664.4 million as compared with
$668.3 million as of December 31, 1995, a decrease of 0.6%.

29
<PAGE>
The following table sets forth the contractual loan maturity of the Bank's
loan portfolio at June 30, 1998. ARM loans are shown in the periods in which
they reprice rather than when they become due. The table does not include the
effect of future principal prepayments. The rate of loan prepayment varies from
time-to-time, depending upon various factors including market interest rates.

<TABLE>
<CAPTION>
AT JUNE 30, 1998
------------------------------------------------------------------------------------------
AFTER TEN
AFTER AFTER AFTER YEARS
ONE YEAR THREE YEARS FIVE YEARS THROUGH AFTER
WITHIN THROUGH THROUGH THROUGH TWENTY TWENTY
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS YEARS YEARS TOTAL
-------- ----------- ----------- ---------- --------- ------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Consumer:
Residential mortgage
(1-4 family)................ $214,806 $ 84,690 $ 184,664 $ 9,214 $ 174,188 $44,795 $ 712,357
Home equity................... 15,851 -- -- -- -- -- 15,851
Other......................... 2,321 -- -- -- -- -- 2,321
-------- ----------- ----------- ---------- --------- ------- ----------
Total consumer.............. 232,978 84,690 184,664 9,214 174,188 44,795 730,529
Commercial:
Secured by real estate--multi-
family...................... 281,961 15,992 13,204 15,969 7,102 -- 334,228
Secured by real estate--
nonresidential.............. 112,457 30 21,106 2,249 6,898 -- 142,740
Construction.................. 35,810 -- -- -- -- -- 35,810
Commercial business........... 27,451 492 -- -- -- 81 28,024
-------- ----------- ----------- ---------- --------- ------- ----------
Total commercial............ 457,679 16,514 34,310 18,218 14,000 81 540,802
Total loans..................... $690,657 $ 101,204 $ 218,974 $ 27,432 $ 188,188 $44,876 1,271,331
-------- ----------- ----------- ---------- --------- ------- ----------
-------- ----------- ----------- ---------- --------- -------
Net deferred loan origination
costs......................... 820
Allowance for loan losses....... (13,207)
----------
Net loans....................... $1,258,944
----------
----------
</TABLE>

The following table sets forth at June 30, 1998 the dollar amount of loans
and mortgage-backed securities contractually due or repricing after June 30,
1999 and whether such loans and securities have fixed or adjustable interest
rates.

<TABLE>
<CAPTION>
DUE OR REPRICING AFTER JUNE 30, 1999
------------------------------------
FIXED ADJUSTABLE TOTAL
-------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Consumer:
Residential mortgage (1-4 family)........................................ $220,680 $ 276,870 $ 497,550
Home equity.............................................................. -- -- --
Other.................................................................... -- -- --
-------- ---------- ----------
Total consumer........................................................ 220,680 276,870 497,550
Commercial:
Secured by real estate--multi-family..................................... 38,443 13,824 52,267
Secured by real estate--nonresidential................................... 13,536 16,747 30,283
Construction............................................................. -- -- --
Commercial business...................................................... 574 -- 574
-------- ---------- ----------
Total commercial...................................................... 52,553 30,571 83,124
Total loans................................................................ 273,233 307,441 580,674
-------- ---------- ----------
Mortgage-backed securities................................................. 220,574 256,122 476,696
-------- ---------- ----------
Total loans and mortgage-backed securities................................. $493,807 $ 563,563 $1,057,370
-------- ---------- ----------
-------- ---------- ----------
</TABLE>

30
<PAGE>
Non-Performing Assets and OREO. Management generally places loans on
non-accrual 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 non-accrual
status, any interest previously accrued but not collected is reversed from
income. Loans are charged off when management determines that collection has
become unlikely. Other real estate owned ('OREO') consists of real property
acquired through foreclosure on the collateral underlying defaulted loans.

The following table sets forth information regarding non-performing assets
at the dates indicated.

<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, --------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ---------- ---------- ---------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans:
Consumer:
Residential mortgage (1 to 4
family)............................ $ 5,610 $ 6,131 $ 7,085 $ 9,366 $ 6,379 $ 9,656
Home equity.......................... -- 15 -- -- -- --
Other................................ -- -- -- -- -- --
----------- ---------- ---------- ---------- -------- --------
Total consumer..................... 5,610 6,146 7,085 9,366 6,379 9,656
----------- ---------- ---------- ---------- -------- --------
Commercial:
Secured by real estate-multifamily... 165 904 3,496 5,673 801 1,049
Secured by real
estate-nonresidential.............. 3,281 2,804 8,896 5,445 4,144 2,829
Construction......................... -- -- -- -- -- 1,057
Commercial business.................. -- -- -- -- -- --
----------- ---------- ---------- ---------- -------- --------
Total commercial................... 3,446 3,708 12,392 11,118 4,945 4,935
----------- ---------- ---------- ---------- -------- --------
Total non-accrual loans................ 9,056 9,854 19,477 20,484 11,324 14,591
Other real estate owned (OREO)......... 240 412 1,619 1,803 5,023 14,415
----------- ---------- ---------- ---------- -------- --------
Total non-performing assets............ $ 9,296 $ 10,267 $ 21,096 $ 22,287 $ 16,347 $ 29,006
----------- ---------- ---------- ---------- -------- --------
----------- ---------- ---------- ---------- -------- --------
Non-performing assets to total
assets............................... 0.49% 0.66% 1.43% 1.46% 1.07% 1.99%
Non-accrual loans to total loans....... 0.71 0.81 1.83 2.00 1.16 1.64
Non-performing assets to total loans
and OREO............................. 0.73 0.85 1.98 2.17 1.67 3.21
Total gross loans...................... $ 1,271,331 $1,213,015 $1,065,552 $1,025,564 $974,620 $888,076
----------- ---------- ---------- ---------- -------- --------
----------- ---------- ---------- ---------- -------- --------
Gross income not recognized on
nonaccrual loans..................... $ 106 $ 64 $ 172 $ 487 $ 224 n/a
Accruing loans contractually past due
90 days or more...................... -- -- -- -- -- --
Loans classified as troubled debt
restructurings but not included
above................................ -- -- -- -- -- --
</TABLE>

The Bank records OREO at the lower of carrying value or fair value less
estimated costs to sell. Estimated losses that result from the ongoing periodic
valuation of these properties are charged to earnings with a provision for
losses on foreclosed property in the period in which they are identified. During
the six months ended June 30, 1998, the Bank reduced total non-performing assets
to $9.3 million from $10.3 million at December 31, 1997, a decrease of $1.0
million or 9.7%. During 1997, the Bank reduced total non-performing assets to
$10.3 million as of December 31, 1997 from $21.1 million as of December 31,
1996, a reduction of $10.8 million or 51.3%. The reduction was the result of the
sale of non-performing loans and the reclassification of other loans which
became current and were reclassified to performing status. During the six months
ended June 30, 1998, the Bank reduced OREO from $412,000 to $240,000, or 41.7%,
as a result of the sale of assets. During the year ended December 31, 1997, OREO
decreased from $1.6 million to $412,000, or 74.5% as a result of the disposition
of the assets. At June 30, 1998, OREO consisted of four properties acquired
through foreclosure with a carrying value of $240,000.

The policy of the Bank is to review each loan in the portfolio to identify
problem credits. There are four classifications for problem loans 'special
mention,' 'substandard,' 'doubtful' and 'loss.' Special mention loans do not yet
warrant adverse classification, but possess credit deficiencies or potential
weaknesses requiring the Bank's attention. Substandard loans have one or more
well-defined weaknesses and are characterized by the distinct possibility that
the Bank will sustain some loss if the deficiencies are not corrected. Doubtful
loans have

31
<PAGE>
the weaknesses of substandard loans with the additional characteristic that the
weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high
possibility of loss. A loan classified 'loss' is considered uncollectible and
its continuance as an asset is not warranted.

The following table sets forth criticized loans at the dates indicated.

<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, ---------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Special mention loans......................... $ 7,718 $ 7,182 $15,902 $ 3,066 $15,226 $11,547
Substandard and doubtful loans................ 12,999 16,822 19,235 28,462 20,248 25,044
----------- ------- ------- ------- ------- -------
Total criticized loans................... $20,717 $24,004 $35,137 $31,528 $35,474 $36,591
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Total allowance for loan losses............... $13,207 $12,142 $11,682 $13,699 $ 7,550 $ 8,000
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Special mention loans to total loans.......... 0.61% 0.59% 1.49% 0.30% 1.56% 1.30%
Substandard and doubtful loans to total
loans....................................... 1.02 1.39 1.80 2.78 2.08 2.83
Criticized loans to total loans............... 1.63 1.98 3.30 3.07 3.65 4.13
Allowance for loan losses to substandard and
doubtful loans.............................. 101.60 72.18 60.73 48.13 37.29 31.94
Allowance for loan losses to criticized
loans....................................... 63.75 50.58 33.25 43.45 21.28 21.86
</TABLE>

With the exception of the criticized loans described above, management is
not aware of any other loans as of June 30, 1998 where the known credit problems
of the borrower would cause management to doubt such borrower's ability to
comply with their present loan repayment terms or that would result in such
loans being included in the non-performing asset table above at some future
date. During the first six months of 1998, the Bank employed an outside loan
review firm to review the classification of its commercial loan portfolio. There
were no material changes in the classifications as a result of such review.

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 non-accrual status or
become impaired or restructured loans or OREO in the future.

32
<PAGE>
The following table sets forth delinquencies in the Bank's loan portfolio
at the dates indicated:
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT JUNE 30, 1998 AT DECEMBER 31, 1997 1996
--------------------------------------- --------------------------------------- ------------------
60-89 DAYS 90 DAYS OR MORE 60-89 DAYS 90 DAYS OR MORE 60-89 DAYS
------------------ ------------------ ------------------ ------------------ ------------------
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE
------ --------- ------ --------- ------ --------- ------ --------- ------ ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSUMER:
Residential mortgages
(1-4 family)............ 3 $ 523 16 $ 2,671 6 $ 717 16 $ 3,547 9 $ 1,054
Home equity............... -- -- -- -- 2 49 1 15 -- --
Other..................... 11 18 11 20 27 35 22 44 19 29
-- -- -- -- --
--------- --------- --------- --------- ---------
Total consumer........ 14 541 27 2,691 35 801 39 3,606 28 1,083
-- -- -- -- --
--------- --------- --------- --------- ---------

COMMERCIAL:
Secured by real estate--
multi-family............ -- -- -- -- -- -- -- -- -- --
Secured by real estate--
nonresidential.......... -- -- 1 740 -- -- 2 2,418 -- --
Construction.............. -- -- -- -- -- -- -- -- -- --
Commercial business....... -- -- -- -- -- -- -- -- -- --
Total commercial...... -- -- 1 740 -- -- 2 2,418 -- --
-- -- -- -- --
--------- --------- --------- --------- ---------
Total loans............... 14 $ 541 28 $ 3,431 35 $ 801 41 $ 6,024 28 $ 1,083
-- -- -- -- --
-- -- -- -- --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

AT DECEMBER 31, 1995
---------------------------------------

90 DAYS OR MORE 60-89 DAYS 90 DAYS OR MORE
------------------ ------------------ ------------------
PRINCIPAL PRINCIPAL PRINCIPAL
NUMBER BALANCE NUMBER BALANCE NUMBER BALANCE
------ --------- ------ --------- ------ ---------

<S> <C> <C> <C> <C> <C> <C>
CONSUMER:
Residential mortgages
(1-4 family)............ 22 $ 4,179 8 $ 310 32 $ 6,055
Home equity............... -- -- -- -- -- --
Other..................... 12 14 9 34 12 8
-- -- --
--------- --------- ---------
Total consumer........ 34 4,193 17 344 44 6,063
-- -- --
--------- --------- ---------
COMMERCIAL:
Secured by real estate--
multi-family............ 1 940 -- -- 2 1,872
Secured by real estate--
nonresidential.......... 6 6,054 -- -- 6 3,750
Construction.............. -- -- -- -- -- --
Commercial business....... -- -- -- -- -- --
Total commercial...... 7 6,994 -- -- 8 5,622
-- -- --
--------- --------- ---------
Total loans............... 41 $11,187 17 $ 344 52 $11,683
-- -- --
-- -- --
--------- --------- ---------
--------- --------- ---------
</TABLE>

33
<PAGE>
During the six months ended June 30, 1998, delinquent residential mortgages
(1-4 family) decreased to $3.2 million or 0.45% of gross residential mortgages
(1-4 family) from $4.3 million or 0.62% of gross residential mortgages (1-4
family) at December 31, 1997. During the year ended December 31, 1997,
delinquent residential mortgages (1-4 family) decreased from $5.2 million, or
0.97% of gross residential mortgages (1-4 family) at December 31, 1996. This
compares with a decrease from $6.4 million as of December 31, 1995, or 1.26% of
gross residential mortgages (1-4 family). Management attributes the reduction in
delinquent loans to a general improvement in the California economy and to the
greater focus by management on the reduction of delinquent loans.

Delinquent mortgage loans secured by nonresidential real estate decreased
to $740,000 at June 30, 1998 from $2.4 million at December 31, 1997 as a result
of the assumption of one of the delinquent nonresidential loans by a third
party. Delinquent mortgage loans secured by nonresidential real estate decreased
to $2.4 million as of December 31, 1997 from $6.1 million as of December 31,
1996, or by 60.7% as a result of the sale of one delinquent loan during the
period. At June 30, 1998, there were no delinquent mortgage loans secured by
multi-family real estate.

Allowance For Loan Losses. The Bank has established a formalized 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 on a pool basis. 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 on a pool basis, such as residential
mortgage loans (1-4 family), management's analysis consists of reviewing
delinquency trends, charge-off experience, economic conditions, current
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 its 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
and reduced by charge-offs, net of recoveries. Loans are charged off to the
extent they are classified as loss either internally or by the Bank's
regulators. For any loan that is past due for 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 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.
If the economy declines or asset quality deteriorates, 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.

34
<PAGE>
The following table sets forth information concerning the Bank's allowance
for loan losses for the dates indicated:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
------------------ ---------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Allowance for loan losses:
Balance beginning of period............... $12,142 $11,682 $11,682 $13,699 $ 7,550 $ 8,000 $ 6,979
------- ------- ------- ------- ------- ------- -------
Provision for loan losses................. 1,401 132 1,154 1,476 8,777 3,206 8,898
Charge-offs:
Consumer:
Residential mortgage (1-4 family)..... 86 473 616 949 1,000 3,337 6,867
Other................................. 90 98 194 227 29 51 71
------- ------- ------- ------- ------- ------- -------
Total consumer...................... 176 571 810 1,176 1,029 3,388 6,938
------- ------- ------- ------- ------- ------- -------
Commercial:
Secured by real
estate--multi-family................ -- 13 13 783 737 76 208
Secured by real
estate--nonresidential.............. 170 246 246 2,604 930 508 1,339
Construction.......................... -- -- -- -- -- -- 80
Commercial business................... -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total commercial.................... 170 259 259 3,387 1,667 585 1,627
------- ------- ------- ------- ------- ------- -------
Total charge-offs......................... 346 830 1,069 4,563 2,696 3,972 8,565
------- ------- ------- ------- ------- ------- -------
Recoveries:
Consumer:
Residential mortgage (1-4 family)..... -- 37 52 -- 60 190 122
------- ------- ------- ------- ------- ------- -------
Other................................. 10 15 34 33 7 10 18
------- ------- ------- ------- ------- ------- -------
Total consumer...................... 10 52 86 33 67 200 140
------- ------- ------- ------- ------- ------- -------
Commercial:
Secured by real estate-multi-family... -- 163 10 367 -- -- --
Secured by real
estate-nonresidential............... -- 279 279 670 -- 115 252
Construction.......................... -- -- -- -- -- -- 233
Commercial business................... -- -- -- -- 1 1 63
------- ------- ------- ------- ------- ------- -------
Total commercial.................... -- 442 289 1,037 1 117 548
------- ------- ------- ------- ------- ------- -------
Total recoveries.......................... 10 494 375 1,070 68 316 688
------- ------- ------- ------- ------- ------- -------
Balance at end of period.................. $13,207 $11,478 $12,142 $11,682 $13,699 $ 7,550 $ 8,000
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Allowance for loan losses to ending
loans................................... 1.04% 1.05% 1.00% 1.10% 1.34% 0.78% 0.90%
Net charge-offs to average loans
outstanding(1).......................... 0.05 0.06 0.06 0.34 0.26 0.37 0.85
</TABLE>

- ------------------
(1) Annualized for the six months ended June 30, 1998 and 1997.

During the six months ended June 30, 1998, the allowance for loan losses
increased to $13.2 million from $12.1 million at December 31, 1997, or by 8.8%,
due to the Bank providing additional loss provisions of $1.4 million and
recording net charge-offs of $336,000. During the year ended December 31, 1997,
the allowance for loan losses increased to $12.1 million from $11.7 million as
of December 31, 1996, or by 3.4%, due to the Bank providing additional loan loss
provisions of $1.2 million and recording net charge-offs of $694,000 during the
year as California real estate values rebounded. During the year ended December
31, 1996, the allowance for loan losses decreased to $11.7 million from $13.7
million as of December 31, 1995, or by 14.6%, as a result of net charge-offs of
$3.5 million during the year which was partially offset by an additional
provision of $1.5 million. The $8.8 million provision for loan losses for the
year ended December 31, 1995, reflected management's decision to increase the
allowance for loan losses to address the continued depressed California economy
and real estate market and to significantly increase the Company's overall level
of loan loss allowance to over 1.00% of gross loans.

35
<PAGE>
The following table provides a summary of the allocation of the allowance
for loan losses for individual loan categories at the dates indicated. The
allocations presented should not be interpreted as an indication that
charge-offs will be incurred in these amounts or proportions, or that the
portion of the allowance allocated to each loan category represents the total
amount available for losses that may occur within that loan category. The entire
amount of the allowance for loan losses is available to absorb loan losses,
irrespective of the loan category to which any potential charge-off might
relate.
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------
AT JUNE 30,
1998 1997 1996 1995
----------------- ----------------- ----------------- -----------------
AMOUNT %(1) AMOUNT %(1) AMOUNT %(1) AMOUNT %(1)
------- ------ ------- ------ ------- ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allocated:
Consumer:
Residential mortgage (1-4 family)........... $ 1,963 56.03% $ 1,982 56.98% $ 1,697 50.79% $ 2,691 49.45%
Home equity................................. 239 1.25 255 1.38 222 1.00 13 0.12
Other....................................... 185 0.18 238 0.23 82 0.25 76 0.29
------- ------ ------- ------ ------- ------ ------- ------
Total consumer............................ 2,387 57.46 2,475 58.58 2,001 52.04 2,780 49.86
------- ------ ------- ------ ------- ------ ------- ------

Commercial:
Secured by real estate--multi-family........ 2,391 26.29 2,130 27.97 2,533 33.93 2,384 36.70
Secured by real estate--nonresidential...... 2,045 11.23 1,919 9.51 2,811 11.54 3,323 12.80
Construction loans.......................... 658 2.82 508 2.19 252 1.87 98 0.64
Commercial business......................... 624 2.20 572 1.74 117 0.62 -- --
------- ------ ------- ------ ------- ------ ------- ------
Total commercial.......................... 5,718 42.54 5,129 41.42 5,713 47.96 5,805 50.14
Other......................................... 79 -- 83 -- 141 -- 275 --
------- ------ ------- ------ ------- ------ ------- ------
Total allocated............................... 8,184 100.00 7,687 100.00 7,855 100.00 8,860 100.00
Unallocated................................... 5,023 -- 4,455 -- 3,827 -- 4,839 --
------- ------ ------- ------ ------- ------ ------- ------
Total allowance for loan losses........... $13,207 100.00% $12,142 100.00% $11,682 100.00% $13,699 100.00%
------- ------ ------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------ ------- ------

1994 1993
---------------- ----------------
AMOUNT %(1) AMOUNT %(1)
------ ------ ------ ------

<S> <C> <C> <C> <C>
Allocated:
Consumer:
Residential mortgage (1-4 family)........... $1,512 44.33% $1,907 42.85%
Home equity................................. -- -- -- --
Other....................................... 11 0.15 16 0.22
------ ------ ------ ------
Total consumer............................ 1,523 44.48 1,923 43.07
------ ------ ------ ------
Commercial:
Secured by real estate--multi-family........ 2,307 40.17 2,055 37.09
Secured by real estate--nonresidential...... 2,693 14.57 2,753 17.01
Construction loans.......................... 259 0.78 447 2.83
Commercial business......................... -- -- -- --
------ ------ ------ ------
Total commercial.......................... 5,259 55.52 5,255 56.93
Other......................................... 162 -- 501 --
------ ------ ------ ------
Total allocated............................... 6,944 100.00 7,679 100.00
Unallocated................................... 606 -- 321 --
------ ------ ------ ------
Total allowance for loan losses........... $7,550 100.00% $8,000 100.00%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>

- ------------------
(1) Represents percentage of gross loans outstanding in specified category to
total gross loans.

36
<PAGE>
Securities. The Bank has historically maintained a securities portfolio
comprised primarily of COFI-based FHLMC and FNMA securities which reprice on a
monthly basis. As a result of the proceeds the Company received and made
available to the Bank from the Private Offerings, the Bank purchased U.S.
Government agency mortgage-backed securities, investment grade securities,
investment grade municipal bonds, and investment grade residential 1-4 family
mortgage-backed securities. The following table sets forth the Bank's securities
portfolio on the date indicated.

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------------------
AT JUNE 30, 1998 1997 1996 1995
-------------------- -------------------- -------------------- --------------------
AMORTIZED MARKET AMORTIZED MARKET AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE COST VALUE COST VALUE
--------- -------- --------- -------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities held to
maturity:
FHLB Note........................... $ -- $ -- $ 2,000 $ 1,998 $ 8,670 $ 8,629 $ 12,960 $ 12,873
FHLB Note........................... -- -- 2,000 2,000 2,000 2,000 2,000 2,000
SLMA Step-Up........................ -- -- -- -- -- -- 25,000 25,000
Other............................... -- -- -- -- 5,000 4,988 7,000 6,979
--------- -------- --------- -------- --------- -------- --------- --------
Total............................. $ -- $ -- $ 4,000 $ 3,998 $ 15,670 $ 15,617 $ 46,960 $ 46,852
--------- -------- --------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- -------- --------- --------
Investment securities available for
sale:
SLMA step-up........................ $ -- $ -- $ -- $ -- $ -- $ -- $ 10,000 $ 10,000
Municipals.......................... 23,845 23,944 -- -- -- -- -- --
Trust preferred securities.......... 73,935 74,670 -- -- -- -- -- --
--------- -------- --------- -------- --------- -------- --------- --------
Total............................. $ 97,780 $ 98,614 $ -- $ -- $ -- $ -- $ 10,000 $ 10,000
--------- -------- --------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- -------- --------- --------
Mortgage-backed securities held to
maturity:
FHLMC............................... $ 45,935 $ 44,378 $ 48,536 $ 46,618 $ 61,629 $ 59,014 $ 70,282 $ 68,503
FNMA................................ 113,859 110,318 117,184 112,788 124,710 119,221 135,432 131,462
Other............................... 13,960 13,561 16,075 15,566 22,216 21,248 27,817 26,574
--------- -------- --------- -------- --------- -------- --------- --------
Total............................. $ 173,754 $168,257 $ 181,795 $174,972 $ 208,555 $199,483 $ 233,531 $226,539
--------- -------- --------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- -------- --------- --------
Mortgage-backed securities available
for sale:
FNMA................................ $ 84,602 $ 82,368 $ 87,237 $ 84,308 $ 123,982 $119,514 $ 141,616 $138,514
GNMA................................ 120,202 120,774 -- -- -- -- -- --
Other............................... 99,682 99,800 -- -- -- -- -- --
--------- -------- --------- -------- --------- -------- --------- --------
Total............................. $ 304,486 $302,942 $ 87,237 $ 84,308 $ 123,982 $119,514 $ 141,616 $138,514
--------- -------- --------- -------- --------- -------- --------- --------
--------- -------- --------- -------- --------- -------- --------- --------
</TABLE>

As of June 30, 1998, the aggregate amortized cost of the securities was
$576.0 million and the market value was $569.8 million. Of the total $6.2
million unrealized loss on these securities, $710,000 relates to securities
which are held as available-for-sale. Such unrealized losses, net of the related
tax benefit of $291,000, is reflected as a reduction of stockholders' equity.
The $5.5 million unrealized loss relating to the $173.8 million of securities
held to maturity has not been recognized in the financial statements.

37
<PAGE>
The following table sets forth the carrying value, weighted average yields
and contractual maturities of the Company's securities as of June 30, 1998.
<TABLE>
<CAPTION>
AT JUNE 30, 1998
------------------------------------------------------------------------------------------------
AFTER ONE YEAR AFTER FIVE YEARS
THROUGH THROUGH
WITHIN ONE YEAR FIVE YEARS TEN YEARS AFTER TEN YEARS TOTAL
------------------- ------------------- ------------------- ------------------- --------
BOOK WEIGHTED BOOK WEIGHTED BOOK WEIGHTED BOOK WEIGHTED BOOK
CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING AVERAGE CARRYING
VALUE YIELD VALUE YIELD VALUE YIELD VALUE YIELD VALUE
-------- -------- -------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment securities
available for sale:
Municipals............... $ -- --% $ -- --% $ -- --% $ 23,944 5.01% $ 23,944
Trust preferred
securities............. -- -- -- -- -- -- 74,670 7.56 74,670
-------- -------- -------- -------- --------
Total.................. -- -- -- -- -- -- 98,614 6.94 98,614
-------- -------- -------- -------- --------
Mortgage-backed securities
available for sale:
FNMA..................... -- -- -- -- -- -- 82,368 5.92 82,368
GNMA..................... -- -- -- -- -- -- 120,774 6.71 120,774
Other.................... -- -- -- -- -- -- 99,800 6.51 99,800
-------- -------- -------- -------- --------
Total.................. -- -- -- -- -- -- 302,942 6.43 302,942
-------- -------- -------- -------- --------
Mortgage-backed securities
held to maturity:
FHLMC.................... -- -- -- -- -- -- 45,935 5.86 45,935
FNMA..................... -- -- -- -- 2,343 5.75 111,516 5.69 113,859
Other mortgage-backed
securities............. -- -- -- -- -- -- 13,960 6.43 13,960
-------- -------- -------- -------- --------
Total.................. -- -- -- -- 2,343 5.75 171,411 5.80 173,754
-------- -------- -------- -------- --------
Total securities........... $ -- -- $ -- -- $2,343 5.75 $572,967 6.33 $575,310
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

<CAPTION>
WEIGHTED
AVERAGE
YIELD
--------
<S> <C>
Investment securities
available for sale:
Municipals............... 5.01%
Trust preferred
securities............. 7.56
Total.................. 6.94
Mortgage-backed securities
available for sale:
FNMA..................... 5.92
GNMA..................... 6.71
Other.................... 6.51
Total.................. 6.43
Mortgage-backed securities
held to maturity:
FHLMC.................... 5.86
FNMA..................... 5.69
Other mortgage-backed
securities............. 6.43
Total.................. 5.79
Total securities........... 6.33
</TABLE>

Deposits. Deposits are the Bank's primary source of funding. At June 30,
1998, the Bank had a deposit mix of 75.0% in time deposits, 1.6% in money market
accounts, 14.7% in passbook accounts and 8.7% in NOW and checking accounts. This
compares with a deposit mix of 75.2%, 1.6%, 15.5% and 7.6% at December 31, 1997,
respectively.

The Bank obtains deposits primarily from the communities it serves. No
material portion of its deposits have been obtained from or are dependent on any
one person or industry. At June 30, 1998, less than 2% of the Bank's deposits
were held by customers located outside the United States. In addition, as of
such date, the 100 depositors with the largest aggregate average deposit
balances comprised less than 10% of the Bank's total deposits. The Bank's
business is not seasonal in nature. The Bank accepts deposits in excess of
$100,000 from customers. Included in time deposits as of June 30, 1998, is
$280.1 million, or 19.0% of total deposits, of deposits of $100,000 or greater.
At June 30, 1998, the Bank had no brokered deposits.

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

<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------------
AT JUNE 30,
1998 1997 1996 1995
--------------------- --------------------- --------------------- ---------------------
INTEREST INTEREST INTEREST INTEREST
AMOUNT RATE AMOUNT RATE AMOUNT RATE AMOUNT RATE
---------- -------- ---------- -------- ---------- -------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NOW and checking accounts........ $ 128,079 0.70% $ 111,984 0.80% $ 106,491 0.79% $ 99,912 0.80%
Money market accounts............ 23,856 3.31 20,986 2.48 22,111 2.39 25,425 2.39
Passbook accounts................ 217,138 2.26 212,013 2.11 216,471 2.20 205,017 2.21
Time deposits.................... 1,105,197 5.11 1,124,004 5.20 1,048,052 4.95 981,250 5.50
---------- ---------- ---------- ----------
Total............................ $1,472,270 4.28 $1,468,987 4.38 $1,393,125 4.17 $1,311,604 4.57
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

The average cost of deposits during the six months ended June 30, 1998 was
4.40% as compared to 4.26% for the same period in the previous year. The average
cost of deposits was 4.38%, 4.37% and 4.57% during the years ended December 31,
1997, 1996 and 1995, respectively. At June 30, 1998, the Bank's average rate
paid on deposits was 60 basis points lower than the COFI index.

38
<PAGE>
The following table presents, by various categories, the amount of time
deposit accounts as of June 30, 1998 and the time to maturity of the time
deposit accounts outstanding at June 30, 1998.

<TABLE>
<CAPTION>
PERIOD TO MATURITY FROM JUNE 30,
--------------------------------------------
ONE THROUGH
CERTIFICATE ACCOUNTS WITHIN ONE YEAR THREE YEARS THEREAFTER AT JUNE 30, 1998
- --------------------------------------------------- --------------- ----------- ---------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
3.99% or less...................................... $ 44,406 $ -- $ -- $ 44,406
4.00% to 4.99%..................................... 259,509 -- -- 259,509
5.00% to 5.99%..................................... 763,915 19,438 810 784,163
6.00% to 6.99%..................................... 16,868 1 100 16,969
7.00% to 7.99%..................................... -- -- -- --
Over 8.00%......................................... 145 -- 5 149
--------------- ----------- ---------- ----------------
$ 1,084,843 $19,439 $916 $1,105,197
--------------- ----------- ---------- ----------------
--------------- ----------- ---------- ----------------
</TABLE>

At June 30, 1998, the Bank had $280.1 million in certificate accounts in
amounts of $100,000 or more maturing as follows:

<TABLE>
<CAPTION>
MATURITY PERIOD
- -------------------------------------------------------------- AMOUNT
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Three months or less.......................................... $106,622
Over 3 through 6 months....................................... 50,564
Over 6 through 12 months...................................... 118,082
Over 12 months................................................ 4,812
-----------
Total....................................................... $280,080
-----------
-----------
</TABLE>

Other Borrowings. The following table sets forth certain information
regarding the short-term borrowings of the Bank at or for the dates indicated.

<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS AT OR FOR THE YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
------------------ ----------------------------
1998 1997 1997 1996 1995
-------- ------- ------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FHLB of San Francisco advances:
Average balance outstanding.............................. $ 46,927 $18,335 $11,176 $33,973 $ 29,278
Maximum amount outstanding at any month-end period....... 298,000 20,000 24,000 53,935 128,600
Balance outstanding at end of period..................... 298,000 -- -- -- 128,600
Weighted average interest rate during the period......... 5.68% 5.53% 5.55% 6.02% 6.58%
Weighted average interest rate at end of period.......... 5.64 -- -- -- 5.90
Weighted average remaining term to maturity at end of
period (in years)..................................... 7 -- -- -- --
Securities sold under agreements to repurchase:
Average balance outstanding.............................. $ 95 $10,743 $ 5,375 $15,819 $165,040
Maximum amount outstanding at any month-end during the
period................................................ -- 9,750 -- 74,400 246,500
Balance outstanding at end of period..................... -- -- -- -- --
Weighted average interest rate during the period......... 5.79% 5.42% 5.47% 6.31% 6.36%
Weighted average interest rate at end of period.......... -- -- -- -- --
Weighted average remaining term to maturity at end of
period (in years)..................................... -- -- -- -- --
</TABLE>

The Bank maintains a secured credit facility with the FHLB of San Francisco
against which advances may be made. The terms of this credit facility require
the Bank to maintain in safekeeping with the FHLB of San Francisco eligible
collateral of at least 100% of outstanding advances. At June 30, 1998, the Bank
had

39
<PAGE>
$298 million of advances outstanding. At December 31, 1997 and 1996, there were
no advances outstanding. At June 30, 1998, credit availability under this
facility was approximately $64 million. Although the Bank eliminated its outside
borrowings in 1996, the Bank has utilized borrowings as a funding source in
conjunction with its strategy of leveraging the proceeds from the Private
Offerings, consistent with its asset and liability objectives and the
maintenance of its status as a 'well capitalized' institution for regulatory
capital purposes. As of June 30, 1998, the Bank had borrowed $298 million from
the FHLB in conjunction with the leverage strategy, of which $202 million were
long-term and $96 million were overnight borrowings. Included in the long-term
advances of $202 million were $17 million which were fixed-rate for ten years
and $185 million which were for ten years but contained provisions that the FHLB
could, at their option, terminate the advances at quarterly intervals at
specified periods ranging from three to five years beyond the advance dates.

Liquidity. Maintenance of adequate liquidity requires that sufficient
resources be available at all times to meet the cash flow requirements of the
Company. Liquidity in a financial institution is required primarily to provide
for deposit withdrawals and the credit needs of its customers and to take
advantage of investment opportunities as they arise. A financial institution may
achieve desired liquidity from both assets and liabilities. Cash and deposits
held in other banks, federal funds sold, other short term investments, maturing
loans and investments, payments of principal and interest on loans and
investments and potential loan sales are sources of asset liquidity. Deposit
growth and access to credit lines established with correspondent banks and
market sources of funds are sources of liquidity.

