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Stock Code: 2834Taiwan Stock Exchange Market Observation Post System：http：//newmops.twse.com.twTBB's annual report is available at：http：//www.tbb.com.tw

PUBLISHED IN MARCH 2011

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Annual Report 2010

http://www.tbb.com.tw

NOTICE TO READERSThis English version annual report is a summary translation of the Chinese version and is not an official document of the shareholders' meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail.

Taiwan Business Bank Head Office

Address: No. 30, Ta Cheng St., Taipei, Taiwan, R.O.C.Tel: 886-2-25597171Web Site: http://www.tbb.com.tw

Spokesperson

Name: Ching-Hua HsuTitle: Executive Vice PresidentTel: 886-2-25509179 /886-2-25597171 ext:1411E-mail Address: [email protected]

Deputy Spokesperson

Name: Shou-Tien LeeTitle: S.V.P & Chief Secretary Tel: 886-2-25505726 / 886-2-25597171 ext: 1511E-mail Address: [email protected]

Deputy Spokesperson

Name: Tzeng-Show Lin Title: V.P.& General Manager, General Affairs Dept. Tel: 886-2-25597108 / 886-2-25597171 ext: 1211E-mail Address: [email protected]

Stock Registration Agent

Name: Capital Securities Corp.Address: B1, No. 125, Sec. 2, Nan-King East Road, Taipei, Taiwan, R.O.C.Tel :886-2- 25077000Web Site: http://www.capital.com.tw

Rating Agency

Name: Taiwan Ratings Co.Address: 49F, No.7, Sec.5, Xinyi Road., Taipei, Taiwan, R.O.C.Tel: 886-2- 87225800Web Site: http://www.taiwanratings.com

The CPA-auditor of the Financial Report

Name: Phoebe Chung, Winnie FangName of Employer: KPMG Certified Public AccountantsAddress: 68F, Taipei 101 Tower, No.7, Sec. 5, Xinyi Road, Taipei, R.O.C.Tel: 886-2- 81016666Web Site: http://www.kpmg.com.tw

Flotation at Overseas Stock Exchange and Information Inquiry: None

We can be the best !

Contents

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Ⅰ Message from the Management

Ⅱ Bank Profile

Ⅲ Organizational Framework

1. Organization Chart

2.Directors and supervisors information

3. List of major shareholders

4. Operations of Major TBB Units

Ⅳ Business Performance in 2010

1. The Domestic and Overseas Financial Environment

2. Restructure of TBB’s Organization

3. Results of Operating Plans and Strategies

4. Budget Implementation

5. Revenues, Expenditures, and Profitability

6. Research and Development

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Ⅴ Business Plans for 2011

1. Operating Directions and Policies

2. Business Targets

3. Future Development Strategies

4. The Impact of Intensifying Competition, Government Regulations and Global Economic

5. Results of Latest Credit Rating

Ⅵ Financial Statements

1. Independent Auditor’s Report

2. Financial Statement in FY2010 and notes to Financial Statement

Ⅶ Implementation of Social Responsibility

Ⅷ Directory of Head Office and Branch Units

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Message from the Management


Message from the Management


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To break out of the shadows of the financial crises and liquidity contraction of 2008, the advanced countries

of Europe and America adopted a series of economic revitalization programs in 2010. These programs

helped to boost recovery in those countries, and the rapid recovery of mainland China and other emerging

countries stimulated continuing strong economic growth around the world. With exports serving as the

lifeblood of its economic growth, Taiwan benefited from the global recovery; its export momentum was

stronger than expected, private consumption and investment increased, and many economic indicators

turned sharply upward as the island’s economy rebounded strongly.

Along with the continuous heating up of the economy, the Taiwan Business Bank, with the support of our

customers and the hard work of our employees, registered a growth in profitability and in the development

of its various areas of business in 2010. Before-tax net profit amounted to NT$2.391 billion, a growth of

48% over 2009 and a 10-year high. Deposits and loans both exhibited stable growth over 2009 to reach

levels not seen in years.

In recent years the Bank has worked vigorously to clear up non-performing loans and strengthen the

control of loan risk. By the end of 2010 the amount of NPLs had been reduced to NT$10.526 billion and the

NPL rate lowered to 1.13%, down by 0.74 points from 1.87% in 2009. The coverage ratio was 79.17% at

the end of the year, an improvement of 31.72 points over 47.45% at the end of 2009 and the highest level

in recent years, reflecting a substantial improvement in asset quality.

The steady improvement of the domestic economy in 2011 will favor the expansion of banking businesses.

The TBB will continue the profit growth momentum of 2010 and work constantly to reinforce its operating

performance. We will carry out bank-wide marketing and strengthen cross-marketing in order to boost

fee income and achieve our profit growth target, and we will carry through with our four major operating

principles--pursuit of business performance, emphasis on shareholder equity, enhancement of employee

value-added, and fulfillment of corporate social responsibility--as we move into the ranks of outstanding

banks and create a brilliant business performance that will repay our shareholders for their support and

encouragement.

President

Tsan-Chang Liao

Chairman

Peter T.C. Lo

Bank Profile

Ⅱ Bank Profile

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1. Establishment and History

The forerunners of the Taiwan Business

Bank were two private cooperative savings

institutins, one established in Taipei in

June of 1915 and the other in Tainan the

following month. The Taipei institution was

merged into another company in 1920

and the Tainan institution was reorganized

under a different name in 1926.

following the restoration of Taiwan

to China on oct. 25, 1945, these two

savings institutions, along with two others,

were taken over by the Taiwan Provincial

Government and, on Sep. 1, 1946 were

combined and reorganized into the Taiwan

Mutual financial Co. on May 31 the

following year this new financial institution

absorbed the Tokiwa real Estate Co.,

bringing its capitalization to NT$10 million.

Its name was changed to the Taiwan

Provincial Loans and Savings Co. on June

1, 1947 and again to the Taiwan Mutual Executive Vice President

Tzeng-Show LinLoans and Savings Co. in January 1948.

The government moved to promote Taiwan’s economic development and boost the growth of its small and

medium enterprises (SMEs) in 1975 by revising the Banking Law and writing in an additional provision for a

specialized SME bank. In line with this government policy, the Taiwan Mutual Loans and Savings Co. was

reorganized into the Medium Business Bank of Taiwan (later to be known as the Taiwan Business Bank,

or TBB) on July 1, 1976, whereupon it became a specialized bank charged with the provision of financial

assistance and guidance to SMEs. It has been cultivating the SME financial services field now for more than

30 years.

To adapt to the liberalized and internationalized financial environment, and work toward the government’s

vision of building Taiwan into an Asia-Pacific operations center, the TBB was converted into a private bank

on Jan. 22, 1998 and entered a brand-new era of operation. At the time of its reorganization in 1976 the

Bank had a capitalization of only NT$500 million, 50 branches, and 58 sub-branches; repeated capital

increases, undertaken to augment operating funds and strengthen the Bank’s operating foundation, have

boosted capitalization to NT$40,285.42 million today. The Bank has also continuously restructured its

organizational framework in response to business needs and the changing financial environment. Today, in

addition to the Auditing Department and Secretarial Department that operate under the Board of Directors,

the Bank’s headquarters management units include 18 departments under three major business groups and

three major management centers. Domestic business units number 125, including the Banking Department;

besides the offshore Banking Unit, there are also three overseas branches: Hong kong, Los Angeles,

Executive Vice PresidentTian-Chang Huang

Chief AuditorChien-Hwa Tu

Executive Vice PresidentChing-Hua Hsu

Bank Profile

Taiwan Business Bank ︱ Annual Report 20108

Sydney and one representative office in Shanghai. In addition, regional Centers have been set up to

reinforce control of the Bank’s asset quality through the centralized management of valuation, review, post-

loan management, and non-performing loans. Domestic Processing Centers have also been established in

northern, central, and southern Taiwan to enhance operating efficiency through the centralized handling of

domestic remittances and bills collection and withdrawal.

2. Bank M&A, reinvestment in related enterprises, and reorganization in 2010 and up to the end of February 2011

The Bank has undertaken no M&A or reorganization during this period. The Bank has reinvested in 2

enterprises, including the Taiwan Business Bank Life Insurance Agency Co., Ltd. and Taiwan Business Bank

Property Insurance Agency Co., Ltd., in which it owns 100% of shares.

3. Membership in a designated financial holding company, and date of membership: None

4. Major exchanages or transfers of shares by directors, supervisors, and others required to report shareholdings under Article 25, Paragraph 3 of the Banking Law: None

5. Major changes in operating rights, operating methods, or business content; other major events of sufficient import to affect shareholder rights; and their influence on the Bank: None

Corporate Governance

Ⅲ Organizational Framework

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2. Directors and supervisors information

3. List of major shareholders



DomesticProcessing Center

offshoreBanking Branch

overseasBranches

President Executive VicePresident

operatingManagement Center

riskManagement Center

AdministrationManagement Center

CorporateBanking Group

PersonalBanking Group

Secretarial Dept.

Auditing Dept.

Loan Supervision CommitteeNPL Management Committee

Trust Asset Evaluation CommitteePersonnel Evaluation Committee

IT Planning & Development Committee

Treasury Group

Humanresources Dept.

AdministrationManagement Dept.

General Affairs Dept.

Accounting Dept.

risk Management Dept.

Loan Supervision Dept.

Credit Investigation Dept.

overdue Loan &Control Dept.

InformationTechnology Dept.

BusinessManagement Dept.

Treasury Dept.

InternationalBanking Dept.

Credit Card Dept.

Wealth ManagementDept.

Securities Dept.

Trust Dept.

Supervisorsresident

Supervisors

ALM CommitteeBusiness Strategy

Committee

General Auditor

risk ManagementCommittee

regional Center

Loan Supervision Div.

Appraisal Div.

Loan review Div.

overdue Loan & Control Div.

Securities Branches

Banking Dept.Domestic branches

Corporate AoPersonal Ao

foBranch operation

CorporateBanking Dept.

PersonalBanking Dept.

Shareholders'Meeting


Board of DirectorsChairman of the

Board

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2. Directors and supervisors informationDec.31 2010

Title Name

Chairman of the Board Peter T.C. Lo

President & Managing Director Tsan-Chang Liao

Managing Director Shih-Tien Chiang

Managing Director Hsien Ming Hung

Independent Managing Director Len-Yu Liu

Director Liang Wang

Director Wan fu Lin

Director Hsueh-Shiang Chen

Director Li-Hua Lin

Director Chau-Jung kuo

Director Leonard f.S. Wang

Director Tsai-Yuan Lin

Director Hong-Yen Lee

Director Tien-Chai Su

Director Jong-Jyr kau

resident Supervisor Yung-Ming Chen

Supervisor rui-Ying Tsai

Supervisor Lan-Zhong An

Supervisor Ning-Zhi Lu

Supervisor Shun-Tian Chen

3. List of major shareholders Dec.31 2010

Name Shares %

Bank of Taiwan 778,010,028 19.31%

Mega financial Group 541,464,015 13.44%

Land Bank of Taiwan 109,409,840 2.72%

Ministry of finance 99,429,949 2.47%

fui Industrial Co., Ltd. 74,512,040 1.85%

Shi Chun Jin 51,840,820 1.29%

Management Board of the Public Service Pension fund 38,035,571 0.94%

Taichung Bank 37,440,000 0.93%

China Man-Made fiber Corporation 37,145,173 0.92%

first Commercial Bank 35,379,454 0.88%



(1) Corporate Banking Group

This unit handles financial services for corporate customers, including business planning, promotion,

and improvement in respect to loan products, forex products, and corporate financial planning

products. It understands customers’ needs and proactively carries out marketing, and is responsible for

development and service in regard to the Group’s products and customers as well as for improvement

of the Bank’s asset quality, operating income, and profit. The Corporate Banking Dept. and International

Banking Dept. operate under the Corporate Banking Group.

(2) Personal Banking Group

This unit handles planning, promotion, and improvement of the Bank’s personal loan products, financial

planning for customers, and marketing services for financial planning products. It carries out proactive

marketing based on an understanding of customers’ needs, is responsible for development and

service in regard to the Group’s products and customers, and maintains improvement of the Bank’s

asset quality, operating income, and profit. The Personal Banking Dept., Credit Card Dept., Wealth

Management Dept., Securities Dept, and Trust Dept. operate under the Personal Banking Group.

(3) Treasury Group

The Treasury Group handles planning, promotion, and improvement of the Bank’s financial businesses,

and is responsible for development and service in regard to the Group’s products and customers as well

as for maintaining improvemenrt of the Bank’s asset quality, operating income, and profit. The Treasury

Dept. operates under the Treasury Group.

(4) risk Management Center

The risk Management Center handles risk control, maintenance of the quality of the Bank’s loan

assets, and investigation and review of loan cases and products, middle-office risk control for financial

planning, economic and financial research and industry investigation, and the collection of overdue

loans. The Loan Supervision Dept., Credit Investigation Dept., overdue Loan & Control Dept., and risk

Management Dept. operate under the risk Management Center.

(5) operating Management Center

This Center carries out TBB’s performance analysis, management and planning of operational

management and information operations, provision of abundant and necessary support for business

development, and simplification of operating procedures in order to achieve operational centralization

as well as to enhance operating efficiency and the formulation of bank-wide operating strategies. The

Business Management Dept. and Informaiton Technology Dept. operate under the Center.

(6) Administration Management Center

This Center is in charge of planning and implementation in regard to document administration, important

matters, legal affairs, public relations, human resources, procurement, and accounting systems, as

well as other matters that do not come under other units. The Human resources Dept., Administration

Management Dept., General Affairs Dept., and Accounting Dept. operate under the Administration

Management Center.

Fund Raising Status

Ⅳ Business Performance in 2010

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With countries all over the world adopting unprecedented market intervention measures in 2010, plus

the stimulation provided by the large growth of self-initiated demand in emerging countries, real global

GDP topped the pre-financial tsunami level in the second quarter. After that, alarmed by the European

debt crisis and warnings of real estate bubbles in emerging countries, many countries turned to cautious

or contractionary monetary and fiscal policies; in addition, the restocking of inventories was coming to

an end, weakening the momentum for recovery. According to data compiled by Global Insight Inc. (GII),

the worldwide economic growth rate for 2010 was 4.1%.

In Taiwan, corporate investment and private consumption turned gradually upward along with the

recovery of the international economy and continued expansion in the emerging countries of Asia,

and the island’s export demand increased quarter by quarter. Domestic demand, too, turned upward

along with the economy, cross-straits relations continued warming up; and, from the relatively low base

of 2009, the largest service sectors (wholesale and retail sales, and catering) experienced growth

on a large scale. Production benefited by the beginning of recovery in the large economies, which

stimulated buying in trade markets, and industries increased production and investment; in addition, the

domestic political situation was relatively stable, helping real growth in 2010 to return to, and surpass,

pre-financial tsunami levels. According to statistics compiled by the Directorate General of Budget,

Accounting and Statistics, Taiwan’s economic growth in 2010 reached 10.82%.


To strengthen business concentration management and enhance operating efficiency, on Jan. 1, 2010

the TBB combined its regional Loan Supervision Center and regional overdue Loan & Control Center

into a regional Center and continued its six-region operating model, with four divisions in each region:

Loan Supervision, Appraisal, Loan review, and overdue Loan & Control.


(1) Strengthened risk control, substantial improvement in asset quality, stable growth of profitability

and all areas of business, and issuance of a 2009 stock bonus of NT$0.4 per share—the first such

issuance in nine years.

