Fitch Assigns Ratings to UCBH Holdings, Inc.

NEW YORK -- Fitch Ratings has assigned a 'BBB' long-term issuer rating and an 'F3' short-term issuer rating to UCBH Holdings, Inc. (UCBH). Fitch also assigned a 'BBB' long-term issuer rating and an 'F2' short-term issuer rating to UCBH's bank subsidiary, United Commercial Bank (UCB). The Rating Outlook is Stable. A complete list of ratings for UCBH and UCB are noted at the end of this release.

Fitch's ratings are based on the company's consistent and improving profitability trends, strong asset quality, and solid capital levels. These strengths are tempered by limited revenue and geographic diversity. Furthermore, the notching between the short-term ratings of the bank and the holding company reflect Fitch's view that UCBH's parent company liquidity position is somewhat limited.

UCBH is a $6.1 billion banking company headquartered in San Francisco. The company focuses on serving the ethnic-Chinese markets within its geographic footprint. The company has grown significantly over the past few years, largely due to the acquisition of the Bank of Canton of California. This acquisition almost doubled the company's size and solidified its presence in the ethnic-Chinese market. Currently, the company operates 44 branches, mainly in the San Francisco and Los Angeles metropolitan areas, with an emerging presence in New York and one branch in Hong Kong.

The company's steadily improving performance is driven by a stable NIM, low credit costs, and efficient operations. That said, earnings are heavily spread income dependent, with almost 90% of total revenue derived from net interest income. Current initiatives, particularly the company's investment in its trade finance business and its expansion into Hong Kong and New York City, should help to build UCBH's franchise and diversify its revenue stream. However, these initiatives also introduce new potential risks to the company, including higher operating costs. UCBH's low credit costs are reflective of fairly prudent underwriting standards that have kept problem assets and credit losses at low levels. The company's strong operating efficiency is attributed to its low expense structure and niche business strategy.

UCBH's capital levels are considered sound, although the capital structure does contain a considerable amount of trust-preferred securities. UCBH's solid core funding base contributes to a fairly liquid balance sheet; however, Fitch views the level of liquidity at the parent company as a limiting rating factor. Fitch would consider the establishment of stronger parent company liquidity and the adoption of policies designed to maintain ample financial flexibility to have positive short-term rating implications.

UCBH Holdings Inc.

--Long-term issuer 'BBB';

--Short-term issuer 'F3';

--Individual 'B/C';

--Support '5'.

United Commercial Bank (UCB)

--Long-term deposit 'BBB+';

--Long-term issuer 'BBB';

--Short-term deposit 'F2';

--Short-term issuer 'F2';

--Individual 'B/C';

--Support '5'.

UCBH Trust Co.

--Trust preferred securities 'BBB-'.

UCBH Holdings Statutory Trust I-II

--Trust preferred securities 'BBB-'.

UCBH Capital Trust I-IV

--Trust preferred securities 'BBB-'.