At June 30, 1998, the Bank had outstanding commitments (including unused
lines of credit) to originate and/or purchase mortgage and non-mortgage loans
and securities of $243.7 million. Certificates of deposit which are scheduled to
mature within one year totaled $1.08 billion at June 30, 1998. The Bank
anticipates that it will have sufficient funds available to meet its current
loan commitments.

The Company reviews its liquidity position on a regular basis based upon
its current position and expected trends of loans and deposits. Management
believes that the Company maintains adequate sources of liquidity to meet its
needs. The Bank's level of liquidity exceeded the applicable regulatory
guidelines as of June 30, 1998 and December 31, 1997 and 1996.

Market Risk and Net Portfolio Value. Market risk is the risk of loss from
adverse changes in market prices and rates. The Company's market risk arises
primarily from interest rate risk inherent in its lending, investment and
deposit taking activities. The Company's profitability is affected by
fluctuations in interest rates. A sudden and substantial change in interest
rates may adversely impact the Company's earnings to the extent that the
interest rates borne by assets and liabilities do not change at the same speed,
to the same extent or on the same basis. To that end, management actively
monitors and manages its interest rate risk exposure.

The principal objective of the Company's interest rate risk management is
to evaluate the interest rate risk inherent in certain balance sheet accounts,
determine the level of risk appropriate given the Company's business strategy,
operating environment, capital and liquidity requirements and performance
objectives, and manage the risk consistent with the Board of Directors' approved
guidelines. Through such management, the Company seeks to minimize the
vulnerability of its operations to changes in interest rates. The Company's
Board of Directors reviews the Company's interest rate risk position quarterly.
The Company's Asset/Liability Committee is comprised of the Company's senior
management under the direction of the Board of Directors, with senior management
responsible for reviewing with the Board of Directors its activities and
strategies, the effect of those strategies on the Company's net interest margin,
the market value of the portfolio and the effect that changes in interest rates
will have on the Company's portfolio and the Company's exposure limits.

The Company utilizes the following strategies to manage interest rate risk:
(i) origination and retention of intermediate fixed-rate and adjustable-rate
mortgage loans; (ii) sale of substantially all fixed-rate mortgage loans with
terms of thirty years without recourse; and (iii) origination of prime-based
commercial loans. The Company currently participates in hedging programs,
interest rate swaps and caps or other activities involving the use of
off-balance-sheet derivative financial instruments, to mitigate interest rate
risk.

The Company's interest sensitivity is monitored by management through the
use of a model which estimates the change in the Company's net portfolio value
('NPV') over a range of interest rate scenarios. NPV is defined as the current
market value of assets, minus the current market value of liabilities, plus or
minus the current value

40
<PAGE>
of off-balance-sheet items. Current market values are estimated through cash
flow-based methodologies. The change in NPV measures an institution's
vulnerability to changes in interest rates by estimating the change in the
market value of an institution's assets, liabilities and off-balance-sheet
contracts in response to an instantaneous change in the general level of
interest rates.

As market interest rates decrease, the average maturities of the Bank's
loans (and securities) shorten as a result of accelerated prepayment speeds,
causing a relatively moderate increase in the value of such assets. The
relatively minor movements in the repricing of the Bank's deposit accounts in a
downwardly moving interest rate environment result in the value of deposits
decreasing at a more rapid speed than the assets increase in value.

The following table lists the Bank's percentage change in NPV assuming an
immediate change of plus or minus of up to 400 basis points from the level of
interest rates at June 30, 1998. All assets presented in this table are
held-to-maturity or available-for-sale. At June 30, 1998, the Bank had no
trading securities.

<TABLE>
<CAPTION>
NET PORTFOLIO VALUE
CHANGE IN INTEREST RATES IN BASIS POINTS --------------------------------
(RATE SHOCK) AMOUNT $ CHANGE % CHANGE
- ------------------------------------------------------------------------------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
400........................................................................... $ 89,231 (84,890 ) -49
300........................................................................... 116,162 (57,959 ) -33
200........................................................................... 138,855 (35,267 ) -20
100........................................................................... 158,037 (16,085 ) -9
0........................................................................... 174,122 -- --
(100).......................................................................... 171,413 (2,709 ) -2
(200).......................................................................... 162,220 (11,902 ) -7
(300).......................................................................... 145,810 (28,312 ) -16
(400).......................................................................... 123,091 (51,031 ) -29
</TABLE>

As market interest rates rise, the average maturities of the Bank's loans
(and securities) lengthen as a result of decreasing prepayment speeds. Given the
COFI concentration within the Bank's loan and securities portfolios and the lag
effect of movements in the COFI index, the value of these assets decreases when
market rates rise. Decreases in the value of the loans and securities occur at a
more rapid rate in the model than increases in the value with respect to the
Bank's deposits. The value of the increase in the Bank's deposits increases
slowly in an increasing interest rate environment due to the high concentration
of time deposits within the Bank's deposit base for which the deposit terms are
generally one year or less.

Certain shortcomings are inherent in the methodology used in the above
interest rate risk measurements. Modeling changes in NPV require the making of
certain assumptions which may or may not reflect the manner in which actual
yields and costs respond to market interest rates. In this regard, the NPV model
presented assumes that the composition of the Bank's interest sensitive assets
and liabilities existing at the beginning of a period remains constant over the
period being measured. Accordingly, although the NPV measurement and net
interest income models provide an indication of the Bank's interest rate risk
exposure at a particular point in time, such measurements are not intended to
and do not provide a precise forecast of the effect of changes in market
interest rates on the Bank's net interest income and will differ from actual
results.

YEAR 2000 COMPLIANCE

Introduction. Similar to other financial institutions, the operations of
the Bank are particularly sensitive to potential problems arising from the
inability of many existing computer hardware and software systems and associated
applications to process accurately information relating to any two-digit 'date
field' entries referring to the year 2000 and beyond. Many existing systems are
constructed to read such entries as referring to dates beginning with '19,'
rather than '20.' This set of issues is generally referred to as the 'Year 2000'
problem. The Federal Financial Institutions Examination Council (the 'FFIEC'),
through the bank regulatory agencies, has issued compliance guidelines requiring
financial institutions to develop and implement plans for addressing Year 2000
issues relevant to their operations.

State of Readiness. The Bank has implemented a detailed Year 2000 plan, as
required by the FFIEC guidelines, to evaluate Year 2000 compliance of its
computer systems and the equipment which supports the

41
<PAGE>
operations of the Bank. Also included in this Year 2000 plan is a detailed
review of the readiness of the Bank's service providers, vendors, major fund
providers, major borrowers and companies with which the Bank has material
investments. As of September 13, 1998, the Bank has met all current target
objectives of the Year 2000 plan, and management believes that it will continue
to meet all future target objectives in accordance with the terms of the plan.

Like many financial institutions, the Bank relies upon computers for the
daily conduct of its business and for data processing generally. In conjunction
with its conversion to a commercial banking charter, the Bank installed a new
core computer system which was compatible with the Bank's commercial banking
business needs. This commercial banking data processing system is run in a
service bureau environment by one of the leading national vendors of data
processing services for banks. The vendor of the new core system is executing
its Year 2000 readiness plan in cooperation with the Bank. Management expects
the new core banking system to be Year 2000 compliant.

In addition to its core computer system, the Bank is reliant on financial
accounting and mortgage loan origination systems that are computer-based, and
thus vulnerable to the Year 2000 issues. The Bank is in the process of
installing new financial accounting and mortgage loan origination systems which
are Year 2000 compliant. The Bank's mortgage loan servicing system is run in a
service bureau environment by a large national vendor of data processing
services. The Bank has renewed its contract with the vendor. The renewal
contract obligates the vendor to have its system Year 2000 compliant by the end
of 1998.

As a result of the new core computer system and the new financial
accounting and mortgage loan origination systems, management believes that it
has resolved the Year 2000 issues with respect to the most critical computer
systems and applications. Management is in the testing or remediation phase with
respect to equipment that is Year 2000 sensitive, which includes equipment
containing embedded microprocessors or other technology related to the
recognition of dates. The Bank expects to complete its Year 2000 conversion by
June 30, 1999.

Because of the substantial progress made by the Bank towards its Year 2000
conversion, the Bank does not anticipate that any additional significant changes
will be required or that the Year 2000 issue will pose significant operational
problems for the Bank. However, if the necessary changes are not made or
completed in a timely fashion or unanticipated problems arise, the Year 2000
issue may take longer for the Bank to address and may have a material impact on
the Bank's financial condition and results of operations.

In addition to its extensive interaction with major service providers, the
Bank has had initial communications with other vendors, major fund providers,
major borrowers and companies with which the Bank has material investments, to
evaluate their Year 2000 compliance plans and state of readiness and to
determine the extent to which the Bank's systems may be affected by the failure
of others to remediate their own Year 2000 issues. To date, however, the Bank
has received only preliminary feedback from such parties and has not
independently confirmed any information received from other parties with respect
to Year 2000 issues. As such, there can be no assurance that such other parties
will complete their Year 2000 conversion in a timely fashion or will not suffer
a Year 2000 business disruption that may adversely affect the Bank's financial
condition and results of operations.

Costs to Address the Year 2000 Issue. The Bank implemented its new core
banking system because of the change in its business focus to commercial
banking. The commercial banking products offered by the Bank were not supported
by the software applications offered as part of the Bank's prior data processing
platform. Additionally, the vendor that ran the Bank's prior data processing
platform indicated that it would not support that data processing platform
beyond 1998, and in fact service quality had begun to deteriorate in 1997. The
new financial accounting system is being installed as a result of the vendor for
the former system notifying the Bank of its intention to cease supporting the
software beyond 1998. The new mortgage loan origination system was purchased to
replace the existing system with a lower cost software solution.

The implementation of these new systems is consistent with the closure of
the Bank's mortgage banking division, its emphasis on portfolio lending within
its niche market, and its commercial banking focus. In each case, the system
conversions were being made for business reasons that were unrelated to the Year
2000 issues and did not contribute to the direct cost of Year 2000 compliance.
Nevertheless, these system replacements are all Year 2000 compliant and
therefore automatically address that issue. The additional costs to achieve Year
2000

42
<PAGE>
compliance are currently estimated to be $500,000, and are not expected to have
a material financial impact on the Bank. The Bank intends to fund such costs
from its operations. However, as the Bank progresses with its Year 2000
conversion and implements the necessary changes to its systems, certain
additional costs may be identified. There can be no assurance that such
additional costs will not have a material adverse effect on the Bank's financial
condition and results of operations.

Risks of Year 2000 Issues. To date, the Bank has not identified any system
which presents a material risk of not being Year 2000 ready in a timely fashion
or for which a suitable alternative cannot be implemented. However, as the Bank
progresses with its Year 2000 conversion, the Bank may identify systems which do
present a material risk of Year 2000 disruption. Such disruption may include,
among other things, the inability to process and underwrite loan applications,
to credit deposits and withdrawals from customer accounts, to credit loan
payments or track delinquencies, to properly reconcile and record daily activity
or to engage in similar normal banking activities. Additionally, if the Bank's
commercial customers are not Year 2000 compliant and suffer adverse effects on
their operations, their ability to meet their obligations to the Bank could be
adversely affected. The failure of the Bank to identify systems which require
Year 2000 conversion that are critical to the Bank's operations or the failure
of the Bank or others with which the Bank does business to become Year 2000
ready in a timely manner could have a material adverse impact on the Bank's
financial condition and results of operations. Moreover, to the extent that the
risks posed by the Year 2000 problem are pervasive in data processing and
transmission and communications services worldwide, the Bank cannot predict with
any certainty that its operations will remain materially unaffected after
January 1, 2000 or on dates preceding this date at which time post-January 1,
2000 dates become significant within the Bank's systems.

Contingency Plans. The Bank has two types of contingency plans:
Remediation and Business Interruption. Remediation Plans are designed to
mitigate the risks associated with the failure to successfully complete
renovation, validation and implementation of mission-critical systems. Business
Interruption Plans are plans of action to ensure the ability of the Bank to
continue functioning as a business entity in the event of unanticipated systems
failures at critical dates prior to, on, and after the Year 2000.

Remediation Plan. The Bank's Year 2000 conversion is expected to be
completed prior to any potential disruption to the Bank's business. However, the
Bank is developing Year 2000 remediation contingency plans for mission-critical
systems. These plans would be invoked in the event of anticipated failures of
particular Year 2000 projects or sub-projects. Such plans may involve the
designation of alternate vendors and would essentially constitute replacement of
the current Year 2000 remediation path with an alternate one. Remediation plans
will be built in succeeding stages of detail and this process may, if management
deems appropriate, be halted at any point where the success of the base project
is clearly predictable. If the results of testing of the Bank's systems are not
satisfactory, remediation contingency plans will be invoked for mission-critical
systems, no later than the conclusion of testing, which is expected to be April
9, 1999.

Business Interruption Plan. These plans would be invoked if unanticipated
Year 2000 problems occur in production, similar to scenarios in Disaster
Recovery Plans. 'Swat Teams' will be established for mobilization in case of
emergencies that threaten the viability of the Bank, and require that certain
resources be available immediately for utilization. The Bank has begun
preparation of these plans, will continue to fine-tune them, train staff to
carry them out, and test them.

The discussion above contains certain forward-looking statements. The costs
of the Year 2000 conversion, the date which the Bank has set to complete such
conversion and the possible risks associated with the Year 2000 issue are based
on the Bank's current estimates and are subject to various uncertainties that
could cause the actual results to differ materially from the Bank's
expectations. Such uncertainties include, among others, the success of the Bank
in identifying systems that are not Year 2000 compliant, the nature and amount
of programming required to upgrade or replace each of the affected systems, the
availability of qualified personnel, consultants and other resources, and the
success of the Year 2000 conversion efforts of others.

43
<PAGE>
BUSINESS

MARKET AREA

The Bank concentrates on marketing its services in the San Francisco Bay
area (which includes Oakland), and the Sacramento/Stockton and Los Angeles
metropolitan areas with a particular focus on areas with a high concentration of
ethnic Chinese. The ethnic Chinese markets within the Bank's primary market area
have experienced rapid growth in recent periods. According to 1990 Census data,
management believes there were an estimated 2.7 million Asian and Pacific
Islanders residing in California, and approximately 70% of this population were
in the middle and upper income brackets. Based on 1995 and 1996 demographic
data, management believes there were 200,000 Asian and Pacific Islanders living
in San Francisco County, which represented approximately 30% of the total
population. In addition, the Bank recently opened a commercial banking office in
Pasadena, California to take advantage of the opportunities in the Los Angeles
metropolitan area, particularly in the ethnic Chinese market. Management has
tailored its products and services to meet the financial needs of these growing
Asian and ethnic Chinese communities within its market area. Management believes
that this approach, combined with the extensive ties of its management and Board
of Directors to the growing Asian and ethnic Chinese communities, provides the
Bank an advantage in competing for customers in its market area. The Bank is the
largest financial institution focused on serving the ethnic Chinese market
within California.

HISTORICAL OPERATIONS

The Bank historically engaged in the origination of residential mortgages
(1-4 family) which were pooled and sold in the secondary market, with loan
servicing rights retained, and the servicing of loans for the Federal Home Loan
Mortgage Corporation ('FHLMC'), the Federal National Mortgage Association
('FNMA'), the Government National Mortgage Association ('GNMA') and private
investors. From time to time, the Bank sold its loan servicing rights and also
purchased agency servicing rights as part of its mortgage banking division
operations. The Bank also originated residential mortgages (1-4 family),
multi-family mortgages and commercial real estate mortgages for portfolio
retention. In addition, since 1993, the Bank has specialized in limited
documentation residential mortgage (1-4 family) lending. Furthermore, because
the Bank does not retain a large volume of fixed-rate mortgages in its permanent
portfolio for interest rate risk considerations, and since the production of
ARMs has been insufficient to provide adequate balance sheet growth, the Bank
has historically relied heavily on loan and securities purchases to complement
its asset base. In 1993, mortgage-backed securities represented approximately
one-third of the Bank's assets.

Historically, the Bank maintained a heavy concentration of ARM assets whose
interest rates were based on COFI. Since adjustments in COFI generally lag
behind market interest rate changes, COFI-based assets can reduce net interest
margins during periods of rapidly increasing deposit and borrowing interest
rates. The Bank experienced such effect in 1994-1995 when its net interest
margin decreased as the COFI adjusted upward more slowly than the cost of the
Bank's deposits and borrowings. During the period from 1990 to 1994, the value
of California real estate collateral declined and the Bank experienced
significant loan losses on a portion of its real estate loans. In 1995, the
Bank's allowance for loan losses was increased from 0.78% of total loans to over
1.00% of total loans. This action was due to a combination of a depressed
California economy and real estate market and to significantly increase the
Company's overall level of allowance for loan losses to over 1.00% of gross
loans. The resulting $8.8 million charge to income, coupled with the diminished
interest income resulting from the 1995 COFI-lag effect resulted in a net loss
of $2.9 million in 1995. During 1996, the Company's net interest income improved
by 35.3% to $39.0 million primarily as a result of the Bank's COFI-based assets
becoming fully indexed and the correction of the COFI-lag impact.

BALANCE SHEET RESTRUCTURING

In recent years, the mortgage banking industry has been highly competitive
and, combined with the availability of more efficient delivery systems through
brokers and the Internet, the industry has experienced shrinking profit margins
and reduced loan servicing values. Higher levels of prepayment activity
resulting from a lower interest rate environment and the willingness of lenders
to offer mortgage loans with no points and, in

44
<PAGE>
many cases, no fees, have reduced servicing values. To respond to these market
factors and to improve the long-term prospects of the Bank, the Bank took the
following measures:

COFI Asset Reduction. In the fourth quarter of 1996, to improve its net
interest margin, the Bank ceased all COFI-based mortgage lending and began to
reduce the Bank's COFI-based mortgage-backed securities portfolio. From December
31, 1996 to June 30, 1998, COFI-based loans have been reduced from 60.2% of the
Bank's total gross loan portfolio to 39.8%. From December 31, 1996 to June 30,
1998, total COFI exposure has been reduced from 64.9% of the Bank's
interest-earning assets to 40.2%.

Closure of Mortgage Banking Division. In 1997, the Bank closed its
mortgage banking division and ceased the origination of non-conventional
mortgages for sale in the secondary market and sold its agency loan servicing
portfolio. While the Bank no longer engages in this activity, the Bank continues
to originate conventional residential mortgage loans for portfolio retention and
conforming mortgages for resale in the secondary market through its retail
branch network. See 'Business--Lending Activities--Residential Mortgages (1-4
family).'

Reduced Non-Performing and Non-Interest Earning Assets. The Bank reduced
its non-performing assets from $22.3 million as of December 31, 1995 to $9.3
million as of June 30, 1998.

Reduced Mismatched Borrowings. The Bank reduced its predominantly high
cost LIBOR-based borrowings (which were mismatched with COFI-based assets) from
$265.3 million at the beginning of 1995 to zero at December 31, 1996 and 1997.
At June 30, 1998, the Bank had $298 million of borrowings which were entered
into in conjunction with the leveraging strategy to fund the purchase of
fixed-rate assets with scheduled maturities ranging from fifteen to thirty
years. Of the $298 million in borrowings, $202 million had scheduled maturities
of ten years, of which $185 million contained provisions that the FHLB could, at
their option, terminate the advances at quarterly intervals at specified periods
ranging from three to five years beyond the advance dates, and $17 million of
fixed-rate advances. The remaining $96 million of advances were short-term. Also
included in the leveraging strategy was the purchase of $200 million of
LIBOR-based interest rate caps to protect the Bank from a reduction in net
interest income in the event of an increase in market interest rates.

IMPLEMENTATION OF STRATEGY

In conjunction with the implementation of the balance sheet restructuring
described above which returned the Bank to profitability in 1996, excluding the
one-time SAIF recapitalization assessment, to further improve the Bank's
long-term prospects and to take advantage of the Bank's significant deposit
market share and the potential cross-selling opportunities to the ethnic Chinese
and Asian communities within its market area, the Board of Directors adopted a
business strategy to shift the primary business focus of the Bank from a
traditional thrift to a full service commercial bank. To implement its business
strategy, the Bank took the actions and adopted the initiatives described below.

Management. The Bank realigned management responsibilities and hired
commercial banking officers and SBA business banking officers with lending
experience in the Bank's market area. The management changes included the
following:

o President. In January 1998, Thomas S. Wu became the Bank's
President and Chief Executive Officer and was charged with the
responsibility of implementing the shift of the Bank's focus to
commercial banking services and products. Prior to that appointment
Mr. Wu was the Executive Vice President and Director of the Bank as
of September 25, 1997. Mr. Wu was Senior Vice President and
Director of Retail Banking from 1992 to 1996 and also served the
Bank as Vice President, Regional Manager, of its Southern
California Retail Banking Division from 1991 to 1992.

o Head of Commercial Banking Division. In January 1996, Sylvia Loh
was appointed Head of the Bank's commercial banking division which
was formally established in 1996. Ms. Loh has over twenty years of
commercial banking and trade finance experience with major
financial institutions, including administrative and managerial
experience in overseeing over 26 branches. She also has experience
working with the United States EXIM Bank and has had extensive
exposure in the ethnic Chinese markets as well as the Pacific Rim
region. She also is a past President of the Association of Asian
American Bankers from 1996 to 1997.

45
<PAGE>
o Chief Credit Officer. In January 1997, William T. Goldrick was
appointed Senior Vice President and Chief Credit Officer to provide
technical expertise to formulate the Bank's commercial lending
policies and procedures. He has over 41 years of commercial bank
credit experience and is responsible for the Bank's regulatory
compliance.

Established Commercial Banking Division. In 1996, to take advantage of the
opportunities in the Bank's targeted markets, the Bank established its
commercial banking division to offer an array of commercial bank services and
products to its customers particularly focused on the ethnic Chinese
communities. Since its establishment, the commercial banking division has
originated approximately $110.1 million in commercial loan commitments and had
$98.7 million in outstanding loans as of June 30, 1998. As of June 30, 1998, the
division had a current committed pipeline of approximately $129 million. To
support its commercial banking activities, the Bank acquired a commercial
banking data processing system to replace a system designed for thrift
institutions. The new system provides customer profitability reports, account
analysis and other commercial banking management tracking and reporting
mechanisms. The installation of this new system was completed in February 1998.
The Bank installed software to enhance commercial real estate loan marketing and
development. The PC based system provides key information on substantially all
commercial real estate transactions in the Bank's market area in California. The
software provides information instrumental to identifying lending and
refinancing opportunities, screening potential credit opportunities and
evaluating collateral values to facilitate efficient solicitation of borrowers
and related depository relationships from commercial and multi-family property
owners. The Bank opened a commercial, construction and SBA lending office in
Pasadena, California during the second quarter of 1998. In addition to other
personnel, the Bank has hired a team of three experienced SBA business banking
officers to staff the Pasadena office. These officers were previously affiliated
with one of the leading lenders focusing on SBA lending to Asians.

Core Deposit Solicitation. To further develop the Bank's core deposit
base, the Bank is evaluating the establishment of mini-branches in or adjacent
to Asian supermarkets in selected target market areas. By continuing to
emphasize multilingual services at its ATMs, through its telephone banking
system and by its customer service and loan officers, the Bank expects to
continue to further its presence in the Asian, and specifically the ethnic
Chinese, markets in California. At June 30, 1998, less than 2% of the Bank's
deposits were held by customers located outside of the United States. In
addition, as of such date, the 100 depositors with the largest aggregate average
deposit balances comprised less than 10% of the Bank's total deposits. The Bank
also expects to increase its business accounts as its commercial lending
portfolio grows and correspondent accounts are established.

Capital Enhancement. At December 31, 1997 the Company's stockholders'
equity was $62.6 million or 4.0% of total assets. In April 1998, the Company
completed the Private Offerings. Following the Private Offering, the Company's
stockholders' equity increased to $98.1 million at June 30, 1998 and the
Company's consolidated Tier I capital increased from $63.9 million at December
31, 1997 to $128.2 million at June 30, 1998. See 'Supervision and
Regulation--Bank Holding Company and Bank Regulation--The Bank--Capital
Requirements.'

Leverage Strategy. As a result of the proceeds raised by the Private
Offerings, the Bank designed and implemented a plan to leverage such proceeds
through the purchase of U.S. Government agency mortgage-backed securities,
investment grade securities, investment grade municipal bonds and investment
grade residential mortgage (1-4 family) securities. The plan specifies that such
purchases will be funded primarily through intermediate and long-term secured
borrowings, advances from the FHLB and from cash made available from the
proceeds. The plan, which is consistent with the Bank's asset and liability
management policy, further specifies that certain interest rate caps are to be
purchased to reduce the Bank's exposure to increasing market interest rates.
Total assets to be purchased pursuant to the plan are approximately $337
million. As of June 30, 1998 the Bank had purchased $325 million of such assets
which were funded with $96 million of short-term borrowings, $202 million of
long-term borrowings and the balance was funded with cash. As of June 30, 1998,
the Bank had purchased $200 million of LIBOR-based interest rate caps to hedge
the assets. The average spread on such assets is in the range of 110 basis
points to 120 basis points, including the amortization of the interest rate
caps.

46
<PAGE>
converted to a California-chartered commercial bank and the Company became a
bank holding company on July 31, 1998. Following the conversions, the Bank's
primary regulator is the California Department of Financial Institutions and the
Company's primary regulator is the Federal Reserve Bank of San Francisco.

CURRENT BANKING SERVICES

Through its network of retail branches, the Bank provides a wide range of
personal and commercial banking services to small-and medium-sized businesses,
business executives, professionals and other individuals. The Bank offers
multilingual services to all of its customers in English, Cantonese and
Mandarin. The Bank offers a variety of deposit products which includes the
traditional range of personal and business checking and savings accounts, time
deposits and individual retirement accounts, as well as a wide range of
specialized services, including international trade services for business
clients, travelers' checks, safe deposit boxes and Master Card and Visa merchant
deposit services.

The Bank engages in a full complement of lending activities, including
residential and commercial real estate, construction, commercial, trade finance,
account receivables, inventory, working capital and SBA loans. In addition to
the origination of residential mortgages, the Bank provides loans to small and
medium-sized developers for the construction of resale housing and interim real
estate loans primarily for construction of single-family residences. The Bank
provides commercial loans for working capital and expansion and account
receivables and inventory financing to small and medium size businesses with
annual revenues that generally range from $500,000 to $20.0 million. The Bank
provides short-term trade finance facilities for terms of less than one year to
U.S. importers, exporters and manufacturers. The Bank also generates loans which
are guaranteed by the SBA, which loans are generally working capital loans
secured by inventories and receivables, and commercial real estate loans secured
by real property. The Bank's commercial borrowers are engaged in a wide variety
of manufacturing, wholesale trade and service businesses.

LENDING ACTIVITIES

Underwriting and Credit Administration. The Bank's lending activities are
guided by the basic lending policies established by the Board of Directors. The
Bank's lending policy requires that loans must meet minimum underwriting
criteria. Lending authority is granted to officers of the Bank on a limited
basis. Loan requests exceeding individual officer approval limits are approved
by the President. All commercial loans are generally ratified by the Credit
Review Committee. Loans in excess of $2.0 million are generally ratified by the
Board of Directors.

The Bank's credit administration function includes an internal asset credit
quality review. In addition, all commercial loans over $100,000 are reviewed by
an outside credit review agency comprised of former bank regulators with an
emphasis in credit review. The President, Chief Credit Officer and Chief
Financial Officer meet biweekly to review delinquencies, non-performing assets,
classified assets and other pertinent information to evaluate credit risk within
the Bank's loan portfolio. The information reviewed by this group is submitted
to the Board of Directors bimonthly.

Loan Portfolio. At June 30, 1998, approximately $712.4 million, or 56.0%
of the Bank's gross loan portfolio was in residential mortgages (1-4 family),
$334.2 million or 26.3% of gross loans was in multi-family mortgages, $142.7
million or 11.2% of gross loans was in commercial real estate loans, $35.8
million or 2.8% of gross loans was in construction loans, $15.9 million or 1.2%
of gross loans was in home equity loans and $28.0 million or 2.2% of gross loans
was in commercial business loans.

Residential Mortgages (1-4 family). The Bank offers fixed-rate and
adjustable rate mortgage loans which include intermediate fixed-rate loans
secured by residential mortgages. Substantially all such loans are secured by
properties located in the Bank's primary market area. Residential mortgage loan
originations are obtained through the Bank's two delivery networks: the retail
branches and the wholesale lending department. In 1997 and the first half of
1998, approximately 41% of all residential mortgage loans were originated by the
Bank's retail branches. The retail branches originate loans by salaried
personnel through customer contact, referral and

47
<PAGE>
solicitation. The wholesale lending department originates loans with
commissioned loan officers through loan brokers. The Bank originates both fully
documented loans for which income and assets are verified with third parties, as
well as loans for which the borrower's stated income and assets are relied upon
without independent verification. The Bank specializes in a limited
documentation mortgage loan product which serves a particular niche of borrowers
willing to pay a premium, in the form of higher interest rates, and provide
larger down payments in exchange for more expedient loan processing by virtue of
providing less documentation.

The Company underwrites one- to four-family residential mortgage loans to
the specific criteria of the program under which the loan is originated. The
residential originations are primarily for portfolio retention and are
underwritten to the Bank's program guidelines. Such guidelines differ from FNMA
and/or FHLMC guidelines with respect to factors such as, but not limited to,
loan amounts and specific loan documentation. Accordingly, such loans are not
saleable to these agencies. The Company has sold portfolio loans in the
secondary market from time to time to assess the saleability of its portfolio
loans. Based upon such sales, management believes that its one- to four-family
residential portfolio loans could be readily sold in the secondary market if
management elected to do so. The Company continues to underwrite loans to FNMA
and FHLMC guidelines which are sold from time to time in the secondary market
for inclusion in FNMA and/or FHLMC pools.

The Bank's underwriting guidelines for loan origination require: (i) for
fully documented loans, up to 80% loan to value ('LTV') for loan amounts up to
$700,000 and up to 70% LTV for loan amounts up to $800,000; (ii) for limited
documentation loans with no income verification, up to 80% LTV for loan amounts
up to $600,000 and up to 65% LTV for loan amounts up to $800,000; (iii) for low
documentation loans with no income or asset verification, up to 80% LTV for loan
amounts up to $450,000 and up to 60% LTV for loan amounts up to $800,000. A
borrower's employment and financial information are verified through third
parties and examination of paycheck stubs, bank statements and tax returns. The
Bank obtains appraisals from licensed appraisers approved by the credit review
committee.

At June 30, 1998, the Bank had approximately 4,290 loans secured by
residential mortgages (1-4 family), which totaled $712.3 million in the
aggregate; as of such date, the Bank's average loan balance with respect to
residential mortgages (1-4 family) amounted to approximately $166,100. Of the
Bank's residential mortgages (1-4 family) at June 30, 1998: $221.4 million, or
31.1% consisted of fixed-rate loans; $214.1 million, or 30.1% consisted of ARMs
with an adjustment date in one year or less; and $276.9 million, or 38.8%
consisted of intermediate fixed-rate loans. The Bank's fixed-rate mortgage loans
are made for terms of 15 years or 30 years. The 30 year, fixed-rate loans are
generally sold in the secondary market on a servicing released basis. Fixed-rate
mortgage loans are originated with due on sale clauses which provide the Bank
with the contractual right to deem the loan immediately due and payable in the
event the borrower transfers ownership of the property without the Bank's
consent. The Bank currently originates 30 year, fixed-rate loans for portfolio
retention only on a customer accommodation basis. The Bank currently offers a
variety of ARM loan programs with interest rates fixed for six months and which
adjust semi-annually thereafter. Intermediate fixed-rate loans have interest
rates fixed for three or five years and adjust annually thereafter. The Bank's
ARM loans generally provide for periodic (not more than 2%) and lifetime (not
more than 6%) caps on the increase or decrease in interest rates over the life
of the loan. The interest rate adjustment on ARM loans currently made by the
Bank is indexed to the one-year U.S. Treasury CMT Index.

Beginning in 1993, the Bank has specialized in the origination of limited
documentation residential mortgages (1-4 family). As of June 30, 1998, $502.8
million, or 70.6% of the Bank's residential mortgages (1-4 family) were
comprised of limited documentation loans. Because of the less than full
documentation required for such loans, the Bank has emphasized relatively small
average loan size and low average loan-to-value ratios for these loans, as
evidenced by an average loan balance of $165,600 and average loan-to-value
ratios of 59% as of June 30, 1998. Approximately 34% of such loans in the first
half of 1998 were originated through the Bank's retail branches.

Since it began originating limited documentation loans in 1993 the Bank has
experienced no net charge-offs with respect to such loans. At June 30, 1998, the
Bank had two loans more than three payments delinquent with an aggregate
principal balance of $199,000. Moreover, during the third quarter of 1997, the
Bank sold $17.2 million of the limited documentation loans to test the market
reception for this product. The Bank received

48
<PAGE>
a price in excess of par value on the sale of such loans. Notwithstanding the
historical performance of this type of loan, there can be no assurance that such
performance will continue.

The Bank previously offered a variety of adjustable-rate programs, which
provided for interest rates which adjusted periodically based on COFI. In the
fourth quarter of 1996, the Bank ceased all COFI-based mortgage lending.
Nevertheless, at June 30, 1998, $146.0 million or 20.5% of the Bank's
residential mortgage (1-4 family) loan portfolio consisted of COFI-based loans.

Commercial Lending-Generally. The Bank has recently established a
commercial banking division and has hired experienced commercial lending
officers. The Bank also has installed software to identify, market and develop
potential commercial real estate lending opportunities in its market area. The
Bank also offers an array of commercial loan products catering primarily to the
needs of its Chinese ethnic community. Set forth below is a description of the
types of commercial loans offered by the Bank.