(2) Implementation of small and medium business loan programs in line with government policy, to

outstanding results; achievement of good performance in carrying out the financial Supervisory

Commission’s “Program to Encourage Lending by Domestic Banks to Small and Medium

Enterprises.” The TBB was chosen for a “Special Award” for this program.

(3) Winning of a top A+ grade and listing among the top 10 in the Seventh Information Transparency

and Disclosure rankings of the Securities and futures Institute; also, achievement of good ranking

in the provision of credit guaranteed loans to SMEs, winning four awards.

(4) raising of NT$4 million in non-accumulated subordinated debentures without maturity dates and

NT$7.05 billion in long-term subordinated financial bonds to strengthen the Bank’s capital structure.

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(5) Expansion of customer services by moving the Tung kang Branch to the Xiaogang District of

kaohsiung City and changing its name to Xiao Gang Branch, and the Cheng Yi Mini-Branch to Houli

District in Taichung City and renaming it the Hou Li Branch.

(6) receipt of permission from the Central Bank to establish the Yun kang Branch and Hwei Long

Branch as foreign exchange branches, providing customers with more convenient forex services.

(7) To strengthen services for overseas Taiwanese businesses, a business cooperation agreement was

signed with the Bank of Beijing and a Shanghai representative office was established with planned

upgrading to branch status after one year so as to expand business in China and strengthen

overseas deployment.

(8) Institution of a Gold Passbook business in response to customers needs for financial planning; and,

in line with government policy to encourage marriage and childbearing, introduction of a public-

benefit program designed to encourage marriage and childbearing through the presentation of gold.

(9) Establishment of an online “Centralized forex Data System” that shortens operating times and

provides for the centralized management of forex data.

(10) Joining of the Taiwan Tobacco and Liquor Purchase Card payment platform and inauguration of the

TTL purchase card business to increase the volume of credit card transactions and boost cross-

marketing synergies.

(11) China Union Pay Card cash withdrawal and balance enquiry at Taiwan ATMs, and introduction of

the Titanium Commercial Card in order to upgrade product competitiveness.

(12) Inauguration of the non-deliverable renminbi currency swap business at the offshore Banking Unit.

(13) Establishment of a “simplified account-opening system” to shorten the time required for customers

to open accounts, thereby effectively enhancing service quality and customer satisfaction.

(14) Planning and establishment of a fund transfer pricing (fTP) system to upgrade performance in the

management of funds and risk capital.

(15) Carrying out of a preferential early retirement program to invigorate the Bank’s human resources

and save personnel expenses; and, in line with manpower needs and the government’s policy to

encourage employment, carrying out of the recruitment of new employees.

(16) Strengthening of information safety management through ISo 27001 information safety

certification; upgrading of operating risk control capability.

(17) Carrying through with the ideal of care for society and fulfillment of corporate social responsibility

by organizing mountain-cleaning hikes and sponsoring nutritious breakfasts at primary schools in

remote areas; holding of MSE loan guidance seminars in industrial zones to assist with industrial

development, thereby fulfilling the TBB’s social responsibility and mission as a specialized small

business bank.



(1) Average deposits in the Bank in 2010 were NT$1,025.7 billion, for a target achievement ratio of

97.39%.

(2) Average loans outstanding amounted to NT$895.5 billion, or 101.31% of the target.

(3) foreign exchange transactions undertaken during the year totaled US$52.2 billion, for a target

achievement ratio of 116.06%.

(4) The volume of securities brokerage was NT$336 billion, or 94.64% of the target.

(5) Mutual fund business amounted to NT$34.8 billion, achieving 108.19% of the target.


Net income for 2010 was NT$16.245 billion, costs related to bad loans amounted to NT$4.116 billion, and

operating expenditures totaled NT$9.738 billion. Before-tax net profit on business operations amounted

to NT$2.391 billion and after-tax net profit to NT$2.006 billion, for a return on assets of 0.17%, return on

shareholder equity of 4.69%, net profit margin of 12.35%, and earnings per share of NT$0.50.

The Bank worked vigorously to improve its asset quality and strengthen its financial structure in 2010 by

writing off bad loans in the amount of NT$3.06 billion, bringing its broadly defined non-performing loan

ratio down to 1.13%. This substantially facilitated the Bank’s development of new types of business and

the upgrading of its profitability.


(1) The Bank has established a unit charged exclusively with surveying, analyzing, and conducting

research on the production, market and development trends of major industries in Taiwan and

overseas, and with the establishment and maintenance of an industry database. The Bank also

publishes periodicals.

(2) To meet the needs of business development and strengthen the Bank’s market competitiveness,

employees are encouraged to undertake their own innovation and development of new financial

products and business-improvement programs. A total of 71 employee-proposed cases were

accepted in 2010, and awards were given accordingly.

Operations Overview

Ⅴ Business Plans for 2011

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2. Business Targets


4. The impact of intensifying competition, government regulations and global economic


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(1) Corporate Banking

Concentration on small and medium-sized clients, cultivation of core customers, and focus on

core products to expand the scale of corporate loans and continuously reinforce the structure of

corporate loan.

(2) Personal Banking

Development of outstanding customer groups and integration of the resources of the Personal

Banking Group to fully realize cross-marketing synergies.

(3) financial Planning

reinforcement of financial operations capability, enhancement of flexibility and efficiency of capital

utilization, strengthening of financial market, and provision of a full spectrum of customized products

so as to increase customers’ foreign-currency investment and hedging channels.

(4) Profit Boosting and Profitability Strengthening

Expansion of interest spread, consolidation of main profit sources, and expansion of the ratio of fee

income so as to improve the structure of operating income.

(5) reinforcement of risk Control Capability

Thorough implementation of risk management mechanisms, working out of a professional division

of labor, strengthening of training in professional credit evaluation skills, and carrying through with

post-loan management work.

(6) Advancement of operating Performance

Improvement of the operating performance of middle- and back-office support units and

reinforcement of information processing capabilities so as to upgrade operating efficiency and

reduce operating risk.

(7) fulfilling of Corporate Social responsibility

The Bank continued its care of and provision of funding for disadvantaged groups for the cultivation

of communities and realization of care for society, while maintaining the social benefit and fulfilling

its corporate social responsibility.

(8) Enhancement of the Corporate Image

full use of media advertising in line with product and service innovation so as to enhance business

visibility, communicate the Bank’s operating philosophy, and establish a good corporate image.

2. Business Targets

The following targets for 2011 are set primarily in consideration of historical growth in the different areas

of business, growth projections of forecasting institutions for the next year, the development of the

banking environment and competitiveness of other banks, and maintenance and enhancement of the

TBB’s position in the market:

(1) Average deposits: NT$1,073.9 billion

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(2) Average loans outstanding: NT$948.7 billion

(3) foreign exchange transactions: US$54.5 billion

(4) Stock brokerage transactions: NT$377.0 billion

(5) Mutual fund business: NT$42.2 billion


(1) The core SME businesses will be cultivated and the Bank will commit itself to the role of specialized

bank for SME financing and services so as to maintain its advantage in this niche.

(2) Integrated business marketing will be strengthened and management by objectives will be carried

out; cross-marketing will be used to expand core-customer business relations, enhance profitability,

and create corporate value and shareholder equity.

(3) Core customers will be cultivated and attention will be focused on core products; the spirit of all-

staff marketing will be translated into action, expanding the scale of key businesses while boosting

business competitiveness and market share.

(4) risk control will be strengthened, asset value will be maintained, the non-performing-loan ratio

will be reduced, reserves against bad debt will be increased, and the TBB will advance toward the

status of a quality bank.

(5) overseas and cross-straits businesses will be vigorously expanded and deployment in mainland

China and overseas will be strengthened to meet customer needs and new trends in the

development of cross-straits financing.

4. The impact of intensifying competition, government regulations and global economic

(1) Economic Cooperation framework Agreement (ECfA)

The cross-straits Economic Cooperation framework Agreement (ECfA) was signed on June 29,

2010, and became effective on Sep. 12 that year. The agreement expanded the opening of financial

markets on both sides of the Taiwan Straits; in response to the intensifying competition, the TBB

signed a cooperative agreement with the Bank of Beijing and set up a representative office in

Shanghai to strengthen services to overseas Taiwanese businesses and reinforce its overseas

deployment.

(2) Central Bank rules for the Extension of Loans Secured by Land and Housing Loans in Specified

areas

In view of the soaring prices of real estate in certain areas of Taiwan and the excessive

concentration of bank loans, Central Bank adopted a series of targeted prudential measures and,

in June of 2010, implemented the “Central Bank regulations Governing the Extension of Land

Collateralized Loans and Housing Loans in Specific Areas by financial Institutions.” The scope

of specified areas for housing loans was expanded in December of 2010, and restrictions on land

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collateralized loans were added with the aim of assuring the healthy development of the home-loan

market and stabilizing domestic finance. The TBB follows Central Bank rules in carrying out the

control of home-loan risk.


Date of Rating Rating CompanyRating Results

OutlookLong-term Credit Short-term Credit

Jan. 20, 2011 Taiwan ratings twa twA-1 Stable

Financial Statements

Ⅵ Financial Statements

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1. Independent Auditor’s Report

2. Financial Statement in FY2010 and notes to Financial Statement


Independent Auditors' Report

The Board of DirectorsTaiwan Business Bank Co., Ltd.

We have audited the accompanying balance sheets of Taiwan Business Bank Co., Ltd. as of December 31, 2010 and 2009, and the related statements of income, changes in stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Bank's management. our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the "rules Governing Certified Public Accountant's Examination and Certification of financial Statements of financial Institutions" and generally accepted auditing standards in the republic of China. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan Business Bank Co., Ltd. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with the "regulations Governing the Preparation of financial Statements for Public Banks", "Business entity accounting law" and "regulation on business entity accounting handling" and accounting principles generally accepted in the republic of China.

As described in Note 3, the Bank obtained the approval letter from financial Supervisory Commission at february 25, 2009, with the issuing number of fSCB(2) 09800039780, changed to adopt the generally accepted accounting principles in the republic of China and amortized all of the deferred loss on sale of non-performing loans amounted to $2,234,193 thousands in 2008.

kPMG

Taipei, Taiwan, r.o.C.March 1, 2011

Notice to readers

The accompanying financial statements are intended only to present the financial position, results of operation and cash flows in accordance with the accounting principles and practices generally accepted in the republic of China and not those of any other jurisdictions. The standards, procedures, and practices to review such financial statements are those generally accepted and applied in the republic of China.

The auditors' report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language auditors' report and financial statements, the Chinese version shall prevail.

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TAIWAN BUSINESS BANK CO., LTD.BALANCE SHEETS

DECEMBEr 31, 2010 AND 2009(New Taiwan Dollars in Thousands)

DECEMBER 31, 2010 DECEMBER 31, 2009 Variance

Amount Amount %

assets

Assets:

Cash and cash equivalents (Note (4)(A) and (5)) $ 15,364,021 17,197,549 (11)

Due from the Central Bank and call loans to banks (Notes (4)(B) and (5)) 71,720,175 65,862,376 9

financial assets measured at fair value through profit or loss, net (Note (4) (C) and (7) (A)) 4,282,763 2,304,398 86

Bills and bonds purchased under resale agreements(Note(4)(D)) 2,519,348 1,233,898 104

receivables , net (Note (4)(E)) 19,710,207 18,278,698 8

Discounts and loans , net (Notes (4)(f) and (5)) 926,970,266 912,803,010 2

Available-for-sale financial assets, net (Note (4)(G) and (7) (A)) 14,928,355 16,916,010 (12)

Held-to-maturity financial assets ,net (Notes (4)(H) and (6)) 135,549,492 129,864,330 4

Investments under the epuity method , net (Note (4)(I)) 45,274 84,580 (46)

other financial assets, net (Notes (4)(J)) 4,318,281 4,204,756 3

Property and equipment, net (Note (4)(k)) 14,185,884 14,512,095 (2)

Intangible assets 192,567 109,706 76

other assets, net (Notes (4)(L)) 3,845,926 4,168,885 (8)

Brokerage accounts, net 8,802 18,570 (53)

ToTAL ASSETS $ 1,213,641,361 1,187,558,861 2


DECEMBER 31, 2010 DECEMBER 31, 2009 Variance

Amount Amount %

LIABILITIES AND SToCkHoLDErS' EQUITY

Liabilities:

Deposits from the Central Bank and other banks (Note (4)(M) and (5)) $ 86,081,932 107,071,746 (20)

financial liabilities measured at fair value through profit or loss (Note (4) (N)) 325,945 255,387 28

Bills and bonds sold under repurchase agreements (Note(4)(o) and (7)) 9,950,660 4,130,048 141

Payables (Note (4)(P)) 23,782,204 25,658,647 (7)

Deposits and remittances (Note (4)(Q) and (5)) 992,348,193 964,087,905 3

financial debentures (Note (4)(r)) 44,000,000 33,050,000 33

Accrued pension liabilities (Note (4)(W)) 176,479 126,534 39

other financial liabilities (Note (4)(S)) 10,552,494 9,743,364 8

other liabilities (Note (4)(T)) 2,567,428 1,708,226 50

Total Liabilities 1,169,785,335 1,145,831,857 2

Stockholders' Equity:

Common stock (Note (4) (U)) 40,285,419 38,735,980 4

retained earnings:

Legal reserve (Note(4)(U)) 907,064 477,443 90

Special reserve (Note(4)(U)) 301,329 1,003,370 (70)

Undistributed earnings (Note (4)(U)) 2,341,339 1,612,124 45

Total retained earnings 3,549,732 3,092,937 15

other Items:

reservation for revaluation 196,068 196,068 -

Cumulative translation adjustments (Note (4) (U)) (93,880) 3,348 (2,904)

Unrealized gain and loss on financial assets (Note (4) (U)) (65,415) (301,329) 78

Net loss on unrecognized pension cost (15,898) - -

Total Stockholders' Equity 43,856,026 41,727,004 5

Significant Commitments and Contingencies (Note (7))

ToTAL LIABILITIES AND SToCkHoLDErS' EQUITY $ 1,213,641,361 1,187,558,861 2

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TAIWAN BUSINESS BANK CO., LTD.STATEMENTS OF INCOME

for THE YEArS ENDED DECEMBEr 31, 2010 AND 2009(New Taiwan Dollars in Thousands, except for earnings per share data)

For TheYear Ended

December 31, 2010

For TheYear Ended

December 31, 2009Variance

%Amount Amount

Interest revenue (Note (5)) $ 18,583,298 19,155,343 (3)

Less: Interest expense (Note (5)) (7,370,087) (9,304,413) (21)

Net interest income 11,213,211 9,850,930 14

Non-interest income net

Commisions and handling fee, net (Note (5)) 1,995,236 1,614,608 24

Gain or loss from financial assets or liabilities measured at fair value through profit or loss 361,581 474,358 (24)

realized gain or loss of available-for-sale financial assets, net 152,058 399,334 (62)

Held to maturity financial assets, net realized gains and losses 15 - -

Investment income recognized under the equity method (Note(4)(I)) 88,503 13,310 565

foreign exchange gain or loss, net 322,096 525,341 (39)

Gain or loss from other non-interest income, net (Note (5)) 173,168 18,387 842

Gain or loss from financial assets measured at cost, net (Note (4)(J)) 129,552 144,824 (11)

Gain or loss from sale of non-performing loans, net 120,497 - -

Brokerage commission 279,050 307,046 (9)

recovery from bad debts and past due accounts (Note (10)) 1,410,830 1,470,422 (4)

Loss on impairment Assets - (92,043) 100

Net revenue 16,245,797 14,726,517 10

Bad debt expenses (including provision for guarantee reserve)(Note(10)) (4,116,458) (3,655,648) 13

operating expenses:

Personnel expenses (Note (10)) (6,764,199) (6,434,198) 5

Depreciation and amortization expenses (Note (10)) (521,653) (506,210) 3

other selling and administrative expenses (2,452,214) (2,514,788) (2)

Total operating expenses (9,738,066) (9,455,196) 3

Earnings from continuing operations before income tax 2,391,273 1,615,673 48

Income tax expense (Note(4)(V)) (385,039) (183,604) 110

Net income $ 2,006,234 1,432,069 40

Before tax After tax Before tax After tax

Basic earnings per share (Note(4)(X))(in New Taiwan dollars) $0.59 0.50 0.42 0.37

Basic earnings per share-retroactive adjustment (Note(4)(X))(in New Taiwan dollars) 0.40 0.36

Diluted earnings per share (Note(4)(X))(in New Taiwan dollars) $0.59 0.50 0.42 0.37

Diluted earnings per share-retroactive adjustment (Note(4)(X))(in New Taiwan dollars) 0.40 0.35


TAIWAN BUSINESS BANK CO., LTD.STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

for THE YEArS ENDED DECEMBEr 31, 2010 AND 2009(New Taiwan Dollars in Thousands)

Stock retained Earnings other Items

TotalCommon stock

Legal reserve

Special reserve

Undistributedearnings

Unrealized revaluation

appreciation

Net loss on unrecognizedpension cost

Unrealized gain and loss on finanical

assets

Cumulativetranslation

adjustments

Balance - January 1, 2009 $38,735,980 449,383 1,117,950 93,535 79,271 - (990,287) (13,083) 39,472,749

Special reserve reversed - - (1,117,950) 1,117,950 - - - - -

Net income for the year ended December 31, 2009 - - - 1,432,069 - - - - 1,432,069

Appropriation of 2008 earnings:

Legal reserve - 28,060 - (28,060) - - - - -

Special reserve - - 1,003,370 (1,003,370) - - - - -

Disposal of land - - - - 116,797 - - - 116,797

Unrealized gain and loss on finanical assets - - - - - - 688,958 - 688,958

Change in cumulative translation adjustments - - - - - - - 16,431 16,431

Balance - December 31, 2009 $38,735,980 477,443 1,003,370 1,612,124 196,068 - (301,329) 3,348 41,727,004

Special reserve reversed - - (702,041) 702,041 - - - - -

Net income for the year ended December 31, 2010 - - - 2,006,234 - - - - 2,006,234

Appropriation of 2009 earnings:

Legal reserve - 429,621 - (429,621) - - - - -

Common stock dividend 1,549,439 - - (1,549,439) - - - - -

Unrealized gain and loss on finanical assets - - - - - - 235,914 - 235,914

Increase in net loss on unrecognized pension cost - - - - - (15,898) - - (15,898)

Change in cumulative translation adjustments - - - - - - - (97,228) (97,228)

Balance - December 31, 2010 $40,285,419 907,064 301,329 2,341,339 196,068 (15,898) (65,415) (93,880) 43,856,026

Note: The Board of directors' remuneration $14,044 and $ 10,024 as well as employee bonuses $112,349 and $ 80,196 of

2010 and 2009 respectively have been deducted from the income statement, please refer to Note 4 (U).

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TAIWAN BUSINESS BANK CO., LTD.STATEMENTS OF CASH FLOWS

for THE YEArS ENDED DECEMBEr 31, 2010 AND 2009(New Taiwan Dollars in Thousands)

for The Year EndedDecember 31, 2010


Cash flows from operating activities:

Net income $ 2,006,234 1,432,069

Adjustment items:

Depreciation 454,062 452,355

Amortization 67,591 53,855

Provision of bad debt expenses 4,116,305 3,661,352

Provision for securities trading loss reserve 1,168 14,234

Provision for default loss reserve 9,414 9,894

Provision for guarantee reserve 153 (5,704)

Provision for contingencies 6,471 8,295

Investment income recognized under the equity method (26,419) (13,310)

Cash dividend received recognized under the equity method 13,989 10,966

Loss on disposal of property and equipment 2,902 6,822

Gain or loss on disposal of financial assets measured at cost - (1,357)

Gain or loss on disposal of stock investment under the equity method (62,084) -

Unrealized valuation gain from financial assets or liabilities (221,497) (249,348)

reversal of impairment loss on financial assets - (369,576)

Gain on sale for non-performing loans (120,497) -

recovery written-off loans (1,410,830) (1,470,422)

Brokerage accounts, net 9,768 (15,301)

Loss on sale for discounts and loans 50,619 -

Net changes of operation assets and liabilities:

Net changes of operation assets:

(Increase) decrease in bills and bonds purchased under resale agreements (1,285,450) 3,311,984

Increase in receivables (1,128,916) (231,499)

Decrease in deferred tax assets 250,000 100,000

Net changes of operation liabilities:

Decrease in payables (1,876,443) (1,905,451)

Increase in accrued pension liabilities 34,047 863

Net cash provided by operating activities 890,587 4,800,721

Cash flows from investing activities:

Purchase of financial assets designated at fair value at initial recognition (1,693,131) (309,774)

Proceeds from disposition of available-for-sale financial assets 2,208,795 6,679,463

Purchase of held-to-maturity financial assets (5,685,162) (18,815,066)

Proceeds from disposition of financial assets measured at cost - 127,279

Proceeds from disposition of stock investment under the equity method 113,820 -

Purchase of property and equipment (174,117) (289,734)

(Increase) decrease in guarantee deposits paid (8,138) 78,195

Purchase of intangible assets (110,515) (67,179)

Decrease (increase) in due from the Central Bank and call loans to bank (5,857,799) 8,086,048




Increase in discounts and loans (17,302,176) (27,557,390)

Proceeds from disposition of non-performing loan 254,903 -

Increase in other financial assets (151,042) (405,735)

(Increase) decrease in other assets (19,526) 797,909

Net cash used in investing activities (28,424,088) (31,675,984)

Cash flows from financing activities:

Issued for financial debentures 10,950,000 3,650,000

Increase (decrease) in bills and bonds sold under repurchase agreements 5,820,612 (4,870,442)

Increase (decrease) in financial liabilities measured at fair value through profit or loss 6,821 (23,192)

Increase in guarantee deposit-in 109,959 44,137

Increase in lease payable 1,132 -

Increase in other financial liabilities 807,998 421,208

Increase (decrease) in other liabilities 732,977 (13,506)

Decrease in deposits from the Central Bank and other banks (20,989,814) (8,505,844)

Increase in deposits and remittances 28,260,288 34,415,216

Net cash provided by financing activities $25,699,973 25,117,577

Net decrease in cash and cash equivalents (1,833,528) (1,757,686)

Cash and cash equivalents, beginning of the year 17,197,549 18,955,235

Cash and cash equivalents, end of the period $ 15,364,021 17,197,549

Supplemental disclosures of cash flow information:

Cash paid during the year for:

Interest $ 7,434,938 11,582,650

Income taxes $91,835 132,975

Non-cash investing and financing activities:

Capitalization of earnings $ 1,549,439 -

reclassified property and equipment to rental assets $16 194

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TAIWAN BUSINESS BANK CO., LTD.NOTES TO FINANCIAL STATEMENTS

December 31, 2010 AND 2009(Expressed in New Taiwan Dollars in Thousands, Unless otherwise Stated)

(1) OVERVIEWTaiwan Business Bank Co., Ltd. (the “Bank”) was formerly a general savings union known as “Taiwan Mutual

financing Bank” or “Tai-Shio Mutual financing Bank” when it was established in 1915. After several mergers and

acquisitions, it was renamed Taiwan Business Bank, Ltd. to serve as a financier and provider of banking assistance

to small and medium-size businesses. The Bank’s major lines of business are the following:

(A) As prescribed by the Banking Law, provides professional services tailored to the needs of small and medium-

size businesses;

(B) Trust and securities brokerage businesses as approved by the relevant authority;

(C) International banking business; and

(D) other relevant businesses as authorized by the relevant authority in-charge.

As of December 31, 2010, the Bank not only set up the banking dept., international dept., securities dept. and

trust dept. under head office but also has 124 domestic branches, 1 offshore banking unit, 3 overseas branches, 1

foreign office and 17 securities brokerage locations.

The Bank became listed on the Taiwan Stock Exchange on January 3, 1998.

Under the ”Statute for Privatization of State Enterprises” and upon the approval of Taiwan Province Government,

the shares of the Bank owned by the provincial government were sold to the public. In line with privatization of the

three other major Taiwan province government owned run commercial banks, the Bank had completed its own

privatization on January 22, 1998.

As of December 31, 2010 and 2009, the Bank had 5,010 and 5,150 employees.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe financial statements are the English translation of the Chinese version prepared and used in the republic of

China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language

financial statements, the Chinese version shall prevail.

The Bank’s financial statements were prepared in accordance with “regulations Governing the Preparation of

financial Statements for Public Banks”, “Business entity accounting law”, and “regulation on handling business

entity accounting” and generally accepted accounting principles of the republic of China. These significant

accounting policies and measurement basis are as follows:

(A) Basis of PresentationThe financial statements include the accounts of headquarters, domestic and overseas branches. All inter-

office balances and transactions are eliminated.

(B) Foreign Currency TranslationThe Bank recorded transactions in New Taiwan Dollars. The non-derivative foreign currency transactions of

the Bank are recorded at the rate of exchange prevailing on the date of the transaction. Monetary assets and

liabilities denominated in foreign currencies are translated into the functional currency at the rate of exchange

ruling at the balance sheet date. Any resulting exchange differences are included in the income statement.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are

translated into the functional currency using the rate of exchange at the date of the initial transaction. Non-

monetary assets and liabilities measured at fair value in a foreign currency are translated into the functional

currency using the rate of exchange ruling at the balance sheet date. Any exchange differences resulting from

fair value variation through profit and loss are included in the income statement, and exchange differences

resulting from fair value variation through equity are accounted for as equity adjustments.

Assets and liabilities of overseas offices (including the offshore banking unit) are translated into New Taiwan


dollars on spot rate on balance date. The beginning balance of retained earnings of overseas branches are

carried from last year’s ending balance. The income statement accounts translated into New Taiwan dollars

on weighted-average exchange rate .The translation differences are reflected as part of cumulative translation

adjustments under stockholders’ equity.

(C) Accountant EstimatesThe preparation of financial statements requires management to make estimates and assumptions to evaluate

and disclose the amounts of assets, liability, revenues, expenses, contingent assets and liabilities. Actual

results could differ from those assumptions and estimates.

(D) Asset ImpairmentExcept for those assets stated as non-applicable, the Bank assesses at each balance sheet date whether

there is any indication that an asset (individual asset or cash-generating unit other than goodwill) may have

been impaired. If any such indication exists, the Bank estimates the recoverable amount of the asset. The

Bank recognizes impairment loss for an asset whose carrying value is higher than the recoverable amount.

The Bank reverses an impairment loss recognized in prior periods for assets other than goodwill if there is

indication that the impairment loss recognized no longer exists or has decreased. The carrying value after the

reversal should not exceed the recoverable amount or the depreciated or amortized balance of the assets

assuming no impairment loss was recognized in prior periods.

(E) Cash and Cash EquivalentsCash and cash equivalent consists of cash on hand, petty cash, foreign currency on hand, cash in banks, but

excludes those items which have specified for designated purposes or restricted by contracts and law.

(F) Financial Assetsfinancial assets are classified into financial assets measured at fair value through profit and loss, available-

for-sale financial assets, held-to-maturity financial assets, and financial assets measured at cost and debt

instrument with no active market.

financial instruments held by the Bank are recorded on settlement date except for stocks and beneficiary

certificate investment which are recorded on trading date. financial instruments are initially recognized at

fair value plus transaction costs except for financial instruments held for trading purpose, which are initially

recognized at fair value. Subsequent to their initial recognition, the financial instruments held by the Bank are

classified according to the purpose of holding as follows:

(a) financial assets measured at fair value through profit or loss: These included financial assets or liabilities

held for trading and financial assets or liabilities designated at fair value at initial recognition. financial

assets and liabilities which are measured at fair value are classified as held for trading if they have been

acquired principally for the purpose of selling or repurchasing in the near term. The derivative financial

instruments held by the Bank, except for those designated as hedging instruments, are classified under this

account. In addition, hybrid instrument and a set of financial assets or liabilities accounted inconsistently

are booked as financial assets or liabilities designated at fair value at initial recognition. The set of financial

assets or liabilities are booked as financial assets or liabilities designated at fair value through profit or

loss at initial recognition in order to eliminate inconsistent accounting. In accordance with the Bank’s risk

control policy or investment strategy, a set of financial assets or liabilities and its components managed are

also designated at fair value.

(b) Available-for-sale financial assets: financial assets are measured at fair value and unrealized gains

and losses thereon are recognized as an adjustment item of stockholders’ equity. The impairment loss

is recognized if there is evidence indicating that a decline in the value of an investment is other than

temporary. If the impairment loss in the following period is reduced, reversal of loss for equity investments

is adjusted to stockholders’ equity, and reversal of loss for debt instrument is credited to current income if

the reduction of impairment loss resulted from a subsequent event.

(c) Held-to-maturity financial assets: financial assets are measured at amortized cost. The impairment loss

is recognized if there is evidence indicating that a decline in the value of an investment is other than

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temporary. If in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment was recognized, the previous recognized

impairment loss is reversed through the profit and loss .The carrying value after the reversal should not

exceed the amortized balance of the assets assuming no impairment loss was recognized.

(d) financial assets measured at cost: Equity instruments with no quoted market price and whose fair value

cannot be reliably measured are stated at cost. The impairment loss is recognized if there is evidence

indicating that a decline in the value of an investment is other than temporary, and the impairment loss is

irreversible.

(e) Debt instrument with no active market: These are debt instruments with no active market quote and

measured at amortized cost. The impairment loss is recognized if there is evidence indicating that a

decline in the value of an investment is other than temporary. If in a subsequent period, the amount of the

impairment loss decreases and the decrease can be related objectively to an event occurring after the

impairment was recognized, the previous recognized impairment loss is reversed through the profit and

loss .The carrying value after the reverse should not exceed the amortized balance of the assets assuming

no impairment loss was recognized.

(G) Loans and AdvancesLoans and advances are recorded at principals outstanding, excluding unearned revenue. Interest revenue is

recognized on accrual basis using the interest method.

Interest accrual on loans and advances is suspended if either of the following occurs:

(a) Payment of principal or interest is delinquent for 6 months and beyond; or

(b) Payment of principal or interest is delinquent for less than 6 months but is already classified as a

delinquent loan.

The accrual interests of the suspension period is recognized as earnings when collected cash.

(H) Allowance for Credit Losses and Reserve for GuaranteeIn accordance with the “rules Governing the Evaluation of Loss reserve Provision on Bank Assets and

Disposal of overdue loans and Bad Debts ” issued by financial Supervisory Commission, Executive Yuan,

r.o.C, the Bank evaluates the non-credit assets in and off the balance sheet by the characteristic of the

assets in order to assess the possible loss and loss reserve provision .

The normal credit assets are classified as first class and the other bad credit assets are classified as different

categories, namely, second class “need to pay attention”, third class ” expected to regain’’, fourth class’’

difficult to recover’’ and fifth class as “irrecoverable’’ depending on the status of guarantee and length of time

overdue.

The Bank evaluate credit assets per aforementioned regulation and recognizes the minimum amounts of bad

debt expense and reserve for guarantee based on certain percentage of each class of credit assets such as

2% of the balance of second class credit assets, 10% of the balance of third class credit assets, 50% of the

balance of fourth class credit assets and 100% of the balance of fifth class credit assets.