Multi-family Mortgages. The Bank originates multi-family mortgages which
are generally secured by five to 36 unit residential buildings. Loans secured by
residential buildings in excess of 36 units are underwritten pursuant to the
Bank's underwriting standards with respect to commercial real estate loans.
Substantially all of the Bank's multi-family loan originations are secured by
properties located in the Bank's primary market area. The Bank underwrites
multi-family mortgages by obtaining full credit information on the borrower and
through independent verification of the borrower's income and assets. The
borrower's ability to effectively manage the multi-family property and ability
to assume the financial responsibility of the debt service obligation in the
event of unforeseen expenses or increased vacancy are also taken into
consideration in the underwriting process. In making its assessment of the
creditworthiness of the borrower, the Bank generally reviews the financial
statements, employment and credit history of the borrower, as well as other
related documentation. The Bank's current program criteria for multi-family
originations generally provide for debt service coverages of 1.15x or greater
and LTV's of 75% or less. The Bank currently offers fixed-rate and ARM
multi-family mortgages. The Bank's ARM multi-family loans are fixed for six
months and thereafter adjust semi-annually based upon the LIBOR index.
Multi-family loans are generally amortized over 30 years with balloon payments
in 10 or 15 years.

As of June 30, 1998, the Bank had approximately 819 multi-family mortgages
with an aggregate outstanding principal balance of $334.2 million. As of such
date, the Bank's average loan balance with respect to multi-family mortgages
amounted to approximately $408,100. As of June 30, 1998, $287.9 million, or
86.1% of these loans consisted of adjustable-rate loans with COFI-based interest
rates. In order to avoid an over concentration in multi-family mortgages, the
Bank limits its total multi-family mortgage exposure to not more than 35% of
total loans. As of June 30, 1998, the Bank had a 26.3% concentration in
multi-family mortgages. As a result of the Bank's limitations, market
competition and alternative investment opportunities, the Bank has not
originated a significant volume of multi-family mortgages during the three years
ended December 31, 1998. During the first six months of 1998, the Bank began to
refocus on the origination of multifamily mortgage loans and originated $15.6
million during this period.

Commercial Real Estate Construction. The Bank originates construction
loans for the development of single-family residences, multi-family and
commercial properties. Such loans are made primarily to experienced builders and
developers known to the Bank in its primary market area. As of June 30, 1998,
the Bank had approximately 86 outstanding construction loans with an aggregate
outstanding principal balance of $35.8 million. As of such date, the Bank's
average loan balance with respect to construction loans amounted to $416,400.

Construction loans are originated in amounts up to 80% of the lesser of the
appraised value of the property, as improved, or the sales price. Proceeds for
construction loans are disbursed on a percentage of completion basis or as
construction thresholds are met. Generally, if the borrower is a corporation or
partnership, guarantees by the principals are required. Construction loans are
adjustable and tied to the prime rate. Generally, the term of construction loans
is for one year, with a one year renewal option, if necessary.

Construction financing generally involves a higher degree of credit risk
than long-term financing on improved, owner-occupied real estate. The risk of
loss on a construction loan is dependent largely upon the property's value at
completion of the construction compared to the estimated cost, including
interest, of construction. If the estimate of value proves to be inaccurate, the
Bank may be confronted with a completed project, having a value which is
insufficient to assure full repayment.

49
<PAGE>
Commercial Real Estate Non-Residential Mortgages. The Bank originates
medium-term commercial real estate loans secured by commercial or industrial
buildings where the properties are either used by the owner for business
purposes ('owner-user properties') or have income derived from tenants
('investment properties'). The Bank solicits potential borrowers through: (i)
its new database software system, which provides key information on
substantially all commercial real estate loans in its primary market in
California, (ii) referrals from its branches, (iii) direct solicitation of
borrowers and real estate brokers by the commercial banking lending officers,
and (iv) referrals from existing borrowing customers. Upon identification of a
prospective borrower, the Bank then makes a preliminary estimate of the value of
the property based upon the location, age, type of property and market rent. For
owner-user properties, the Bank may use market rent information from such
borrowers for its cash flow analysis. A proposal letter summarizing the
tentative terms of the prospective loan is then submitted to the borrower for
acceptance, at which time the non-refundable fee is paid to the Bank. This pre-
screening process helps the Bank control appraisal costs by reducing the number
of appraisals ordered for loans that ultimately are not approved. Upon
acceptance of the proposal, the Bank then performs property appraisal and
environmental surveys. The Bank's underwriting practices generally require the
principal balance of the loan to be no more than 65% of the stabilized appraised
value of the underlying real estate collateral. Commercial real estate loans are
typically secured by first deeds of trust, generally have terms of no more than
seven to ten years and are amortized up to 25 years. Although substantially all
of the commercial real estate loans currently being originated have interest
rates that adjust with changes in the prime rate or have fixed-rate terms of up
to five years, the Bank previously offered commercial real estate loans with
interest rates which adjusted periodically based on COFI.

At June 30, 1998, the Bank had approximately 147 commercial real estate
loans with an aggregate principal balance of $142.7 million. As of such date,
the average balance with respect to the Bank's commercial real estate loans
amounted to $971,000. As of June 30, 1998, of the Bank's $142.7 million of
commercial real estate loans, $72.1 million, or 50.5% consisted of COFI-based
loans. The Bank's underwriting practice also generally requires that the
properties securing commercial real estate loans have debt service coverage
ratios (the ratio of earnings before debt service to debt service) of at least
1.35. The Bank's loan documentation usually provides the Bank with the right to
call the loan in the event that the debt service coverage ratio falls below
1.35x. The Bank generally requires that all commercial real estate loans made to
corporations, partnerships and other business entities be personally guaranteed
by the principals. The Bank utilizes tax returns to review and verify the income
stream of the borrower. Loan documentation is reviewed by the Bank's in-house
legal department. Such documentation typically requires annual financial
statements and rent rolls of a borrower to determine covenant compliance.

During the six months ended June 30, 1998, the Bank originated $35.3
million of commercial real estate loans. During the years ended December 31,
1997, 1996 and 1995, the Bank originated $23.7 million, $2.7 million and
$864,000 of commercial real estate loans, respectively. Management believes it
will originate $125.0 million of commercial real estate loans during 1998.
Through June 30, 1998, the Bank had in its pipeline $98.4 million of commercial
real estate loans. Notwithstanding the foregoing, no assurance can be made that
the Bank will achieve its year-end projections or that all of the commercial
real estate loans in the Bank's pipeline as of June 30, 1998, will close.

Loans secured by commercial real estate properties are generally larger and
involve a greater degree of risk than residential mortgages (1-4 family).
Because payments on loans secured by commercial real estate properties are
generally dependent on successful operation or management of the properties,
repayment of such loans is subject to a greater extent than the repayment of
residential mortgages on the then prevailing conditions in the real estate
market or the economy. The Bank seeks to minimize these risks through its
underwriting standards and in the first half of 1998, the Bank employed an
outside loan review firm to assist management with respect to internal asset
review of the Bank's commercial loans, including its commercial real estate
loans.

Commercial Business Loans. The Bank provides commercial business loans to
customers for working capital purposes and to finance equipment, account
receivables and inventory. Working capital loans are generally subject to annual
review, and equipment loans have terms up to five years. Interest rates on these
loans are generally based on the prime rate. Working capital loan advances are
generally made against security interests in inventory and account receivables,
and equipment loans are secured by the underlying equipment. When

50
<PAGE>
appropriate, the Bank may require additional collateral on such loans and may
further secure the indebtedness with a lien on real estate. In many cases,
personal guarantees are obtained as additional security.

During the six months ended June 30, 1998, the Bank originated $25.8
million of commercial loans. During the years ended December 31, 1997, 1996 and
1995, the Bank originated $31.9 million, $9.9 million and $0 of commercial
business loans, respectively. Management believes it will originate $55.0
million of commercial business loans during 1998 (not including SBA loans).
Through June 30, 1998, the Bank had in its pipeline $21.1 million of commercial
business loans (not including SBA loans). Notwithstanding the foregoing, no
assurance can be made that the Bank will achieve its year-end projections or
that all of the commercial business loans in the Bank's pipeline as of June 30,
1998, will close.

Unlike consumer residential mortgage loans, which generally are made on the
basis of the borrower's ability to make repayment from his or her employment or
other income and which are secured by real property whose value tends to be more
easily ascertainable, commercial business loans are of higher risk and typically
are made on the basis of the borrower's ability to make repayment from the cash
flow of the borrower's business. As a result, the availability of funds for the
repayment of commercial loans may be substantially dependent on the success of
the business itself. Further, any collateral securing such loans may depreciate
over time, may be difficult to appraise and may fluctuate in value based on the
success of the business. The Bank currently utilizes the unaffiliated firm
referenced above to assist management with respect to internal asset review of
the Bank's commercial business loans.

The Bank provides commercial lines of credit to small- and medium-sized
companies to finance their accounts receivable and inventory on a short term
basis (less than one year) and/or to finance their equipment and working capital
on a long term basis (over one year).

Short term financing is structured to enable the borrower to complete its
trade cycle from purchase of inventory to collection of receivables. As such,
the credit line may also include an option for the issuance of letters of credit
to overseas suppliers/sellers in order for the borrower to obtain inventory.
Pursuant to such letters of credit, the Bank extends credit to the borrower by
providing assurance, to the borrower's foreign suppliers, that payments will be
made upon shipment of goods. Upon shipment of goods and when the letters of
credit are negotiated by the foreign suppliers, the borrower's inventory is
financed by the Bank under the pre-approved line of credit facility.

The underwriting criteria of such short term trade financings often depends
on the quality of the borrowers' inventory and their accounts receivables. As a
general rule, inventory should not be held for more than 60 days, and accounts
receivables should not extend beyond 90 days. Total credit exposure (outstanding
loans plus letters of credit) under the line of credit are monitored monthly by
using a borrowing base formula of up to 80% against eligible receivables aged up
to 90 days, and up to 50% against eligible inventory with or without limits.
Aside from the established base formula, the borrower's overall financial
condition is considered, such as consistency in revenue streams, gross margins,
expense ratios, and net income. Another important underwriting criteria is the
adequacy of the borrower's capital in relation to the financial growth it seeks
to achieve. A company with a leverage ratio below 2.5:1 is acceptable to the
Bank.

Fixed assets, such as machinery and equipment, provide long term financial
benefits to the borrowers. Accordingly, loans for these types of financings are
structured for a term longer than one year. Repayment of the loans are
structured to match the income generated over the life expectancy of the assets.
As such, the underwriting criteria is dependent upon the amount of cash flow
(income plus depreciation) the borrower has available to service debt based on a
full amortization schedule, usually between five to seven years. The maximum
amount financed on capital assets is approximately 70% of its value. Similar to
trade finance credits, financial evaluation of revenue, profitability, expense
ratios and capital adequacy are made in considering this type of credit for
approval.

The Bank originates and funds loans qualifying for guarantees issued by the
SBA. The SBA currently guarantees from 75% to 80% of the principal and accrued
interest of such loans. Loans are provided to eligible applicants or small
businesses to finance working capital, the purchase of equipment or real estate.
Depending upon the use of loan proceeds, the loan term may range from seven to
twenty-five years. The Bank typically requires that SBA loans be secured by
inventories and receivables or if commercial real estate is being financed,
secured by real property. Primary underwriting criteria are historical cash flow
to demonstrate repayment

51
<PAGE>
capability, experienced business management and adequate collateral to secure
the requested credit. Typically, the SBA prefers that the applicant inject at
least 30%-33% cash (equity) into the transaction. The Bank's benefits in
originating loans under this program include limited credit exposure for the
Bank as a result of the SBA guaranty, increased Bank revenues by selling the
guaranteed portion of the loan through the secondary market at a premium, and
gaining 'Preferred Lender Program' status with the SBA by producing volume and
quality credits while serving the financial needs of small business communities.

During the six months ended June 30, 1998, the Bank originated $2.5 million
of SBA loans. Management believes it will originate approximately $20.0 million
of SBA loans during 1998. Through June 30, 1998, the Bank had in its pipeline
$9.4 million of SBA loans. Notwithstanding the foregoing, no assurance can be
made that the Bank will achieve its year-end projections or that all of the SBA
loans in the Bank's pipeline as of June 30, 1998 will close.

Consumer Loans. The Bank's consumer loan portfolio is substantially
comprised of home equity lines of credit which are secured by residential real
estate. These lines of credit generally consist of floating rate loans, tied to
the prime rate.

DEPOSITS

The Bank's deposits are obtained primarily from ethnic Chinese households,
small and medium-sized businesses owned by ethnic Chinese, and ethnic Chinese
business executives, professionals and other individuals. The Bank offers the
traditional range of depository products provided by commercial banks. Rates
paid on deposits vary depending on the deposit size, the term of deposit, and
the type of deposit. The Bank sets its deposit rates based on deposit needs and
market competition. As of June 30, 1998, less than 2% of the Bank's deposits
were held by customers located outside the United States. In addition, as of
such date, the 100 depositors with the largest aggregate average deposit
balances comprised less than 10% of the Bank's total deposits. As of June 30,
1998, the Bank's weighted average cost of deposits was 4.28%, which was 60 basis
points less than the COFI. The Bank does not solicit brokered deposits.

COMPETITION

The banking and financial services business in California generally, and in
the Bank's market area specifically, is highly competitive. The increasingly
competitive environment results from changes in regulation, changes in
technology and product delivery systems, and the consolidation among financial
services providers. The Bank competes for loans, deposits and customers for
financial services with other commercial banks, savings and loan associations,
securities and brokerage companies, mortgage companies, insurance companies,
finance companies, money market funds, credit unions, and other nonbank
financial service providers. Many of these competitors are much larger in total
assets and capitalization, have greater access to capital markets and offer a
broader array of financial services than the Bank. To compete with the other
financial services providers, the Bank relies on local promotional activities,
personal relationships established by officers, directors and employees with its
customers, and specialized services tailored to meet its customers' needs.

The Bank competes for deposits from the ethnic Chinese markets with other
banks serving the Asian community in California. The Bank believes that it has
two major competitors that are targeting the ethnic Chinese market. Such
institutions have branch locations in many of the same neighborhoods as the
Bank, provide similar loan, savings and financial services, and market their
services in similar Asian publications and media in California.

EMPLOYEES

At June 30, 1998, the Bank had 338 full-time equivalent employees. None of
the employees are covered by a collective bargaining agreement. The Bank
considers its employee relations to be satisfactory.

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<PAGE>
PROPERTIES

The Bank owns the facility that is located at 711 Van Ness Avenue, San
Francisco, California which serves as the Company's and the Bank's headquarters.
The Bank leases all of its remaining branch facilities under noncancelable
operating leases, many of which contain renewal options and some of which have
escalation clauses. The Bank's branch offices are set forth below:

<TABLE>
<CAPTION>
TOTAL DEPOSITS AT JUNE
30, 1998
OFFICE LOCATION LEASE EXPIRATION DATE ----------------------
- --------------------------------------------------------------------- --------------------- (DOLLARS IN THOUSANDS)
<S> <C> <C>
Alhambra
1211 East Valley Blvd.
Alhambra, CA 91801................................................... October 2001 $ 44,097
Artesia
11809 Artesia Blvd.
Artesia, CA 90701.................................................... May 2003 51,414
Balboa
3555 Balboa Street
San Francisco, CA 94121.............................................. March 1999 37,234
Citrus Heights
7803 Madison Ave #650
Citrus Heights, CA 95610............................................. February 1999 (1)
Clement
498 Clement Street
San Francisco, CA 94118.............................................. March 2004 123,666
Cupertino
20510 Stevens Creek Blvd.
Cupertino, CA 95014.................................................. March 2001 30,137
Daly City
246 Skyline Plaza
Daly City, CA 94015.................................................. November 2002 2,760
Freeport
4790 Freeport Blvd.
Sacramento, CA 95822................................................. April 2009 56,883
Fremont
34420 Fremont Blvd., Suite F
Fremont, CA 94555.................................................... January 1999 32,179
Fresno
1320 East Shaw Avenue, Suite 160
Fresno, CA 93710..................................................... December 1998 (2)
Geary
6001 Geary Blvd.
San Francisco, CA 94121.............................................. September 1999 21,743
Irvine
15333 Culver Dr., #670
Irvine, CA 92604..................................................... May 2001 18,437
</TABLE>

(table continued on next page)

53
<PAGE>

<TABLE>
<CAPTION>
TOTAL DEPOSITS AT JUNE
30, 1998
OFFICE LOCATION LEASE EXPIRATION DATE ----------------------
- --------------------------------------------------------------------- --------------------- (DOLLARS IN THOUSANDS)
<S> <C> <C>
Irving
2219 Irving Street
San Francisco, CA 94122.............................................. October 1999 $ 23,621
Kearny
900 Kearny Street
San Francisco, CA 94133.............................................. November 2011 46,298
Los Angeles Chinatown
951 No. Broadway
Los Angeles, CA 90012................................................ February 2001 46,734
Montebello
863 N. Wilcox Avenue
Montebello, CA 90640................................................. April 2002 (3)
Monterey Park
419 No. Atlantic Blvd., #101
Monterey Park, CA 91754.............................................. November 2003 90,469
Noriega
1301 Noriega Street
San Francisco, CA 94122.............................................. August 2005 78,954
Oakland
367 Eighth Street
Oakland, CA 94607.................................................... February 1999 143,945
Oakland-Webster
800 Webster Street
Oakland, CA 94607.................................................... September 2007 62,539
Pasadena
199 South Los Robles, Suite 780
Pasadena, CA 91101................................................... June 2003 (4)
Paso Robles
825 Riverside Ave., Suite #2
Paso Robles, CA 93446................................................ January 2001 (5)
Rowland Heights
1015 S. Nogales St., #102
Rowland Heights, CA 91748............................................ June 1999 44,212
San Francisco Chinatown
1066 Grant Avenue
San Francisco, CA 94133.............................................. September 2003 199,900
San Francisco Van Ness
711 Van Ness Avenue
San Francisco, CA 94102.............................................. Company-owned 61,880
San Francisco Stockton
1318 Stockton Street
San Francisco, CA 94133.............................................. July 2003 62,330
</TABLE>

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(1) Facility is a spot construction lending center that does not take deposits.
(2) Facility is a construction lending center that does not take deposits.
(3) Facility is a homeowners center that does not take deposits.
(4) Facility is a commercial loan center that does not take deposits.
(5) Facility is a SBA Loan office that does not take deposits.

The Bank believes its present facilities are adequate for its present
needs. However, the Bank may acquire additional properties if needed due to
business expansion. The Bank believes that, if necessary, it could secure
suitable alternative facilities without adversely affecting operations.

LEGAL PROCEEDINGS

The Bank is subject to pending or threatened actions and proceedings
arising in the normal course of business. In the opinion of management, the
ultimate disposition of all pending or threatened actions and proceedings will
not have a material adverse effect on the Bank's operations or financial
condition.

SUPERVISION AND REGULATION

INTRODUCTION

Bank holding companies and commercial banks engaged in the commercial
banking business are extensively regulated under both federal and state law. Set
forth below is a summary description of certain laws which relate to the
regulation of the Company and the Bank The description below does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.

RECENT LEGISLATIVE DEVELOPMENTS

The Financial Services Act of 1998, introduced in March 1998, would allow
securities firms, insurance companies and commercial banks to merge under a
holding company structure. Among other things, the bill would expand the Federal
Reserve's regulatory authority over these financial institutions. The Company is
unable to predict whether this bill or any other such legislation will be
enacted, what the provisions of such final legislation may be, or the extent to
which the legislation would restrict, disrupt or otherwise have a material
effect on its operations.

BANK HOLDING COMPANY AND BANK REGULATION

The Company. As a registered bank holding company, the Companyis subject
to regulation under the Bank Holding Company Act of 1956, as amended (the
'BHCA') and the regulations promulgated by the Federal Reserve Board pursuant
thereto. Holdings is required to file with the Federal Reserve Board quarterly
and annual

55
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reports and such additional information as the Federal Reserve Board may require
pursuant to the BHCA. The Federal Reserve Board may conduct examinations of the
Company and its non-bank subsidiaries. The Company is a bank holding company
within the meaning of Section 3700 of the California Financial Code. As such,
the Company and its subsidiaries are subject to examination by, and may be
required to file reports with, the DFI.

The Federal Reserve Board could require that the Company terminate an
activity or terminate control of or liquidate or divest certain subsidiaries or
affiliates when the Federal Reserve Board believes the activity or the control
of the subsidiary or affiliate constitutes a significant risk to the financial
safety, soundness or stability of a banking subsidiary such as the Bank. The
Federal Reserve Board also has the authority to regulate provisions of certain
bank holding company debt, including authority to impose interest ceilings and
reserve requirements on such debt. Under certain circumstances, the Company
would be required to file written notice and obtain approval from the Federal
Reserve Board prior to purchasing or redeeming its equity securities. Further,
the Company is required by the Federal Reserve Board to maintain certain levels
of capital.

The Company is required to obtain the prior approval of the Federal Reserve
Board for the acquisition of more than 5% of the outstanding shares of any class
of voting securities or substantially all of the assets of any bank (other than
the Bank) or bank holding company. Prior approval of the Federal Reserve Board
would also be required for the merger or consolidation of the Company and
another bank holding company.

The Company is prohibited by the BHCA, except in certain statutorily
prescribed instances, from acquiring direct or indirect ownership or control of
more than 5% of the outstanding voting shares of any company that is not a bank
or bank holding company and from engaging directly or indirectly in activities
other than those of banking, managing or controlling banks or furnishing
services to its subsidiaries. However, the Company, subject to the prior
approval of the Federal Reserve Board, can engage in any, or acquire shares of
companies engaged in, activities that are deemed by the Federal Reserve Board to
be so closely related to banking or managing or controlling banks as to be a
proper incident thereto. In making any such determination, the Federal Reserve
Board would be required to consider whether the performance of such activities
by the Company or an affiliate could reasonably be expected to produce benefits
to the public, such as greater convenience, increased competition or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest or unsound
banking practices. The Federal Reserve Board is also empowered to differentiate
between activities commenced de novo and activities commenced by acquisition, in
whole or in part, of a going concern. In 1996, the Budget Act of 1996 (the
'Budget Act') eliminated the requirement that bank holding companies seek
Federal Reserve Board approval before engaging de novo in permissible nonbanking
activities listed in Federal Reserve Board Regulation Y, which governs bank
holding companies, if the holding company and its lead depository institution
are well managed and well capitalized and certain other criteria specified in
the statute are met. For purposes of determining the capital levels at which a
bank holding company shall be considered well capitalized under this section of
the Budget Act and Regulation Y, the Federal Reserve Board adopted, as a rule,
risk-based capital ratios (on a consolidated basis) that are the same as the
level set for determining that a state member bank is well capitalized under the
provisions established under the prompt corrective action provisions of federal
law. See '--Prompt Corrective Action.'

Under Federal Reserve Board regulations, a bank holding company is required
to serve as a source of financial and managerial strength to its subsidiary
bank(s) and may not conduct its operations in an unsafe or unsound manner. In
addition, it is the Federal Reserve Board policy that in serving as a source of
strength to its subsidiary bank(s), a bank holding company should stand ready to
use available resources to provide adequate capital funds to its subsidiary
bank(s) during periods of financial stress or adversity and should maintain the
financial flexibility and capital-raising capacity to obtain additional
resources for assisting its subsidiary bank(s). A bank holding company's failure
to meet its obligations to serve as a source of strength to its subsidiary
bank(s) will generally be considered by the Federal Reserve Board to be an
unsafe and unsound banking practice or a violation of the Federal Reserve
Board's regulations or both.

Transactions with Affiliates. The Company is a bank holding company and as
such is subject to the FRB regulations, examination, supervision and reporting
requirements As an insured institution and a subsidiary of a bank holding
company, the Bank is subject to restrictions in its dealings with companies that
are 'affiliates' of the Company under the Federal Reserve Act.

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<PAGE>
The Bank's transactions with its affiliates are subject to the limitations
set forth in Sections 23A, 23B, 22(g) and 22(h) of the Federal Reserve Act and
Regulation O adopted by the Federal Reserve Board. Affiliates are defined as any
company that controls or is under common control with an institution. Under
Section 23A, the Company is an 'affiliate' of the Bank. Sections 23A and 23B
require that covered transactions and certain other transactions with affiliates
be on terms and conditions consistent with safe and sound banking practices or
on terms comparable to similar transactions with non-affiliated parties, and
impose quantitative restrictions on the amount of and collateralization
requirements on covered transactions. 'Covered transactions' generally include
loans or extensions of credit to an affiliate, purchases of securities issued by
an affiliate, purchases of assets from an affiliate (except as may be exempted
by order or regulation), and certain other transactions. In addition, a bank is
prohibited from extending credit to an affiliate (other than a subsidiary of the
institution), unless the affiliate is engaged only in activities that the
Federal Reserve Board has determined, by regulation, to be permissible for bank
holding companies. Sections 22(g) and 22(h) of the Federal Reserve Act impose
limitations on loans and extensions of credit from an institution to its
executive officers, directors and principal stockholders and each of their
related interests.

The Bank. The Bank is a California state-chartered commercial bank, and is
subject to primary supervision, periodic examination and regulation by the
Commissioner of the California DFI (the 'Commissioner') and the FDIC. If, as a
result of an examination of a Bank, either of these Bank regulatory agencies
should determine that the financial condition, capital resources, asset quality,
earnings prospects, management, liquidity or other aspects of the Bank's
operations are unsatisfactory or that the Bank or its management is violating or
has violated any law or regulation, various remedies are available to the bank
regulatory agency. Such remedies include the power to enjoin 'unsafe or unsound'
practices, to require affirmative action to correct any conditions resulting
from any violation or practice, to issue an administrative order that can be
judicially enforced, to direct an increase in capital, to restrict the growth of
the bank, to assess civil monetary penalties, to remove officers and directors
and ultimately to terminate a bank's deposit insurance, which would result in a
revocation of the Bank's charter. The Bank was not the subject of any such
actions by the OTS in the past.

Safety and Soundness Standards. The FDIC and the Federal Reserve Board
have adopted final guidelines establishing standards for safety and soundness,
as required by FDICIA. These standards are designed to identify potential safety
and soundness concerns and ensure that action is taken to address those concerns
before they pose a risk to the deposit insurance funds. The standards relate to:
(i) internal controls, information systems and internal audit systems; (ii) loan
documentation; (iii) credit underwriting; (iv) asset growth; (v) earnings; and
(vi) compensation, fee and benefits. If the FDIC or the Federal Reserve Board
determine that an institution fails to meet any of these standards, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard. In the event the institution fails to
submit an acceptable plan within the time allowed by the agency or fails in any
material respect to implement an accepted plan, the agency must, by order,
require the institution to correct the deficiency. The FDIC or the Federal
Reserve Board agencies have promulgated safety and soundness regulations and
accompanying interagency compliance guidelines on asset quality and earnings
standards. These new guidelines provide six standards for establishing and
maintaining a system to identify problem assets and prevent those assets from
deteriorating. The institution should: (i) conduct periodic asset quality
reviews to identify problem assets; (ii) estimate the inherent losses in those
assets and establish reserves that are sufficient to absorb estimated losses;
(iii) compare problem asset totals to capital; (iv) take appropriate corrective
action to resolve problem assets; (v) consider the size and potential risks of
material asset concentrations; and (vi) provide periodic asset reports with
adequate information for management and the board of directors to assess the
level of asset risk. These new guidelines also set forth standards for
evaluating and monitoring earnings and for ensuring that earnings are sufficient
for the maintenance of adequate capital and reserves. If an institution fails to
comply with a safety and soundness standard, the appropriate federal banking
agency may require the institution to submit a compliance plan. Failure to
submit a compliance plan or to implement an accepted plan may result in
enforcement action.

Capital Requirements. The FDIC has adopted risk-based capital guidelines
to which the Bank is subject. The guidelines establish a systematic analytical
framework that makes regulatory capital requirements more sensitive to
differences in risk profiles among banking organizations. The Bank is required
to maintain certain levels of regulatory capital in relation to regulatory
risk-weighted assets. The ratio of such regulatory capital to

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<PAGE>
regulatory risk-weighted assets is referred to as the Bank's 'risk-based capital
ratio.' Risk-based capital ratios are determined by allocating assets and
specified off-balance sheet items to four risk-weighted categories ranging from
0% to 100%, with higher levels of capital being required for the categories
perceived as representing greater risk.

These guidelines divide a bank's capital into two tiers. The first tier
('Tier I') includes common equity, retained earnings, certain non-cumulative
perpetual preferred stock (excluding auction rate issues) and minority interests
in equity accounts of consolidated subsidiaries, less goodwill and other
intangible assets (except mortgage servicing rights and purchased credit card
relationships subject to certain limitations). Supplementary ('Tier II') capital
includes, among other iterms, cumulative perpetual and long-term limited-life
preferred stock, mandatory convertible securities, certain hybrid capital
instruments, term subordinated debt and the allowance for loan and lease losses,
subject to certain limitations, less required deductions. Banks are required to
maintain a total risk-based capital ratio of 8%, of which at least 4% must be
Tier I capital.

In addition, the FDIC has established regulations prescribing a minimum
Tier I leverage ratio (Tier I capital to adjusted total assets as specified in
the regulations). These regulations provide for a minimum Tier I leverage ratio
of 3% for banks that meet certain specified criteria, including that they have
the highest examination rating and are not experiencing or anticipating
significant growth. All other banks are required to maintain a Tier I leverage
ratio of 3% plus an additional cushion of at least 100 to 200 basis points. The
FDIC may, however, set higher leverage and risk-based capital requirements on
individual institutions when particular circumstances warrant. Banks
experiencing or anticipating significant growth are expected to maintain capital
ratios, including tangible capital positions, well above the minimum levels. At
June 30, 1998, the Bank's tangible and core capital ratios were 6.56% and the
risk-based capital ratio was 13.61%.

In August 1995, the FDIC, along with the other federal banking agencies,
adopted a regulation providing that the agencies will take account of the
exposure of a bank's capital and economic value to changes in interest rate risk
in assessing a bank's capital adequacy. According to the agencies, applicable
considerations include the quality of the bank's interest rate risk management
process, the overall financial condition of the bank and the level of other
risks at the bank for which capital is needed. Institutions with significant
interest rate risk may be required to hold additional capital. The agencies also
have issued a joint policy statement providing guidance on interest rate risk
management, including a discussion of the critical factors affecting the
agencies' evaluation of interest rate risk in connection with capital adequacy.
The agencies have determined not to proceed with a previously issued proposal to
develop a supervisory framework for measuring interest rate risk and an explicit
capital component for interest rate risk.

Insurance of Accounts. The FDIC has adopted a risk-based insurance
assessment system. The FDIC assigns an institution to one of three capital
categories based on the institution's financial information, as of the reporting
period ending seven months before the assessment period. The capital categories
are (1) well capitalized, (2) adequately capitalized or (3) undercapitalized. An
institution is also placed in one of three supervisory subcategories within each
capital group. The supervisory subgroup to which an institution is assigned is
based on a supervisory evaluation provided to the FDIC by the institution's
primary federal regulator and information that the FDIC determines to be
relevant to the institution's financial condition and the risk posed to the
deposit insurance funds. An institution's assessment rate depends on the capital
category and supervisory category to which it is assigned with the most well
capitalized, healthy institutions receiving the lowest rates.

Deposits of the Bank are presently insured by the SAIF. Both the SAIF and
the BIF are statutorily required to achieve and maintain a ratio of insurance
reserves to total insured deposits equal to 1.25%. Until recently, members of
the SAIF and BIF were paying average deposit insurance assessments of between 24
and 25 basis points. The BIF met the required reserve level in 1995, whereas the
SAIF was not expected to meet or exceed the required level until 2002 at the
earliest. This situation was primarily due to the statutory requirement that
SAIF members make payments on bonds issued in the late 1980s by the Financing
Corporation ('FICO') to recapitalize the predecessor to the SAIF.

In view of the BIF's achieving the 1.25% ratio, the FDIC ultimately adopted
a new assessment rate schedule ranging from 0-27 basis points under which 92% of
BIF members paid an annual premium of only $2,000. With respect to SAIF member
institutions, the FDIC adopted a final rule retaining the previously existing
assessment rate schedule applicable to SAIF member institutions of 23 to 31
basis points. As long as the premium differential

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continued, it may have had adverse consequences for SAIF members, including
reduced earnings and an impaired ability to raise funds in the capital markets.
In addition, SAIF members, such as the Bank, could have been placed at a
substantial competitive disadvantage to BIF members with respect to pricing of
loans and deposits and the ability to achieve lower operating costs.

On September 30, 1996, the President of the United States signed into law
the Funds Act which, among other things, imposed a special one-time assessment
on SAIF member institutions, including the Bank, to recapitalize the SAIF. As
required by the Funds Act, the FDIC imposed a special assessment of 65.7 basis
points on SAIF assessable deposits held as of March 31, 1995, payable November
27, 1996 (the 'SAIF Special Assessment'). The SAIF Special Assessment was
recognized by the Bank as an expense in the quarter ended September 30, 1996,
and is generally tax deductible. The SAIF Special Assessment recorded by the
Bank amounted to $7.7 million on a pre-tax basis and $4.5 million on an
after-tax basis.

The Funds Act also spread the obligations for payment of the FICO bonds
across all SAIF and BIF members. Beginning on January 1, 1997, BIF deposits were
assessed for a FICO payment of 1.3 basis points, while SAIF deposits pay 6.48
basis points. Full pro rata sharing of the FICO payments between BIF and SAIF
members will occur on the earlier of January 1, 2000, or the date the BIF and
SAIF are merged.

As a result of the Funds Act, the FDIC voted to effectively lower SAIF
assessments to 0-27 basis points as of January 1, 1997, a range comparable to
that of BIF members. SAIF members will also continue to make the FICO payments
described above. The FDIC also lowered the SAIF assessment schedule for the
fourth quarter of 1996 to 18-27 basis points. Management cannot predict the
level of FDIC insurance assessments on an on-going basis.

The Bank's assessment rate, effective as of January 1, 1997, was reduced to
0.164% based upon its current risk classification, and the regular premium paid
for 1997 was $1.8 million. As discussed in further detail under 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations--Noninterest Expenses,' the Bank's deposit
insurance premium has been reduced to 6.4 basis points, effective as of January
1, 1998.

The FDIC is authorized to raise the assessment rates in certain
circumstances. The FDIC has exercised this authority several times in the past
and may raise insurance premiums in the future. If such action is taken by the
FDIC, it could have an adverse effect on the earnings of the Bank.

Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS. The management of the Bank does not know of any practice, condition or
violation that might lead to termination of deposit insurance.

Prompt Corrective Action. The federal banking regulators have established
capital levels for institutions to implement the 'prompt corrective action'
provisions of the FDICIA which require certain supervisory actions against
undercapitalized institutions. Based on these capital levels, insured
institutions will be categorized as well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized or critically undercapitalized.
The FDICIA requires federal banking regulators to take prompt corrective action
to solve the problems of those institutions that fail to satisfy their
applicable minimum capital requirements. The level of regulatory scrutiny and
restrictions imposed become increasingly severe as an institution's capital
level falls.

A 'well capitalized' institution must have risk-based capital of 10% or
more, leverage capital ratio of 5% or more and Tier 1 risk-based capital (based
on the ratio of core capital to risk-weighted assets) of 6% or more and may not
be subject to any written agreement, order, capital directive, or prompt
corrective action directive. As of December 31, 1997 and thereafter, the Bank
was a well capitalized institution under the definitions. An institution will be
categorized as 'adequately capitalized' if it has total risk-based capital of 8%
or more, Tier 1 risk-based capital of 4% or more, and generally a leverage
capital ratio of 4% or more and does not meet the definition of 'well
capitalized;' 'undercapitalized' if it has total risk-based capital of less than
8%, or Tier 1 risk-based capital of less than 4%, or generally a leverage ratio
of less than 4%; 'significantly undercapitalized' if it has total risk-based
capital of less than 6%, or Tier 1 risk-based capital of less than 3%, or
leverage capital of

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less than 3%; and 'critically undercapitalized' if it has a ratio of tangible
equity to total assets that is equal to less than 2%.

In the case of an institution that is categorized as 'undercapitalized,'
such an institution must submit a capital restoration plan to the FDIC. An
undercapitalized depository institution generally will not be able to acquire
other banks or thrifts, establish additional branches, pay dividends, or engage
in any new lines of business unless consistent with its capital plan. A
'significantly undercapitalized' institution will be subject to additional
restrictions on its affiliate transactions, the interest rates paid by the
institution on its deposits, the institution's asset growth, compensation of
senior executive officers, and activities deemed to pose excessive risk to the
institution. Regulators may also order a significantly undercapitalized
institution to hold elections for new directors, terminate any director or
senior executive officer employed for more than 180 days prior to the time the
institution became significantly undercapitalized, or hire qualified senior
executive officers approved by the regulators. The FDICIA provides that an
institution that is 'critically undercapitalized' must be placed in
conservatorship or receivership within 90 days of becoming categorized as such
unless the institution's regulator and the FDIC jointly determine that some
other course of action would result in a lower resolution cost to the
institution's insurance fund.

Potential Enforcement Actions. Commercial banking organizations, such as
the Company and the Bank, and their institution-affiliated parties, may be
subject to potential enforcement actions by the Federal Reserve Board, the FDIC
and/or the Commissioner for violations of any law, rule, regulation or any
condition imposed in writing by the agency or any written agreement with the
agency for unsafe or unsound practices in conducting their businesses.
Enforcement actions may include the imposition of a conservator or receiver, the
issuance of a cease-and-desist order that can be judicially enforced, the
termination of insurance of deposits (in the case of the Bank), the imposition
of civil money penalties, the issuance of directives to increase capital, the
issuance of formal and informal agreements, the issuance of removal and
prohibition orders against institution affiliated parties, and the imposition of
restrictions and sanctions under the prompt corrective action provisions of the
FDICIA. Additionally, a holding company's inability to serve as a source of
strength to its subsidiary banking organizations could serve as an additional
basis for a regulatory action against the holding company. Neither the Company
nor the Bank has been subject to any such enforcement actions.

Federal Home Loan Bank System. The Bank is a member of the FHLB system,
which consists of 12 regional Federal Home Loan Banks governed and regulated by
the Federal Housing Finance Board. The Federal Home Loan Banks provide a central
credit facility for member institutions. The Bank, as a member of the FHLB of
San Francisco, is required to acquire and hold shares of capital stock in the
FHLB of San Francisco in an amount at least equal to the greater of 1% of the
aggregate principal amount of its unpaid residential mortgage loans, home
purchase contracts and similar obligations as of the close of each calendar
year, or 5% of its borrowings from the FHLB of San Francisco (including advances
and letters of credit issued by the FHLB on the Bank's behalf). The Bank is
currently in compliance with this requirement, with a $14.9 million investment
in stock of the FHLB of San Francisco as of June 30, 1998.

The FHLB of San Francisco makes advances to members in accordance with
policies and procedures periodically established by the Federal Housing Finance
Board and the Board of Directors of the FHLB of San Francisco. Currently
outstanding advances from the FHLB of San Francisco are required to be secured
by a member's shares of stock in the FHLB of San Francisco and by certain types
of mortgages and other assets. The FIRREA further limited the eligible
collateral in certain respects. Interest rates charged for advances vary
depending on maturity, the cost of funds to the FHLB of San Francisco and the
purpose of the borrowing. As of June 30, 1998, there were $298.0 million in
outstanding advances from the FHLB of San Francisco to the Bank.

Federal Reserve System. The Federal Reserve Board regulations require
depository institutions to maintain non-interest-earning reserves against their
transaction accounts. The Federal Reserve Board regulations generally required
that reserves be maintained against aggregate transaction accounts as follows:
for accounts aggregating $47.8 million or less (subject to adjustment by the
Federal Reserve Board) the reserve requirement is 3%; and for accounts greater
than $47.8 million, the reserve requirement is $1.4 million plus 10% (subject to
adjustment by the Federal Reserve Board between 8% and 14%) against that portion
of total transaction accounts in excess of $47.8 million. The first $4.7 million
of otherwise reservable balances (subject to adjustment by the Federal Reserve
Board) are exempted from the reserve requirements. The Bank is in compliance
with the foregoing

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requirements. Because required reserves must be maintained in the form of either
vault cash, a non-interest-bearing account at a Federal Reserve Bank or a
pass-through account as defined by the Federal Reserve Board, the effect of this
reserve requirement is to reduce the Bank's interest-earning assets. FHLB System
members are also authorized to borrow from the Federal Reserve 'discount
window,' but Federal Reserve Board regulations require institutions to exhaust
all FHLB sources before borrowing from a Federal Reserve Bank.

Community Reinvestment Act. Under the Community Reinvestment Act (the
'CRA'), as implemented by FDIC regulations, an institution has a continuing and
affirmative obligation consistent with its safe and sound operation, to help
meet the credit needs of its entire community, including low and moderate income
neighborhoods. The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. The CRA
requires the federal bank regulators, in connection with its examination of a
financial institution, to assess the institution's record of meeting the credit
needs of its community and to take such records into account in its evaluation
of certain applications. As a state chartered bank, the Bank is subject to the
fair lending requirements and reporting obligations involving home mortgage
lending operations of the CRA. The FIRREA amended the CRA to require public
disclosure of an institution's CRA rating and to require that the federal
regulators provide a written evaluation of an institution's CRA performance
utilizing a four-tiered descriptive rating system in lieu of the existing
five-tiered numerical rating system. Based upon OTS examinations in 1996 and
1998, the Bank's CRA ratings were 'outstanding.'

Loans-to-One-Borrower Limitations. The FIRREA provided that
loans-to-one-borrower limits applicable to national banks apply to other
depository institutions. Generally, under current limits, loans and extensions
of credit outstanding at one time to a single borrower shall not exceed 15% of
the bank's unimpaired capital and unimpaired surplus. Loans and extensions of
credit fully secured by certain readily marketable collateral may represent an
additional 10% of unimpaired capital and unimpaired surplus. As of June 30,
1998, the Bank was in compliance with the loans-to-one-borrower limitations.

Interstate Banking and Branching. Under the Interstate Branching Act, a
bank holding company that is adequately capitalized and managed may obtain
approval under the BHCA (via merger) to acquire (via merger) an existing bank
located in another state without regard to state law. A bank holding company is
not permitted to make such an acquisition if, upon consummation, it would
control (a) more than 10% of the total amount of deposits of insured depository
institutions in the United States or (b) 30% or more of the deposits in the
state in which the bank is located. A state may limit the percentage of total
deposits that may be held in that state by any one bank or bank holding company
if application of such limitation does not discriminate against out-of-state
banks or bank holding companies. An out-of-state bank holding company may not
acquire a state bank in existence for less than a minimum length of time that
may be prescribed by state law, except that a state may not impose more than a
five-year age requirement.

The Interstate Branching Act also permits mergers of insured banks located
in different states and conversion of the branches of the acquired bank into
branches of the resulting bank. Each state may adopt legislation to prohibit
interstate mergers after that date in that state or in other states by that
state's banks. The same concentration limits discussed in the preceding
paragraph apply. The Interstate Branching Act also permits a national or state
bank to establish branches in a state other than its home state if permitted by
the laws of that state, subject to the same requirements and conditions as for a
merger transaction.

Under the Interstate Branching Act, the extent of a commercial bank's
ability to branch into a new state will depend on the law of the state.
California has adopted an early 'opt in' statute under the Interstate Branching
Act that permits out-of-state banks to acquire California banks that satisfy a
five-year minimum age requirement (subject to exceptions for supervisory
transactions) by means of merger or purchases of assets; although entry through
acquisition of individual branches of California institutions and de novo
branching into California are not permitted. The Interstate Branching Act and
the California branching statute allows out-of-state banks to enter and compete
in the markets in which the Bank operates.

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MANAGEMENT OF THE COMPANY AND THE BANK

In accordance with the respective bylaws of the Company and the Bank, the
Boards of Directors of the Company and the Bank consists of seven members. The
directors of the Company have been elected to the following classes: one class
of directors, consisting of Messrs. Fell and McMeekin, has a term expiring at
the annual meeting of stockholders in 1999; the second class, consisting of
Messrs. Downing and Lam, has a term of office expiring at the annual meeting of
stockholders in 2000; and the third class, consisting of Messrs. Wong and Wu,
has a term of office expiring at the annual meeting of stockholders in 2001. The
remaining vacancy is expected to be filled by the Board of Directors of the
Company and the Bank in the near future. There are no arrangements or
understandings between the Company and the Bank and any person pursuant to which
such person has been proposed to be a director, and no director nominee is
related to any other director nominee or executive officer of the Company or the
Bank by blood, marriage or adoption.

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company and the Bank are set
forth below:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------- --- -------------------------------------------------
<S> <C> <C>
Directors:
Sau-wing Lam............................... 46 Chairman of the Boards of Directors
Thomas S. Wu............................... 40 President, Chief Executive Officer and Director
Jonathan H. Downing........................ 46 Senior Vice President, Chief Financial Officer,
Treasurer and Director
Robert Fell................................ 76 Director
Ronald McMeekin............................ 65 Director
Godwin Wong................................ 48 Director

Executive Officers Who Are Not Directors:
Louis E. Barbarelli........................ 56 Senior Vice President and Director of Operations
and Systems
William T. Goldrick........................ 66 Senior Vice President and Chief Credit Officer
Cecilia Lai................................ 49 Senior Vice President, Director of Retail Banking
Dennis Alan Lee............................ 56 Vice President and Corporate Counsel
Sylvia Loh................................. 43 Senior Vice President and Director of Commercial
Banking
Deanne Miller.............................. 50 Senior Vice President and Director of Human
Resources
</TABLE>

Mr. Lam was appointed President, Chief Executive Officer and Vice Chairman
of the Board of Directors of the Bank in December 1996. On December 31, 1997, he
retired as President and Chief Executive Officer of the Bank but remained as
Vice Chairman of the Board of Directors. Previously, Mr. Lam served as President
and Chief Executive Officer of Pacific Link Communications Limited located in
Hong Kong, a subsidiary of the First Pacific Group. Mr. Lam was appointed
President, Chief Executive Officer and Director of the Bank in March 1991 and
left in 1995 to head up Pacific Link Communications Limited. Mr. Lam's banking
experience began when he joined the International Division of Crocker National
Bank in San Francisco in July 1977. He was transferred to Crocker's Hong Kong
Regional Officer in 1979 where he directed the administration, correspondent
banking and marketing functions. He returned to Crocker's headquarters in 1983
where he directed Correspondent Banking for the Asia Pacific Region. In February
1984, he joined The Hibernia Bank in San Francisco, then a First Pacific Group
('Group') subsidiary, as the head of Trust Banking. When the Group acquired the
Bank in 1986, Mr. Lam was appointed its Chief Administrative Officer and Senior
Vice President, Retail Banking. In 1989, he was transferred to the Group's
headquarters in Hong Kong to become the Group Treasurer. Mr. Lam devotes a
significant amount of his personal time on voluntary services in the ethnic
Chinese communities. Mr. Lam graduated with a B.S. degree in Business
Administration from California State University at Fresno in 1975, and a MBA
degree in International Finance at the University of California at Berkeley in
1977.

62
<PAGE>
Mr. Wu was appointed President and Chief Executive Officer of the Bank
effective January 1, 1998. Prior to that appointment, Mr. Wu was the Executive
Vice President and Director of the Bank as of September 25, 1997. Previously,
Mr. Wu was the Director of Customer Care for Pacific Link Communications Limited
in Hong Kong where he managed over 600 employees and was responsible for
formulating and implementing customer care, customer retention, and customer
communications strategies. Mr. Wu served as a director of the Bank from
1995-1996 and was a Senior Vice President, Head of Retail Banking of the Bank
from 1992-1996 when he directed the marketing, public relations, loan
originations, branch administration and operations control functions. Mr. Wu
also served the Bank as Vice President, Regional Manager, of its Southern
California Retail Banking Division from 1991-1992. Prior to joining the Bank in
1991, Mr. Wu was at First Pacific Bank, Hong Kong where he served as Vice
President and Team Leader of its Business Banking Group; Vice President, Deputy
Head, Retail Banking Group; and Assistant Vice President, Retail Banking Group
from 1986-1991. Prior to First Pacific Bank, Mr. Wu's experience included the
following: Assistant Treasurer, and Branch Manager for Chase Manhattan Bank,
N.A., Hong Kong; Assistant Manager, Banque Nationale De Paris, Hong Kong;
Assistant Officer, Standard Chartered Bank, Hong Kong (1977-1986). Mr. Wu has
also served on the Board of Directors of the Self-Help For the Elderly (also a
member of the finance committee) and the PineView Housing Corporation (also
chairperson of the finance committee). Mr. Wu is a graduate of Cognitio College,
Hong Kong and has taken numerous banking and management courses at the
University of California, Berkeley and the Chartered Institute of Bankers.

Mr. Barbarelli has been Senior Vice President and Director of Operations
and Systems of the Bank since August 1993, and served as a member of the Board
of Directors from 1994 to 1998. Prior to 1993, he served for two years as a
Senior Vice President and Chief Auditor of the Bank. Before joining the Bank,
Mr. Barbarelli was the General Auditor at Jackson County Federal Bank in
Medford, Oregon. Mr. Barbarelli has also served at the senior management level
at Hibernia Bancshares (San Francisco, California), Central Bank (Concord,
California), Bank of California, Fireman's Fund Insurance and U.S. Leasing. Mr.
Barbarelli has a B.S. in Information Systems Management from the University of
San Francisco.

Mr. Downing has been Senior Vice President and Chief Financial Officer of
the Bank since 1989. Mr. Downing has served as a director of the Bank since
January 1991. Mr. Downing joined the First Pacific Group in July 1983 as one of
four professionals contracted to create a de novo mortgage banking operation
(FPM Inc.) in California. Mr. Downing served as Chief Financial Officer of FPM
Inc. until it was merged into United Savings Bank in 1986. At that time he
assumed the responsibilities of Director of Secondary Marketing for the Bank and
was appointed its Chief Financial Officer in 1989. Prior to joining the First
Pacific Group, Mr. Downing was with Arthur Andersen & Co. Mr. Downing received a
B.S. in Business Administration from California State University, San Diego. Mr.
Downing is a CPA and a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.

Mr. Goldrick has been Senior Vice President and Chief Credit Officer of the
Bank since January 1997. Prior to joining the Bank, Mr. Goldrick was the Senior
Vice President, Senior Credit Officer for America California Bank from 1995 to
1997; Chief Lending Officer for National American Bank from 1992 to 1995; First
Vice President-Manager Loan Administration for MBANK from 1987 to 1991; Vice
President-Credit Policy, Vice President-Senior Credit Officer for Asia and Vice
President-Division Administrator for Crocker National Bank. Mr. Goldrick has
also held various international banking positions with Crocker National Bank
from 1969 to 1986. Mr. Goldrick received a B.A. in Economics from the University
of California, Santa Barbara in 1957.

Ms. Lai has served as a member of the Board of Directors from 1997 to 1998,
and has served as the Senior Vice President and Director of Retail Banking since
1997. Prior to holding that position she was Vice President of Credit Risk
Management and Compliance, as well as CRA Officer and Compliance Officer at the
Bank since 1992. From 1988 to 1992, Ms. Lai held a variety of positions
(Director of Marketing, Manager, Market Support Group, Branch Manager and
Marketing Analyst) within the Bank. Prior to joining the Bank, Ms. Lai served as
Executive Director of the Oakland Chinese Community Council and in various
positions at Automatic Data Processing, Underwriters Travelers Insurance, and
Allstate Insurance Company. Ms. Lai received a B.A. and M.A. from Holy Names
College.

Mr. Lee has served as Corporate Counsel for the Bank since June, 1993.
Currently, he also serves as Vice President for the Bank. Prior to joining the
Bank, Mr. Lee was a director and General Counsel for Golden Coin

63
<PAGE>
Savings and Loan Association. Prior to this, Mr. Lee was in private practice at
the Law Office of Barkley & Lee. Mr. Lee has also served in a variety of
positions in the legal profession, including City Attorney for the City of
Pleasant Hill, City Attorney for the cities of Martinez and Pleasant Hill,
Senior Assistant City Attorney for the City of Redwood City, Acting City
Attorney and Assistant City Attorney for the City of Berkeley, Judge Pro-Tem at
the Berkeley-Albany Municipal Court and Temporary Court Commissioner. Mr. Lee
received an A.A. degree from Warren Wilson Junior College (Asheville, North
Carolina), B.A. degree from San Francisco State College in 1966 and a J.D. from
the University of California, Hastings College of Law in 1969. Mr. Lee is a
member of the State Bar of California.

Ms. Loh is a Senior Vice President and Director of Commercial Banking of
the Bank and joined the Bank as Vice President and Head of Commercial Banking in
January 1996. Ms. Loh created the commercial banking division for the Bank and
manages three marketing teams which focus on commercial real estate, trade
finance, business banking loan products and SBA. Prior to joining the Bank, Ms.
Loh held the position of Vice President, Relationship Manager, Bank of America,
International Trade Bank from 1992-1996. In this position, she managed an export
portfolio with an annual fee income of $12,000,000 and managed and increased an
import credit portfolio to $45,000,000. From 1988-1992, Ms. Loh was the Vice
President, Team Manager, Commercial Banking, Security Pacific Asian Bank where
she managed a team of loan officers with a focus on trade finance, real estate
investment and private banking. Ms. Loh was the Vice President, Preferred
Banking Manager, Bank of America, Golden Gate Area Management Group from
1987-1988 where she managed a team of seven Preferred Bankers supporting 26
retail branches with a focus on high net worth clientele. From 1982-1985, Ms.
Loh was the Assistant Vice President, Credit Administration, San Francisco Main
Office where she was responsible for the credit quality of a $200,000,000
commercial loan portfolio, assisted the commercial banking officers in credit
structuring and achieved excellent credit examinations for three consecutive
years. Ms. Loh was the Branch Manager, for Bank of America's Mandarin Towers
Branch from 1979-1982. Ms. Loh received a B.A. degree in Accounting and Finance
from the California State University in San Francisco in 1979 and is a past
President of the Association of Asian American Bankers (1996-1997).

Ms. Miller is Senior Vice President and Director of Human Resources of the
Bank. Ms. Miller joined the Bank in 1986 as Assistant Vice President and
Employment Manager. In 1993 Ms. Miller was promoted to Vice President and
Director of Human Resources, and was promoted to Senior Vice President in 1997.
Prior to joining the Bank, Ms. Miller was a Human Resources Representative at
Crocker National Bank/Wells Fargo Bank, and a Personnel Recruiter for Allan Kent
Personnel Service. Ms. Miller is a graduate of Cedar Rapids Business College,
and completed the Paralegal Studies Program at San Francisco State University
and has taken personnel course work at the University of California, Berkeley.

Mr. Fell was appointed to the Board of the Bank in 1994. Mr. Fell joined
the Board of the FPB Bank Holding Company Limited in August 1993. Mr. Fell is
currently a financial consultant and is Chairman of the International Securities
Consultancy Limited. Mr. Fell is a published author, having written his personal
account of the history of the stock market and banking in Hong Kong during the
last ten years. Mr. Fell is a British subject who currently resides in London,
United Kingdom. He began his Civil Service career after the War with the British
Board of Trade where he concentrated on international trade and finance. He
served for five years in Australia as a Trade Commissioner and five years in
India. From 1967 to 1980 he was in charge of the United Kingdom's export policy
and commercial relations with the United States. He later became the head of the
Export Credits Guarantee Department where he was closely involved with the
United States EXIM Bank and the Department of the Treasury. In 1974 he left
government service to become the first Chief Executive of the London Stock
Exchange. In 1981, he was invited by the Hong Kong government to become a
Commissioner for Securities. He was instrumental in the unification of Hong
Kong's three stock exchanges and the creation of a financial futures market. In
1984 he was appointed Commissioner of Banking and of Deposit-taking Companies.
He was directly responsible for the changes in Hong Kong's banking regulations
and the successful rescue of several banks during the crisis of 1983. After the
stock market crash in October 1987, he took over as Chief Executive of the Hong
Kong Stock Exchange and introduced the new management set up which is still in
use today.

Mr. McMeekin was appointed as a director of the Company and the Bank in
July 1998. With over 30 years of extensive domestic and overseas banking
experience, he has served as Chief Executive Officer for the following banks:
Bank of the Orient in San Francisco from 1990 to 1996, I.B.I. Asia in Hong Kong
from 1988 to

64
<PAGE>
1989, and Ocean Leila in Hong Kong from 1973 to 1976. Mr. McMeekin has developed
banking operations in the United States, Europe, and Asia. His experience in
environments undergoing rapid change has allowed him to engineer the turn-around
of a major financial services group in Hong Kong as well as a United States
bank. Earlier assignments included senior management positions with Crocker Bank
(now Wells Fargo Bank) in San Francisco and Standard Chartered Bank, London. Mr.
McMeekin is also a member of the Institute of Bankers, Scotland, and has
attended management development programs at Harvard Business School.

Dr. Wong has been a director of the Bank since 1994. Dr. Wong has been on
the Faculty of the Haas School of Business at the University of California at
Berkeley for the last thirteen years. Dr. Wong has also been a tenured professor
of management at Golden Gate University for the last fifteen years. Dr. Wong has
been on the faculty of the Graduate School of Business Administration, Zurich,
Switzerland for the last nine years and lectured in 16 countries to high level
business executives throughout the world. Dr. Wong was appointed by the FDIC,
Federal Home Loan Bank Board, Resolution Trust Corporation and the OTS to be on
the Boards of Directors of various financial institutions, including Gateway
Bank and California National Bank. Dr. Wong has also served on the Boards of
other organizations, including World Affairs Council, International Forum,
Harvard Club and Chinatown Resources Development Center. Dr. Wong graduated with
a Bachelor's degree from the University of Wisconsin, a M.B.A. from the
University of California, Los Angeles and a M.A. and Ph.D from Harvard
University.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS OF
THE COMPANY

The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of its committees. The
Board of Directors of the Company meets quarterly and may have additional
meetings as needed. During the year ended December 31, 1997, the Board of
Directors of the Company acted eight times by unanimous written consent in lieu
of meeting. All of the directors of the Company participated in at least 75% of
the total number of the Company's Board meetings held and committee meetings on
which such directors served during 1997. The Board of Directors of the Company
maintains an Audit and Examining Committee, a Credit Policy and Investment
Committee and a Human Resources Committee, the nature and composition of which
are described below:

AUDIT COMMITTEE. The Audit and Examining Committee of the Company and the
Bank consist of Messrs. Fell, Wong and McMeekin. The Audit Committee is
responsible for reporting to the Board on the general financial condition of the
Bank and the results of the annual audit, and is responsible for ensuring that
the Bank's activities are being conducted in accordance with applicable laws and
regulations. The Audit and Examining Committee of the Company was formed in May
1998. The Audit and Examining Committee of the Bank met six times in 1997.

HUMAN RESOURCES COMMITTEE. The Human Resources Committee of the Company
consists of Messrs. Lam and Fell. The Human Resources Committee of the Company
reviews and recommends to the Board of Directors compensation for senior
management of the Bank; the adoption, amendment and implementation of incentive
compensation plans, stock option plans, and other benefit plans and programs for
the Company and the Bank. The Human Resources Committee of the Company and the
Bank is also responsible for maintaining on behalf of the Board of Directors a
current senior management succession and contingency plan; charged with the
investigation and resolution of any incident which may be construed as a
potential conflict of interest on behalf of any member of senior management or
other offices of the Company and the Bank wherein Board of Directors oversight
and action are appropriate; and may be required from time to time that senior
management of the Bank and officers and directors of the Company provide
proposals for, or status or progress reports on, policies or programs which may
have a material bearing on the strategic human resources philosophy and
consequent operational direction of the Bank. The Human Resources Committee of
the Company was formed in 1998. The Human Resources Committee of the Bank met
four times in 1997.

CREDIT POLICY AND INVESTMENT COMMITTEE. The Credit Policy and Investment
Committee of the Company and the Bank consists of Messrs. Wong, Downing, Fell,
Lam, McMeekin and Wu. The committee is responsible for approving credit
policies, setting parameters for credit risks, monitoring the overall credit
risk profile of the Company and the Bank and the valuation allowance reserve.
The Credit Policy and Investment Committee of the Company was formed in May
1998. The Credit Policy and Investment Committee of the Bank met six times in
1997.

65
<PAGE>
DIRECTORS' COMPENSATION

DIRECTORS' FEES. Currently, all outside directors of the Company and the
Bank each receive an annual retainer of $25,200, while the Chairman of the Board
of Directors of the Company and the Bank receives an annual retainer of
$150,000, for service on the Board of Directors of the Company and the Bank. No
committee meeting fees are paid by the Company or the Bank. Messrs. Wu and
Downing do not receive any additional compensation for serving as directors of
the Company and the Bank.

SUMMARY COMPENSATION TABLE

The following presents, for the year ended December 31, 1997, the cash
compensation paid by the Company and the Bank as well as certain other
compensation paid for that year, to the Chief Executive Officer and the other
five most highly compensated executive officers of the Company.

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ------------------------- -------
OTHER RESTRICTED SECURITIES LTIP ALL
NAME AND BONUS ANNUAL STOCK UNDERLYING PAYOUTS OTHER
PRINCIPAL POSITION YEAR SALARY (3) COMPENSATION AWARDS OPTIONS/SARS (4) COMPENSATION
- ---------------------------- ---- -------- ------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sau-wing Lam (1)............ 1997 $285,554 $ -- $3,529 $-- -- $-- $--
Chairman of the
Board of Directors
Thomas S. Wu (2)............ 1997 $ 47,788 $30,000 $1,334 -- -- -- --
President, Chief Executive
Officer and Director
Jonathan H.................. 1997 $159,000 $17,500 $ 499 -- -- -- --
Downing Senior Vice
President, Chief Financial
Officer, Treasurer and
Director
Louis E. Barbarelli......... 1997 $126,000 $25,000 $ 242 -- -- -- --
Senior Vice President
and Director of
Operations and Systems
Cecilia Lai................. 1997 $101,246 $20,000 $ 194
Senior Vice President
and Director of
Retail Banking
Dennis A. Lee............... 1997 $117,468 $ 3,000 $2,697 -- -- -- --
Vice President and
Corporate Counsel
Sylvia Loh.................. 1997 $117,600 $20,000 $ 220 -- -- -- --
Senior Vice President
and Director of
Commercial Banking
</TABLE>

- ------------------

(1) Mr. Lam was President and Chief Executive Officer of the Bank and Vice
Chairman of the Board of Directors of the Bank during 1997. Effective
December 31, 1997, Mr. Lam resigned as President and Chief Executive Officer
of the Bank but remained as Vice Chairman of the Board of Directors.
Effective April 17, 1998, Mr. Lam was elected as Chairman of the Board of
Directors of the Bank and the Company.

(2) Mr. Wu re-joined the Bank on September 23, 1997, after spending one year
with a former overseas affiliate. Mr. Wu was named President and Chief
Executive Officer of the Bank effective January 1, 1998. Mr. Wu was elected
President and Chief Executive Officer of the Company effective March 26,
1998 and as a director of the Company on April 17, 1998. As of September 23,
1997, Mr. Wu's annual base compensation was $175,000 per annum.

(3) The referenced bonus represents a performance bonus for the year ended
December 31, 1996 which was paid in the first quarter of 1997.

(4) The former Long-Term Incentive Plan was terminated in conjunction with the
Private Offerings.

66
<PAGE>
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS

The Bank and the Company have entered into employment agreements with
Thomas S. Wu, the President and Chief Executive Officer of the Company and the
Bank (the 'Executive'). These employment agreements are intended to ensure that
the Bank and the Company will be able to maintain a stable and competent
management base. The continued success of the Bank and the Company depends to a
significant degree on the skills and competence of the Executive.

The employment agreements provide for a three-year term. The Bank
employment agreement provides that, commencing on the first anniversary date and
continuing each anniversary date thereafter, the Board of Directors will review
the agreement and the Executive's performance for purposes of determining
whether to extend the agreement for an additional year so that the remaining
term shall be three years, unless written notice of non-renewal is given by the
Board of Directors after conducting a performance evaluation of the Executive.
The term of the Company employment agreement shall be extended on a daily basis
unless written notice of non-renewal is given by the Board of Directors after
conducting a performance evaluation of the Executive. The agreements provide
that the Executive's base salary will be reviewed annually. In addition to the
base salary, the agreements provide for, among other things, participation in
stock benefit plans and other fringe benefits applicable to executive personnel.
The agreements provide for termination by the Bank or the Company for cause as
would be defined in the agreements, at any time. In the event the Bank or the
Company choose to terminate the Executive's employment for any reasons other
than for cause, or in the event of the Executive's resignation from the Bank and
the Company upon: (i) failure to re-elect the Executive to Executive's current
offices; (ii) a material change in the Executive's functions, duties or
responsibilities; (iii) a relocation of the Executive's principal place of
employment by more than 25 miles; (iv) liquidation or dissolution of the Bank or
the Company; or (v) a breach of the agreement by the Bank or the Company; the
Executive or, in the event of death, the Executive's beneficiary, would be
entitled to receive an amount equal to the remaining base salary payments due to
the Executive and the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Bank or the Company during the
remaining term of the agreement. The Bank and the Company would also continue
and pay for the Executive's life, health and disability insurance coverage for
the remaining term of the agreement.

Under the agreements, if voluntary or involuntary termination follows a
change in control of the Bank or the Company as defined in the proposed
employment agreements, it is expected that, the Executive, or, in the event of
the Executive's death, his beneficiary, would be entitled to a severance payment
equal to the greater of: (i) the payments due for the remaining term of the
agreement; or (ii) three times the highest annual compensation paid for the
preceding three years. It is expected that the Bank and the Company would also
continue the Executive's life, health and disability insurance coverage for 36
months.

The Bank and the Company have entered into three-year termination and
change in control agreements ('CIC Agreements') with seven other executive
officers (the 'Officers') of the Company and the Bank. The CIC Agreements
provide that commencing on the first anniversary date and continuing on each
anniversary thereafter, the Bank's CIC Agreements may be renewed by the Board of
Directors for an additional year. The Company's CIC Agreements are similar to
the Bank's CIC Agreements except that the term of the Company's CIC Agreements
shall be extended on a daily basis. The CIC Agreements provide that in the event
voluntary or involuntary termination follows a change in control of the Bank or
the Company, the Officer would be entitled to receive a severance payment equal
to three times the Officer's highest annual compensation for the three years
preceding the change in control. The Bank would also continue, and pay for, the
Officer's life, health and disability insurance coverage for the remaining term
of the agreements. Payments to the Officer under the Bank's CIC Agreements are
guaranteed by the Company in the event that payments of benefits are not paid by
the Bank. The CIC Agreements also provide that if an Officer is terminated
during the existence of the CIC Agreement for any reason other than resignation,
cause (as defined in the CIC Agreements), death or permanent disability, but
prior to any change in control of the Company or the Bank, the Officer shall be
paid a severance payment equal to the highest annual compensation paid to such
Officer for the three preceding years.

In the event of a change in control, total payments to executives and
officers under the employment agreements and the CIC Agreements, based solely on
current base salary, would be $3.2 million.

67
<PAGE>
STOCK OPTION PLAN

The Board of Directors of the Company has adopted a Stock Option Plan (the
'Stock Option Plan') which provides for the granting of stock options to
eligible officers, employees and directors of the Company and the Bank. The
Company has reserved 653,333 shares of Common Stock to be issued pursuant to the
Stock Option Plan, of which 620,000 were granted at an exercise price of $15.00
and will vest over a three-year period.