Unrecoverable overdue loans and bad debts are written-off after deducting the recoverable portion .Upon

approval by the board of directors and notification to supervisors , the excess amount of written off loans over

such allowance or reserve is reflected as a current loss.

(I) Investments under the Equity MethodInvestees in which the Bank and its subsidiaries directly or indirectly, hold more than 20% of the outstanding

stock with voting power, or hold less than 20% of outstanding stock with voting power but has significant

influence over the investees are accounted for under the equity method.

Commencing from January 1, 2006, the Bank adopted the amended SfAS No. 5 “Long-term Investments

under Equity Method”. Under the standard, the difference between the investment cost and the net equity of

the investee acquired is recognized in accordance with this amended standard.

The difference between original investment cost and net equity value of the investee previously recognized is

amortized equally over 5 years due to the inability of analyzing underlying causes is no longer amortized from


January 1 2006.

Upon disposition, gain or loss on disposal of long-term equity investment is calculated based on the difference

between selling price and book value. The remaining capital surplus arising from long-term equity investment

is adjusted to profit and loss based on the percentage of sales.

(J) Property and Equipment Property and equipment are stated at cost plus revaluation appreciation, if any. The cost for major

renovations, additions, and improvements are capitalized, while repairs and maintenance costs are charged to

current earnings.

Depreciation is provided by using the straight-line method over the estimated useful lives. revaluation

appreciation is depreciated over the remaining useful lives from the date of revaluation. The economic lives of

major property and equipment are as follows:

Buildings 10 to 50 years

Machinery 3 to 5 years

Transportation equipment 3 to 6 years

Miscellaneous equipment 5 to 8 years

Leased assets 5 years

Gain or loss from disposition property and equipment is included in current earnings.

(K) Deferred ChargesThe costs of installation for utilities, including electricity and water, as well as security facilities, are capitalized

and amortized equally over 5 years.

(L) Collateral AssumedCollaterals assumed are stated at the lower of net book value or net realizable value; i.e., the amount the Bank

receives when creditors cannot meet obligations and the collaterals and salvages are auctioned off. Under

SfB Letter ruling (2) 094801856 on July 11, 2005, collateral assumed must be disposed before December

31, 2005. If the Bank is unable to dispose the collateral assumed before December 31, 2005, it reserves a

provision for loss equal to the carrying value of the collateral assumed. on disposition of collateral, the related

provision is reversed. The selling price deducts the original book value of collateral assumed is recognized as

gain on sale of collateral assumed.

(M) Reserve for Default LossesIn compliance with the rules Governing Securities firms, the Bank provides monthly a default indemnity

reserve based on 0.0028% of securities brokerage turnover until the balance of the reserve reaches $200,000.

Such reserve may only be used to cover default losses from securities brokerage or otherwise upon SfC

approval.

(N) Reserve for Trading LossesIn compliance with rules Governing Securities firms, the Bank provides securities trading loss reserve at

the rate of 10% of net gain from trading of operating securities when net gain exceeds loss. This reserve is

reversed in the month when the loss is actually realized. Also, this reserve is made until the balance reaches

$200,000.

(O) Pension PlanThe Bank adopted the roC Statement of financial Accounting Standards (SfAS) No. 18, “Accounting for

Pensions”. An actuarial valuation of pension liability for defined benefit plan is performed on balance sheet

date, and a minimum pension liability is disclosed in the financial statements based on the difference between

the accumulated benefit obligation and the fair value of plan assets. The Bank follow SfAS18 to recognize the

pension cost.

Under the “Labor Pension Act” which became effective on July 1, 2005(hereinafter called the “new pension

plan’), if an old employee chooses to adopt the “new pension plan” and new employee adopts the contributory

defined benefit pension plan, the employer is required to contribute monthly an amount equal to not be less

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than 6% of the employees' monthly salary into the employees individual pension fund accounts with the

Bureau of Labor Insurance .Such contribution is charged to current expense account.

(P) Recognition of Interest Revenue and Commissions and Handling FeesInterest is recognized on an accrual basis . Interest accrual is suspended from the date when the loan is

reclassified to non-performing loan and only when the Bank received cash , the revenue is recognized.

Income from commission and handling fees are recognized when the Bank received cash or the revenue is

earned.

(Q) Income TaxesThe Bank adopted SfAS No. 22 “Accounting for Income Tax” to effect inter and intra- period income tax

allocation. Income tax effects from taxable temporary differences are reported as deferred tax liabilities, and

deductible temporary differences, prior years’ loss carry forwards, and investment tax credits are reflected as

deferred tax assets. Deferred tax assets are recognized subject to management’s judgment that realization

is more likely than not. Adjustments to prior year’s income tax expenses are reflected as current income tax

expense.

The 10% surtax on undistributed earnings is reported as current expense on the date when the stockholders

decided not to distribute the earnings during their annual meeting.

(R) Earnings per Share (EPS)EPS is based on the weighted-average number of shares outstanding. In the event of capital increase through

capitalization of retained earnings, capital surplus, or employee bonuses, EPS is retroactively adjusted based

on the percentage of capital increase, regardless of the period when the incremental shares are outstanding.

The Company’s employee bonuses issued by stocks were dilutive potential common shares. If the potential

common shares has a non-dilutive effect, the Bank should only disclose the basic earnings per share. on

the contrary, if the potential common shares have a dilutive effect, the Bank should disclose both the basic

and diluted earnings per share. In calculating the diluted earnings per share which should take the effect of

potential common shares to net income and the weighted-average number of common shares outstanding

share into consideration is based on the assumption that all dilutive potential common shares are outstanding

and of the current period.

(S) Significant Commitments and ContingenciesIf the loss from a commitment or a contingency is deemed highly likely and the amount thereof can be

reasonably estimated, such loss is recognized currently; otherwise only the nature of commitment and

contingency is disclosed in the notes to financial statements.

(T) Employee Bonuses and Directors’ EmolumentsEmployee bonuses and directors’ emoluments appropriated after 1 January 2008 are accounted for by

Interpretation (96)052 issued by the Accounting research and Development foundation. The Company

estimates the amount of employee bonuses and directors’ emoluments according to the Interpretation and

recognizes it as expenses. Differences between the amounts are approved in the shareholders’ meeting and

recognized in the financial statements, if any, and accounted for as changes in accounting estimates and

recognized as profit or loss.


(3) REASONS FOR AND EFFECTS OF ACCOUNTING CHANGES: NONE

(4) SUMMARY OF MAJOR ACCOUNTS:

(A) CASH AND CASH EQUIVALENTS

December 31, 2010 December 31, 2009

Petty cash $ 7,725,985 7,964,126

foreign currency on hand 957,117 1,090,396

Checks awaiting clearing 4,077,457 6,321,952

Cash in banks 2,603,462 1,821,075

Total $ 15,364,021 17,197,549

(B) DUE FROM THE CENTRAL BANK AND CALL LOANS TO BANKS


Due from the Central Bank $ 50,751,661 42,957,367

Deposits transferred to Central Bank 142,261 260,144

Call loans to banks 20,826,253 22,644,865

Trust fund reserve 70,000 50,000

Securities deposited as trust fund reserve (70,000) (50,000)

Total $ 71,720,175 65,862,376

As of December 31, 2010 and 2009, in accordance with the Banking Law and the Central Bank Law, the

required reserve deposited by the Bank with the Central Bank amounted to $50,658,745 and $42,942,829, of

which $27,164,755 and $32,674,749 respectively, were restricted and such restriction may only be lifted when

the required reserve is adjusted to a lower amount.

Effective December 2000, in accordance with the amended “rules Governing Adjustments to and review of

Deposits in financial Institutions and reserve for other Liabilities”, the Bank provides the required additional

reserve on foreign currency deposits. As of December 31, 2010 and 2009, the required reserve with the

Central Bank amounted to $92,916 and $14,538 respectively, and its use is unrestricted.

As of December 31, 2010 and 2009, deposits collected on behalf of the armed forces, prisons, and other

national deposits amounted to $142,261 and $260,144, respectively, and their use are restricted.

Effective January 20, 2001, in accordance with the requirement of the Central Bank of China, the Bank

complies with Clause 34 of the Trust Law to treat the discretionary trust of investments in overseas marketable

securities as a default loss reserve. As of December 31, 2010 and 2009, the Bank deposited marketable

securities of $70,000 and $50,000, respectively, as a trust fund reserve.

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(C) FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS-NET


financial assets held for trading:

Commercial paper $ 1,568,213 499,526

Negotiable certificates of time deposits - 1,794

Government bonds - 52,180

Listed and oTC stocks - 33,132

Beneficiary certificates 111,391 374,469

foreign exchange forward contracts 142,369 37,433

Currency swap contracts 143,814 55,193

Non- delivery forward contracts 4,552 4,104

Interest swap contracts 50,576 27,286

Currency option-call 24,685 17,866

Structured product option-call 396 -

Stock index futures 23,486 -

Sub-total 2,069,482 1,102,983

financial assets designated at fair value at initialrecognition:

overseas bonds 2,213,281 1,201,415

Total $ 4,282,763 2,304,398

Please refer to Note 7(A) for the information with regard to resale conditions for financial assets held for

trading shown above.

As of December 31, 2010, and 2009 the nominal amounts of unsettled financial derivatives instrument

contracts were as follows:


foreign exchange forward contracts $ 5,188,541 2,427,603

Currency swap contracts 47,891,798 43,254,786

Non- delivery forward contracts 771,775 1,801,635

Interest swap contracts 13,408,538 9,213,025

option contracts 1,694,449 1,161,920

(D) BILLS AND BONDS PURCHASED UNDER RESALE AGREEMENTS


Bills purchased under resale agreements $ 2,519,348 1,233,898

resale period 2011.1.3~2011.1.19 2010.1.4~2010.1.15

range of resale interest rate 0.49%~0.53% 0.26%~0.28%

resale price $ 2,519,669 1,233,981


(E) RECEIVABLES -NET


Interest receivable $ 1,570,055 1,421,889

Bankers' acceptances receivable 2,488,679 2,078,151

revenue receivable 24,173 18,337

Accounts receivable 2,654,317 1,836,307

Income tax refundable 646,496 570,288

factoring account receivable 433,997 116,798

Spot exchange receivable 11,558,357 11,716,043

other receivables 479,547 678,436

Sub-total 19,855,621 18,436,249

Less: Allowance for doubtful accounts (145,414) (157,551)

net $ 19,710,207 18,278,698

(F) DISCOUNTS AND LOANS –NET


foreign currency imports/exports financing $ 374,912 675,396

Notes discounted 2,065,473 2,621,261

Customer overdrafts 42,441 456,099

Secured overdrafts 1,250,785 3,286,073

Short-term unsecured loans 119,894,984 163,058,691

Short-term secured loans 112,276,504 110,411,767

receivables from securities lending 2,827,001 2,130,060

Medium-term unsecured loans 217,914,601 191,887,904

Medium-term secured loans 125,019,211 108,101,402

Long-term unsecured loans 21,780,148 48,865,696

Long-term secured loans 321,581,535 273,137,548

receivables for margin loans 177,478 36,221

Non-accrual loans 10,098,590 16,319,421

Sub-total 935,303,663 920,987,539

Less: Allowance for doubtful accounts (8,333,397) (8,184,529)

net $ 926,970,266 912,803,010

(G) AVAILABLE-FOR-SALE FINANCIAL ASSETS-NET


Government bonds $ 5,748,892 5,535,954

Corporate bonds 705,536 703,539

financial bonds - 70,068

Beneficiary certificate 16,318 244,072

overseas bonds 7,847,252 10,334,537

Listed and oTC stocks 610,357 353,869

overseas stocks - 40,305

Subtotal 14,928,355 17,282,344

Less: Accumulated impairment - (366,334)

Total $ 14,928,355 16,916,010

Please refer to Note 7(A) for the information with regard to conditions on available-for-sale financial assets

shown above.

The Bank has recognized an asset impairment loss of $0 and $ 366,334 due to its investment loss in overseas

bonds, as of December 31, 2010 and 2009.

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(H) HELD-TO- MATURITY FINANCIAL ASSETS-NET


Certificates of deposit with Central Bank $ 127,900,000 121,000,000

Corporate bonds 4,280,309 4,919,159

financial bonds - 399,962

Government bonds 2,378,146 2,112,151

Beneficiary certificates 133,467 516,251

overseas bonds 857,570 916,807

Total $ 135,549,492 129,864,330

As of December 31, 2010 and 2009, held-to-maturity financial assets provided and deposited as reserve for

trust loss and operational guaranty for provisional seizure by the court, international card payment reserve,

trust claim reserve and operating guaranty funds amounted to $797,600 and $850,700, respectively.

In order to comply with the immediate tax settlements mechanism of Central Bank and the interbank funds

transfer system, the Bank provided time deposits with Central Bank amounted to $24,100,000 and $10,500,000

as overdraft guarantee as of December 31, 2010 and 2009, respectively. The amount of the guarantee can be

modified anytime and the remaining amount could be served as liquid reserves.

(I) INVESTMENTS UNDER THE EQUITY METHOD -NET


Book Value Ownership% Book Value Ownership%

Primasia Investment Trust Co. Ltd (with original investment cost of $105,024) $ - - 55,298 20.00

Taiwan Business Bank Insurance Agency Co., Ltd. (with original investment cost of $2,000)

41,459 100.00 28,339 100.00

Taiwan Business Bank Property Insurance Agency Co., Ltd. (with original investment cost of $3,000)

3,815 100.00 943 100.00

Total $ 45,274 84,580

The Bank disposed 6,000,000 shares of Primasia Investment Trust Co., Ltd which is evaluated under the

equity method. The execution proceeds and profit amounted to 113,820 and 62,084 respectively and were

recognized as gain and loss under the equity method investment.

for the years ended December 31, 2010 and 2009, investment income recognized under the equity method

amounted to $26,419 and $13,310 respectively.

for the years ended December 31, 2010 and 2009, the Bank received cash dividend from Taiwan Business

Bank Insurance Agency Co., Ltd. amounted to $13,989 and $10,966, respectively.

for the ownership of investee companies held by the Bank exceeding 50%, the amount was not significant.

Therefore, the Bank did not prepare consolidated financial statements.


(J) OTHER FINANCIAL ASSTES-NET


Non-accrual receivables $ 309,519 266,986

Less:Allowance for doubtful accounts (113,661) (76,144)

Non-accrual receivables-net 195,858 190,842

foreign currency long positions 18,899 3,313

financial assets measured at cost 2,272,385 2,272,385

Less:Accumulated impairment – financial assetsmeasured at cost (214,958) (214,958)

financial assets measured at cost-net 2,057,427 2,057,427

Debt instrument with no active market 1,500,000 1,500,000

restricted assets – Negotiable certificate of deposit 61,950 67,570

restricted assets – Zero-coupon bond 37,797 41,449

restricted assets – Banker's acceptance 446,350 344,155

Total $ 4,318,281 4,204,756

(a) financial assets measured at cost are as follows:

InvesteeDecember 31, 2010 December 31, 2009

Amount % Amount %

Taiwan Power Company $11,427 - 11,427 -

Taiwan Sugar Corporation 61,364 0.30 61,364 0.30

Sunysino Development Associated Inc. 17,440 3.96 17,440 3.96

"Taiwan Small & Medium Enterprises Devel. Co., Ltd." 29,000 4.84 29,000 4.84

Taipei forex Incorporation 7,000 3.53 7,000 3.53

financial Information Service Co., Ltd. 45,500 1.14 45,500 1.14

Evernight Investment Co., Ltd. 500,000 4.95 500,000 4.95

Taiwan Stock Exchange Corp. 198,012 0.95 198,012 0.95

Asia Pacific Telecom Co., Ltd. (originally named 300,000 0.46 300,000 0.46

Asia Pacific Broadband Telecom Co.,Ltd.)