The stock option benefits provided under the Stock Option Plan are designed
to attract and retain qualified personnel in key positions, provide officers,
directors and key employees with a proprietary interest in the Company as an
incentive to contribute to the success of the Company, promote the attention of
management to other Stockholders' concerns and reward key employees for
outstanding performance. All employees and directors of the Company and its
subsidiaries are eligible to participate in such plan. The Stock Option Plan
provides for the grant of: (i) options to purchase the Company's Common Stock
intended to qualify as incentive stock options under Section 422 of the Code
('Incentive Stock Options'); or (ii) options that do not so qualify
('Non-Statutory Stock Options'). Unless sooner terminated, the Stock Option Plan
will be in effect for a period of ten years from the date of adoption by the
Board of Directors. The Company intends to grant all future options under the
Stock Option Plan at an exercise price equal to the fair market value of the
underlying Common Stock on the date of grant. Following termination of
employment or service in the event of disability, a change in control or death,
all Non-Statutory Stock Options, whether or not exercisable, shall vest and
become immediately exercisable. In the event of termination for cause or
termination of employment for any other reason including retirement or voluntary
resignation, all vested Non-Statutory Stock Options as of the date of
termination shall remain exercisable for a period of one year, and all unvested
Non-Statutory Stock Options shall become null and void. Following termination of
employment or service in the event of disability, retirement, a change in
control or death, all Incentive Stock Options, whether or not exercisable, shall
vest and become immediately exercisable. In the event of termination for cause
or termination of employment for any other reason including voluntary
resignation, all vested Incentive Stock Options as of the date of termination
shall remain exercisable for a period of one year, and all unvested Incentive
Stock Options shall become null and void. It is anticipated that all options
granted to officers and employees will be intended to be Incentive Stock Options
to the extent permitted under Section 422 of the Code.

TRANSACTIONS WITH CERTAIN RELATED PERSONS

The Financial Institutions Reform, Recovery and Enforcement Act ('FIRREA')
requires that all loans or extensions of credit to executive officers and
directors must be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
the general public and must not involve more than the normal risk of repayment
or present other unfavorable features. In addition, loans made to a director or
executive officer in excess of the greater of $25,000 or 5% of the Bank's
capital and surplus (up to a maximum of $500,000) must be approved in advance by
a majority of the disinterested members of the Board of Directors. The Bank's
policy provides that no loans may be made by the Bank to its executive officers
and directors.

It is the policy of the Company that all transactions between the Company
and holders of 10% or more of the shares of any class of its common stock and
affiliates thereof, contain terms no less favorable to the Company than could
have been obtained by it in arm's-length negotiations with unaffiliated persons
and are required to be approved by a majority of independent outside directors
of the Company not having any interest in the transaction.

68
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHER BENEFICIAL OWNERS

The following table sets forth, as of September 30, 1998, certain
information as to those persons who were known by management to be beneficial
owners of more than 5% of the Company's outstanding shares of Common Stock, each
director, each Named Executive Officer and the shares of Common Stock
beneficially owned by all directors and executive officers of the Company as a
group.

<TABLE>
<CAPTION>
NUMBER PERCENTAGE
POSITION(S) WITH THE OF BENEFICIALLY
NAME OF BENEFICIAL OWNER COMPANY SHARES (1) OWNED
- -------------------------------------------------- --------------------------- ---------- ------------
<S> <C> <C> <C>
Sau-wing Lam...................................... Chairman of the Board of 50,000 *
Directors
Thomas S. Wu...................................... Director, President and 33,333 *
Chief Executive Officer
Jonathan H. Downing............................... Senior Vice President, 16,667 *
Chief Financial Officer,
Treasurer and Director
Robert Fell....................................... Director -- *
Godwin Wong....................................... Director 20,000 *
Ronald McMeekin................................... Director -- *
Louis E. Barbarelli............................... Senior Vice President and 3,333 *
Director of Operations
and Systems
Cecilia Lai....................................... Senior Vice President and 10,000 *
Director of Retail
Banking
Dennis Alan Lee................................... Vice President and 6,667 *
Corporate Counsel
Sylvia Loh........................................ Senior Vice President and 16,667 *
Director of Commercial
Banking
All Executive Officers and Directors as a
Group (12 persons).............................. 163,333 1.75%
</TABLE>

- ------------------
* Does not exceed 1.0% of the Company's voting securities.
(1) The number of shares of Common Stock outstanding and the number owned by the
individuals or entities listed does not include any shares issuable pursuant
to outstanding options, none of which may be exercised until April 17, 1999.

69
<PAGE>
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY

GENERAL

The Company is authorized to issue 25 million shares of Common Stock having
a par value of $.01 per share and 10 million shares of preferred stock having a
par value of $.01 per share (the 'Preferred Stock'). The Company issued
9,333,333 shares of Common Stock and no shares of Preferred Stock in the Private
Offerings. Each share of the Company's Common Stock has the same relative rights
as, and is identical in all respects with, each other share of Common Stock. All
such stock has been duly authorized and is fully paid and non-assessable.

COMMON STOCK

Dividends. The Company can pay dividends out of statutory surplus or from
certain net profits if, as and when declared by its Board of Directors. The
payment of dividends by the Company is subject to limitations which are imposed
by law and applicable regulation. See 'Supervision and Regulation.' The holders
of Common Stock of the Company are entitled to receive and share equally in such
dividends as may be declared by the Board of Directors of the Company out of
funds legally available therefor. If the Company issues Preferred Stock, the
holders thereof may have a priority over the holders of the Common Stock with
respect to dividends.

Voting Rights. The holders of Common Stock of the Company possess
exclusive voting rights in the Company. They elect the Company's Board of
Directors and act on such other matters as are required to be presented to them
under Delaware law or the Company's Certificate of Incorporation or as are
otherwise presented to them by the Board of Directors. Except as discussed in
'Restrictions on Acquisition,' holders of Common Stock are entitled to one vote
per share and do not have any right to cumulate votes in the election of
directors. If the Company issues Preferred Stock, holders of the Preferred Stock
may also possess voting rights. Certain matters require an 80% stockholder vote.
See 'Restrictions on Acquisition.'

Voting rights with respect to the Bank are vested exclusively in the owners
of the shares of capital stock of the Bank, which is the Company, and voted at
the direction of the Company's Board of Directors. Consequently, the holders of
the Common Stock do not have direct control of the Bank.

Liquidation. In the event of any liquidation, dissolution or winding up of
the Bank, the Company, as holder of the Bank's capital stock, would be entitled
to receive, after payment or provision for payment of all debts and liabilities
of the Bank, all assets of the Bank available for distribution. In the event of
liquidation, dissolution or winding up of the Company, the holders of its Common
Stock would be entitled to receive, after payment or provision for payment of
all its debts and liabilities, all of the assets of the Company available for
distribution. If Preferred Stock is issued, the holders thereof may have a
priority over the holders of the Common Stock in the event of liquidation or
dissolution.

Preemptive Rights. Holders of Common Stock of the Company are not be
entitled to preemptive rights with respect to any shares which may be issued.
The Common Stock is not subject to redemption.

PREFERRED STOCK

None of the shares of the Company's Preferred Stock have been issued. Such
stock may be issued with such preferences and designations as the Board of
Directors may from time to time determine. The Board of Directors can, without
stockholder approval, issue preferred stock with voting, dividend, liquidation
and conversion rights which could dilute the voting strength of the holders of
the Common Stock and may assist management in impeding an unfriendly takeover or
attempted change in control.

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RESTRICTIONS ON ACQUISITION

GENERAL

Certain provisions in the Company's Certificate of Incorporation and Bylaws
and in its management remuneration, together with provisions of Delaware
corporate law, may have anti-takeover effects. In addition, regulatory
restrictions may make it difficult for persons or companies to acquire control
of either the Company or the Bank.

RESTRICTIONS IN THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS

A number of provisions of the Company's Certificate of Incorporation and
Bylaws deal with matters of corporate governance and certain rights of
stockholders. The following discussion is a general summary of certain
provisions of the Company's Certificate of Incorporation and Bylaws and certain
other statutory and regulatory provisions relating to stock ownership and
transfers, the Board of Directors and business combinations, which might be
deemed to have a potential 'anti-takeover' effect. These provisions may have the
effect of discouraging a future takeover attempt, which is not approved by the
Board of Directors but which individual Company stockholders may deem to be in
their best interests or in which stockholders may receive a substantial premium
for their shares over then current market prices. As a result, stockholders who
might desire to participate in such a transaction may not have an opportunity to
do so. Such provisions will also render the removal of the current Board of
Directors or management of the Company more difficult. The following is a
general description of certain of the provisions of the Certificate of
Incorporation and Bylaws of the Company.

Limitation on Voting Rights. The Certificate of Incorporation of the
Company provides that in no event shall any record owner of any outstanding
Common Stock which is beneficially owned, directly or indirectly, by a person
who beneficially owns in excess of 10% of the then outstanding shares of Common
Stock (the 'Limit') be entitled or permitted to any vote in respect of the
shares held in excess of the Limit. Beneficial ownership is determined pursuant
to Rule 13d-3 of the General Rules and Regulations promulgated pursuant to the
Exchange Act, and includes shares beneficially owned by such person or any of
his affiliates (as defined in the Certificate of Incorporation), shares which
such person or his affiliates have the right to acquire upon the exercise of
conversion rights or options and shares as to which such person and his
affiliates have or share investment or voting power, but shall not include
shares beneficially owned by directors, officers and employees of the Bank or
Company or shares that are subject to a revocable proxy and that are not
otherwise beneficially owned or deemed by the Company to be beneficially owned,
by such person and his affiliates. The Certificate of Incorporation of the
Company further provides that this provision limiting voting rights may only be
amended upon the vote of 80% of the outstanding shares of voting stock (after
giving effect to the limitation on voting rights).

Board of Directors. The Board of Directors of the Company is divided into
three classes, each of which shall contain approximately one-third of the whole
number of members of the Board. Each class shall serve a staggered term, with
approximately one-third of the total number of directors being elected each
year. The Company's Certificate of Incorporation and Bylaws provide that the
size of the Board shall be determined by a majority of the directors. The
Certificate of Incorporation and the Bylaws provide that any vacancy occurring
in the Board, including a vacancy created by an increase in the number of
directors or resulting from death, resignation, retirement, disqualification,
removal from office or other cause, shall be filled for the remainder of the
unexpired term exclusively by a majority vote of the directors then in office.
The classified Board is intended to provide for continuity of the Board of
Directors and to make it more difficult and time consuming for a stockholder
group to fully use its voting power to gain control of the Board of Directors
without the consent of the incumbent Board of Directors of the Company. The
Certificate of Incorporation of the Company provides that a director may be
removed from the Board of Directors prior to the expiration of his term only for
cause, upon the vote of 80% of the outstanding shares of voting stock.

In the absence of these provisions, the vote of the holders of a majority
of the shares could remove the entire Board, with or without cause, and replace
it with persons of such holders' choice.

Cumulative Voting, Special Meetings and Action by Written Consent. The
Certificate of Incorporation does not provide for cumulative voting for any
purpose. Moreover, special meetings of stockholders of the Company may be called
only by the Board of Directors of the Company. The Certificate of Incorporation
also

71
<PAGE>
provides that any action required or permitted to be taken by the stockholders
of the Company may be taken only at an annual or special meeting and prohibits
stockholder action by written consent in lieu of a meeting.

Authorized Shares. The Certificate of Incorporation authorizes the
issuance of 25 million shares of Common Stock and 10 million shares of Preferred
Stock. The shares of Common Stock and Preferred Stock were authorized to provide
the Company's Board of Directors with as much flexibility as possible to effect,
among other transactions, financings, acquisitions, stock dividends, stock
splits and employee stock options. However, these additional authorized shares
may also be used by the Board of Directors consistent with its fiduciary duty to
deter future attempts to gain control of the Company. The Board of Directors
also has sole authority to determine the terms of any one or more series of
Preferred Stock, including voting rights, conversion rates, and liquidation
preferences. As a result of the ability to fix voting rights for a series of
Preferred Stock the Board has the power, to the extent consistent with its
fiduciary duty, to issue a series of Preferred Stock to persons friendly to
management in order to attempt to block a post-tender offer merger or other
transaction by which a third party seeks control, and thereby assist management
to retain its position. The Company's Board of Directors currently has no plans
for the issuance of additional shares, other than the issuance of additional
shares upon exercise of stock options issued pursuant to the terms of the Stock
Option Plan.

Stockholder Vote Required to Approve Business Combinations with Principal
Stockholders. The Certificate of Incorporation requires the approval of the
holders of at least 80% of the Company's outstanding shares of voting stock to
approve certain 'Business Combinations,' as defined therein, and related
transactions. Under Delaware law, absent this provision, Business Combinations,
including mergers, consolidations and sales of all or substantially all of the
assets of a corporation must, subject to certain exceptions, be approved by the
vote of the holders of only a majority of the outstanding shares of Common Stock
of the Company and any other affected class of stock. Under the Certificate of
Incorporation, at least 80% approval of stockholders is required in connection
with any transaction involving an Interested Stockholder or (ii) if the proposed
transaction meets certain conditions set forth therein which are designed to
afford the stockholders a fair price in consideration for their shares in which
case, if a stockholder vote is required, approval of only a majority of the
outstanding shares of voting stock would be sufficient. The term 'Interested
Stockholder' is defined to include any individual, corporation, partnership or
other entity (other than the Company or its subsidiary) which owns beneficially
or controls, directly or indirectly, 10% or more of the outstanding shares of
voting stock of the Company. This provision of the Certificate of Incorporation
applies to any 'Business Combination,' which is defined to include (i) any
merger or consolidation of the Company or any of its subsidiaries with or into
any Interested Stockholder or Affiliate (as defined in the Certificate of
Incorporation) of an Interested Stockholder; (ii) any sale, lease, exchange,
mortgage, pledge, transfer, or other disposition to or with any Interested
Stockholder or Affiliate of 25% or more of the assets of the Company or combined
assets of the Company and its subsidiary; (iii) the issuance or transfer to any
Interested Stockholder or its Affiliate by the Company (or any subsidiary) of
any securities of the Company in exchange for any assets, cash or securities of
the Company in exchange for any assets, cash or securities the value of which
equals or exceeds 25% of the fair market value of the Common Stock of the
Company; (iv) the adoption of any plan for the liquidation or dissolution of the
Company proposed by or on behalf of any Interested Stockholder or Affiliate
thereof; and (v) any reclassification of securities, recapitalization, merger or
consolidation of the Company which has the effect of increasing the
proportionate share of Common Stock or any class of equity or convertible
securities of the Company owned directly or indirectly by an Interested
Stockholder or Affiliate thereof.

Evaluation of Offers. The Certificate of Incorporation of the Company
further provides that the Board of Directors of the Company, when evaluating any
offer of another 'Person' (as defined therein) to (i) make a tender or exchange
offer for any equity security of the Company, (ii) merge or consolidate the
Company with another corporation or entity, or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
may, in connection with the exercise of its judgment in determining what is in
the best interest of the Company, the Bank and the stockholders of the Company,
give due consideration to all relevant factors, including, without limitation,
the social and economic effects of acceptance of such offer on the Company's
customers and the Bank's present and future account holders, borrowers and
employees; on the communities in which the Company and the Bank operate or are
located; and on the ability of the Bank to fulfill the objectives of a banking
institution under applicable statutes and regulations. By having these standards
in the Certificate of Incorporation of the Company, the Board of Directors may
be in a stronger position to oppose such

72
<PAGE>
a transaction if the Board concludes that the transaction would not be in the
best interest of the Company, even if the price offered is significantly greater
than the then market price of any equity security of the Company.

Amendment of Certificate of Incorporation and Bylaws. Amendments to the
Company's Certificate of Incorporation must be approved by a majority vote of
its Board of Directors and also by a majority of the outstanding shares of its
voting stock; provided, however, that an affirmative vote of at least 80% of the
outstanding voting stock entitled to vote (after giving effect to the provision
limiting voting rights) is required to amend or repeal certain provisions of the
Certificate of Incorporation, including the provision limiting voting rights,
the provisions relating to approval of certain business combinations, calling
special meetings, the number and classification of directors, director and
officer indemnification by the Company and amendment of the Company's Bylaws and
Certificate of Incorporation. The Company's Bylaws may be amended by its Board
of Directors, or by a vote of 80% of the total votes eligible to be voted at a
duly constituted meeting of stockholders.

Certain Bylaw Provisions. The Bylaws of the Company also require a
stockholder who intends to nominate a candidate for election to the Board of
Directors, or to raise new business at a stockholder meeting to give at least 90
days advance notice to the Secretary of the Company. The notice provision
requires a stockholder who desires to raise new business to provide certain
information to the Company concerning the nature of the new business, the
stockholder and the stockholder's interest in the business matter. Similarly, a
stockholder wishing to nominate any person for election as a director must
provide the Company with certain information concerning the nominee and the
proposing stockholder.

ANTI-TAKEOVER EFFECTS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
AND MANAGEMENT REMUNERATION

The provisions described above are intended to reduce the Company's
vulnerability to takeover attempts and certain other transactions which have not
been negotiated with and approved by members of its Board of Directors. The
provisions of the employment agreements, CIC Agreements and Stock Option Plan
may also discourage takeover attempts by increasing the costs to be incurred by
the Bank and the Company in the event of a takeover. See 'Management of the
Company and Bank--Employment and Change in Control Agreements' and '--Stock
Option Plan.'

The Company's Board of Directors believes that the provisions of the
Certificate of Incorporation, Bylaws and management remuneration plans are in
the best interest of the Company and its stockholders. An unsolicited
non-negotiated proposal can seriously disrupt the business and management of a
corporation and cause it great expense. Accordingly, the Board of Directors
believes it is in the best interests of the Company and its stockholders to
encourage potential acquirors to negotiate directly with management and that
these provisions will encourage such negotiations and discourage non-negotiated
takeover attempts. It is also the Board of Directors' view that these provisions
should not discourage persons from proposing a merger or other transaction at a
price that reflects the true value of the Company and that otherwise is in the
best interest of all stockholders.

DELAWARE CORPORATE LAW

The state of Delaware has a statute designed to provide Delaware
corporations with additional protection against hostile takeovers. The takeover
statute, which is codified in Section 203 of the Delaware General Corporate Law
('Section 203'), is intended to discourage certain takeover practices by
impeding the ability of a hostile acquiror to engage in certain transactions
with the target company.

In general, Section 203 provides that a 'Person' (as defined therein) who
owns 15% or more of the outstanding voting stock of a Delaware corporation (an
'Interested Stockholder') may not consummate a merger or other business
combination transaction with such corporation at any time during the three-year
period following the date such 'Person' became an Interested Stockholder. The
term 'business combination' is defined broadly to cover a wide range of
corporate transactions including mergers, sales of assets, issuances of stock,
transactions with subsidiaries and the receipt of disproportionate financial
benefits.

The statute exempts the following transactions from the requirements of
Section 203; (i) any business combination if, prior to the date a person became
an Interested Stockholder, the Board of Directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
Interested

73
<PAGE>
Stockholder; (ii) any business combination involving a person who acquired at
least 85% of the outstanding voting stock in the transaction in which he became
an Interested Stockholder, with the number of shares outstanding calculated
without regard to those shares owned by the corporation's directors who are also
officers and by certain employee stock plans; (iii) any business combination
with an Interested Stockholder that is approved by the Board of Directors and by
a two-thirds vote of the outstanding voting stock not owned by the Interested
Stockholder; and (iv) certain business combinations that are proposed after the
corporation had received other acquisition proposals and which are approved or
not opposed by a majority of certain continuing members of the Board of
Directors. A corporation may exempt itself from the requirements of the statute
by adopting an amendment to its Certificate of Incorporation or Bylaws electing
not to be governed by Section 203. At the present time, the Board of Directors
does not intend to propose any such amendment.

REGULATORY RESTRICTIONS

The Change in Bank Control Act and the BHCA, together with FRB regulations
promulgated under those acts, require that the consent of the FRB be obtained
prior to any person or company acquiring 'control' of a bank holding company.
Control is conclusively presumed to exist if an individual or company acquires
more than 25% of any class of voting stock of the bank holding company. Control
is rebuttably presumed to exist if the person acquires more than 10% of any
class of voting stock of a bank holding company and if either (i) the company
has registered securities under Section 12 of the Exchange Act or (ii) no other
person will own a greater percentage of that class of voting securities
immediately after the transaction. The regulations provide a procedure to rebut
the foregoing presumption. Since the Company's Common Stock will be registered
under Section 12 of the Exchange Act, any acquisition of 10% or more of the
outstanding Common Stock will give rise to a rebuttable presumption that the
acquiror of such stock controls the Company, requiring the acquiror, prior to
acquiring such stock, to rebut the presumption of control to the satisfaction of
the FRB or obtain FRB approval for the acquisition of control.

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<PAGE>
REGISTRATION RIGHTS

In connection with the Private Offerings, the Company on April 13, 1998
entered into the Registration Rights Agreement with the initial purchasers of
the Common Stock, pursuant to which the Company agreed to (i) cause to be filed
with the Commission within 120 days after the original issuance of the Common
Stock pursuant to the Purchase Agreement, a shelf registration statement
providing for the offer and sale of the Common Stock issued in the Private
Offerings, (ii) use its best efforts to cause the shelf registration statement
to be declared effective under the Securities Act as promptly as possible and
(iii) use its best efforts to keep effective the shelf registration statement
until the earlier of the second anniversary of the date such shelf registration
statement is declared effective by the Commission or such time as all of the
Common Stock have been sold thereunder or otherwise may be sold without the need
for the shelf registration statement, as set forth in the Registration Rights
Agreement. The Company agreed to bear the expenses arising out of the filing of
such shelf registration statement. The Registration Statement of which this
Prospectus forms a part has been filed to satisfy the Company's obligations
under the Registration Rights Agreement.

Pursuant to the terms of the Registration Rights Agreement, a holder of
Common Stock and the Placement Agent desiring to sell some or all of such
securities pursuant to the shelf registration statement shall give the Company
not less than ten days' prior written notice, and the Company will use its best
efforts to promptly file any required amendment(s) to the shelf registration
statement in order to facilitate such sales. Initiating Holders, as defined in
the Registration Rights Agreement to mean one or more holders of not less than
25% of the then-outstanding Common Stock, may elect that the offering of Common
Stock be in the form of an underwritten offering. Under such circumstances, the
Company will provide written notice to all holders of the Common Stock and the
Placement Agent of such underwritten offering and will provide them with an
opportunity to participate in such underwritten offering, under terms and with
such conditions as set forth in the Registration Rights Agreement.

Under the Registration Rights Agreement, a holder that sells Common Stock
pursuant to the shelf registration statement generally is required to be named
as a selling security holder in the related prospectus and is required to
deliver a prospectus to purchasers, is subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and is bound
by the provisions of the Registration Rights Agreement that are applicable to
such a holder (including certain indemnification rights and obligations).

Each certificate representing shares of Common Stock contain a legend to
the effect that the holder thereof, by its acceptance thereof, is deemed to have
agreed to be bound by the provisions of the Registration Rights Agreement. In
that regard, each holder is deemed to have agreed that, upon receipt of notice
from the Company of the occurrence of any event which makes a statement in the
prospectus which is part of the shelf registration statement untrue in any
material respect or which requires the making of any changes in such prospectus
in order to make the statements therein not misleading, such holder will suspend
the sale of Common Stock pursuant to such prospectus until the Company has
amended or supplemented such prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented prospectus to such
holder or the Company has given notice that the sale of the Common Stock may be
resumed.

The Registration Rights Agreement is governed by, and construed in
accordance with, the laws of the State of Delaware. The summary herein of
certain provisions of the Registration Rights Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Registration Rights Agreement.

SELLING HOLDERS

The Common Stock was originally issued and sold by the Company in the
Private Offerings in transactions exempt from the registration requirements of
the Securities Act, to persons reasonably believed by the Company to be
'qualified institutional buyers' (as defined in Rule 144A under the Securities
Act) or other 'accredited investors' (as defined in Rule 501(a) under the
Securities Act). The Selling Holders (which term includes their transferees,
pledgees, donees or their successors) may from time to time offer and sell
pursuant to this Prospectus any or all of the Common Stock owned by each of
them.

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<PAGE>
The following table sets forth information with respect to the Selling
Holders named herein and the shares of Common Stock beneficially owned and
offered hereby by such Selling Holders. Such information has been obtained from
such Selling Holders. Except as otherwise disclosed herein, such Selling Holders
do not have, or within the past three years have not had, any position, office
or other material relationship with the Company or affiliates. Because such
Selling Holders may offer all or some portion of the Common Stock pursuant to
this Prospectus, no estimate can be given as to the amount of the Common Stock
that will be held by such Selling Holders upon termination of any such sales. In
addition, the Selling Holders identified below may have sold, transferred or
otherwise disposed of all or a portion of their Common Stock since the date on
which it provided the information regarding their Common Stock in transactions
exempt from the registration requirements of the Securities Act. Finally, if
required, additional Selling Holders may from time to time be identified and
information with respect to such Selling Holders be provided in a Prospectus
Supplement.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
NAME OF SELLING HOLDER BENEFICIALLY OWNED AND OFFERED HEREBY
- ---------------------------------------------------------------------------- -------------------------------------
<S> <C>
Russell T. Abbott........................................................... 6,667
Howard Amster IRA........................................................... 81,600
Amster Trading Co. Charitable Remainder Unitrust............................ 16,700
Michael J. Antonelli........................................................ 10,000
Apple Ridge Partners........................................................ 25,000
Asset Management Holding LLC................................................ 13,000
BK Investments.............................................................. 6,667
Louis E. Barbarelli......................................................... 3,333
Bay Pond Investors Bermuda L.P.............................................. 216,000
Bay Pond Partners L.P....................................................... 366,000
Bayhill Fund Limited........................................................ 21,667
Bedford Falls Investors LP.................................................. 239,300
Benefit Designs Inc. Pension Plan........................................... 3,334
Thomas G. Berlin IRA........................................................ 16,700
Francois Bitz............................................................... 20,000
Frank Boides................................................................ 10,000
Booth & Co.................................................................. 13,333
Allan Bortel & Sydne Bortel................................................. 13,333
Nathan S. Brand............................................................. 30,000
Robert J. Buckley........................................................... 10,000
King Street Capital L.P..................................................... 133,333
Charles Schwab & Co. Inc.................................................... 3,333
Charles W. Palmer Trust..................................................... 6,667
Chester County Fund Inc..................................................... 10,000
Sally Chow.................................................................. 1,000
John Sheldon Clark.......................................................... 13,333
John Cleary................................................................. 666
Mark B. Cohen............................................................... 45,140
The Common Fund............................................................. 18,000
Joel A. Comer............................................................... 6,667
James Connor................................................................ 6,667
Deem Sum International Inc.................................................. 6,667
May F. Della Pietra......................................................... 6,667
Delverde Corporation........................................................ 66,667
Sandy Ding.................................................................. 6,667
Donaldson Lufkin & Jenrette................................................. 6,667
Jonathan H. Downing......................................................... 16,667
Jonathan J. Doyle........................................................... 6,667
Drake Associates L.P........................................................ 15,000
James J. Dunne III.......................................................... 51,562
</TABLE>

76
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
NAME OF SELLING HOLDER BENEFICIALLY OWNED AND OFFERED HEREBY
- ---------------------------------------------------------------------------- -------------------------------------
<S> <C>
Eagle Capital Partners L.P.................................................. 125,000
Emerald Fund Ltd............................................................ 24,500
Emerald Partners L.P........................................................ 231,350
Engineers Joint Pension..................................................... 11,550
John R. Eppinger............................................................ 6,667
Marc L. Flaster............................................................. 20,476
Financial Stocks Private Equity Fund 1998 L.P............................... 386,667
Formula Fund LLC............................................................ 50,931
Formula Offshore Investment Fund............................................ 2,736
Francis H. Tse MD A Professional Corporation Amended Employees Pension
Plan...................................................................... 10,000
Brian Fraser................................................................ 333
Emerging Managers Fund...................................................... 5,500
Gabrielle R. Propp Marital Trust B.......................................... 66,667
Lance S. Gad................................................................ 35,000
GAM Equity 10............................................................... 16,000
Gerlach & Co................................................................ 390,000
Thomas Glasser.............................................................. 13,030
Sandra Go................................................................... 1,000
Donald F. U. Goebert........................................................ 3,333
William T. Goldrick......................................................... 3,333
Daniel L. Gorman............................................................ 6,667
Gould Trading Co............................................................ 46,700
H. Wayne Griest & Barbara W. Griest......................................... 5,000
Haberman Value Fund LP...................................................... 6,667
Paul R. Haklisch............................................................ 16,288
Hanaper Partners............................................................ 10,000
Hare & Co................................................................... 19,833
Ahron Haspel & Ruth Haspel.................................................. 10,000
Lawrence Haspel & Deborah Haspel............................................ 10,000
Haussmann Holdings.......................................................... 34,300
Helen Heller................................................................ 66,990
Melvin S. Heller............................................................ 200,000
William F. Hickey........................................................... 6,667
Andrea Ho................................................................... 667
El Coronado Holdings........................................................ 35,000
Richard A. Horstman......................................................... 140,000
Neelam Idnani............................................................... 14,833
Rajesh Idnani............................................................... 14,834
Sarah Y. Ip................................................................. 2,000
Jackson Boulevard Investments LP............................................ 23,000
Jackson Boulevard Partners.................................................. 42,000
Jam Partners LP............................................................. 220,000
JDN Partners LP............................................................. 45,000
Kaufman Family LLC.......................................................... 66,667
Keefe Offshore Fund......................................................... 160,000
Steven Kelly................................................................ 6,667
Gary Kilgore................................................................ 13,333
Sam Klein & Leslie Klein.................................................... 20,000
Paul M. La Noce............................................................. 3,333
Cecilia Lai................................................................. 10,000
Lakeview Financial Corp..................................................... 66,667
</TABLE>

77
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
NAME OF SELLING HOLDER BENEFICIALLY OWNED AND OFFERED HEREBY
- ---------------------------------------------------------------------------- -------------------------------------
<S> <C>
Anne Man Chi Lam............................................................ 2,667
George Lam.................................................................. 17,665
Jonathan Y. Lam............................................................. 5,000
Justin Y. Lam............................................................... 7,000
Lam Family Living Trust..................................................... 38,000
Lawrence Offshore Partners.................................................. 22,500
Lawrence Partners........................................................... 37,500
Catherine A. Lawton......................................................... 6,667
Dennis Lee.................................................................. 6,667
Lenient & Co................................................................ 133,333
Bruce R. Lesser............................................................. 3,334
Lawrence R. Lesser.......................................................... 3,333
Bruce A. Levy............................................................... 10,000
Clunet Lewis................................................................ 6,667
Dominic S. Li............................................................... 667
Matle Lo.................................................................... 1,333
Sylvia Loh.................................................................. 16,667
T. Joseph Longino........................................................... 6,667
Endicott Partners LP........................................................ 50,000
Jackson Boulevard Equities LP............................................... 60,000
The Seedling Fund LP........................................................ 14,500
Endicott Offshore Investors Ltd............................................. 10,000
Leona S. Ma................................................................. 6,000
Mac & Co.................................................................... 6,667
Patrick E. Malloy III....................................................... 166,667
Malta Hedge Fund II L.P..................................................... 67,000
Malta Hedge Fund L.P........................................................ 80,000
Malta Partners II L.P....................................................... 56,000
Malta Partners L.P.......................................................... 147,000
Bijan Capital Management.................................................... 17,500
Keefe Managers L.P.......................................................... 156,000
George R. Mark.............................................................. 7,334
Dennis S. Marlo............................................................. 6,667
Timothy Matz and Jane Matz.................................................. 6,667
Michael McKilligan.......................................................... 6,667
Joseph A. Melillo........................................................... 10,000
Mercer Insurance Company.................................................... 6,667
Merrill Lynch Pierce Fenner & Smith, Inc.................................... 6,667
Metropolitan Capital Advisors Intl. Ltd..................................... 150,700
Deanne Miller............................................................... 3,333
Bruce Mommsen............................................................... 6,667
Morey Organization Inc...................................................... 10,000
Morgan Stanley & Co......................................................... 30,497
Morgan Stanley & Co. Incorporated........................................... 333,333
National Financial Services Corporation..................................... 6,667
James C. Ng................................................................. 6,667
Christine Noland............................................................ 2,000
Northfork Bancorporation Inc................................................ 457,000
Thomas F. O'Neill........................................................... 6,667
P II Inc.................................................................... 6,667
Angela Pan.................................................................. 13,333
Janet E. Paroo.............................................................. 6,667
</TABLE>

78
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
NAME OF SELLING HOLDER BENEFICIALLY OWNED AND OFFERED HEREBY
- ---------------------------------------------------------------------------- -------------------------------------
<S> <C>
Endeavour Capital Partners.................................................. 83,333
Charles Patton.............................................................. 10,000
PH Industries............................................................... 10,000
PMLDSS Ltd.................................................................. 6,667
Points West Intl. Investments Ltd........................................... 41,420
PRB Investors LP............................................................ 80,000
Fred D. Price............................................................... 13,961
Progress Capital Inc........................................................ 88,334
Douglas Propp............................................................... 6,667
Eve Propp................................................................... 6,666
James Propp................................................................. 6,667
Morris Propp................................................................ 6,666
Prudential Securities, Inc.................................................. 25,000
Kenneth F. Puglisi IRA...................................................... 6,667
Christopher Quackenbush..................................................... 51,562
Rainbow Partners L.P........................................................ 68,000
Ramat Securities Ltd........................................................ 13,300
Reliance Bancorp Inc........................................................ 66,667
Rembrandt Balanced Fund..................................................... 36,735
Rembrandt Value Fund........................................................ 359,930
Robert Riccio............................................................... 20,000
Michael W. Richardson....................................................... 6,667
William F. Richardson IV.................................................... 6,667
Eileen Romero............................................................... 1,333
Ronald J. Morey Radio Parnership............................................ 6,667
J. David Rosenberg.......................................................... 125,000
Roslyn Bancorp Inc.......................................................... 135,000
Michael Rowe................................................................ 10,000
Frank G. Salvaterra......................................................... 6,667
David Sandler............................................................... 8,720
Herman S. Sandler........................................................... 58,555
T. Dennis Sanford........................................................... 10,000
Hugh Sargant................................................................ 1,667
Stanley Seid................................................................ 8,000
Selective Insurance Co. of America.......................................... 50,000
Seymour Propp Nominee....................................................... 6,667
Mary Ann Shula.............................................................. 6,667
Bruce E. Simmons............................................................ 6,667
Smith Barney Inc............................................................ 20,000
Vincent Smyth............................................................... 66,000
Spear Leeds & Kellogg....................................................... 178,333
Glen Spiro.................................................................. 6,667
Edward Stein................................................................ 6,667
Carrie Ann Stephens......................................................... 6,667
Charles P. Stevenson Jr..................................................... 66,667
Stillwell Associates LP..................................................... 33,000
Susan Mravca Dec. of Trust.................................................. 6,667
TFP Overseas Fund Ltd....................................................... 40,000
Third Point Offshore Fund Ltd............................................... 61,170
Third Point Partners LP..................................................... 89,750
Thistle Group Holdings Inc.................................................. 33,333
John B. Thompson II......................................................... 21,872
</TABLE>

79
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
NAME OF SELLING HOLDER BENEFICIALLY OWNED AND OFFERED HEREBY
- ---------------------------------------------------------------------------- -------------------------------------
<S> <C>
Raymond Tiernan............................................................. 6,667
Tontine Financial Partners L.P.............................................. 200,000
Tontine Overseas Fund....................................................... 95,000
Tontine Partners L.P........................................................ 40,000
Charles J. Tornetta IRA..................................................... 16,667
John Traynor................................................................ 13,333
Kenny Tse................................................................... 667
USA Capital Inc............................................................. 23,334
Value Realization Fund...................................................... 15,000
David X. Wang............................................................... 1,000
The Walt Disney Company Retirement Plan Master Trust........................ 48,300
Westlakes Capital Partners.................................................. 6,667
Lynn Wiese.................................................................. 6,667
William P. O'Reilly Trust................................................... 13,333
Godwin Wong................................................................. 20,000
Debby Wu.................................................................... 667
Thomas S. Wu................................................................ 33,333
Kirk Wycoff................................................................. 6,667
ZPG Securities LLC.......................................................... 7,660
1st Matthew................................................................. 46,667
1867 Western Financial...................................................... 100,000
</TABLE>

The Company has agreed to indemnify the Selling Holders against certain
liabilities arising out of any actual or alleged material misstatements or
omissions in the Registration Statement, other than liabilities arising from
information supplied by the Selling Holders for use in the Registration
Statement. Each Selling Holder, severally but not jointly, has agreed to
indemnify the Company against liabilities arising out of any actual or alleged
material misstatements or omissions in the Registration Statement insofar as
such misstatements or omissions were made in reliance upon written information
furnished to the Company by such Selling Holder expressly for use in the
Registration Statement.