Taiwan futures Exchange Co., Ltd. 20,000 1.00 20,000 1.00

koyon Capital Corporation (originally named koyon Small & Medium Enterprises Devel. Co.,Ltd.) 4,958 5.00 4,958 5.00

Taiwan Asset Management Corp. 1,000,000 5.68 1,000,000 5.68

Taiwan finance Asset Service Corp. 50,000 2.94 50,000 2.94

financial E-Solution Co., Ltd. 19,285 5.13 19,285 5.13

Taiwan Depository and Clearing Corp. 4,639 0.08 4,639 0.08

Taiwan Integrated Shareholder's Service Company 3,300 1.10 3,300 1.10

Yand Guang Asset Management Corp. 460 0.77 460 0.77

Subtotal 2,272,385 2,272,385

Less:Accumulated impairment-Asia Pacific (210,000) (210,000)

Telecom Co,Ltd.

Accumulated impairment- koyon Capital (4,958) (4,958)

Corporation

Total $2,057,427 2,057,427

There is evidence indicating that a decline in the value of Asia Pacific Telecom Co., Ltd. (originally named Asia

Pacific Broadband Telecom Co., Ltd.) is other than temporary, therefore, the Bank recognized impairment loss

of $210,000 in the past year. The Bank recognized impairment loss of $4,958 of koyon Capital Corporation

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(originally named koyon Small & Medium Enterprises Devel. Co., Ltd. ), which has already conducted

liquidation procedures in the previous year.

The Bank disposed 146,250 shares of United Taiwan Bank S.A. for $127,279 which resulted in a gain of $1,357

(recorded as gain from financial asset measured at cost) as of September 22, 2009.

(b) Debt instrument with no active market are as follows:

December 31, 2010 December 31, 2009InvesteeTaiwan High Speed rail Corp. Preferred Stock

$1,500,000 1,500,000

(K) PROPERTY AND EQUIPMENT-NET

December 31, 2010 Cost RevaluationAppreciation Total

Cost Land $6,538,600 2,422,644 8,961,244 Buildings 7,199,472 31,035 7,230,507 Machinery 2,180,087 - 2,180,087 Transportation equipment 332,854 - 332,854 Miscellaneous equipment 579,776 - 579,776 Lease improvement 87,002 - 87,002 Construction in progress 3,034 - 3,034 Prepayment for equipment 62,472 - 62,472 Leased assets 1,305 - 1,305

$16,984,602 2,453,679 19,438,281 Accumulated depreciation Buildings $2,611,603 16,617 2,628,220 Machinery 1,780,970 - 1,780,970 Transportation equipment 288,180 - 288,180 Miscellaneous equipment 520,893 - 520,893 Lease improvement 33,977 - 33,977 Leased assets 157 - 157

$5,235,780 16,617 5,252,397

net 14,185,884

December 31, 2010 Cost RevaluationAppreciation Total

Cost Land $6,538,600 2,422,644 8,961,244 Buildings 7,186,026 31,035 7,217,061 Machinery 2,193,919 - 2,193,919 Transportation equipment 341,158 - 341,158 Miscellaneous equipment 584,529 - 584,529 Lease improvement 84,183 - 84,183 Prepayment for equipment 180,613 - 180,613

$17,109,028 2,453,679 19,562,707 Accumulated depreciation Buildings $2,432,464 16,617 2,449,081 Machinery 1,756,309 - 1,756,309 Transportation equipment 285,305 - 285,305 Miscellaneous equipment 517,085 - 517,085 Lease improvement 42,832 - 42,832

$5,033,995 16,617 5,050,612

net 14,512,095


(a) Land and buildings were revalued on June 30, 1975, July 1, 1981, July 1, 1990, July 1, 1992, July 1, 1996,

April 10, 1997 January 1, 2006 and January 1, 2009 in accordance with the “Land right Equalization Act”

or “Profit Seeking Enterprise Asset revaluation Act.”

(b) As of December 31, 2010 and 2009, the appreciation from revaluation of properties (including rental assets

under operating lease and reflected as other assets) both amounted to $2,709,196. The reserve for land

incremental tax thereon both amounted to $782,281 (reflected as other liabilities), and the net amount is

classified under unrealized revaluation appreciation.

(L) OTHER ASSETS


Supplies inventory $ 23,783 22,345

Prepayments 1,423,851 1,419,137

Non-operating assets,net 414,261 417,410

operating guaranty and settlement funds 74,347 71,055

Guarantee deposits paid 179,973 171,835

Less:Allowance for credit losses (28,710) (28,710)

Guarantee deposits paid-net 151,263 143,125

Collateral assumed 432,130 483,341

Less:Allowance for credit losses (432,130) (483,341)

Collateral assumed-net - -

Deferred income tax assets-net (Note (4)(V)) 1,757,869 2,007,869

Deferred charges 552 628

Temporary payments and suspense - 87,316

Total $ 3,845,926 4,168,885

Non-operating assets consisted of leased or idle land or buildings are as follows:


Rental Assets

Cost

Land $ 37,250 37,250

Buildings 52,449 52,433

Sub-total 89,699 89,683

revaluation appreciation

Land 43,967 43,967

Buildings 149 149

Sub-total 44,116 44,116

Cost plus revaluation appreciation 133,815 133,799

Less: Accumulated depreciation (19,714) (18,447)

Less: Accumulated impairment (1,738) (1,738)

net $ 112,363 113,614

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Idle Assets

Cost

Land $ 49,976 49,976

Buildings 97,244 97,244

Sub-total 147,220 147,220

revaluation appreciation

Land 211,401 211,401

Cost plus revaluation appreciation 358,621 358,621

Less: Accumulated depreciation (22,894) (20,996)

Less: Accumulated impairment (33,829) (33,829)

net $ 301,898 303,796

Net of rental assets and idle assets $ 414,261 417,410

As of both December 31, 2010 and 2009, land amounted to $69,205 was illegally occupied. Part of the illegally

occupied land would be disposed after the Bank received the certificate of legal costs and the rest would be

auctioned at appropriate time.

(M) DEPOSITS FROM THE CENTRAL BANK AND OTHER BANKS


Central Bank deposits $ 394,246 1,399,247

Call loans from Central Banks 6,490,000 4,182,880

Deposits from other banks 1,523,718 126,203

Call loans from banks 17,013,375 17,788,871

Bank overdrafts 747,455 1,745,734

Post office deposits 59,913,138 81,828,811

Total $ 86,081,932 107,071,746

(N) FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


foreign exchange forward contracts $ 23,634 38,928

Currency swap contracts 66,511 16,237

Non-delivery forward contracts 4,497 3,473

Interest swap contracts 206,616 178,883

foreign exchange option - put 24,685 17,866

Structured options - put 2 -

Toatl $ 325,945 255,387

The nominal amount of unsettled financial derivatives instrument contracts of December 31, 2010 and 2009

please refer to (4) (C).


(O) BILLS AND BONDS SOLD UNDER REPURCHASE AGREEMENTS


Bills sold under repurchase agreements $ 3,858,724 1,733,815

Bonds sold under repurchase agreements 6,091,936 2,396,233

Total $ 9,950,660 4,130,048

repurchase period 2011.1.3~2011.6.8 2010.1.4~2010.6.14

range of repurchase interest rate 0.25%~0.53% 0.1%~0.22%

repurchase price

Bills sold under repurchase agreements $3,859,097 1,733,896

Bonds sold under repurchase agreements 6,093,684 2,396,685

Total $ 9,952,781 4,130,581

(P) PAYABLES

December 31,2010 December 31,2009

Interest payable $ 1,623,774 1,688,624

Accounts payable 4,089,147 6,322,494

Bankers' acceptance 2,580,237 2,136,041

Accrued expenses 1,771,339 1,486,314

Proceeds collected on behalf of others 678,532 747,955

Deposits received from securities borrowers 132,305 128,692

Guaranteed price from securities borrowers 145,898 142,661

factoring payable 69,860 43,902

Spot exchange payable 11,577,585 11,713,259

other payable 1,111,155 1,246,388

others 2,372 2,317

Total $ 23,782,204 25,658,647

(Q) DEPOSITS AND REMITTANCES


Savings deposits $ 515,891,876 497,442,729

Time deposits 235,371,020 228,091,232

Demand deposits 219,065,510 217,206,507

Checking deposits 21,472,847 20,891,006

remittances 546,940 456,431

Total $ 992,348,193 964,087,905

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(R) FINANCIAL DEBENTURES

December 31, 2010

Terms of Transactions Bond Issued

Bonds Issue date Maturity date Interest Rate Type Amount

2001-1 11/20/2001 11/20/2011 The debentures bear annual interest rate of 3.7%.Simple interest is accrued and paid annually. one-fifth of the principal will be repaid annually from the sixth year.

Unsecured subordinated long-term financial debentures

$ 100,000

2007-1 8/23/2007 08/23/2014 The debentures bear annual interest rate, which is the index rate plus 0.49%. The index rate is the average offer of 90-days CP which is indicated in reuters page 6165 at 11 A.M Taipei time, 2 operation days prior to the interest commencement date. Simple interest is accrued quarterly and paid annually. The principal will be repaid in full at maturity.


5,000,000

2008-1 3/13/2008 09/13/2013 The debentures bear annual interest rate, which is the index rate plus 0.75%. Theindex rate is the average offer of 90-days CP which is indicated in reuters page 6165 at 11 A.M Taipei time, 2 operation days prior to the interest commencement date. Simple interest is accrued quarterly and paid twice a year. The principal will be repaid in full at maturity.


3,000,000

2008-1 3/13/2008 09/13/2013 The debentures bear annual interest rate of 3.1%.Simple interest is accrued and paid twice a year.


450,000

2008-1 3/13/2008 03/13/2014 The debentures bear annual interest rate of 3.15%.Simple interest is accrued and paid twice a year. The principal will be repaid in full at maturity.


1,100,000



5,200,000

2008-3 12/30/2008 06/30/2014 The debentures bear annual interest rate of 3.2%. Simple interest is accrued and paid twice a year. The principal will be repaid in full at maturity.


2,150,000



1,400,000


December 31, 2010



2009-2 8/27/2009 8/27/2015 The debentures bear annual interest rate of 2.35%. Simple interest is accrued and paid once a year.The principal will be repaid in full at maturity.

Unsecuredsubordinated long-termfinancialdebentures

1,000,000

2009-1P 10/23/2009 None The debentures bear annual interest rate which is the seven Banks' board floating average interest rate for 1-year time deposit plus 1.29% for the seven years after the issue date. The interest rate will be the seven Banks' board floating average interest rate for 1-year time deposit plus 2.29% from the eighth year. The bond is redeemable per face balue at the interest payment date after seven years from the issue date under the consent of the competent authority.

Perpetualaccumulatedsubordinatedfinancialdebentures

12,000,000

2009-3 12/18/2009 12/18/2016 The debentures bear an annual interest rate of 2.5%,Simple interest rate is accrued and paid annually. The principal will be repaid in full at maturity.


1,550,000

2010-1 3/5/2010 3/5/2017 The debentures bear an annual interest rate of 2.32%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.


1,050,000

2010-2 9/2/2010 9/2/2017 The debentures bear an annual interest rate of 1.92%. Simple interest is accrued and paid annually. The principal will be repaid in full at maturity.


6,000,000

2010-1PA 9/23/2010 None The debentures bear annual interest rate which is the Chunghwa post's board average interest rate for 1-year time deposit plus 1.34% for the ten years after the issue date. The interest rate will be the Chunghwa post's board interest rate for 1-year time deposit plus 2.34% from the eleventh year. The debentures is redeemable per face value plus accrued interest at the interest payment date after ten years from the issue date under the consent of the competent authority.

Perpetualunaccumulatedsubordinatedfinancialdebentures

3,200,000

2010-1P B 9/23/2010 None The debentures bear an interest rate of 3.05% for the first ten years. The interest rate will be 4.05% from the eleventh year. The debentures is redeemable per face value plus accrued interest at the interest payment date after ten years from the issue date under the consent of the competent authority.

Perpetualunaccumulatedsubordinatedfinancialdebentures

800,000

$ 44,000,000

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December 31, 2009



2001-1 11/20/2001 11/20/2011 The debentures bear annual interest rate of 3.7%.Simple interest is accrued and paid annually. one-fifth of the principal will be repaid annually from the sixth year.


$ 200,000

2007-1 8/23/2007 08/23/2014 The debentures bear annual interest rate, which is the index rate plus 0.49%. The index rate is the average offer of 90-days CP which is indicated in reuters page 6165 at 11 A.M Taipei time, 2 operation days prior to the interest commencement date. Simple interest is calculated quarterly and paid annually. The principal will be repaid in full at maturity.


5,000,000

2008-1 3/13/2008 09/13/2013 The debentures bear annual interest rate, which is the index rate plus 0.75%. The index rate is the average offer of 90-days CP which is indicated in reuters page 6165 at 11 A.M Taipei time, 2 operation days prior to the interest commencement date.Simple interest is accrued quarterly and paid twice a year. The principal will be repaid in full at maturity.


3,000,000

2008-1 3/13/2008 09/13/2013 The debentures bear annual interest rate of 3.1%.Simple interest is accrued and paid twice a year.


450,000

2008-1 3/13/2008 03/13/2014 The debentures bear annual interest rate of 3.15%.Simple interest is accrued and paid twice a year. The principal will be repaid in full at maturity.


1,100,000



5,200,000



2,150,000

2009-1 6/10/2009 12/10/2014 The debentures bear annual interest rate of 2.45%. Simple interest is accrued and paid twice a year.


1,400,000

2009-2 8/27/2009 8/27/2015 The debentures bear annual interest rate of 2.35%. Simple interest is accrued and paid once a year. The principal is paid in full at maturity.


1,000,000


2009-1P 10/23/2009 None The debentures bear an annual interest rate which is the seven Banks' board floating average interest rate for 1-year time deosit plus 1.29% for the seven years after the issue date. The interest rate will be the seven Banks' board floating average interest rate for 1-year time deposit plus 2.29% from the eighth year. The debentures will be redeemable per face value at the interest payment date after seven year from the issue date under the consent of the competene authority.

Perputual accumulsted subordinated financial debentures

12,000,000

2009-3 12/18/2009 12/18/2016 The debentures bear annual interest rate of 2.5%. Smple interest is accrued and paid once a year. Te principal is repaid in full at maturity.


1,550,000

$ 33,050,000

(S) OTHER FINANCIAL LIABILITIES


funds appropriated for loans $ 10,373,287 9,743,364

Lease payable 1,132 -

other miscellaneous items - finance debt 178,075 -

Total $ 10,552,494 9,743,364

(T) OTHER LIABILITIES


Advance interest $ 1,552 300

Advance revenue 155,783 111,709

other advances 29,072 37,386

Estimated reserve for land value incremental tax 782,281 782,281

reserve for guarantees 1 -

reserve for trading loss 88,591 87,423

reserve for default loss 96,536 87,122

reserve for contingent loss 41,321 35,212

Guarantee deposit-in 675,964 566,793

Temporary collections and accounts awaiting clearance

696,327 -

Total $ 2,567,428 1,708,226

(U) STOCKHOLDERS’ EQUITY(a) Common stock

As of December 31, 2010 and 2009, the paid-in capital for common shares of the Bank was $40,285,419

and $38,735,980 and the outstanding shares were 4,028,542 thousand shares and 3,873,598 thousand

shares.

Pursuant to the resolution approved by the stockholders’ meeting of the Bank on June 23, 2010, in order

to meet the need to increase capital and issue new shares, the Bank increased its authorized capital to

$60,000,000, the paid-in capital for common shares of the Bank was $40,285,419. Besides, Pursuant to

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the resolution approved by the shareholders’ meeting of the Bank on June 23, 2010, the Bank using the

reserve for capitalization of $1,549,439 from share premium-common stock to increase capital and issue

154,944 thousand shares. The case of capital increase has been submitted to financial Supervisory

Commission, Executive Yuan on August 11, 2010. Capital increase date set on September 14, 2010, the

replenishment of the case, the legal registration procedures have been completed.

(b) Capital Surplus

Under the Company Law, except for the additional paid-in capital and capital surplus arising from

donations, which can be used to increase capital or offset losses, capital surplus can only be used to

offset cumulative losses. SfC regulations permit capitalization of capital surplus only once a year, and the

amount should not exceed 10% of actual capital.

(c) Earnings Distribution and Dividend Policy

Under the Bank’s Articles of Incorporation, earnings are used initially to pay for income taxes and restore

cumulative losses. 30% of the remaining earnings is set aside as legal reserve. Special reserve is

appropriated from earnings if necessary for business expansion.

The remaining balance of these earnings, if any, is distributed as follows:

1. Dividends according to the proposal submitted by the Board of Directors to the annual stockholders’

meeting for resolution.

2. Employees bonus: 1% to 8%.

3. remuneration to directors and supervisor: 1%.

In principle, the amounts of cash and stock dividends shall be equal. If the ratio of capital held by the

Bank to risk assets is lower than the ratio stipulated by the government plus 1% after the distribution, cash

dividends per share shall not exceed $0.5, and the remainder is distributed as stock dividends. Employees’

bonus may be in the form of cash or stock dividends, depending on the board of directors’ resolution. The

Bank estimated employee bonuses $112,349 and 80,196, and the directors’ remuneration $14,044 and

10,024 for the years ended December 31, 2010 and 2009, respectively. This estimate was calculated

based on the estimated income before tax conversion from income before tax for the years ended

December 31, 2009, deduct legal reserve and special reserve multiply the distribution rate of employee

bonuses and remuneration directors remuneration of 8% and 1%. The shares of stock dividends were

calculated based on the closing price of the date before stockholder’s meeting and it also took into

consideration the effect of stock dividends. Differences between the amount approved at the shareholders’

meeting and recognized in the financial statement are accounted for as changes in accounting estimates

and recognized as 2011 profit or loss.

The resolved amounts of $80,196 and $10,024 of the employee bonuses and directors and supervisors

remuneration were consistent with the resolutions of the meeting of the shareholders held on June 23,

2010.

The information about the appropriations of employee bonuses and directors and supervisors remuneration

is available at the Market observation Post System website.

When the balance of legal reserve is still less than the level of total paid-in capital, payment of cash

dividends shall not exceed 15% of total paid-in capital.

Under the rules set forth by the SfC, special reserve is appropriated from retained earnings based on the

equivalent amounts of the contra accounts in the stockholders’ equity. This special reserve may not be

distributed as dividends to stockholders until the balances of these contra accounts in the stockholders’

equity is reversed.


(V) INCOME TAXES(a) on December 31, 2010 and 2009, the components of deferred tax assets were as follows:


Deductible temporary difference due to provision for reserve for default loss and contingent loss $ 28,350 30,176

Deductible temporary difference due to provision for reserve for trading loss 15,032 17,451

Deductible temporary difference due to amortization of pension expense under SfAS 18 77,352 91,002

Provisions for impairment losses on available-for-sale financial assets - 73,267

Deductible temporary difference due to provision of allowance for bad debts exceeding limit - 40,383

Deductible temporary difference due to provision for impairment losses on other assets 10,927 12,856

Deductible temporary difference due to provision for impairment losses on other financial assets 36,543 42,992

Deductible temporary difference due to provision for contingent losses of lawsuit 51,113 60,134

Deductible temporary difference due to provision for unrealized loss on available-for-sale financial assets 23,290 78,463

Deferred loss on disposal of non-performing loan - 60,493

Available loss carryforward benefits 4,061,049 4,573,941

Tax effect on unused investment tax credits 16,876 22,561

Deductible temporary difference from cumulative translation adjustments 3,314 (192)

$ 4,323,846 5,103,527

(b) Deferred income tax assets and liabilities was as follows:


Deferred income tax assets $ 4,323,846 5,103,527

Allowance for deferred income tax assets (2,565,977) (3,095,658)

net $ 1,757,869 2,007,869

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(c) In compliance with the amendment of the Income Tax Act which was originally published on May 27, 2009,

the statutory income tax rate will be reduced from 25% to 20% commencing from year 2010. furthermore,

in compliance with the amendment of the Income Tax Act which was published on June 15, 2010, the

statutory income tax rate will be reduced to 17%. for the nine months ended December 31 2010 and 2009,

the Company and its subsidiaries adopted the “Income Basic Tax Act” in determining the income basic

tax, and its income tax rate is 17% and 25% respectively. The income tax expense for the year ended

December 31, 2010 and 2009 were calculated as follows:

For The Year Ended

December 31, 2010

For The Year Ended

December 31, 2009

Income tax computed on financial income at statutory tax rate (17% and 25%) $ 406,516 403,918

Permanent differences:

- Suspended securities transaction tax (34,299) (89,050)

- Net income from oBU operation (50,243) (117,919)

- recognized gain from financial assets and liabilities measured at fair value through profit or loss (58,089) (20,878)

- Provision of impairment loss on available-for-sale financial assets - 23,011

- Separation tax interest income - (4,331)

- Cash Dividend (25,104) (36,644)

- Gain on disposal of investment carried at cost - (339)

- Gain on investment recognized under the equity method (4,491) (3,328)

- Land transation tax-exempt 574 -

Temporary differences:

- Provisions for reserve for default loss and accidental loss 2,701 4,547

- Provisions for reserve for trading loss 199 3,558

- Deferred loss on disposal of non-performing loans (51,420) (482,932)

- Estimated contingent loss on lawsuit - 4,125

- Write-off of provision for bad debt (34,326) 363,644

Taxable income 152,018 47,382

Duduct: Loss carryforward (152,018) (47,382)

Income tax payable (current) - -

Decrease in deferred income tax assets 82,846 988,783

Cumulative effect of changes in income tax rate 762,145 1,258,396

Decrease in allowance for deferred income tax assets (594,991) (2,147,179)

Increase (decrease) in deferred income tax assets-cumulative translation adjustments (3,506) 11,393

overseas branch income tax expenses 91,835 65,448

Item separately taxed - 1,233

10% surtax on undistributed earnings 15,505 -

Underestimate (overestimate) prior income tax expense 10,374 (452)

Basic tax 20,831 5,982

Income tax expense $ 385,039 183,604

(d) The Bank’s income tax returns for years up to 2006 have been approved by the tax authority.


(e) Imputation Credit Account and Tax Deductible ratio


Stockholders' imputation credit account $ 400,226 734,619

Stockholders' tax deductible ratio 17.09%(estimated) 33.33%(actual)

Components of inappropriate earnings:


Before 1997 $ - -

After 1998 2,341,339 1,612,124

Total $ 2,341,339 1,612,124

(f) As of December 31, 2010, the loss to reduce future year’s income base on Income Tax Law were as

follows:

Amount Deductible Year

2004 (authorized) $ 7,344,370 2005~2014

2005 (authorized) 13,799,316 2006~2015

2006 (authorized) 1,021,326 2007~2016

2009 (declared) 1,723,510 2010~2019

$ 23,888,522

(g) As of December 31, 2010, the vocational training expense or venture capital investing that could be used

to reduce future years income tax based on Statute for Upgrading Industries were as follows:

Amount Deductible Year

2007 (declared) 5,284 2007~2011

2008 (declared) 7,456 2008~2012

2009 (declared) 4,136 2009~2013

Total $ 16,876

(W) PENSION PLAN(a) for the years ended December 31, 2010 and 2009, the pension expenses were as follows:

For The Year Ended December 31, 2010


Provisions for defined benefit plan $ 480,991 463,629

Provisions for defined contribution plan 62,417 59,196

Borrowed employees pension expense recoverd (165) (366)

Total $ 543,243 522,459

(b) The bank uses the defined benefit plan in the pension fund:

1. The pension fund deposited in Taiwan Bank was provided $446,496 and $458,119 in 2010 and 2009,

respectively.

2. The reverse for pension is saved in the Bank of Taiwan (known as the Central Trust of China previously,)

by the account name of Labor Pension fund Supervisory Committee. The annual contribution to the

pension was made at rate 8% of gross salary paid, and adjusted to 12% in october 2001, 11.3% in June

2002, 11.5% in March 2003, 12.8% in April 2004, 11.4% in May 2005, 14.6% in January 2006, 13.09%

in January 2007, 13.35% in January 2008, 13.67% in June 2009, and 13.80% in 2010. As of December

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31, 2010 and 2009, the accumulated amounts of the pension fund were $4,783,189 and $4,326,877.

3. Actuarial assumptions used to calculate net pension costs were as follows:



Discount rate 2.00% 2.50%

future salary increase rate 2.00% 2.00%

Projected long-term rate of return on assets 2.00% 2.50%

4. reconciliation between funded status and accrued pension liability per book was as follows:


Benefit obligstion:

Vested benefit obligation $ (3,953,162) (3,146,985)

Non-vested benefit obligation (1,006,506) (1,067,821)

Accumulated benefit obligation (4,959,668) (4,214,806)

Effect of future salary increases (1,220,443) (1,080,052)

Expected benefit obligation (6,180,111) (5,294,858)

fair value of pension fund assets 4,783,189 4,326,877

funded status (1,396,922) (967,981)

Unamortized balance of prior service cost 23,090 36,437

Unamortized balance of pension fund 1,236,341 805,010

Supplementary accrued pension liabilities (38,988) -

Accrued pension liabilities $ (176,479) (126,534)

5. As of the years ended December 31, 2010 and 2009, components of net pension cost were as follows:

For The Year EndedDecember 31, 2010

For The Year EndedDecember 31, 2009

Service cost 431,741 424,054

Interest cost 132,371 119,636

Actual return on pension fund assets $ (70,708) (27,242)

Loss on pension fund assets (43,674) (77,542)

Expected return on pension fund assets (114,382) (104,784)

Amortization 31,261 24,723

Net pension cost 480,991 463,629

As of December 31, 2010 and 2009, the vested benefit under the Bank’s employee retirement guidelines

amounted to 5,114,473 and 4,264,310, respectively.


(X) EARNINGS PER SHARE

For The Year Ended Decemberber 31, 2010

For The Year Ended Decemberber 31, 2009

Before tax After tax Before tax After tax

Net income $ 2,391,273 2,006,234 1,615,673 1,432,069

Weighted Average number of common stock shares outstanding (in thousands) 4,028,542 4,028,542 3,873,598 3,873,598

Basic earnings per share (in dollar) $ 0.59 0.50 0.42 0.37

Basic earnings per share-retroactive adjustment:

Weighted-average shares of common stock outstanding-retroactive adjustment (in thousands)

4,028,542 4,028,542

Basic earnings per share-retroactive adjustment (in dollars) 0.40 0.36

Dilutive potential common shares (in thousands) (Note) 8,511 8,511 10,898 10,898

Weighted average number of shares outstanding for dulited EPS (in thousands) 4,037,053 4,037,053 3,884,496 3,884,496

Diluted earnings per shares (in dollars) $0.59 0.50 0.42 0.37

Diluted earnings per share-retroactive adjustment:

Weighted-average shares of common stock outstanding-retroactive adjustment (in thousands)

4,039,440 4,039,440

Diluted earning per share:

retroactive adjustement (in dollars) 0.40 0.35

(Note) The shares were calculated based on the stockholder's equity at the balance sheet date.

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(Y) FINANCIAL INSTRUMENTS(a) fair value information

As of December 31 2010 and 2009, the fair value information of financial assets and liabilities is as follows:

Non-Derivatives Financial Instruments


Book value

Fair value

Book value

Fair value

Quoted prices

in active market

Determined value by

using valuation

techniques

Quoted prices

in active market

Determined value by

using valuation

techniques financial assets:

Cash and cash equivalents $15,364,021 - 15,364,021 17,197,549 - 17,197,549

Deposits with the central bank and call loans to banks 71,720,175 - 71,720,175 65,862,376 - 65,862,376

financial assets measured at fair value through profit or loss 3,892,885 3,892,885 - 2,162,516 2,162,516 -

Bills and bonds purchased under resale agreements 2,519,348 - 2,519,348 1,233,898 - 1,233,898

receivables, net 19,710,207 - 19,710,207 18,278,698 - 18,278,698

Discounts and loans, net 926,970,266 - 926,970,266 912,803,010 - 912,803,010

Available-for-sale financial assets, net 14,928,355 14,928,355 - 16,916,010 16,916,010 -

Held-to-maturity financial assets, net 135,549,492 - 135,549,411 129,864,330 - 129,716,503

other financial assets, net 4,318,281 - 4,318,281 4,204,756 - 4,204,756

operating guaranty and settlement funds 74,347 - 74,347 71,055 - 71,055

refundable deposits, net 151,263 - 151,263 143,125 - 143,125

Brokerage accounts, net 8,802 - 8,802 18,570 - 18,570

financial liabilities:

Deposits from Central Bank and other banks 86,081,932 - 86,081,932 107,071,746 - 107,071,746

Bills and bonds sold under repurchase agreements 9,950,660 - 9,950,660 4,130,048 - 4,130,048

Payables 23,782,204 - 23,782,204 25,658,647 - 25,658,647

Deposits and remittances 992,348,193 - 992,348,193 964,087,905 - 964,087,905

financial debentures 44,000,000 - 44,000,000 33,050,000 - 33,050,000

other financial liabilities 10,552,494 - 10,552,494 9,743,364 - 9,743,364

Guarantee deposit-in 675,964 - 675,964 566,793 - 566,793

Derivatives Financial Instruments

financial assets:

foreign exchange forward contracts $142,369 - 142,369 37,433 - 37,433

Currency swap contracts 143,814 - 143,814 55,193 - 55,193

Non-Delivery forwards 4,552 - 4,552 4,104 - 4,104

Interest swap contracts 50,576 - 50,576 27,286 - 27,286

foreign exchange option - call 24,685 - 24,685 17,866 - 17,866

Structured product options- call 396 - 396 - - -

Stock index future 23,486 - 23,486 - - -

financial liabilities:

foreign exchange forward contracts 23,634 - 23,634 38,928 - 38,928

Currency swap contracts 66,511 - 66,511 16,237 - 16,237

Non-Delivery forwards contracts 4,497 - 4,497 3,473 - 3,473

Interest swap contracts 206,616 - 206,616 178,883 - 178,883

foreign exchange options - put 24,685 - 24,685 17,866 - 17,866

Structured product options - put 2 - 2 - - -


(b) Methods and assumptions used in estimating the fair values of financial instruments are specified below:

1. The fair value of short-term financial instruments is determined by their face value on the balance sheet.

Because these instruments will mature on short notice, the face value is used as a reasonable basis

for establishing the fair value. This method is applied to cash and cash equivalent, due from the Central

Bank and call loans to banks, bills and bonds purchased under resale agreements, receivables, Central

Bank deposits and deposits from other banks, bills and bonds sold under repurchase agreements,

payables, deposits and remittances, etc.