PLAN OF DISTRIBUTION

The Common Stock offered hereby may be sold from time to time to purchasers
directly by the Selling Holders at market prices or at negotiated prices.
Alternatively, the Selling Holders may from time to time offer the Common Stock
to or through underwriters, dealers or agents who may receive compensation in
the form of underwriting discounts, concessions or commissions from the Selling
Holders or the purchasers of Common Stock, for whom they may act as agents. The
Selling Holders and any underwriters, dealers or agents which participate in the
distribution of Common Stock may be deemed to be 'underwriters' within the
meaning of the Securities Act and any profit on the sale of Common Stock by them
and any discounts, commissions, concessions or other compensation received by
any such underwriter, dealer or agent may be deemed to be underwriting discounts
and commissions under the Securities Act.

The Common Stock may be sold from time to time in one or more transactions
at fixed prices, at prevailing market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices. The sale of the
Common Stock may be effected in transactions (which may involve block
transactions) (i) on any national securities exchange or quotation service on
which the Common Stock may be listed or quoted at the time of sale, (ii) in the
over-the-counter market or (iii) in transactions otherwise than on such
exchanges or in the over-the-counter market. At the time a particular offering
of the Common Stock is made, a Prospectus Supplement, if required, will be
distributed which will set forth the aggregate amount and type of Common Stock
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, any discounts, commissions and other terms
constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.

80
<PAGE>
To comply with the securities laws of certain jurisdictions, if applicable,
the Common Stock will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the Common Stock may not be offered or sold unless they have been registered or
qualified for sale in such jurisdictions or an exemption from registration or
qualification is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Common Stock may not simultaneously engage in
market-making activities with respect to such securities for a restricted period
prior to the commencement of such distribution. In addition to and without
limiting the foregoing, each Selling Holder and any other person participating
in a distribution will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including without limitation Rules
102, 103 and 104, which provisions may limit the timing of purchases and sales
of any of the securities by the Selling Holders or any such other person. All of
the foregoing may affect the marketability of the Common Stock and brokers' and
dealers' ability to engage in market-making activities with respect to these
securities.

Pursuant to the Registration Rights Agreement, all expenses of the
registration of the Common Stock will be paid by the Company, including, without
limitation, Commission filing fees and expenses of compliance with state
securities or 'blue sky' laws; provided, however, that the Selling Holders will
pay all underwriting discounts and selling commissions, if any. The Selling
Holders will be indemnified by the Company against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith. The Company will indemnified by the
Selling Holders against certain civil liabilities, including certain liabilities
under the Securities Act, or will be entitled to contribution in connection
therewith.

SHARES ELIGIBLE FOR FUTURE SALE

As of August 12, 1998, there were 9,333,333 shares of Common Stock of the
Company outstanding. All shares of Common Stock sold in the Offering will be
freely tradable without restriction or further registration under the Securities
Act, except that any shares purchased by affiliates of the Company, as that term
is defined in Rule 144 under the Securities Act, may generally only be resold in
compliance with applicable provisions of Rule 144.

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted shares for at
least one year is entitled to sell, within any three-month period, a number of
such shares that does not exceed the greater of (i) 1% of the then outstanding
shares of Common Stock or (ii) the average weekly trading volume in the Common
Stock during the four calendar weeks preceding the date of the notice filed
pursuant to Rule 144. Sales under Rule 144 are also subject to certain manner of
sale restrictions and notice requirements and to the availability of current
public information about the Company. In addition, a person who is deemed an
'affiliate' of the Company must comply with Rule 144 in any sale of shares of
Common Stock not covered by a registration statement (except, in the case of
registered shares acquired by the affiliate on the open market, for the holding
period requirement). A person (or person whose shares are aggregated) who is not
deemed an 'affiliate' of the Company and who has beneficially owned restricted
shares for at least two years is entitled to sell such shares under Rule 144(k)
without regard to the volume, notice and other limitations of Rule 144. In
meeting the one and two year holding periods described above, a holder of
restricted shares can include the holding periods of a prior owner who was not
an affiliate.

The Company has reserved 653,333 shares for grants under its existing Stock
Option Plan. As of August 12, 1998, the Company had options outstanding to
purchase up to 620,000 shares of Common Stock. See 'Management--Stock Option
Plan.' The Company intends to file a registration statement under the Securities
Act to register all shares of Common Stock issuable under such Stock Option
Plan. Shares covered by this registration statement will be eligible for sale in
the public market after the effective date of such registration statement.

81
<PAGE>
EXPERTS

The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of operations, of stockholders' equity and of cash flows
for the years ended December 31, 1997, 1996 and 1995 included in this Prospectus
have been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.

LEGAL MATTERS

The validity of the Common Stock will be passed upon for the Company by
Patton Boggs LLP, Washington, D.C., counsel to the Company.

ADDITIONAL INFORMATION

The Company has filed with the SEC a registration statement under the
Securities Act with respect to the Common Stock offered hereby. As permitted by
the rules and regulations of the SEC, this Prospectus does not contain all the
information set forth in the registration statement. Such information can be
examined without charge at the public reference facilities of the SEC located at
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such material can
be obtained from the SEC at prescribed rates. In addition, the SEC maintains a
web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC, including the Company. This Prospectus contains a description of
the material terms and features of all material contracts, reports or exhibits
to the Registration Statement required to be described, however, the statements
contained in this Prospectus as to the contents of any contract or other
document filed as an exhibit to the registration statement are, of necessity,
brief descriptions thereof and are not necessarily complete; each such statement
is qualified by reference to such contract or document.

In connection with the Offering, the Company has registered its Common
Stock with the SEC under Section 12(g) of the Exchange Act and, therefore, the
Company and the holders of its stock will become subject to the proxy
solicitation rules, reporting requirements and restrictions on stock purchases
and sales by directors, officers and greater than 10% stockholders, the annual
and periodic reporting and certain other requirements of the Exchange Act.

A copy of the Certificate of Incorporation and the Bylaws of the Company
are available without charge from the Company.

82
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997.................................... F-2
Consolidated Statements of Operations for the Six Months Ended June 30, 1998 and 1997.................... F-3
Consolidated Statements of Changes in Stockholders' Equity for Six Months Ended June 30, 1998............ F-4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1997.................... F-5
Notes to Consolidated Financial Statements for the Six Months Ended June 30, 1998 and 1997............... F-6

Report of Independent Accountants........................................................................ F-18
Consolidated Balance Sheets as of December 31, 1997 and 1996............................................. F-19
Consolidated Statements of Operations For Years Ended December 31, 1997, 1996 and 1995................... F-20
Consolidated Statements of Changes in Stockholders' Equity For Years Ended December 31, 1997, 1996 and
1995................................................................................................... F-21
Consolidated Statements of Cash Flows For Years Ended December 31, 1997, 1996 and 1995................... F-22
Notes to Consolidated Financial Statements For Years Ended December 31, 1997, 1996 and 1995.............. F-24
</TABLE>

F-1
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks............................................................ $ 15,855 $ 13,853
Federal funds sold................................................................. -- 21,000
Investment securities available for sale, at market value.......................... 98,614 --
Investment securities, at cost (market value $3,998 at December 1997).............. -- 4,000
Mortgage-backed securities available for sale, at market value..................... 302,942 84,308
Mortgage-backed securities, at cost (market value $168,258 at June 30, 1998 and
$174,972 at December 31, 1997)................................................... 173,754 181,795
Federal Home Loan Bank stock....................................................... 14,900 13,914
Loans.............................................................................. 1,272,151 1,214,237
Allowance for loan losses.......................................................... (13,207) (12,142)
----------- -----------
Net loans.......................................................................... 1,258,944 1,202,095
----------- -----------
Accrued interest receivable........................................................ 11,515 8,594
Premises and equipment, net........................................................ 23,487 23,931
Other assets....................................................................... 10,368 8,160
----------- -----------
Total assets.................................................................. $ 1,910,379 $ 1,561,650
----------- -----------
----------- -----------

LIABILITIES
Deposits........................................................................... $ 1,474,270 $ 1,468,987
Federal funds purchased............................................................ 96,000 --
Other borrowings................................................................... 202,000 --
Long-term debt to affiliates (including capitalized interest)...................... -- 20,060
Accrued interest payable........................................................... 2,513 452
Other liabilities.................................................................. 7,487 9,599
----------- -----------
Total liabilities............................................................. 1,782,270 1,499,098
----------- -----------
Guaranteed preferred beneficial interests in junior subordinated debentures........ 30,000 --

STOCKHOLDERS' EQUITY
Preferred stock, par value $.01, 10,000,000 shares authorized, none outstanding at
June 30, 1998; none authorized or outstanding at December 31, 1997............... -- --
Common stock, par value $.01, authorized 25,000,000 shares; 9,333,333 shares issued
and outstanding at June 30, 1998; par value $0.00167, 18,000,000 shares
authorized, 6,000,000 shares issued and outstanding at December 31, 1997......... 93 10
Additional paid-in capital......................................................... 60,044 30,278
Accumulated other comprehensive income............................................. (419) (1,728)
Retained earnings-substantially restricted......................................... 38,391 33,992
----------- -----------
Total stockholders' equity.................................................... 98,109 62,552
----------- -----------
Total liabilities and stockholders' equity.................................... $ 1,910,379 $ 1,561,650
----------- -----------
----------- -----------
</TABLE>

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

F-2
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
----------------------
1998 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Interest income:
Interest on loans....................................................................... $47,954 $41,197
Interest on funds sold and securities purchased under agreements to resell.............. 471 1,081
Interest on investment and mortgage-backed securities................................... 9,766 9,828
--------- --------
Total interest income................................................................ 58,191 52,106
--------- --------
Interest expense:
Interest on deposits.................................................................... 31,254 28,999
Interest on short-term borrowings....................................................... 66 798
Interest on guaranteed preferred beneficial interests in junior subordinated
debentures........................................................................... 570 --
Interest on long-term borrowings........................................................ 1,270 --
Interest on long-term debt to affiliates................................................ 599 893
--------- --------
Total interest expense............................................................... 33,759 30,690
--------- --------

Net interest income.................................................................. 24,432 21,416
Provision for loan losses................................................................. 1,401 132
--------- --------
Net interest income after provision for loan losses.................................. 23,031 21,284
--------- --------
Noninterest income:
Commercial banking fees................................................................. 565 429
Service charges on deposit accounts..................................................... 544 482
Gain on sale of loans, securities and servicing rights.................................. 307 (530)
Loan servicing income................................................................... 292 526
Miscellaneous income.................................................................... 24 258
--------- --------
Total noninterest income............................................................. 1,732 1,165
--------- --------
Noninterest expense:
Personnel............................................................................... 8,247 7,169
Occupancy............................................................................... 2,447 2,306
Data processing......................................................................... 1,180 979
Furniture and equipment................................................................. 1,170 852
Deposit insurance....................................................................... 457 1,142
Communication........................................................................... 201 172
Professional fees and contracted services............................................... 902 882
Foreclosed assets expense............................................................... (3) 393
Miscellaneous expense................................................................... 2,693 2,050
--------- --------
Total noninterest expense............................................................ 17,294 15,945
--------- --------
Income before taxes....................................................................... 7,469 6,504
Income tax expense........................................................................ 3,070 2,677
--------- --------
Net income......................................................................... $ 4,399 $ 3,827
--------- --------
--------- --------
Basic earnings per share.................................................................. $ 0.60 $ 0.64
Diluted earnings per share................................................................ $ 0.56 $ 0.55
</TABLE>

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

F-3
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
NUMBER OF COMMON PAID-IN COMPREHENSIVE RETAINED STOCKHOLDERS'
SHARES STOCK CAPITAL INCOME EARNINGS EQUITY
---------- ------ ---------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997...... 6,000,000 $ 10 $ 30,278 $(1,728) $ 33,992 $ 92,830
Net income...................... -- -- -- -- 4,399 4,399
Change in accumulated other
comprehensive income, net of
taxes........................ -- -- -- 1,309 -- 1,309
Conversion of long-term debt to
affiliates to common stock... 1,974,000 3 20,597 -- -- 41,253
Common stock issued............. 9,333,333 93 129,156 -- -- 269,156
Common stock redeemed........... (7,974,000) (13) (119,987) -- -- (239,987)
---------- ------ ---------- ------------- -------- -----------
Balance at June 30, 1998.......... 9,333,333 $ 93 $ 60,044 $ (419) $ 38,391 $ 168,960
---------- ------ ---------- ------------- -------- -----------
---------- ------ ---------- ------------- -------- -----------
</TABLE>

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

F-4
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
1998 1997
-------- --------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................................................ $ 4,399 $ 3,827
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Amortization of investment and mortgage-backed securities premium..................... (94) 97
Amortization of loan discount......................................................... 403 123
Provision for loan losses............................................................. 1,401 132
Increase in accrued interest receivable............................................... (2,921) (419)
Depreciation and amortization of premises and equipment............................... 1,323 1,057
Amortization of servicing assets...................................................... 91 250
(Increase) decrease in other assets................................................... (3,401) 1,554
Increase in accrued interest payable.................................................. 2,061 1,341
Decrease in other liabilities......................................................... (2,113) (1,190)
Gain on sale of servicing rights...................................................... -- (214)
Gain on sale of foreclosed assets..................................................... (99) (181)
(Gain) loss on sale of loans.......................................................... (307) 744
-------- --------
Net cash provided by operating activities.......................................... 743 7,120
-------- --------
INVESTING ACTIVITIES
Investments and mortgage-backed securities held to maturity:
Principal payments and maturities....................................................... 11,859 12,601
Purchases............................................................................... (612) (200)
Investments and mortgage-backed securities, available for sale:
Principal payments and maturity......................................................... 2,957 8,934
Purchases............................................................................... (318,084) --
Sales of securities..................................................................... -- --
Securities called....................................................................... -- --
Net decrease in credit card loans......................................................... 351 38
Loans purchased........................................................................... (217) (797)
Loans originated net of principal collections............................................. (62,612) (38,151)
Proceeds from sale of loans............................................................... 3,816 4,152
Purchases of premises and equipment....................................................... (942) (424)
Proceeds from sale of premises and equipment.............................................. 63 87
Proceeds from sale of servicing rights.................................................... -- 1,317
Proceeds from sale of foreclosed assets................................................... 607 2,573
-------- --------
Net cash used in investing activities................................................... (362,814) (9,869)
-------- --------
FINANCING ACTIVITIES
Net increase in NOW accounts, money market accounts and passbook accounts................. 24,090 7,398
Net (decrease) increase in time deposits.................................................. (18,807) 63,454
Net increase in short-term borrowings..................................................... 96,000 --
Net increase in long-term borrowings...................................................... 202,000 --
Net (decrease) increase in long-term debt to affiliates................................... (20,060) 1,500
Proceeds from issuance of common stock, net of redemptions and of issue costs............. 29,850 --
Proceeds from issuance of guaranteed preferred beneficial interests in subordinated
debentures, gross....................................................................... 30,000 --
Net cash provided by financing activities............................................... 343,073 72,352
-------- --------
(Decrease) increase in cash and cash equivalents............................................ (18,998) 60,603
Cash and cash equivalents at beginning of period............................................ 34,853 18,394
-------- --------
Cash and cash equivalents at end of period.................................................. $ 15,855 $ 87,997
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest.................................................. $ 31,698 $ 29,349
Cash paid during the period for income taxes.............................................. 2,575 450

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Receivable resulting from sale of servicing rights........................................ -- 146
Real estate acquired through foreclosure.................................................. 392 3,363
</TABLE>

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

F-5
<PAGE>
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 June 30, 1998 and the Consolidated
Statements of Operations and Consolidated Statements of Cash Flows for the six
months ended June 30, 1998 and 1997 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,
1997. 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 six months ended June 30,
1998 are not necessarily indicative of the results to be expected for the full
year.

On April 17, 1998, the Company completed a 6,000-for-1 stock split.
Accordingly, the financial statements for all periods presented have been
restated to reflect the impact of the stock split. On April 17, 1998, the
Company's long-term debt to affiliates was converted to 1,974,000 shares of
common stock, as adjusted for the aforementioned stock split. Given the
occurrence of this conversion, management has considered this long-term debt to
affiliates as convertible debt for purposes of its calculation of diluted
earnings per share.

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. There have been no changes in the
subsidiaries of the Company between December 31, 1997 and June 30, 1998. All
significant intercompany balances and transactions have been eliminated in
consolidation.

2. RECENT ACCOUNTING PRONOUNCEMENTS

The provisions of Statement of Financial Accounting Standards ('SFAS') No.
125, 'Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities,' that were deferred by SFAS No. 127, 'Deferral
of the Effective Date of Certain Provisions of FASB Statement No. 125--An
Amendment of FASB Statement No. 125,' became effective as to repurchase
agreements, dollar rolls, securities lending and certain other transactions
after December 31, 1997. Management does not believe implementation of such
provisions will have a significant effect on the Company's financial position,
results of operations, or capital.

As of December 31, 1997, the Company adopted SFAS No. 128, 'Earnings per
Share,' which specifies the computation, presentation and disclosure
requirements for earnings per share ('EPS'). Basic EPS is computed by dividing
net income by the weighted average number of shares outstanding during the
period. Diluted EPS considers the possible dilutive effect of instruments such
as convertible debt, convertible preferred stock, and stock options. Prior
period EPS has been expanded to comply with the provisions of SFAS No. 128.

SFAS No. 130, 'Reporting Comprehensive Income,' is effective for fiscal
years beginning after December 15, 1997. SFAS No. 130 establishes presentation
and disclosure requirements for comprehensive income; however, it does not
affect existing recognition or measurement standards. For the Company,
comprehensive income consists of net income and the change in unrealized gains
and losses on available-for-sale securities. For the six months ended June 30,
1998 and 1997, total comprehensive income was $5.7 million and $3.6 million,
respectively.

SFAS No. 131, 'Disclosures about Segments of an Enterprise and Related
Information,' is effective for fiscal years beginning after December 15, 1997.
SFAS No. 131 establishes standards for reporting information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim reports issued to shareholders.
It also establishes standards for related disclosures about products and
services, geographic areas, and major customers. SFAS No. 131 does not affect
existing

F-6
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. RECENT ACCOUNTING PRONOUNCEMENTS--(CONTINUED)
recognition or measurement standards. The provisions of SFAS No. 131 need not be
applied to interim financial statements in the initial year of its application.
Accordingly, such disclosures have not been presented herein.

SFAS No. 133, 'Accounting for Derivative Instruments and Hedging
Activities' will become effective for fiscal years beginning after June 15,
1999. SFAS 133 defines derivative instruments and requires that they be
recognized as assets or liabilities in the statement of financial position,
measured at fair value. It further specifies the nature of changes in the fair
value of the derivatives which are included in the current period results of
operations and those which are included in other comprehensive income.
Management has not yet quantified the impact that SFAS 133 will have on the
financial statements of the Company, if any.

3. INVESTMENT SECURITIES

The Company had no investment securities classified as available for sale
at December 31, 1997. The amortized cost and approximate market value of
investment securities classified as available for sale at June 30, 1998 are
shown in the table below (dollars in thousands):

<TABLE>
<CAPTION>
JUNE 30, 1998
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Available for sale
Trust Preferred Securities................... $73,935 $735 $ -- $74,670
Municipals................................... 23,845 113 14 23,944
Other........................................ -- -- -- --
--------- ---------- --- -------
$97,780 $848 $ 14 $98,614
--------- ---------- --- -------
--------- ---------- --- -------
</TABLE>

The amortized cost and approximate value of investment securities
classified as available for sale at June 30, 1998, by contractual maturity are
shown in the table below (dollars in thousands):

<TABLE>
<CAPTION>
JUNE 30, 1998
--------------------
AMORTIZED MARKET
COST VALUE
--------- -------
<S> <C> <C>
Available for sale
Due after ten years.................................................. $97,780 $98,614
--------- -------
$97,780 $98,614
--------- -------
--------- -------
</TABLE>

F-7
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. MORTGAGE-BACKED SECURITIES

The amortized cost and approximate market value of mortgage-backed
securities classified as held to maturity and available for sale at June 30,
1998 and December 31, 1997 are shown in the table below (dollars in thousands):

<TABLE>
<CAPTION>
JUNE 30, 1998
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Held to maturity
FHLMC................................... $ 45,935 $ -- $1,556 $ 44,379
FNMA.................................... 113,859 -- 3,541 110,318
Other................................... 13,960 -- 399 13,561
--------- ---------- ---------- --------
$ 173,754 $ -- $5,496 $168,258
--------- ---------- ---------- --------
--------- ---------- ---------- --------
Available for sale
FNMA.................................... $ 84,602 $ 37 $2,271 $ 82,368
GNMA.................................... 120,202 572 -- 120,774
Other................................... 99,682 118 -- 99,800
--------- ---------- ---------- --------
$ 304,486 $727 $2,271 $302,942
--------- ---------- ---------- --------
--------- ---------- ---------- --------
</TABLE>

<TABLE>
<CAPTION>
1997
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Held to maturity
FHLMC................................... $ 48,536 $-- $1,918 $ 46,618
FNMA.................................... 117,184 -- 4,396 112,788
Other................................... 16,075 -- 509 15,566
--------- --- ---------- --------
$ 181,795 $-- $6,823 $174,972
--------- --- ---------- --------
--------- --- ---------- --------
Available for sale
FNMA.................................... $ 87,237 $-- $2,929 $ 84,308
--------- --- ---------- --------
--------- --- ---------- --------
</TABLE>

Approximately $246.5 million and $45.6 million of mortgage-backed
securities have been pledged to secure contractual arrangements entered into by
the Company at June 30, 1998 and December 31, 1997, respectively.

There were no sales of available for sale securities during the six months
ended June 30, 1998. Proceeds from the sale of available for sale securities
during 1997 totaled $23.4 million.

Mortgage-backed securities sold under agreements to repurchase as of June
30, 1998 and December 31, 1997 were (dollars in millions):

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
<S> <C> <C>
Book value.............................................. $-- $ --
Market value............................................ -- --
Obligations............................................. -- --
Weighted average interest rate at end of period......... -- --
Weighted average interest rate during the period........ 5.79% 5.47%
Average balance during the period....................... 95.0 5.3
Maximum amount outstanding at any month end during the
year.................................................. -- --
</TABLE>

F-8
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. MORTGAGE-BACKED SECURITIES--(CONTINUED)
When the Company enters into these transactions, the obligations generally
mature within one year and generally represent agreements to repurchase the same
securities.

As of June 30, 1998 and December 31, 1997, remaining maturities on
mortgage-backed securities classified as held to maturity and available for sale
were as follows (dollars in thousands):

<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
--------------------- ---------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Held to maturity
In one year or less..................... $ -- $ -- $ 1,413 $ 1,406
After one year through five years....... -- -- -- --
After five years through ten years...... 2,343 2,299 2,961 2,881
After ten years......................... 171,411 165,959 177,421 170,685
--------- -------- --------- --------
$ 173,754 $168,258 $ 181,795 $174,972
--------- -------- --------- --------
--------- -------- --------- --------
Available for sale
After ten years......................... $ 304,486 $302,942 $ 87,237 $ 84,308
--------- -------- --------- --------
--------- -------- --------- --------
</TABLE>

5. BORROWINGS

The Company maintains a secured credit facility with the Federal Home Loan
Bank of San Francisco ('FHLB-SF') against which the Company may take advances.
The terms of this credit facility require the Company to maintain in safekeeping
with the FHLB-SF eligible collateral of at least 100% of outstanding advances.

At June 30, 1998, the Company had a total of $298 million of outstanding
advances, of which $96 million were short-term and $202 million were long-term.
The advances were secured with mortgage-backed securities. The fixed rate
long-term debt of $202 million matures in 2008. The weighted average contractual
maturity as of June 30, 1998 was seven years. Included in the long-term debt as
of June 30, 1998 were $185 million of advances with provisions which allow the
FHLB-SF, at their option, to terminate the advances at quarterly intervals at
specified periods ranging from three to five years beyond the advance dates. For
the six months ended June 30, 1998, the following advances were outstanding:

<TABLE>
<S> <C>
Average outstanding advances during the period.................................... $ 46,927
Maximum advances outstanding at any month end during the period................... $298,000
</TABLE>

The interest rate on this debt ranged from 5.30% to 6.03% and the weighted
average interest rate was 5.64% at June 30, 1998 and 5.49% for the six months
then ended. Interest is paid quarterly on substantially all of these advances
and principal is due at maturity. The interest expense on such advances was
$1,336,000 for the six months ended June 30, 1998.

At June 30, 1998, the unused credit available under this facility was
approximately $64 million.

6. LONG-TERM DEBT TO AFFILIATES

Included in the liabilities of the Company as of December 31, 1997, is
long-term debt payable to affiliates in the aggregate amount of $20,060,000.
Such debt was comprised of two promissory notes with interest rates of 10%. In
conjunction with the Private Offerings which closed on April 17, 1998, such
notes were exchanged for shares of Common Stock of the Company. Subsequently,
the Company redeemed all of the stock owned by affiliates with the proceeds
raised in the Private Offerings. The Selling Shareholders are no longer
affiliated with the Company.

F-9
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY'S JUNIOR SUBORDINATED
DEBENTURES

On April 17, 1998, UCBH Trust Co. (the 'Trust'), a Delaware statutory
business trust owned by the Company, issued $30 million of 9.375% Guaranteed
Preferred Beneficial Interest in the Company's Subordinated Debentures ('Capital
Securities'). The Trust exists for the sole purpose of issuing the Capital
Securities and investing the proceeds thereof in 9.375% Junior Subordinated
Debentures issued by the Company. The Junior Subordinated Debentures mature on
May 1, 2028. Payment of distributions out of the monies held by the Trust and
payments on liquidation of the Trust or the redemption of the Capital Securities
are guaranteed by the Company to the extent the Trust has funds available
therefore. The obligations of the Company under the Guarantee and the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
indebtedness of the Company and will be structurally subordinated to all
liabilities and obligations of the Company's subsidiaries. Distributions on the
Capital Securities are payable semi-annually in arrears on May 1 and November 1
of each year, commencing November 1, 1998. The Junior Subordinated Debentures
are not redeemable prior to May 1, 2005, unless certain events have occurred.
The proceeds from the issuance of the Capital Securities were used primarily to
provide additional capital for the Bank.

Interest expense on the Capital Securities was $570,000 for the six months
ended June 30, 1998.

8. STOCKHOLDERS' EQUITY

The Company and United Commercial Bank (the Bank) are subject to various
regulatory capital requirements administered by the federal banking agencies.
Under these capital requirements, the Bank must meet specific minimum capital
requirements (described below) that involve quantitative measures of the Bank's
assets, liabilities, and certain off-balance sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and classification
are also subject to qualitative judgements by the regulators about components,
risk weightings, and other factors.

Specifically, current federal capital regulations require the Bank to
maintain minimum ratios (set forth in the table below) of total and Tier I
capital to risk-weighted assets (as defined). Tier I capital is defined as
common equity, retained earnings and qualifying perpetual preferred stock, less
certain intangibles. The remainder of capital may consist of certain
subordinated debt, certain hybrid capital instruments and other qualifying
preferred stock, and a limited amount of loan loss allowance. Each of the
federal banking agencies also has established minimum leverage capital
requirements. In addition, under the prompt corrective action provisions of
federal law, financial institutions are categorized as 'well capitalized,'
'adequately capitalized,' 'undercapitalized,' or 'critically undercapitalized,'
depending on their capital level. 'Well capitalized' banks are defined as
institutions that have a total risk-based capital ratio of 10%, a Tier I
risk-based capital ratio of 6%, and a leverage ratio of 5%. An 'adequately
capitalized' bank is defined as an institution with a total risk-based capital
ratio of 8%, a Tier I risk-based capital ratio of 4% and a leverage ratio of 4%.
If the Bank were to fail to meet the minimum capital requirements and/or were to
fall within the 'undercapitalized' or 'critically undercapitalized' categories
of the prompt corrective action provisions could cause the regulators to
initiate certain mandatory-- and possibly additional discretionary--actions
that, if undertaken, could have a direct material effect on the Bank and on the
Company's financial statements.

As of December 31, 1997, the most recent notification from the Office of
Thrift Supervision (the former regulator of the Bank) categorized the Bank as
'well capitalized' under the prompt corrective action provisions. There are no
conditions or events since that notification that management believes have
changed the institution's category. As of December 31, 1996, the Office of
Thrift Supervision categorized the Bank as 'adequately capitalized' under the
regulatory framework for prompt corrective action.

The Company converted from a unitary savings and loan holding company to a
bank holding company under Section 3(a)(1) of the Bank Holding Company Act of
1956 effective on July 31, 1998. The Bank simultaneously converted from a
federally chartered savings bank to a state chartered non-member commercial
bank.

F-10
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. STOCKHOLDERS' EQUITY--(CONTINUED)
As a result of the conversion, the Company's primary regulator is now the
Board of Governors of the Federal Reserve System ('Federal Reserve'). Under the
Federal Reserve's capital adequacy guidelines for bank holding companies, the
minimum standard of total capital to risk-weighted assets is 8%; and the minimum
standards of Tier I capital to risk-weighted assets is 4%. The Federal Reserve
also requires bank holding companies to maintain a minimum leverage ratio of
Tier I capital to adjusted average quarterly assets equal to 3%, if such
companies meet certain specified criteria, including that they have the highest
regulatory rating. All other bank holding companies generally are required to
maintain a leverage ratio of at least 100 to 200 basis points above the stated
minimum.

The Bank's primary federal regulator now is the Federal Deposit Insurance
Corporation (FDIC). The FDIC has adopted minimum risk-based and leverage capital
ratio regulations at 12 CFR 325 that are substantially similar to those
requirements imposed by the Federal Reserve on bank holding companies described
above.

The Company's and the Bank's actual capital amounts and ratios are also
presented in the following table (dollars in thousands):

<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
--------------- --------------------- ----------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
-------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 1998:
Total Capital (to risk weighted assets)
United Commercial Bank............... $137,729 13.61% $80,985 8.00 %
UCBH Holdings, Inc. ................. 140,901 13.90 81,115 8.00 $101,393 10.00%
Tier I Capital (to risk weighted
assets)
United Commercial Bank............... $125,068 12.35% $40,492 4.00 %
UCBH Holdings, Inc. ................. 128,220 12.65 40,557 4.00 $ 60,836 6.00%
Tier I Capital (to average assets)
(Leverage Ratio)
United Commercial Bank............... $125,068 7.47% $67,009 4.00 %
UCBH Holdings, Inc. ................. 128,220 7.64 67,109 4.00 $ 83,887 5.00%
</TABLE>

F-11
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. STOCKHOLDERS' EQUITY--(CONTINUED)
The following is a reconciliation of capital under Generally Accepted
Accounting Principles ('GAAP') with regulatory capital at June 30, 1998 (dollars
in thousands):

<TABLE>
<CAPTION>
TIER I CAPITAL RISK-BASED CAPITAL
--------------------------------- ---------------------------------
UNITED UCBH UNITED UCBH
COMMERCIAL BANK HOLDINGS, INC. COMMERCIAL BANK HOLDINGS, INC.
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
GAAP Capital......................... $ 124,957 $ 98,109 $ 124,957 $ 98,109
Nonallowable components:
Unrealized losses on securities
available for sale.............. 419 419 419 419
Goodwill........................... (301) (301) (301) (301)
Mortgage servicing rights--
excess.......................... (7) (7) (7) (7)
Additional capital components:
Guaranteed preferred beneficial
interests in junior subordinated
debentures...................... 30,000 30,000
Allowance for loan losses--
limited......................... 12,662 12,662
--------- -------- --------- --------
Regulatory capital................... $ 125,068 $128,220 $ 137,730 $140,882
--------- -------- --------- --------
--------- -------- --------- --------
</TABLE>

On March 31, 1998, the Company entered into an Exchange and Redemption
Agreement ('Agreement') with its Selling Stockholders. In conjunction with the
Private Offerings and pursuant to the terms of the Agreement, the $20,600,000 of
Long-term Debt to Affiliates, which was payable to the Selling Stockholders, was
exchanged for shares of Common Stock. Subsequently, the Company used
approximately $120,000,000 of the proceeds raised by the Private Offerings to
redeem all of the shares of Common Stock then owned by the Selling Shareholders,
which included the shares of Common Stock exchanged for the notes. As a result,
the Selling Shareholders are no longer affiliated with the Company.