2. If there is a quoted price in an active market for the financial asset, including financial instruments

measured at fair value through profit or loss, and available-for-sale and held-to-maturity, the quoted

price is regarded as its fair value. If there is no quoted price in an active market for the financial asset,

its fair value is estimated on the basis of the result of a valuation technique that refers to quoted prices

provided by financial institutions. Ask (bid) is used to evaluate the selling (buying) position by the

Bank if the quoted price include ask and bid price. If there is not a quoted price for the financial asset,

transaction price close to the balance sheet date is the fair value.

3. Investments under the equity method and financial assets measured at cost are all unlisted companies.

The variation of the reasonable estimates of the investments’ fair value is not insignificant, and the

probability of the range of the variation can not be reasonable estimated. As mentioned above, the fair

value of the investments can not be measured reliably and is not disclosed in the financial statement.

4. fair value of financial derivatives (foreign exchange forward contracts, interest swap contracts, currency

swap contracts, cross currencies swap contracts and foreign exchange option) are established by

the amount of cash to be paid or to be received, assuming that the contract will be terminated on the

balance sheet date. There are reference reports from financial institutions for most of the financial

derivatives of the Bank. financial derivatives pricing model (ex. method of cash flow discount, Black-

Scholes model), which are popularly used by other banks, is used by the Bank. The factors and prices

from reuters or Bloomberg data system are used to calculate the fair value of the holding position.

(c) financial risk information

1. Market risk

Market risk is defined as the effect of the value of the position caused by the change of the market risk

factor (include interest rates, foreign exchange rates, equity securities prices and commodities price).

Market risk management, include identification of the market risk, measurement of the fair value, risk

control and the related report disclosure, is executed by the Bank to control the financial instruments

transactions loss of market risk in the tolerable range, and the limit management of the open positions

and stop loss is executed by the Bank as well.

2. Credit risk

The Bank’s financial instruments may lead to loss when a borrower or counterparty defaults on

payment. Therefore, the credit rating of the securities of the Bank investment must exceed certain

investment degree (BBB–). Major portion of the investment portfolio is denominated in New Taiwan

dollar comprising of certificates of deposit with the Central Bank whose credit rating is superior and

has no credit risk. for high credit risk corporate bonds and foreign securities, the Bank’s management

follows strict credit evaluation procedures and authorizes various Bank personnel to control credit risk.

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The maximum credit exposure amount of the financial instruments the Bank held are as follows:


Financial Instruments Book valueMaximum

credit exposure

Book valueMaximum

credit exposure

Financial assets measured at fair value through profit or loss

Commercial paper $ 1,568,213 1,568,213 499,526 499,526

Negotiable certificates of deposits - - 1,794 1,794

Listed and OTC stocks - - 33,132 33,132

Beneficiary certificates 111,391 111,391 374,469 374,469

Government bonds - - 52,180 52,180

Overseas bonds 2,213,281 2,213,281 1,201,415 1,201,415

Discounts and loans 926,970,266 926,970,266 912,803,010 912,803,010

Available-for-sale financial assets

Government bonds 5,748,892 5,748,892 5,535,954 5,535,954

Corporate bonds 705,536 705,536 703,539 703,539

Financial bonds - - 70,068 70,068


Overseas bonds 7,847,252 7,847,252 10,334,537 10,334,537

Listed and OTC stocks 610,357 610,357 353,869 353,869

Overseas stcoks - - 40,305 40,305

Held-to-maturity financial assets

Certificates of deposit with Central Bank 127,900,000 127,900,000 121,000,000 121,000,000

Government bonds 2,378,146 2,378,146 2,112,151 2,112,151

Corporate bonds 4,280,309 4,280,309 4,919,159 4,919,159

Financial bonds - - 399,962 399,962


Overseas bonds 857,570 857,570 916,807 916,807

Derivatives financial instrument

Foreign exchange forward contracts 142,369 142,369 37,433 37,433

Currency swaps contracts 143,814 143,814 55,193 55,193

Non-delivery forward contracts 4,552 4,552 4,104 4,104

Interest swap contracts 50,576 50,576 27,286 27,286

Foreign exchange options - call 24,685 24,685 17,866 17,866

Structured product options - call 396 396 - -

Stock index future 23,486 23,486 - -

Total $ 1,081,730,876 1,081,730,876 1,062,254,082 1,062,254,082

Note: The maximum credit exposure amount applies to contracts with positive fair value on the balance sheet date.

When the Bank provides loan, loan commitment, and guarantee, the Bank performs strict credit review, under

which, it requires provision of collateral including cash, inventory, currency securities or other assets from


loans, loans commitment, and guarantee. When the counterparty defaults, the Bank can enforce its right over

the collateral or other guarantee to effectively reduce credit risk.

Credit risk applies to contracts with positive fair value on the balance sheet date, off-balance-sheet

commitment and guarantee contracts. The Bank is exposed to concentration risk if counter-parties to financial

instrument transactions are engaged in similar activities, active in the same geographic region, or share

similar economic features that would cause their abilities to fulfill contractual obligations to be similarly affected

by changes in economic or other conditions.

Amount of contracts with concentration of credit risk were as follows:


Loans - by region:

Domestic $ 871,872,939 859,608,837

Southeast Asia (Note) 1,737,786 688,792

Other 51,613,246 44,373,802

Total $ 925,223,971 904,671,431

Note. Includes, Singapore, Thailand, Malaysia, Indonesia, etc.


Loans - by industry:

Manufacturing $ 252,200,147 251,162,443

Wholesale, retail and catering 75,930,789 71,585,550

Real estate industry 36,376,573 26,886,373

Water,electricity and gas 33,291,562 40,013,627

Government organization 132,476,085 135,699,036

Person 241,202,329 265,693,942

Other 153,746,486 113,630,460

Total $ 925,223,971 904,671,431

Because the Bank provides guarantee endorsements and commercial letters of credit as guarantee, it has

guarantee and credit commitments mostly confined within one year. Further, the Bank issues credit cards and

has loan commitments accordingly.

Contract amounts of financial instruments with off-balance-sheet credit risks were as follows:


Guarantees and letters of credit $ 26,201,152 28,064,622

Commitments on credit cards 19,845,768 21,184,013

$ 46,046,920 49,248,635

3. Liquidity risk

The Bank has established a funding liquidity risk crux to control liquidity risk from financial funding.

The ratio of gap to total assets and weekly average liquidity ratio are reported to Assets Liabilities

Management Committee periodically. In addition, in order to control assets liquidity risk and avoid

concentration of investment portfolio, the Bank invests limited amount to the same related enterprise,

single stock and single fund.

According to the nature of assets and liabilities , the Bank selects suitable grouping method to make the due analysis to

appraise the Bank's liquidity. The due analysis of December 31, 2010 and 2009 is as follows

December 31, 2010

Financial items

Within 1 month 1 month to 3months

AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets

Cash and cash equivalent $ 15,364,021 15,364,021 - -

Due from the Central Bank and call loans to banks 52,623,966 52,623,966 14,662,982 14,662,982

Financial assets measured at fair value through profit or loss (Note 1) 2,069,482 2,069,482 - -

Bills and bonds purchasd under resale agreements 2,519,348 2,519,348 - -

Interest receivable 728,194 728,194 211,784 211,784

Factoring-account receivable 383,199 383,199 44,043 44,043

Accounts receivable 1,051,235 1,051,235 211,965 211,965


Available-for-sale financial assets 277,012 277,012 184,242 184,242

Held-to-maturity financial assets 65,386,137 65,386,137 35,007,068 35,007,068

Other financial assets- zero-coupon bonds - - - -

Other financial assets- trade acceptance - - 446,350 446,350

Other financial assets-negotiable certificates of deposits - - 61,950 61,950

Total assets $ 183,339,561 183,339,561 138,050,161 138,050,161

Liabilities

Deposits from the Central Bank and other banks $ 13,509,118 13,509,118 35,522,758 35,522,758

Financial liabilities measured at fair value through profit or loss 325,945 325,945 - -

Bills and bonds sold under repurchase agreements 9,726,587 9,726,587 149,160 149,160

Interest payable 346,788 346,788 452,414 452,414

Deposits and remittances(Note2) 625,631,388 625,631,388 108,832,908 108,832,908

Financial Debentures - - - -

Funds Appropriated for loans 6,750 6,750 1,000 1,000

Total liabilities $ 649,546,576 649,546,576 144,958,240 144,958,240

Net liquidity gap $ (466,207,015) (466,207,015) (6,908,079) (6,908,079)

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loans, loans commitment, and guarantee. When the counterparty defaults, the Bank can enforce its right over

the collateral or other guarantee to effectively reduce credit risk.

Credit risk applies to contracts with positive fair value on the balance sheet date, off-balance-sheet

commitment and guarantee contracts. The Bank is exposed to concentration risk if counter-parties to financial

instrument transactions are engaged in similar activities, active in the same geographic region, or share

similar economic features that would cause their abilities to fulfill contractual obligations to be similarly affected

by changes in economic or other conditions.

Amount of contracts with concentration of credit risk were as follows:


Loans - by region:

Domestic $ 871,872,939 859,608,837

Southeast Asia (Note) 1,737,786 688,792

Other 51,613,246 44,373,802

Total $ 925,223,971 904,671,431

Note. Includes, Singapore, Thailand, Malaysia, Indonesia, etc.


Loans - by industry:

Manufacturing $ 252,200,147 251,162,443

Wholesale, retail and catering 75,930,789 71,585,550

Real estate industry 36,376,573 26,886,373

Water,electricity and gas 33,291,562 40,013,627

Government organization 132,476,085 135,699,036

Person 241,202,329 265,693,942

Other 153,746,486 113,630,460

Total $ 925,223,971 904,671,431

Because the Bank provides guarantee endorsements and commercial letters of credit as guarantee, it has

guarantee and credit commitments mostly confined within one year. Further, the Bank issues credit cards and

has loan commitments accordingly.

Contract amounts of financial instruments with off-balance-sheet credit risks were as follows:


Guarantees and letters of credit $ 26,201,152 28,064,622

Commitments on credit cards 19,845,768 21,184,013

$ 46,046,920 49,248,635

3. Liquidity risk

The Bank has established a funding liquidity risk crux to control liquidity risk from financial funding.

The ratio of gap to total assets and weekly average liquidity ratio are reported to Assets Liabilities

Management Committee periodically. In addition, in order to control assets liquidity risk and avoid

concentration of investment portfolio, the Bank invests limited amount to the same related enterprise,

single stock and single fund.

According to the nature of assets and liabilities , the Bank selects suitable grouping method to make the due analysis to

appraise the Bank's liquidity. The due analysis of December 31, 2010 and 2009 is as follows

December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets









Available-for-sale financial assets 277,012 277,012 184,242 184,242




Other financial assets-negotiable certificates of deposits - - 61,950 61,950

Total assets $ 183,339,561 183,339,561 138,050,161 138,050,161

Liabilities











December 31, 2010

Financial items

3 months to 1 year 1 year to 2 years

AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets

Cash and cash equivalent - - - -

Due from the Central Bank and call loans to banks 4,433,227 4,433,227 - -

Financial assets measured at fair value through profit or loss (Note 1) 233,351 233,351 771,666 771,666

Bills and bonds purchasd under resale agreements - - - -


Factoring-account receivable 6,755 6,755 - -



Available-for-sale financial assets 2,960,705 2,960,705 5,013,689 5,013,689


Other financial assets- zero-coupon bonds 37,797 37,797 - -

Other financial assets- trade acceptance - - - -

Other financial assets-negotiable certificates of deposits - - - -

Total assets 304,388,098 304,388,098 126,120,935 126,120,935

Liabilities

Deposits from the Central Bank and other banks 37,050,056 37,050,056 - -

Financial liabilities measured at fair value through profit or loss - - - -

Bills and bonds sold under repurchase agreements 74,913 74,913 - -



Financial Debentures 100,000 100,000 - -


Total liabilities 276,196,235 276,196,235 17,185,910 17,185,910

Net liquidity gap 28,191,863 28,191,863 108,935,025 108,935,025

December 31, 2010

Financial items

2 years to 3 years 3 years to 4 years

AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets


Due from the Central Bank and call loans to banks - - - -



Interest receivable - - - -

Factoring-account receivable - - - -

Accounts receivable - - - -



Held-to-maturity financial assets 855,869 855,869 631,028 631,028




Total assets 93,052,109 93,052,109 57,991,938 57,991,938

Liabilities

Deposits from the Central Bank and other banks - - - -


Bills and bonds sold under repurchase agreements - - - -

Interest payable 6,411 6,411 178 178

Deposits and remittances(Note2) 3,021,581 3,021,581 8,080 8,080

Financial Debentures 3,450,000 3,450,000 9,650,000 9,650,000




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December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets






Factoring-account receivable 6,755 6,755 - -





Other financial assets- zero-coupon bonds 37,797 37,797 - -



Total assets 304,388,098 304,388,098 126,120,935 126,120,935

Liabilities






Financial Debentures 100,000 100,000 - -




December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets














Total assets 93,052,109 93,052,109 57,991,938 57,991,938

Liabilities






Financial Debentures 3,450,000 3,450,000 9,650,000 9,650,000





December 31, 2010

Financial items

4 years to 5 years Over 5 years Total

AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets

Cash and cash equivalent - - - - 15,364,021

Due from the Central Bank and call loans to banks - - - - 71,720,175

Financial assets measured at fair value through profit or loss (Note 1) 147,500 147,500 - - 4,282,763

Bills and bonds purchasd under resale agreements - - - - 2,519,348

Interest receivable - - - - 1,570,055

Factoring-account receivable - - - - 433,997

Accounts receivable - - - - 2,654,317

Discounts and loans 38,601,996 38,601,996 239,791,505 231,458,108 935,303,663

Available-for-sale financial assets 754,876 754,876 1,013,568 1,013,568 14,928,355

Held-to-maturity financial assets 1,248,427 1,248,427 371,609 371,609 135,549,492

Other financial assets- zero-coupon bonds - - - - 37,797

Other financial assets- trade acceptance - - - - 446,350

Other financial assets-negotiable certificates of deposits - - - - 61,950

Total assets 40,752,799 40,752,799 241,176,682 232,843,285 1,184,872,283

Liabilities

Deposits from the Central Bank and other banks - - - - 86,081,932

Financial liabilities measured at fair value through profit or loss - - - - 325,945

Bills and bonds sold under repurchase agreements - - - - 9,950,660

Interest payable 120 120 4,928 4,928 1,623,774

Deposits and remittances(Note2) 11,946 11,946 2,799 2,799 992,348,193

Financial Debentures 6,200,000 6,200,000 24,600,000 24,600,000 44,000,000

Funds Appropriated for loans 137,700 137,700 8,239,507 8,239,507 10,373,287

Total liabilities 6,349,766 6,349,766 32,847,234 32,847,234 1,144,703,791

Net liquidity gap 34,403,033 34,403,033 208,329,448 199,996,051 40,168,492

Note 1: The amount for financial assets measured at fair value through profit or loss is $4,282,763, which is consisted of financial assets for trading purposes amounting to $2,069,482, and financial assets designated at fair value at initial recognition amounting to $2,213,281.

Note 2: Amount for deposits and remittances shown in column “within 1 month” consists of checking deposits amounting to $21,472,847 demand deposits amounting to $219,065,510 and demand savings deposits amounting to $248,518,908.