F-12
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominator of the
basic and diluted earnings per share (Dollars in thousands, except for per share
data):

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1998
-----------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic:
Net income............................................................. $ 4,399 7,370,370 $0.60
Effect of long-term debt to affiliates................................... 353 1,162,467
------- ---------
Diluted:
Net income and assumed conversion...................................... $ 4,752 8,532,837 $0.56
-------- --------
-------- --------
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997
-----------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
Basic:
Net income............................................................. $ 3,827 6,000,000 $0.64
Effect of long-term debt to affiliates................................... 527 1,974,000
------- ---------
Diluted:
Net income and assumed conversion...................................... $ 4,354 7,974,000 $0.55
------- ---------
------- ---------
</TABLE>

10. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE
SHEET RISK

The Company is a party to derivative financial instruments and financial
instruments with off-balance sheet risk in the normal course of business to meet
the financing needs of its customers and to reduce its own exposure to
fluctuations in interest rates. The Company does not hold or issue financial
instruments for trading purposes. Financial instruments in the normal course of
business include commitments to extend and purchase credit, forward commitments
to sell loans, long put and call options, letters of credit and interest-rate
swaps and caps. Those instruments involve, to varying degrees, elements of
credit and interest-rate risk in excess of the amount recognized in the
statement of financial position. The contract or notional amounts of those
instruments reflects the extent of involvement the Company has in particular
classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual or notional amount of those instruments. The
Company uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments. For interest-rate swap
and cap transactions and forward commitments to sell loans, the contract or
notional amounts do not represent exposure to credit loss. The Company controls
the credit risk of its interest-rate swap and cap agreements and forward
commitments to sell loans through credit approvals, limits, and monitoring
procedures. The Company does not require collateral or other security to support
interest-rate swap transactions with credit risk.

F-13
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE
SHEET RISK
--(CONTINUED)

Contract or notional amounts of derivative financial instruments and
financial instruments with off-balance-sheet risk as of June 30, 1998 and
December 31, 1997 are as follows (dollars in millions):

<TABLE>
<CAPTION>
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit:
Consumer................................................................... $67.6 $65.0
Commercial (excluding construction)........................................ 24.3 10.8
Construction............................................................... 105.0 78.7
Commitments to purchase loans................................................. 25.0 0.1
Commitments to purchase investment securities................................. 18.5
Letters of credit............................................................. 3.3 1.9
Financial instruments whose notional or contract amounts exceed the amount of
credit risk:
Interest-rate swap and cap agreements......................................... 200.0 --
Forward commitments to sell loans............................................. -- 3.5
</TABLE>

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

Commitments to purchase loans are agreements to buy loans from a primary
broker/dealer as long as there are no violations of any condition established in
the contract. Commitments terminate on the final closing date mutually agreed
upon by the purchaser and seller as defined in the contract. The Company
evaluates each loan's worthiness on a loan-by-loan basis. Each loan is
collateralized by residential real estate.

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

Interest rate swap transactions generally involve the exchange of fixed-and
floating-rate interest payment obligations without the exchange of the
underlying principal amounts. Interest-rate swaps are entered into to reduce the
Company's exposure to interest rate movements and are used as part of
asset/liability management. The Company typically becomes a principal in the
exchange of fixed- and floating-rate interest payment obligations with another
party and, therefore, is exposed to loss if the other party defaults. The
Company minimizes this risk by performing normal credit reviews on its swap
counterparties.

Interest rate caps are interest rate protection instruments that involve
the payment from the seller to the buyer of an interest differential. This
differential represents the difference between current interest rates and
agreed-upon rate applied to a notional principal amount. The Company is a
purchaser of interest rate caps.

Entering into interest-rate swap agreements involves not only the risk of
dealing with counterparties and their ability to meet the terms of the
contracts, but also the interest-rate risk associated with unmatched positions.
Notional principal amounts often are used to express the volume of these
transactions, but the amounts potentially subject to credit risk are much
smaller.

F-14
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE
SHEET RISK
--(CONTINUED)
possible inability of counterparties to meet the terms of their contracts and
from movements in security values and interest rates.

In order to minimize the exposure arising from forward contracts, the
Company enters into hedge options from time to time. At June 30, 1998 the
Company had LIBOR-based interest rate caps with a notional amount of $200
million outstanding. At December 31, 1997, the Company had long put options
amounting to $1 million and long call options of $600,000.

For the six months ended June 30, 1998 and the six months ended June 30,
1997, the Company incurred costs associated with interest rate swaps and caps of
$50,000 and $65,000, respectively.

11. PARENT COMPANY

Condensed unconsolidated financial information of UCBH Holdings, Inc. is
presented below.

CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks.............................................................. $ 1,899 $ 56
Investment in subsidiary............................................................. 124,957 82,556
Other assets......................................................................... 1,823 --
--------- --------
Total assets.................................................................... $ 128,679 $ 82,612
--------- --------
--------- --------

LIABILITIES
Accrued interest payable............................................................. 570 $ --
Long-term debt to affiliates......................................................... -- 20,060
--------- --------
Total liabilities............................................................... 570 20,060
--------- --------
Guaranteed preferred beneficial interests in junior subordinated debentures.......... 30,000 --

STOCKHOLDERS' EQUITY
Common stock......................................................................... 93 10
Additional paid-in capital........................................................... 60,044 30,278
Accumulated other comprehensive income............................................... (419) (1,728)
Retained earnings.................................................................... 38,391 33,992
--------- --------
Total stockholders' equity...................................................... 98,109 62,552
--------- --------
Total liabilities and stockholders' equity...................................... $ 128,679 $ 82,612
--------- --------
--------- --------
</TABLE>

F-15
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11. PARENT COMPANY--(CONTINUED)
CONDENSED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997
---------------- ----------------
<S> <C> <C>
INCOME
Interest income............................................................. $ 8 $ --
------- --------
Total income........................................................... 8 --
------- --------
EXPENSE
Interest expense on guaranteed preferred beneficial interests in junior
subordinated debentures................................................... 570 --
Interest expense on long-term debt to affiliates............................ 596 893
Miscellaneous expense....................................................... 64 --
------- --------
Total expense.......................................................... 1,230 893
------- --------
Loss before taxes and equity in undistributed net income of subsidiary...... (1,222) (893)
Income tax benefit.......................................................... 279 --
Equity in undistributed net income of subsidiary............................ 5,342 4,720
------- --------
Net income............................................................. $4,399 $ 3,827
------- --------
------- --------
</TABLE>

CONDENSED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income.................................................................. $ 4,399 $ 3,827
Adjustment to reconcile net income to net cash provided by (used for)
operating activities:
Equity in undistributed net income of subsidiary....................... (5,342) (4,720)
Increase in other assets............................................... (1,823) --
Increase in accrued interest payable................................... 570 893
-------- --------
Net cash used in operating activities................................ (2,196) --
-------- --------
INVESTING ACTIVITIES
Capital contribution to subsidiary.......................................... (35,750) (1,500)
-------- --------
Net cash used in investing activities.................................. (35,750) (1,500)
-------- --------
FINANCING ACTIVITIES
Proceeds from issuance of guaranteed preferred beneficial interests in
Company's subordinated debentures, gross.................................. 30,000 --
Long-term debt to affiliates issued......................................... -- 1,500
Long-term debt to affiliates repaid......................................... (20,060) --
Proceeds from issuance of common stock, net................................. 29,849 --
-------- --------
Net cash provided by financing activities.............................. 39,789 1,500
-------- --------
Net increase in cash and cash equivalents................................... 1,843 --
Cash and cash equivalents beginning of period............................... 56 11
-------- --------
Cash and cash equivalents end of period..................................... $ 1,899 $ 11
-------- --------
-------- --------
</TABLE>

F-16
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. SUBSEQUENT EVENT

On July 31, 1998, the Bank converted its charter to a California-chartered
commercial bank and the Company to a bank holding company. The Company, as a
bank holding company, is subject to examination and regulation by the Federal
Reserve Bank. The Bank, as a state-chartered commercial bank is subject to
comprehensive regulation and examination by the California Department of
Financial Institutions ('DFI'), as its primary regulator, and by the FDIC, which
administers the SAIF, which insures the Bank's deposits to the maximum extent
permitted by law.

F-17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of UCBH Holdings, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of UCBH Holdings, Inc. and its subsidiaries at December 31, 1997 and
1996, and the results of their operations and their cash flows for the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP
San Francisco, California
March 30, 1998, except for paragraph 3 of Note 1,
as to which the date is June 26, 1998

F-18
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Cash and due from banks............................................................... $ 13,853 $ 16,044
Federal funds sold.................................................................... 21,000 2,350
Investment securities, at cost (market value $3,998 in 1997 and $15,617 in 1996)...... 4,000 15,670
Mortgage-backed securities available for sale, at market value........................ 84,308 119,514
Mortgage-backed securities, at cost (market value $174,972 in 1997 and $199,483 in
1996)............................................................................... 181,795 208,555
Federal Home Loan Bank stock.......................................................... 13,914 13,082
Loans................................................................................. 1,214,237 1,066,368
Allowance for loan losses............................................................. (12,142) (11,682)
---------- ----------
Net loans............................................................................. 1,202,095 1,054,686
---------- ----------
Accrued interest receivable........................................................... 8,594 8,002
Premises and equipment, net........................................................... 23,931 22,839
Other assets.......................................................................... 8,160 13,875
---------- ----------
Total assets..................................................................... $1,561,650 $1,474,617
---------- ----------
---------- ----------

LIABILITIES
Deposits.............................................................................. $1,468,987 $1,393,125
Accrued interest payable.............................................................. 452 500
Long-term debt to affiliates (including capitalized interest)......................... 20,060 16,736
Other liabilities..................................................................... 9,599 9,912
---------- ----------
Total liabilities................................................................ 1,499,098 1,420,273
---------- ----------
Commitments and contingent liabilities

STOCKHOLDERS' EQUITY
Common stock, par value $0.00167 authorized 18,000,000 shares; 6,000,000 shares issued
and outstanding..................................................................... 10 10
Additional paid-in capital............................................................ 30,278 30,278
Unrealized loss on mortgage-backed securities available for sale...................... (1,728) (2,637)
Retained earnings-substantially restricted............................................ 33,992 26,693
---------- ----------
Total stockholders' equity....................................................... 62,552 54,344
---------- ----------
Total liabilities and stockholders' equity....................................... $1,561,650 $1,474,617
---------- ----------
---------- ----------
</TABLE>

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

F-19
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Interest income:
Interest on loans............................................................ $ 86,141 $ 78,711 $72,742
Interest on funds sold and securities purchased under agreements to resell... 2,760 1,417 398
Interest on investment and mortgage-backed securities........................ 18,690 22,836 25,894
-------- -------- -------
Total interest income..................................................... 107,591 102,964 99,034
-------- -------- -------
Interest expense:
Interest on deposits......................................................... 61,513 59,273 56,038
Interest on short-term borrowings............................................ 294 998 6,550
Interest on Federal Home Loan Bank advances.................................. 620 2,044 5,867
Interest on long-term debt to affiliates..................................... 1,825 1,640 1,741
-------- -------- -------
Total interest expense.................................................... 64,252 63,955 70,196
-------- -------- -------
Net interest income....................................................... 43,339 39,009 28,838
Provision for loan losses...................................................... 1,154 1,476 8,777
-------- -------- -------
Net interest income after provision for loan losses....................... 42,185 37,533 20,061
-------- -------- -------
Noninterest income:
Commercial banking fees...................................................... 977 421 92
Service charges on deposit accounts.......................................... 888 615 566
Gain on sale of loans, securities and servicing rights....................... 155 1,200 1,137
Loan servicing income........................................................ 601 680 272
Miscellaneous income......................................................... 473 481 1,700
-------- -------- -------
Total noninterest income.................................................. 3,094 3,397 3,767
-------- -------- -------
Noninterest expense:
Personnel.................................................................... 14,087 14,875 12,000
Occupancy.................................................................... 4,811 4,754 4,355
Data processing.............................................................. 2,059 1,859 1,696
Furniture and equipment...................................................... 1,902 1,814 1,357
Deposit insurance............................................................ 1,798 3,519 3,051
SAIF recapitalization assessment............................................. -- 7,716 --
Communication................................................................ 400 383 317
Professional fees and contracted services.................................... 2,242 1,551 1,303
Foreclosed assets expense.................................................... 671 686 2,785
Miscellaneous expense........................................................ 4,220 4,256 3,278
-------- -------- -------
Total noninterest expense................................................. 32,190 41,413 30,142
-------- -------- -------
Income (loss) before taxes..................................................... 13,089 (483) (6,314)
Income tax expense (benefit)................................................... 5,790 (177) (3,406)
-------- -------- -------
Net income (loss)....................................................... $ 7,299 $ (306) $(2,908)
-------- -------- -------
-------- -------- -------
Basic earnings (loss) per share................................................ $ 1.22 $ (0.05) $ (0.48)
-------- -------- -------
-------- -------- -------
Diluted earnings (loss) per share.............................................. $ 1.05 $ (0.05) $ (0.48)
-------- -------- -------
-------- -------- -------
</TABLE>

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

F-20
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
ADDITIONAL ON SECURITIES TOTAL
COMMON PAID-IN AVAILABLE RETAINED STOCKHOLDERS'
STOCK CAPITAL FOR SALE EARNINGS EQUITY
------ ---------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994....................... $ 10 $ 30,278 $ (845) $ 29,907 $59,350
Net loss......................................... (2,908) (2,908)
Change in unrealized net loss on securities
available for sale, after applicable taxes.... (985) (985)
---- -------- ------- ------- ------
Balance at December 31, 1995....................... 10 30,278 (1,830) 26,999 55,457
Net loss......................................... (306) (306)
Change in unrealized net loss on securities
available for sale, after applicable taxes.... (807) (807)
---- -------- ------- ------- ------
Balance at December 31, 1996....................... 10 30,278 (2,637) 26,693 54,344
Net income....................................... 7,299 7,299
Change in unrealized net loss on securities
available for sale, after applicable taxes.... 909 909
---- -------- ------- -------- -------
Balance at December 31, 1997....................... $ 10 $ 30,278 $(1,728) $ 33,992 $62,552
---- -------- -------- -------- -------
---- -------- -------- -------- -------
</TABLE>

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

F-21
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Operating activities
Net income (loss)........................................................... $ 7,299 $ (306) $ (2,908)
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Amortization of investment and mortgage-backed securities premium....... 138 193 762
Amortization of loan discount........................................... 66 76 (571)
Provision for loan losses............................................... 1,154 1,476 8,777
Decrease (increase) in accrued interest receivable...................... (592) 1,140 (1,038)
Depreciation and amortization of premises and equipment................. 2,254 1,981 1,576
Amortization of servicing rights........................................ (590) 849 1,527
Decrease in other assets................................................ 2,808 1,439 3,426
Decrease in accrued interest payable.................................... (49) (663) (186)
Increase (decrease) in other liabilities................................ (313) 133 (2,967)
Gain on sale of servicing rights........................................ (1,165) (672) (755)
Gain on sale of foreclosed assets....................................... (401) (602) (684)
Loss on sale of loans................................................... 204 -- 28
Gain on branch sale..................................................... -- -- (656)
Loss on sale of securities.............................................. 806 335 --
--------- --------- ---------
Net cash provided by operating activities............................ 11,619 5,379 6,331
--------- --------- ---------
Investing activities
Investments and mortgage-backed securities held to maturity:
Principal payments and maturities and securities called................... 37,980 56,095 33,899
Purchases................................................................. (200) (80) (75)
Investments and mortgage-backed securities, available for sale:
Principal payments and maturities and securities called................... 12,124 18,217 1,373
Sale of securities........................................................ 23,495 8,800 --
Net increase in credit card loans........................................... (39) (131) (1,121)
Loans purchased............................................................. (44,416) (7,643) (16,677)
Loans originated net of principal collections............................... (151,334) (41,217) (49,698)
Proceeds from sale of loans................................................. 43,350 478 8,384
Purchases of premises and equipment......................................... (3,453) (2,540) (2,035)
Proceeds from sale of premises and equipment................................ 106 61 74
Proceeds from sale of servicing rights...................................... 3,760 672 227
Proceeds from sale of foreclosed assets..................................... 4,280 4,532 6,766
Proceeds from sale of branch deposits....................................... -- -- (28,770)
Purchase of branch deposits................................................. -- -- 10,582
--------- --------- ---------
Net cash (used in) provided by investing activities....................... (74,347) 37,244 (37,071)
--------- --------- ---------
Financing activities
Net increase (decrease) in NOW accounts, money market accounts and passbook
accounts.................................................................. (90) 14,719 (51,794)
Net increase in time deposits............................................... 75,952 66,802 213,993
Net decrease in short-term borrowings....................................... -- (128,600) (136,741)
Increase (decrease) in long-term debt to affiliates......................... 1,500 -- (500)
Increase in capitalized interest component of long-term debt to
affiliates................................................................ 1,825 1,640 --
--------- --------- ---------
Net cash provided by (used in) financing activities....................... 79,187 (45,439) 24,958
--------- --------- ---------
Increase (decrease) in cash and cash equivalents.............................. 16,459 (2,816) (5,782)
Cash and cash equivalents at beginning of year................................ 18,394 21,210 26,992
--------- --------- ---------
Cash and cash equivalents at end of year...................................... $ 34,853 $ 18,394 $ 21,210
--------- --------- ---------
--------- --------- ---------
</TABLE>

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

F-22
<PAGE>
UCBH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------
1997 1996 1995
------- ------- --------
<S> <C> <C> <C>
Supplemental disclosure of cash flow information
Cash paid during the year for interest........................................ $62,475 $62,978 $ 70,098
Cash paid during the year for income taxes.................................... 4,083 832 495

Supplemental schedule of noncash investing and financing activities
Receivable resulting from sale of servicing rights............................ $ 371 $ -- $ 528
Real estate acquired through foreclosure...................................... 4,260 4,443 5,373
Securities transferred to available for sale securities....................... -- -- 125,987
Long-term debt resulting from refinance of long-term debt to affiliates and
related accrued interest................................................... -- 15,048 --
</TABLE>

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

F-23
<PAGE>
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), is a savings institution holding company
that conducts its business through its principal subsidiary, United Commercial
Bank (United), a federally chartered savings bank based in California. Through
December 31, 1997, United was known as United Savings Bank, F.S.B. and through
March 30, 1998, the Company was known as USB Holdings, Inc. The Company is a
wholly-owned subsidiary of Chief Investments, Ltd.

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. The Company's business consists primarily of
attracting retail deposits from consumers and business customers and originating
loans. The Company originates loans secured by mortgages on residential real
estate and loans secured by commercial real estate, including multi-family
housing, mixed use properties, retail and other commercial uses. The Company
also offers commercial loans and lines of credit, trade finance lines and other
commercial loans, as well as a variety of consumer loan products. The Company
also provides a variety of fee-generating services to both commercial customers
and consumers. Substantially all loans are originated for portfolio and held for
investment. All significant intercompany balances and transactions have been
eliminated in consolidation. Certain reclassifications have been made to prior
years' consolidated financial statements to conform to the December 31, 1997
presentation.

On April 17, 1998, the Company completed a 6,000-for-1 stock split.
Accordingly, the financial statements for all years presented have been restated
to reflect the impact of the stock split. On April 17, 1998, the Company's
long-term debt to affiliates was converted to 1,974,000 shares of common stock,
as adjusted for the aforementioned stock split. Given the occurrence of this
conversion, management has considered this long-term debt to affiliates as
convertible debt for purposes of its calculation of diluted earnings per share.

Risks and Uncertainties

In the normal course of its business, the Company encounters two
significant types of risk: economic and regulatory. There are three main
components of economic risk: interest rate risk, credit risk and market risk.
The Company is subject to interest rate risk to the degree that its
interest-bearing liabilities mature or reprice at different speeds, or on a
different basis, than its interest-earning assets. Related to interest rate risk
is prepayment risk. Prepayment risk is the risk associated with the prepayment
of assets, and the write-off of premiums associated with those assets, should
interest rates fall dramatically. Credit risk is the risk of default, primarily
in the Company's loan portfolio that results from the borrowers' inability or
unwillingness to make contractually required payments. Market risk reflects
changes in the value of securities, the value of collateral underlying loans
receivable and the valuation of real estate owned.

The Company is subject to the regulations of various governmental agencies.
These regulations change significantly from period to period. Such regulations
can also restrict the growth of the Company and United as a result of capital
requirements. The Company also undergoes periodic examinations by the regulatory
agencies which may subject it to further changes with respect to asset
valuations, amounts of required loss allowances and operating restrictions. Such
changes may result from the regulators' judgments based on information available
to them at the time of their examination.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and

F-24
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and noninterest bearing deposits,
federal funds sold and securities purchased under agreements to resell. For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with original maturities when purchased of three months
or less to be cash equivalents.

Securities Purchased Under Agreements to Resell

The Company periodically purchases securities under agreements to resell
(repurchase agreements). The amounts advanced under such agreements represent
short-term loans. During the agreement period, the securities are maintained by
the dealer under a written custodial agreement that explicitly recognizes the
Company's interest in the securities.

Investment and Mortgage-backed Securities

In accordance with Statement of Financial Accounting Standards No. 115
(SFAS 115) 'Accounting for Certain Investments in Debt and Equity Securities,'
the Company has designated a portion of the investment and mortgage-backed
securities portfolio as 'held to maturity' securities. As such, this portion of
the portfolio is carried at cost, adjusted for the amortization of premiums and
accretion of discounts. Cost is determined on a specific identification basis.
Inasmuch as the Company has the ability and intent to hold the 'held to
maturity' securities in its portfolio until maturity, the carrying value has not
been adjusted to reflect decreases in market value from book value, if any. Also
in accordance with SFAS 115, the Company has designated a portion of the
mortgage-backed securities portfolio as 'available for sale.' Such securities
are carried at fair value. Fair value is the quoted market price. Unrealized
holding gains or losses for 'available for sale' securities are excluded from
earnings and reported in a separate component of stockholders' equity, net of
tax. Premiums and discounts on investment and mortgage-backed securities are
amortized against interest income, using the interest method, with the
amortization period extending to the maturity date of the securities. Gains or
losses on the sale of securities are recognized when sold.

In November 1995, the Financial Accounting Standards Board issued a Special
Report, 'A Guide to Implementation of Statement 115 on Accounting for Certain
Debt and Equity Securities.' Concurrent with the implementation of the Guide,
but not later than December 31, 1995, all institutions could conduct a one time
reassessment of the classification of all securities held at that time. In
accordance with the provisions of the Guide, management elected to transfer
securities with a fair value of $123.3 million and amortized cost of $126
million from the held-to-maturity classification to the available-for-sale
classification. The unrealized holding gain (loss) at the transfer date of $1.6
million (tax effected) has been reflected as a separate component of
shareholder's equity.

Loans

Loans are carried at the principal balance outstanding adjusted for the
amortization of premiums and the accretion of discounts. Premiums and discounts
are recognized as an adjustment of loan yield by the interest method based on
contractual term of the loans. Interest is accrued as earned.

Loans are generally placed on nonaccrual status when the payments become 90
days past due, or earlier if, in management's opinion, the full and timely
collection of principal or interest becomes uncertain. Any accrued and unpaid
interest on such loans is reversed and charged against current income.

F-25
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
The Company recognizes interest income on nonaccrual loans to the extent
received in cash. However, where there is doubt regarding the ultimate
collectibility of the loan principal, cash receipts, whether designated as
principal or interest, are applied to reduce the carrying value of the loan.

Loan origination fees, net of certain direct origination costs, are
deferred and recognized as an adjustment of the loan yield over the contractual
life of the loan. Amortization of deferred loan fees is discontinued on
nonperforming loans.

On January 1, 1995, the Company adopted prospectively the provisions of
Statement of Financial Standards No. 114, (SFAS 114) 'Accounting by Creditors
for Impairment of a Loan' as amended by Statement of Financial Standards No. 118
(SFAS 118), 'Accounting by Creditors for Impairment of a Loan--Income
Recognition and Disclosures.' These standards require the Company to evaluate
loans for possible impairment. The Company considers a loan to be impaired when,
based on current information and events, it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the loan
agreement, including scheduled interest payments. For a loan that has been
restructured, the contractual terms of the loan agreement refer to the
contractual terms specified by the original loan agreement, not the contractual
terms specified by the restructuring agreement.

When evaluating loans for possible impairment, the Company makes an
individual assessment for impairment when and while such loans are on nonaccrual
status, or the loan has been restructured. When a loan has been identified as
being impaired, the amount of impairment will be measured by the Company using
discounted cash flows, except when it is determined that the primary remaining
source of repayment for the loan is the operation or liquidation of the
underlying collateral. In such cases, the current fair value of the collateral,
reduced by estimated costs to sell, will be used in place of discounted cash
flows. The Company does not apply the loan-by-loan evaluation process described
above to large groups of smaller balance homogeneous loans that are evaluated
collectively for impairment, such as residential mortgage (1 to 4 family) loans
with balances up to $500,000, home equity, and other consumer loans.

If the measurement of the impaired loan is less than the recorded
investment in the loan (including accrued interest, net deferred loan fees or
costs and unamortized premium or discount), an impairment is recognized by
creating or adjusting an existing allocation of the allowance for loan losses.
The Company's charge-off policy with respect to impaired loans is similar to its
charge-off policy for all loans. Specifically, loans are charged off in the
month in which they are considered uncollectible.

The adoption of SFAS 114 and 118 did not affect the Company's accounting
policies regarding income recognition, charge-offs, or recoveries and did not
affect the comparability of the Company's disclosures regarding classification
of nonaccrual or other problem loans.

Allowance for Loan Losses

The allowance for loan losses is based on management's continuous
evaluation of various factors affecting collectibility of the loan portfolio.
These factors include, but are not limited to, changes in the composition of the
portfolio, current and forecasted economic conditions, overall portfolio
quality, review of specific problem loans, and historical loan-loss experience.
The allowance for loan losses is based on estimates, and ultimate losses may
vary from the current estimates. These estimates are reviewed periodically and,
as adjustments become necessary, they are reported in earnings in the period in
which they become known. The allowance is increased by provisions charged to
expense and reduced by loan losses, net of recoveries.

The determination of the allowance for loan losses is based on estimates
that are susceptible to changes in the economic environment and market
conditions. Management believes that, as of December 31, 1997 and 1996, the
allowance for loan losses is adequate based on information currently available.
If recent improvements in the economies of the Company's principal market areas
are not sustainable, the Company's loan portfolios could be

F-26
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
adversely affected and higher charge-offs and increases in non-performing assets
could result. Such an adverse impact could also require a larger allowance for
loan losses.

Mortgage Banking Activities

Through 1996, the Company operated a mortgage banking division. This
division was closed in early 1997 and mortgage banking activities are no longer
a significant business activity for the Company. The Company periodically sells
some of its mortgage loan production for cash proceeds equal to the market value
of the loans. Gain or loss is recognized to the extent of the difference between
the cash proceeds received and the carrying value of the loans sold. In
addition, for loans sold in which servicing has been retained by the Company,
gain is recognized and an asset is recorded at the time of sale based upon the
present value of amounts expected to be received resulting from the difference
between the borrowers' contractual interest rates and the rates paid to the
investors.

Through December 31, 1996, the Company accounted for its loan servicing
assets in accordance with the provisions of Statement of Financial Standards No.
122 (SFAS 122) 'Accounting for Mortgage Servicing Rights,' which required that
rights to service mortgage loans be recognized as separate assets, whether
originated or acquired. Management implemented this Statement on December 31,
1995.

On January 1, 1997, the Company adopted Statements of Financial Accounting
Standards No. 125, 'Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities' (SFAS 125). SFAS 125 requires application of
a financial components approach that focuses on control. Under this approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes liabilities
when extinguished. The statement also distinguishes transfers of financial
assets that are sales from transfers of financial assets that are secured
borrowings.

SFAS 125 supersedes the provisions SFAS 122; however, mortgage banking
activities are now an insignificant part of the Company's business, and there
are no significant differences in The Company's accounting for mortgage banking
activities or mortgage servicing rights under SFAS 125.

Implementation of the provisions of SFAS 125 did not have a significant
effect on the Company's financial position or results of operations.

Premises and Equipment

Premises and equipment are carried at cost, less accumulated depreciation
and amortization. Provisions for depreciation and amortization are determined on
a straight-line basis over the lesser of the estimated useful lives or the terms
of the leases. Terms range from three to ten years for furniture, equipment, and
computer software, and from forty to fifty years for premises.

Foreclosed Assets

Foreclosed assets (other real estate owned) consist of properties acquired
through, or in lieu of, foreclosure and are carried at the lower of cost or fair
value (less estimated selling costs). Cost includes the unpaid loan balance
adjusted for applicable accrued interest, unamortized deferred loan fees and
acquisition costs. In the event that the fair value (less estimated selling
costs) is less than cost at the time of acquisition, the shortfall is charged to
the allowance for loan losses. Subsequent write-downs, if any, and disposition
gains and losses are reflected as charges to current operations.

F-27
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING
POLICIES--(CONTINUED)
Goodwill

Goodwill resulted from a variety of transactions, including branch
acquisitions and is generally amortized over seven years. Goodwill is included
in other assets.

Securities Sold Under Agreements to Repurchase

The Company periodically enters into sales of securities under agreements
to repurchase (reverse repurchase agreements). Fixed-coupon reverse repurchase
agreements are treated as financings. Accordingly, the securities underlying the
agreement remain in the asset accounts and the obligations to repurchase
securities sold are reflected as a liability in the consolidated balance sheets.
The securities underlying the agreements are delivered to the dealers who
arrange the transactions. Under some agreements, the dealers may sell, lend, or
otherwise dispose of the securities to other parties and agree to resell to the
Company substantially identical securities at the maturities of the agreements.

Interest Rate Swap and Cap Agreements

The Company periodically enters into interest rate swap and cap agreements
as a means of managing its interest rate exposure. The differential to be paid
or received on interest rate swap agreements entered into to reduce the impact
of changes in interest rates is recognized over the life of the agreements.
Premiums paid on cap agreements are amortized over the life of the agreements.
The results of swap and cap transactions are recognized currently as an
adjustment to interest expense.

Accounting for Income Taxes

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109), 'Accounting for Income
Taxes.' SFAS 109 requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. The Company provides a
valuation allowance against net deferred tax assets to the extent that
realization of the assets is not considered more likely than not.

The Company and United file a consolidated federal income tax return and a
combined California tax return. The Company allows all tax benefits generated
within the consolidated group to be retained by United.

Impairment of Long-Lived Assets

On January 1, 1996, the Company adopted prospectively, the provisions of
Statement of Financial Accounting Standards No. 121 (SFAS 121), 'Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of.' This Statement establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. Long-lived assets and identifiable
intangibles held by the Company consist of premises and equipment, other real
estate owned, and goodwill. Implementation of SFAS 121 did not have an effect on
the financial position or results of operations of the Company since management
determined that there was no impairment with respect to premises and equipment
or goodwill. The Company's previous accounting treatment of other real estate
owned was substantially identical to the treatment required under SFAS 121.
Accordingly, no adjustment was required in connection with the implementation of
SFAS 121.

2. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL

Securities purchased under agreements to resell averaged $44.0 million and
$22.1 million during 1997 and 1996, respectively, and the maximum amounts
outstanding at any month-end during 1997 and 1996 were

F-28
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL--(CONTINUED)
$70 million and $20 million, respectively. At December 31, 1997 and 1996, there
were no securities purchased under agreements to resell.

3. INVESTMENT SECURITIES

The amortized cost and approximate market value of investment securities
classified as held to maturity at December 31, 1997 and 1996 were (dollars in
thousands):

<TABLE>
<CAPTION>
1997
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Held to maturity
FHLB Note................................. $ 2,000 $-- $ 2 $ 1,998
FNMA Note................................. 2,000 -- -- 2,000
--------- --- --- -------
$ 4,000 $-- $ 2 $ 3,998
--------- --- --- -------
--------- --- --- -------
</TABLE>

<TABLE>
<CAPTION>
1996
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Held to maturity
FHLB Note................................. $ 8,670 $2 $ 43 $ 8,629
FHLB CD................................... 2,000 -- -- 2,000
Other..................................... 5,000 -- 12 4,988
--------- --- --- -------
$15,670 $2 $ 55 $15,617
--------- --- --- -------
--------- --- --- -------
</TABLE>

For 1996, other investments consisted primarily of medium-term notes and
certificates of deposit with financial institutions and medium-term notes with
governmental agencies.

The amortized cost and approximate market value of investment securities
classified as held to maturity at December 31, 1997 and 1996, by contractual
maturity, are shown below (dollars in thousands):

<TABLE>
<CAPTION>
1997
--------------------
AMORTIZED MARKET
COST VALUE
--------- -------
<S> <C> <C>
Held to maturity
Due in one year or less................................. $ 2,000 $ 1,998
Due after one year through five years................... 2,000 2,000
--------- -------
$ 4,000 $ 3,998
--------- -------
--------- -------
</TABLE>

<TABLE>
<CAPTION>
1996
--------------------
AMORTIZED MARKET
COST VALUE
--------- -------
<S> <C> <C>
Held to maturity
Due in one year or less................................. $11,670 $11,662
Due after one year through five years................... 4,000 3,955
--------- -------
$15,670 $15,617
--------- -------
--------- -------
</TABLE>

During 1996, $29 million of securities classified as investments held to
maturity were called by the issuer.

F-29
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. MORTGAGE-BACKED SECURITIES

The amortized cost and approximate market value of mortgage-backed
securities classified as held to maturity and available for sale at December 31,
1997 and 1996, were (dollars in thousands):

<TABLE>
<CAPTION>
1997
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Held to maturity
FHLMC................................... $ 48,536 -- $1,918 $ 46,618
FNMA.................................... 117,184 -- 4,396 112,788
Other................................... 16,075 -- 509 15,566
--------- --- ------ --------
$ 181,795 $-- $6,823 $174,972
--------- --- ------ --------
--------- --- ------ --------
Available for sale
FNMA.................................... $ 87,237 $-- $2,929 $ 84,308
--------- --- ------ --------
--------- --- ------ --------
</TABLE>

<TABLE>
<CAPTION>
1996
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Held to maturity
FHLMC................................... $ 61,629 -- $2,615 $ 59,014
FNMA.................................... 124,710 -- 5,489 119,221
Other................................... 22,216 -- 968 21,248
--------- --- ------ --------
$ 208,555 $-- $9,072 $199,483
--------- --- ------ --------
--------- --- ------ --------
Available for sale
FNMA.................................... $ 123,982 $-- $4,468 $119,514
--------- --- ------ --------
--------- --- ------ --------
</TABLE>

Approximately $45.6 million and $75.5 million of mortgage-backed securities
have been pledged to secure contractual arrangements entered into by the Company
at December 31, 1997 and 1996, respectively.

Proceeds from the sale of available for sale securities during 1997 and
1996 totaled $23.4 million and $8.8 million, respectively. There were no sales
of available for sale securities during 1995. Gross realized losses totaled
$806,000 and $335,000 for 1997 and 1996, respectively.

Mortgage-backed securities sold under agreements to repurchase as of
December 31, 1997 and 1996 were (dollars in millions):

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
$
Book value.................................................... -- $--
Market value.................................................. -- --
Obligations................................................... -- --
Weighted average interest rate at end of period............... -- --
Weighted average interest rate during the period.............. 5.47% 6.31%
Average balance during the year............................... 5.3 15.8
Maximum amount outstanding at any month end during the year... -- 74.4
</TABLE>

When the Company enters into these transactions, the obligations generally
mature within one year and generally represent agreements to repurchase the same
securities.

F-30
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. MORTGAGE-BACKED SECURITIES--(CONTINUED)
As of December 31, 1997 and 1996, remaining maturities on mortgage-backed
securities classified as held to maturity and available for sale were as follows
(dollars in thousands):

<TABLE>
<CAPTION>
1997
---------------------
AMORTIZED MARKET
COST VALUE
--------- --------
<S> <C> <C>
Held to maturity
In one year or less.................................... $ 1,413 $ 1,406
After one year through five years...................... -- --
After five years through ten year...................... 2,961 2,881
After ten years........................................ 177,421 170,685
--------- --------
$ 181,795 $174,972
--------- --------
--------- --------
Available for sale
After ten years........................................ $ 87,237 $ 84,308
--------- --------
--------- --------
</TABLE>

<TABLE>
<CAPTION>
1996
---------------------
AMORTIZED MARKET
COST VALUE
--------- --------
<S> <C> <C>
Held to maturity:
In one year or less.................................... $ 4,595 $ 4,485
After one year through five years...................... 1,845 1,820
After five years through ten year...................... 3,096 2,995
After ten years........................................ 199,019 190,183
--------- --------
$ 208,555 $199,483
--------- --------
--------- --------
Available for sale
After ten years........................................ $ 123,982 $119,514
--------- --------
--------- --------
</TABLE>

F-31
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. LOANS

As of December 31, 1997 and 1996, the composition of the loan portfolio was
as follows (dollars in thousands):

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Consumer
Residential mortgage (one to four family).......... $ 691,167 $ 541,156
Home equity........................................ 16,743 10,673
Other.............................................. 2,732 2,642
---------- ----------
710,642 554,471
---------- ----------
Commercial
Secured by real estate - multifamily............... 339,257 361,591
Secured by real estate - nonresidential............ 115,366 123,003
Construction....................................... 26,603 19,892
Lines of credit.................................... 21,146 6,595
---------- ----------
502,372 511,081
---------- ----------
Gross loans............................................. 1,213,014 1,065,552
Net deferred loan costs................................. 1,223 816
Allowance for loan losses............................... (12,142) (11,682)
---------- ----------
Net loans............................................... $1,202,095 $1,054,686
---------- ----------
---------- ----------
</TABLE>

In the table above, construction loans are presented net of undrawn
commitments of $71.0 million and $25.8 million at December 31, 1997 and 1996,
respectively.

As of December 31, 1997, loans at fixed interest rates amounted to $241.5
million, and loans at variable interest rates amounted to $971.5 million. Loans
of approximately $9.9 million and $19.5 million were on nonaccrual status at
December 31, 1997 and 1996, respectively.

As of December 31, 1997, the portfolio above contained $685.0 million of
loans that were interest-rate sensitive within one year, $304.2 million from one
to five years, $12.3 million from five to ten years, $175.2 million from ten to
twenty years and $36.3 million over twenty years.

As of December 31, 1997, loans with a book value and market value of $245.3
million were pledged to secure FHLB advances (see Note 10).

The Company serviced real estate loans for others of $11.0 million and
$300.0 million at December 31, 1997 and 1996, respectively. These loans are not
included in the consolidated balance sheets. In connection therewith, the
Company held trust funds of approximately $2.1 million and $4.7 million as of
December 31, 1997 and 1996, respectively, all of which were segregated in
separate accounts and included in the respective balance sheets.

Some agreements with investors to whom the Company has sold loans have
provisions which could require repurchase of loans under certain circumstances.
Management does not believe that any such repurchases will be significant.

F-32
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. LOANS--(CONTINUED)
The following table sets forth impaired loan disclosures as of and for the
year ended December 31, 1997 and 1996 (dollars in thousands):

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Impaired loans with an allowance................................. $1,359 $2,894
Impaired loans without an allowance.............................. 20 6,218
------ ------
Total impaired loans........................................ $1,379 $9,112
------ ------
------ ------
Allowance for impaired loans under SFAS 114...................... $ 109 $ 315
------ ------
------ ------
</TABLE>

<TABLE>
<CAPTION>
1997 1996 1995
------ ------- ------
<S> <C> <C> <C>
Interest income recognized on impaired loans during the
period........................................................ $ 68 $ 181 $ 167
------ ------- ------
------ ------- ------
Average recorded investment in impaired loans................... $3,425 $10,394 $2,268
</TABLE>

In the table above, loans included in the 'Impaired loans without an
allowance' category are those loans for which the discounted cash flows,
collateral value (net of estimated selling costs) or market price equals or
exceeds the carrying value of the loan. Such loans do not require an allowance.

For the years ended December 31, 1997, 1996 and 1995, the activity in the
allowance for loan losses was as follows (dollars in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year................................. $11,682 $13,699 $ 7,550
Provision for loan losses.................................... 1,154 1,476 8,777
Loans charged off............................................ (1,069) (4,562) (2,696)
Recoveries of loans previously charged off................... 375 1,069 68
------- ------- -------
Balance at end of year....................................... $12,142 $11,682 $13,699
------- ------- -------
------- ------- -------
</TABLE>

6. PREMISES AND EQUIPMENT

As of December 31, 1997 and 1996, premises and equipment were as follows
(dollars in thousands):

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Land and buildings........................................... $ 19,054 $ 18,866
Leasehold improvements....................................... 8,420 7,901
Equipment, furniture and fixtures............................ 11,853 9,936
-------- --------
39,327 36,703
Less accumulated depreciation and amortization............... (15,396) (13,864)
-------- --------
Total................................................... $ 23,931 $ 22,839
-------- --------
-------- --------
</TABLE>

Depreciation and amortization expense was $2.3 million, $2.0 million and
$1.6 million for the years ended December 31, 1997, 1996 and 1995, respectively.

F-33
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. SERVICING ASSETS

Included in other assets are servicing assets. For the years ended December
31, 1997, 1996 and 1995, activity with respect to servicing assets was as
follows (dollars in thousands):

<TABLE>
<CAPTION>
1997
--------------------------------------
CAPITALIZED PURCHASED ORIGINATED
EXCESS MORTGAGE MORTGAGE
SERVICING SERVICING SERVICING
FEES RIGHTS RIGHTS
----------- --------- ----------
<S> <C> <C> <C>
Beginning balance, net................................... $ 546 $ 1,832 $ 382
Sales............................................... (5) (2,532) (428)
Additions........................................... -- -- 44
Amortization:
Normal......................................... (206) (150) (51)
Decrease in valuation allowance..................... -- 850 147
----- ------- ------
Ending balance, net...................................... $ 335 $ -- $ 94
----- ------- ------
----- ------- ------
</TABLE>

<TABLE>
<CAPTION>
1996
--------------------------------------
CAPITALIZED PURCHASED ORIGINATED
EXCESS MORTGAGE MORTGAGE
SERVICING SERVICING SERVICING
FEES RIGHTS RIGHTS
----------- --------- ----------
<S> <C> <C> <C>
Beginning balance, net................................... $ 672 $ 2,509 $ --
Additions........................................... -- -- 576
Amortization:
Normal......................................... (126) (627) (47)
Increase in valuation allowance..................... -- (50) (147)
----- ------- -------
Ending balance, net...................................... $ 546 $ 1,832 $ 382
----- ------- -------
----- ------- -------
</TABLE>

<TABLE>
<CAPTION>
1995
--------------------------------------
CAPITALIZED PURCHASED ORIGINATED
EXCESS MORTGAGE MORTGAGE
SERVICING SERVICING SERVICING
FEES RIGHTS RIGHTS
----------- --------- ----------
<S> <C> <C> <C>
Beginning balance, net................................... $ 902 $ 3,806 $ --
Additions........................................... -- -- --
Amortization:
Normal......................................... (230) (497) --
Increase in valuation allowance..................... -- (800) --
----- ------- ------
Ending balance, net...................................... $ 672 $ 2,509 $ --
----- ------- ------
----- ------- ------
</TABLE>

For the years ended December 31, 1997, 1996 and 1995, the activity in the
valuation allowance for servicing assets was as follows (dollars in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
----- ---- ----
<S> <C> <C> <C>
Balance, beginning of year............................................ $ 997 $800 $ --
Provision for impairment.............................................. -- 197 800
Reversal of valuation allowance....................................... (997) -- --
Write-downs........................................................... -- -- --
----- ---- ----
Balance, end of year.................................................. $ -- $997 $800
----- ---- ----
----- ---- ----
</TABLE>

F-34
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. FORECLOSED ASSETS

As of December 31, 1997 and 1996, other assets include $412,000 and $1.6
million, respectively, in real estate acquired through foreclosure.

9. DEPOSITS

As of December 31, 1997 and 1996, deposit balances were as follows (dollars
in thousands):

<TABLE>
<CAPTION>
1997
----------------------
WEIGHTED
AVERAGE
BALANCE RATE
---------- --------
<S> <C> <C>
NOW and checking accounts.................................. $ 111,984 0.80%
Money market accounts...................................... 20,986 2.48%
Passbook accounts.......................................... 212,013 2.11%
Time deposits:
Less than $100,000.................................... 831,292 5.12%
$100,000 or greater................................... 292,712 5.41%
---------- --------
Total................................................. $1,468,987 4.38%
---------- --------
---------- --------
</TABLE>

<TABLE>
<CAPTION>
1996
----------------------
WEIGHTED
AVERAGE
BALANCE RATE
---------- --------
<S> <C> <C>
NOW and checking accounts.................................. $ 106,491 0.79%
Money market accounts...................................... 22,111 2.39%
Passbook accounts.......................................... 216,471 2.20%
Time deposits:
Less than $100,000.................................... 773,571 4.87%
$100,000 or greater................................... 274,481 5.16%
---------- --------
Total................................................. $1,393,125 4.17%
---------- --------
---------- --------
</TABLE>

As of December 31, 1997, remaining maturities on time deposits were as
follows (dollars in thousands):

<TABLE>
<S> <C>
1998.................................................................. $1,111,927
1999.................................................................. 10,324
2000.................................................................. 1,753
----------
Total................................................................. $1,124,004
----------
----------
</TABLE>

For the years ended December 31, 1997, 1996 and 1995, interest expense on
deposits was as follows (dollars in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
NOW and demand deposit accounts.............................. $ 875 $ 826 $ 781
Money market accounts........................................ 517 561 654
Passbook accounts............................................ 4,834 4,772 4,797
Time deposits................................................ 55,570 53,360 50,046
Less penalties for early withdrawal.......................... (283) (246) (240)
------- ------- -------
Total................................................... $61,513 $59,273 $56,038
------- ------- -------
------- ------- -------
</TABLE>

F-35
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. DEPOSITS--(CONTINUED)
As of December 31, 1997 and 1996, the composition of deposits by interest
rate was as follows (dollars in thousands):

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Under 3%................................................ $ 345,473 $ 345,027
3.00% to 3.99%.......................................... 45,148 49,750
4.00% to 4.99%.......................................... 262,607 423,922
5.00% to 5.99%.......................................... 681,977 562,446
6.00% to 6.99%.......................................... 133,313 11,099
7.00% to 7.99%.......................................... -- 251
8.00% to 8.99%.......................................... 469 630
---------- ----------
Total.............................................. $1,468,987 $1,393,125
---------- ----------
---------- ----------
</TABLE>

10. FEDERAL HOME LOAN BANK ADVANCES

The Company maintains a secured credit facility with the Federal Home Loan
Bank of San Francisco (FHLB-SF) against which the Company may take advances. The
terms of this credit facility require the Company to maintain in safekeeping
with the FHLB-SF eligible collateral of least 100% of outstanding advances.
There were no advances outstanding at December 31, 1997 or 1996. At December 31,
1997, credit availability under this facility was approximately $291 million.

11. LONG-TERM DEBT TO AFFILIATES

The Company has a promissory note to United Holdings Int'l Ltd. (UHIL)
dated April 1, 1996 for a principal sum of $15,548,000. This note refinanced
previous affiliate debt and related accrued interest. Interest is capitalized on
the note through December 31, 1999 and calculated at a compound annual interest
rate of 10%. As of January 1, 2000, accrued interest is payable annually within
60 days after each year end. The Company has an additional promissory note to
Chief Investments Limited (Chief) dated February 28, 1997 for a principal sum of
$1,500,000. Interest is capitalized on the note through December 31, 1999 and
calculated at a compound annual interest rate of 10%. Annual payments
representing the lesser of $1,000,000 or the outstanding balance of the note are
to be paid within 60 days of each calendar year end, effective December 31,
1999. Chief is the Company's parent and UHIL is another related party.

At December 31, 1997, future principal payments (including capitalized
interest) on long term debt are payable as follows (dollars in thousands):

<TABLE>
<S> <C>
1998..................................................................... $ --
1999..................................................................... --
2000..................................................................... 1,000
2001..................................................................... 3,127
2002..................................................................... 3,000
Aggregate thereafter..................................................... 12,933
-------
Total............................................................... $20,060
-------
-------
</TABLE>

F-36
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS

The Company and United are subject to various regulatory requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, United
must meet specific capital guidelines that involve quantitative measures of
United's assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. United's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require United to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1997, that United
meets all capital adequacy requirements to which it is subject.

As of December 31, 1997, the most recent notification from the Office of
Thrift Supervision categorized United as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
United must maintain minimum total risk-based, Tier I risk-based, Tier I
leverage ratios as set forth in the table. There are no conditions or events
since that notification that management believes have changed the institution's
category. As of December 31, 1996, the Office of Thrift Supervision categorized
United as adequately capitalized under the regulatory framework for prompt
corrective action.

United's actual capital amounts and ratios are also presented in the
following table (dollars in thousands):

<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
-------------- --------------------- ---------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital (to risk weighted assets)... $94,547 11.15% $67,837 8.00 % $84,796 10.00%
Core Capital (to adjusted tangible
assets)................................. 83,927 5.37% 62,519 4.00 % 78,148 5.00%
Tier I Capital (to risk weighted
assets)................................. 83,927 9.90% 33,919 4.00 % 50,864 6.00%
Tangible Capital (to tangible assets)..... 83,927 5.37% 23,444 1.50 % N/A N/A
</TABLE>

The following table is a reconciliation of United's capital under Generally
Accepted Accounting Principles ('GAAP') with its regulatory capital at December
31, 1997 (dollars in thousands):

<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
-------- ------- ----------
<S> <C> <C> <C>
GAAP Capital.......................................................... $ 82,556 $82,556 $ 82,556
Nonallowable components:
Unrealized losses on securities available for sale.................. 1,728 1,728 1,728
Goodwill............................................................ (348) (348) (348)
Mortgage servicing rights-excess.................................... (9) (9) (9)
Additional capital components:
Allowance for loan losses--allowable in risk-based capital.......... -- -- 10,620
-------- ------- ----------
United regulatory capital............................................. $ 83,927 $83,927 $ 94,547
-------- ------- ----------
-------- ------- ----------
</TABLE>

F-37
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

12. STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL REQUIREMENTS--(CONTINUED)
The Company, as a savings institution holding company, is not subject to
regulatory capital requirements separate from its subsidiary, United.

United is prohibited by federal regulations from paying dividends if the
payment would reduce United's net worth below certain minimum requirements. The
Company has agreed that United would not declare or pay in any year a dividend
that exceeds 50% of The Company's net operating income (dividends may be
deferred and paid in a subsequent year) without the prior written consent of the
Office of Thrift Supervision (OTS). At December 31, 1997, $5.1 million of
United's retained earnings were available for distribution as dividends to the
Company.

13. FEDERAL AND STATE TAXES ON INCOME

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

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------
1997 1996 1995
------ ----- -------
<S> <C> <C> <C>
Current tax (benefit) expense:
Federal........................................................ $3,244 $ 174 $ (783)
State.......................................................... 1,881 28 317
------ ----- -------
5,125 202 (466)
------ ----- -------
Deferred tax (benefit) expense:
Federal........................................................ 1,155 (327) (2,199)
State.......................................................... (490) (52) (741)
------ ----- -------
665 (379) (2,940)
------ ----- -------
$5,790 $(177) $(3,406)
------ ----- -------
------ ----- -------
</TABLE>

F-38
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. FEDERAL AND STATE TAXES ON INCOME--(CONTINUED)
Deferred tax liabilities (assets) are comprised of the following (dollars
in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Deferred loan fees............................................................. $ 3,356 $ 3,812
FHLB dividends................................................................. 2,803 2,456
Amortization of excess servicing fees.......................................... 138 225
Market value adjustments on certain loans and securities....................... 81 1,409
Purchase accounting adjustments................................................ 229 306
Capitalized originated mortgage servicing...................................... 39 153
-------- --------
6,646 8,361
-------- --------
Deferred tax assets:
Net operating loss carryforwards............................................... (84) (3,282)
Loan and OREO loss allowances.................................................. (4,162) (4,028)
Servicing rights impairment allowance.......................................... -- (331)
AMT credit carryover........................................................... (1,166) (1,707)
State taxes.................................................................... (539) (129)
Depreciation................................................................... (396) (270)
Unrealized losses on securities available for sale............................. (1,130) (1,707)
Deferred compensation.......................................................... (132) (211)
Other deferred deduction items................................................. (2,562) (1,749)
-------- --------
(10,171) (13,414)
-------- --------
Deferred tax assets valuation allowance.......................................... -- 286
-------- --------
Net deferred tax assets.......................................................... $ (3,525) $ (4,767)
-------- --------
-------- --------
</TABLE>

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

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1997 1996 1995
---- ----- -----
<S> <C> <C> <C>
Federal income tax rate........................................... 34.0% (34.0)% (34.0)%
State franchise tax rate, net of federal income tax effects....... 7.2% (7.6)% (7.6)%
---- ----- -----
Statutory income tax rate......................................... 41.2% (41.6)% (41.6)%
(Reduction) increase in tax rate resulting from:
Amortization of intangibles..................................... 0.2% 2.0% 0.4%
Reversal of taxes previously provided........................... -- -- (16.0)%
Reversal of valuation allowance................................. (2.2)% -- --
Other items, net................................................ 5.0% 3.0% 3.3%
---- ----- -----
44.2% (36.6)% (53.9)%
---- ----- -----
---- ----- -----
</TABLE>

F-39
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

13. FEDERAL AND STATE TAXES ON INCOME--(CONTINUED)
Taxes on income included the following (dollars in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Net deferred (asset) liability:
Federal income tax..................................................... $(3,429) $(5,004)
State franchise tax.................................................... (96) 237
------- -------
(3,525) (4,767)
(Prepaid income taxes) taxes payable..................................... 40 (656)
------- -------
$(3,485) $(5,423)
------- -------
------- -------
</TABLE>

The Company computes its bad debt deduction using the experience method for
Federal and state tax purposes which considers current year charge-offs together
with those from the previous five years.

During 1996, legislation was enacted which eliminated the Company's tax
exposure relating to tax bad debt reserve that arose prior to 1988. In
accordance with SFAS 109, a deferred tax liability of $946,000 had not been
recognized at December 31, 1995 for $2,784,000 of these temporary differences.

Tax years 1996 through 1997 remain open for Internal Revenue Service
purposes and tax years 1994 through 1997 remain open for California Franchise
Tax Board purposes.

At December 31, 1997, the Company had regular Federal net operating loss
carryovers of $248,000 which expire 2005.

14. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK

The Company is a party to derivative financial instruments and financial
instruments with off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers and to reduce its own exposure to
fluctuations in interest rates. The Company does not hold or issue financial
instruments for trading purposes. Financial instruments in the normal course of
business include commitments to extend and purchase credit, forward commitments
to sell loans, long put and call options, letters of credit and interest-rate
swaps and caps. Those instruments involve, to varying degrees, elements of
credit and interest-rate risk in excess of the amount recognized in the
statement of financial position. The contract or notional amounts of those
instruments reflects the extent of involvement the Company has in particular
classes of financial instruments.

F-40
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET
RISK--(CONTINUED)
Contract or notional amounts of derivative financial instruments and
financial instruments with off-balance-sheet risk as of December 31, 1997 and
1996 are as follows (dollars in millions):

<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit:
Consumer (including residential mortgage)......................................... $65.0 $47.0
Commercial (excluding construction)............................................... 10.8 16.0
Construction...................................................................... 78.7 29.5
Commitments to purchase loans........................................................ 0.1 0.4
Letters of credit.................................................................... 1.9 1.3
Financial instruments whose notional or contract amounts exceed the amount of credit
risk:
Forward commitments to sell loans.................................................... 3.5 4.2
</TABLE>

Forward contracts are contracts for delayed delivery of securities or loans
in which the seller agrees to make delivery at a specified future date of a
specified instrument at a specified price or yield. Risks arise from the
possible inability of counterparties to meet the terms of their contracts and
from movements in security values and interest rates. In order to minimize the
exposure arising from forward contracts, the Company entered into

F-41
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET
RISK--(CONTINUED)
long put options amounting to $1 million and $4 million as of December 31, 1997
and 1996, respectively. The Company had $0.6 million and $1.1 million of long
call options as of December 31, 1997 and 1996, respectively.

Interest rate swaps with a notional amount of $20 million matured in 1996.

For the years ended December 31, 1996 and 1995, costs associated with the
interest rate swaps and caps negatively impacted net interest income by $137,000
and $538,000, respectively.

15. CONCENTRATIONS OF CREDIT RISK

All of the Company's loan activity is with customers located throughout the
State of California. Substantially all residential and commercial real estate
loans are secured by properties located in the State of California. The Company
is required by law to maintain 70% of its portfolio assets--as defined by
regulations-- in qualifying residential or small business assets. As of December
31, 1997, 91.1% of the Company's portfolio assets consisted of such qualifying
assets.

Substantially all real estate loans in the portfolio are originated at 80%
loan-to-value or better. Management believes that the risk of significant losses
in excess of underlying collateral value is low.

16. LEASE COMMITMENTS AND CONTINGENT LIABILITIES

Lease Commitments

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

Future minimum rental payments, which do not include common area costs, due
each year under existing operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31, 1997, are
payable as follows (dollars in thousands):

<TABLE>
<S> <C>
1998..................................................................... $ 3,016
1999..................................................................... 2,017
2000..................................................................... 1,853
2001..................................................................... 1,382
2002..................................................................... 1,208
Aggregate thereafter..................................................... 10,642
-------
Total minimum payments required.......................................... $20,118
-------
-------
</TABLE>

Rental expense was approximately $3.2 million, $3.5 million and $3.0
million for the years ended December 31, 1997, 1996 and 1995, respectively.

Contingent Liabilities

The Company is subject to pending or threatened actions and proceedings
arising in the normal course of business. In the opinion of management, the
ultimate disposition of all pending or threatened actions and proceedings will
not have a material adverse effect on the Company's operations or financial
condition.

17. FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, 'Disclosures about
Fair Value of Financial Instrument,' requires all entities to estimate the fair
value of all financial instrument assets, liabilities, and off-balance-sheet
transactions. Fair values are point-in-time estimates that can change
significantly based on

F-42
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

17. FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)
numerous factors. Accordingly, management cannot provide any assurance that the
estimated fair values presented below could actually be realized. The fair value
estimates for financial instruments were determined as of December 31, 1997 and
1996, by application of the described methods and significant assumptions.

Cash and Short-Term Investments

For these short-term instruments, the carrying value of $34,797,000 at
December 31, 1997 and $18,383,000 at December 31, 1996 is a reasonable estimate
of fair value.

Investment And Mortgage-Backed Securities

The aggregate fair value of investment and mortgage-backed securities is
$277,192,000 at December 31, 1997 and $347,696,000 at December 31, 1996. Fair
value equals quoted market price, if available. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
securities.

Loans Receivable

The aggregate fair value of loans receivable is $1,212,105,000 at December
31, 1997 and $1,036,369,000 at December 31, 1996. Fair value is estimated by
discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings at the same remaining
maturities. In addition, the allowance for loan losses was considered a
reasonable adjustment for credit risk for the entire portfolio.

Capitalized Servicing Fees

Fair value is estimated by discounting estimated future cash flows using
current rates which are required for similar assets. Fair value is estimated to
be the same as the carrying value of $429,087 at December 31, 1997 and $929,000
at December 31, 1996.

Deposit Liabilities

Fair value of demand deposits, savings accounts, and certain money market
deposits is the amount payable on demand at the reporting date. The fair value
of fixed maturity certificates of deposit is estimated using the rates currently
offered for deposits of similar remaining maturities. The aggregate fair value
of deposits is $1,426,274,000 at December 31, 1997 and $1,392,058,000 at
December 31, 1996.

Federal Home Loan Bank Advances

No Federal Home Loan Bank advances were outstanding at December 31, 1997 or
1996.

Long-term Debt to Affiliates

Due to the related party nature of the Company's long-term debt, management
does not believe that fair value estimates are meaningful. Accordingly, such
estimates have not been presented.

Securities Sold Under Agreement to Repurchase

No securities sold under agreement to repurchase were outstanding at
December 31, 1997 or 1996.

Interest Rate Swap and Cap Agreements

The fair value of the swap and cap agreements used for hedging purposes is
the estimated amount that the Company would receive or pay to terminate the
agreements at the reporting date, taking into account current

F-43
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

17. FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)
interest rates and the current creditworthiness of the swap and cap
counterparties. There were no swap of cap agreements at December 31, 1997 and
1996.

Commitments to Extend Credit, Commitments to Purchase Loans, Securities Sold
But Not Owned, and Options on Interest Rate Futures

The fair value of commitments is estimated using the fees currently charged
to enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counterparties. For
fixed-rate commitments, fair value also considers the difference between current
levels of interest rates and the committed rates. Fair values for securities
sold but not owned and options on interest rate futures are based on quoted
market prices or dealer quotes. The fair value of commitments to extend credit
and commitments to purchase loans cannot be readily determined. The fair value
of put options on interest rate futures is $56,875 at December 31, 1997 and
$50,625 at December 31, 1996. The fair value of call options on interest rate
futures is $28,437 at December 31, 1997 and $11,016 at December 31, 1996.

18. PARENT COMPANY

Condensed unconsolidated financial information of UCBH Holdings, Inc. is
presented below. See Note 11 for information regarding the Company's long-term
debt.

CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
ASSETS
Cash and due from banks......................................................... $ 56 $ 11
Investment in subsidiary........................................................ 82,556 71,069
------- -------
Total assets................................................................. $82,612 $71,080
------- -------
------- -------
LIABILITIES
Long-term debt to affiliates.................................................... $20,060 $16,736
------- -------
Total liabilities............................................................ 20,060 16,736
------- -------
STOCKHOLDERS' EQUITY
Common stock.................................................................... 10 10
Additional paid-in capital...................................................... 30,278 30,278
Unrealized loss on subsidiary's mortgage-backed securities available for sale... (1,728) (2,637)
Retained earnings............................................................... 33,992 26,693
------- -------
Total stockholders' equity................................................... 62,552 54,344
------- -------
Total liabilities and stockholders' equity................................... $82,612 $71,080
------- -------
------- -------
</TABLE>

F-44
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

18. PARENT COMPANY--(CONTINUED)
CONDENSED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
INCOME
Dividends from subsidiary............................................... $ 250 $ -- $ 354
------- ------- -------
Total income....................................................... 250 -- 354
------- ------- -------
EXPENSE
Interest expense in long-term debt to affiliates........................ 1,825 1,640 1,741
Miscellaneous expense................................................... 205 -- --
------- ------- -------
Total expense...................................................... 2,030 1,640 1,741
------- ------- -------
Loss before taxes and equity in undistributed net income (loss) of
subsidiary............................................................ (1,780) (1,640) (1,387)
Income tax benefit...................................................... -- -- --
Equity in undistributed net income (loss) of subsidiary................. 9,078 1,334 (1,521)
------- ------- -------
Net income......................................................... $ 7,298 $ (306) $(2,908)
------- ------- -------
------- ------- -------
</TABLE>

CONDENSED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................................................. $ 7,298 $ (306) $(2,908)
Adjustment to reconcile net income to net cash provided by (used for) operating
activities:
Equity in undistributed net (income) loss of subsidiary...................... (9,078) (1,334) 1,521
Increase in accrued interest payable......................................... -- -- 1,457
Decrease in dividends payable................................................ -- -- 417
------- ------- -------
Net cash (used for) provided by operating activities....................... (1,780) (1,640) 487
------- ------- -------
INVESTING ACTIVITIES
Capital contribution to subsidiary................................................ (1,500) -- --
------- ------- -------
Net cash used in investing activities...................................... (1,500) -- --
------- ------- -------
FINANCING ACTIVITIES
Long-term debt to affiliates issued............................................... 1,500 -- --
Long-term debt to affiliates repaid............................................... -- -- (500)
Increase in capitalized interest component of long-term debt to affiliates........ 1,825 1,640 --
------- ------- -------
Net cash provided by (used in) financing activities........................ 3,325 1,640 (500)
------- ------- -------
Net increase (decrease) in cash and cash equivalents.............................. 45 -- (13)
Cash and cash equivalents beginning of year....................................... 11 11 24
------- ------- -------
Cash and cash equivalents end of year............................................. $ 56 $ 11 $ 11
------- ------- -------
------- ------- -------
</TABLE>

F-45
<PAGE>
UCBH HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

19. LEGISLATION ENACTED IN 1996

Legislation was enacted in 1996 to recapitalize the FDIC's Savings
Association Insurance Fund (SAIF). Under this legislation, all institutions with
SAIF-insured deposits, including the Company's subsidiary United, were required
to pay a one-time assessment to recapitalize this insurance fund. For the
United, this assessment was approximately $7.7 million, which resulted in a
charge against 1996 earnings. This assessment was tax deductible and is expected
to substantially reduce the level of future periodic SAIF assessments paid by
United.

20. SUBSEQUENT EVENTS

On March 30, 1998, the Company changed its name from USB Holdings, Inc. to
UCBH Holdings, Inc.

21. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997, 1996 AND 1995
-------------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
(Dollars in thousands, except per share amounts)
1997:
Basic:
Net income............................................ $ 7,299 6,000,000 $ 1.22
Effect of long-term debt to affiliates..................... 1,077 1,974,000
------- ---------
Diluted:
Net income and assumed conversions.................... $ 8,376 7,974,000 $ 1.05
------- ---------
------- ---------
1996:
Basic:
Net loss.............................................. ($ 306) 6,000,000 ($ 0.05)
Effect of long-term debt to affiliates..................... 968 1,974,000
------- ---------
Diluted:
Net income and assumed conversions.................... $ 662 7,974,000 ($ 0.05)
------- ---------
------- ---------
1995:
Basic:
Net loss.............................................. ($2,908) 6,000,000 ($ 0.48)
Effect of long-term debt to affiliates..................... 1,027 1,974,000
Diluted:
------- ---------
Net loss and assumed conversions...................... ($1,881) 7,974,000 ($ 0.48)
-------- ---------
-------- ---------
</TABLE>

For the years ended December 31, 1996 and 1995, the assumed conversions of
long-term debt to affiliates would be considered anti-dilutive. Accordingly,
diluted loss per share for these periods is equal to basic loss per share.

F-46
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, A SELLING HOLDER OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY STATE TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary......................................... 3
Selected Consolidated Financial Data............ 7
Risk Factors.................................... 8
The Private Offerings and the Redemption
Transactions.................................. 14
Use of Proceeds................................. 15
Dividends and Market for Common Stock........... 15
Ratio of Earnings to Combined Fixed Charges..... 16
Consolidated Statements of Operations........... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 18
Business........................................ 44
Supervision and Regulation...................... 55
Management of the Company and the Bank.......... 62
Description of Capital Stock of the Company..... 70
Restrictions on Acquisition..................... 71
Anti-Takeover Effects of the Company's
Certificate Of Incorporation and Bylaws and
Management Remuneration....................... 73
Registration Rights............................. 75
Selling Holders................................. 75
Plan of Distribution............................ 80
Shares Eligible for Future Sale................. 81
Experts......................................... 82
Legal Matters................................... 82
Additional Information.......................... 82
Index to Consolidated Financial Statements...... F-1
</TABLE>

------------------------

UNTIL NOVEMBER 7, 1998 OR 25 DAYS AFTER THE FIRST DATE ON WHICH THE
REGISTERED SECURITIES ARE BONA FIDE OFFERED TO THE PUBLIC, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

9,333,333 SHARES

[LOGO]

UCBH HOLDINGS, INC.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
------------------------
PROSPECTUS
------------------------
OCTOBER 13, 1998

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