December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets







Accounts receivable 724,002 724,002 151,123 151,123


Available-for-sale financial assets 1,458,429 1,458,429 663,764 663,764



Other financial assets- negotiable certificates of deposits - - 67,570 67,570

Other financial assets-zero-coupon bonds - - - -

Total assets $ 214,856,203 214,856,203 110,369,516 110,369,516

Liabilities










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December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets



Financial assets measured at fair value through profit or loss (Note 1) 147,500 147,500 - - 4,282,763




Accounts receivable - - - - 2,654,317


Available-for-sale financial assets 754,876 754,876 1,013,568 1,013,568 14,928,355


Other financial assets- zero-coupon bonds - - - - 37,797


Other financial assets-negotiable certificates of deposits - - - - 61,950

Total assets 40,752,799 40,752,799 241,176,682 232,843,285 1,184,872,283

Liabilities












December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets












Other financial assets- negotiable certificates of deposits - - 67,570 67,570


Total assets $ 214,856,203 214,856,203 110,369,516 110,369,516

Liabilities











December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets












Other financial assets- negotiable certificates of deposits - - - -

Other financial assets-zero-coupon bonds 41,449 41,449 - -

Total assets 307,568,442 307,568,442 129,278,724 129,278,724

Liabilities






Financial Debentures 100,000 100,000 100,000 100,000



Net liquidity gap (13,202,786) (13,202,786) 112,486,775 112,486,775

December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets










Held-to-maturity financial assets 1,491,630 1,491,630 296,285 296,285




Total assets 82,310,199 82,310,199 50,336,294 50,336,294

Liabilities






Financial Debentures - - 3,450,000 3,450,000




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December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets













Other financial assets-zero-coupon bonds 41,449 41,449 - -

Total assets 307,568,442 307,568,442 129,278,724 129,278,724

Liabilities






Financial Debentures 100,000 100,000 100,000 100,000



Net liquidity gap (13,202,786) (13,202,786) 112,486,775 112,486,775

December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets














Total assets 82,310,199 82,310,199 50,336,294 50,336,294

Liabilities






Financial Debentures - - 3,450,000 3,450,000





December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets



Financial assets measured at fair value through profit or loss (Note 1) - - - - 2,304,398




Accounts receivable - - 24,046 24,046 1,836,307


Available-for-sale financial assets 1,366,382 1,366,382 675,697 675,697 16,916,010

Held-to-maturity financial assets 31,215 31,215 292,933 292,933 129,864,330


Other financial assets- negotiable certificates of deposits - - - - 67,570

Other financial assets-zero-coupon bonds - - - - 41,449

Total assets 43,605,588 43,605,588 219,869,302 211,684,773 1,158,194,268

Liabilities












4. Cash flow risk from interest-rate fluctuation and fair value risk from interest-rate fluctuation

The Bank’s investment in floating rate assets and the floating rate debt that the Bank possesses can

have an impact on the future cash flow and cause risks due to interest rate fluctuations. The risk

of change in fair value of fixed rate bonds can also result from interest rate fluctuations. In order to

hedge against potential risks resulting from interest-rate fluctuation, the Bank has signed interest swap

contracts after evaluating positions that are exposed to greater interest rate risk. The Bank has also

established interest rate control rules for risk measurement and related limits. In additional, asset and

liabilities management committee surveys the evaluation result of each interest rate risk measurement

index and related responding measures, which will achieve the Bank’s objective to periodically monitor

risks attributed by interest rate fluctuations.

Based on the structure of assets and liabilities as of December 31, 2010, net interest revenue increases

NT$20.93 million if interest rate increases 1BP (1%), budget ratio of 2010 NII was 0.170%.



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December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets



Financial assets measured at fair value through profit or loss (Note 1) - - - - 2,304,398




Accounts receivable - - 24,046 24,046 1,836,307





Other financial assets- negotiable certificates of deposits - - - - 67,570

Other financial assets-zero-coupon bonds - - - - 41,449

Total assets 43,605,588 43,605,588 219,869,302 211,684,773 1,158,194,268

Liabilities












4. Cash flow risk from interest-rate fluctuation and fair value risk from interest-rate fluctuation

The Bank’s investment in floating rate assets and the floating rate debt that the Bank possesses can

have an impact on the future cash flow and cause risks due to interest rate fluctuations. The risk

of change in fair value of fixed rate bonds can also result from interest rate fluctuations. In order to

hedge against potential risks resulting from interest-rate fluctuation, the Bank has signed interest swap

contracts after evaluating positions that are exposed to greater interest rate risk. The Bank has also

established interest rate control rules for risk measurement and related limits. In additional, asset and

liabilities management committee surveys the evaluation result of each interest rate risk measurement

index and related responding measures, which will achieve the Bank’s objective to periodically monitor

risks attributed by interest rate fluctuations.






A. Maturity analysis of expected repricing date or maturity date.

As of December 31, 2010 and 2009, the Bank’s expected repricing date and maturity date were not

affected by the contract date. The maturity analysis of the expected repricing date and maturity date

were as follows:

December 31, 2010

Financial items

With in 1 month 1 month to 3 months

AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets

Cash in banks, due from the Central Bank and call loans to banks (Note 2) $ 31,508,624 31,508,624 14,662,982 14,662,982

Financial assets measured at fair value through profit or loss 1,568,213 1,568,213 45,239 45,239

Bills and bonds purchased under resale agreements 2,519,348 2,519,348 - -

Account Receivables 1,399,980 1,399,980 - -

Discounts and loans (excluding non-accural loans) 816,958,939 816,958,939 67,899,625 67,899,625



Other financial assets-trade acceptance - - 446,350 446,350

Other financial assets-Negotiable certificates of deposit - - 61,950 61,950

Total assets $ 920,753,160 920,753,160 125,487,574 125,487,574

Liabilities

Deposits from other banks (Note 3) $ - - - -

Financial liabilities measured at fair value through profit or loss (IRS) - - 195,589 195,589

Call loans from banks and bank overdrafts (including call loan to central bank) 8,189,467 8,189,467 6,870,468 6,870,468


Savings deposits,Time deposits and demand deposits 367,094,120 367,094,120 48,899,085 48,899,085

Post office deposits 58,766,128 58,766,128 211,608 211,608

Funds appropriated for loans 9,199,212 9,199,212 - -

Financial debentures payable 4,600,000 4,600,000 7,500,000 7,500,000


Interest rate sensitivity gap $ 463,177,647 463,177,647 61,661,664 61,661,664

December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets

Cash in banks, due from the Central Bank and call loans to banks (Note 2) 4,433,227 4,433,227 - -

Financial assets measured at fair value through profit or loss 684,159 684,159 501,959 501,959

Bills and bonds purchased under resale agreements - - - -

Account Receivables - - - -


Available-for-sale financial assets 493,788 493,788 1,138,840 1,138,840


Other financial assets-trade acceptance - - - -

Other financial assets-Negotiable certificates of deposit - - - -

Total assets 62,848,119 62,848,119 7,936,419 7,936,419

Liabilities

Deposits from other banks (Note 3) 1,494,088 1,494,088 - -

Financial liabilities measured at fair value through profit or loss (IRS) 11,027 11,027 - -

Call loans from banks and bank overdrafts (including call loan to central bank) 9,190,896 9,190,896 - -



Post office deposits 935,402 935,402 - -

Funds appropriated for loans 69,000 69,000 1,105,075 1,105,075

Financial debentures payable 12,100,000 12,100,000 - -


Interest rate sensitivity gap (508,926,593) (508,926,593) 1,219,078 1,219,078

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A. Maturity analysis of expected repricing date or maturity date.

As of December 31, 2010 and 2009, the Bank’s expected repricing date and maturity date were not

affected by the contract date. The maturity analysis of the expected repricing date and maturity date

were as follows:

December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets


Financial assets measured at fair value through profit or loss 1,568,213 1,568,213 45,239 45,239


Account Receivables 1,399,980 1,399,980 - -






Total assets $ 920,753,160 920,753,160 125,487,574 125,487,574

Liabilities


Financial liabilities measured at fair value through profit or loss (IRS) - - 195,589 195,589

Call loans from banks and bank overdrafts (including call loan to central bank) 8,189,467 8,189,467 6,870,468 6,870,468



Post office deposits 58,766,128 58,766,128 211,608 211,608




Interest rate sensitivity gap $ 463,177,647 463,177,647 61,661,664 61,661,664

December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets










Total assets 62,848,119 62,848,119 7,936,419 7,936,419

Liabilities

Deposits from other banks (Note 3) 1,494,088 1,494,088 - -

Financial liabilities measured at fair value through profit or loss (IRS) 11,027 11,027 - -

Call loans from banks and bank overdrafts (including call loan to central bank) 9,190,896 9,190,896 - -



Post office deposits 935,402 935,402 - -


Financial debentures payable 12,100,000 12,100,000 - -




December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets

Cash in banks, due from the Central Bank and call loans to banks (Note 2) - - - -

Financial assets measured at fair value through profit or loss 885,000 885,000 - -








Total assets 5,700,127 5,700,127 4,096,122 4,096,122

Liabilities

Deposits from other banks (Note 3) - - - -

Financial liabilities measured at fair value through profit or loss (IRS) - - - -

Call loans from banks and bank overdrafts (including call loan to central bank) - - - -


Savings deposits,Time deposits and demand deposits 822,351 822,351 448 448

Post office deposits - - - -

Funds appropriated for loans - - - -



Interest rate sensitivity gap 2,927,776 2,927,776 (1,854,326) (1,854,326)

December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets

Cash in banks, due from the Central Bank and call loans to banks (Note 2) - - - - 50,604,833

Financial assets measured at fair value through profit or loss 147,500 147,500 - - 3,832,070

Bills and bonds purchased under resale agreements - - - - 2,519,348

Account Receivables - - - - 1,399,980

Discounts and loans (excluding non-accural loans) 1,530,846 1,530,846 2,566,034 2,566,034 925,205,073

Available-for-sale financial assets 313,793 313,793 921,044 921,044 14,301,679


Other financial assets-trade acceptance - - - - 446,350

Other financial assets-Negotiable certificates of deposit - - - - 61,950

Total assets 3,240,566 3,240,566 3,858,688 3,858,688 1,133,920,775

Liabilities

Deposits from other banks (Note 3) - - - - 1,494,088

Financial liabilities measured at fair value through profit or loss (IRS) - - - - 206,616

Call loans from banks and bank overdrafts (including call loan to central bank) - - - - 24,250,831


Savings deposits,Time deposits and demand deposits 750 750 - - 970,328,406

Post office deposits - - - - 59,913,138

Funds appropriated for loans - - - - 10,373,287

Financial debentures payable 2,500,000 2,500,000 9,400,000 9,400,000 44,000,000


Interest rate sensitivity gap 739,816 739,816 (5,541,312) (5,541,312) 13,403,750

Note 1: The above amount included the revenue or cost of interest-yielding assets and interest-bearing liabilities which are affected by interest rate fluctuations.

Note 2: Cash in banks amounted to $ 2,603,462 which $2,471,564 is accrued interest and $131,898 is unaccrued interest. Total call loans to bank amounted to $20,826,253 which is accrued interest. Due from the Central Bank amounted to $50,751,661 of which $27,164,755 is accrued interest and $23,586,906 is unaccrued interest. Deposits transferred to the Central Bank amounted to $142,261 which is accrued interest.

Note 3: Deposits from other banks amounted to $1,523,718 of which $1,494,088 is accrued interest and $ 29,630 is unaccrued interest.

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December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets










Total assets 5,700,127 5,700,127 4,096,122 4,096,122

Liabilities


Financial liabilities measured at fair value through profit or loss (IRS) - - - -

Call loans from banks and bank overdrafts (including call loan to central bank) - - - -


Savings deposits,Time deposits and demand deposits 822,351 822,351 448 448





Interest rate sensitivity gap 2,927,776 2,927,776 (1,854,326) (1,854,326)

December 31, 2010

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets


Financial assets measured at fair value through profit or loss 147,500 147,500 - - 3,832,070




Available-for-sale financial assets 313,793 313,793 921,044 921,044 14,301,679




Total assets 3,240,566 3,240,566 3,858,688 3,858,688 1,133,920,775

Liabilities

Deposits from other banks (Note 3) - - - - 1,494,088

Financial liabilities measured at fair value through profit or loss (IRS) - - - - 206,616

Call loans from banks and bank overdrafts (including call loan to central bank) - - - - 24,250,831


Savings deposits,Time deposits and demand deposits 750 750 - - 970,328,406





Interest rate sensitivity gap 739,816 739,816 (5,541,312) (5,541,312) 13,403,750



Note 3: Deposits from other banks amounted to $1,523,718 of which $1,494,088 is accrued interest and $ 29,630 is unaccrued interest.


December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets




Account Receivables 76,208 76,208 1,214,868 1,214,868






Total assets $ 866,506,436 866,506,436 82,829,997 82,829,997

Liabilities


Financial liabilities measured at fair value through profit or loss - - 147,664 147,664

Call loans from banks and bank overdrafts 16,605,719 16,605,719 5,663,571 5,663,571



Post office deposits 19,002,930 19,002,930 42,666,326 42,666,326




Interest rate sensitivity gap $ 486,126,107 486,126,107 (17,963,355) (17,963,355)

December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets










Total assets 118,779,161 118,779,161 15,037,420 15,037,420

Liabilities

Deposits from other banks (Note 3) 70,570 70,570 - -


Call loans from banks and bank overdrafts 1,448,196 1,448,196 - -



Post office deposits 20,159,556 20,159,556 - -


Financial debentures payable 12,100,000 12,100,000 100,000 100,000



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December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets




Account Receivables 76,208 76,208 1,214,868 1,214,868






Total assets $ 866,506,436 866,506,436 82,829,997 82,829,997

Liabilities


Financial liabilities measured at fair value through profit or loss - - 147,664 147,664

Call loans from banks and bank overdrafts 16,605,719 16,605,719 5,663,571 5,663,571



Post office deposits 19,002,930 19,002,930 42,666,326 42,666,326




Interest rate sensitivity gap $ 486,126,107 486,126,107 (17,963,355) (17,963,355)

December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets










Total assets 118,779,161 118,779,161 15,037,420 15,037,420

Liabilities

Deposits from other banks (Note 3) 70,570 70,570 - -


Call loans from banks and bank overdrafts 1,448,196 1,448,196 - -



Post office deposits 20,159,556 20,159,556 - -


Financial debentures payable 12,100,000 12,100,000 100,000 100,000




December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets










Total assets 12,251,749 12,251,749 6,184,576 6,184,576

Liabilities



Call loans from banks and bank overdrafts - - - -


Savings deposits,Time deposits and demand deposits 1,865,467 1,865,467 5,346 5,346



Financial debentures payable - - 1,950,000 1,950,000


Interest rate sensitivity gap 10,386,282 10,386,282 4,229,230 4,229,230

December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets


Financial assets measured at fair value through profit or loss - - - - 1,782,200








Total assets 5,946,217 5,946,217 5,314,458 5,314,458 1,112,850,014

Liabilities

Deposits from other banks (Note 3) - - - - 70,570


Call loans from banks and bank overdrafts - - - - 23,717,486


Savings deposits,Time deposits and demand deposits 218 218 125 125 942,740,467





Interest rate sensitivity gap (4,001) (4,001) 1,264,333 1,264,333 17,390,384



Note 3: Deposits from other banks amounted to $126,203 of which $70,570 is accrued interest and $ 55,633 is unaccrued interest.

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December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Assets










Total assets 12,251,749 12,251,749 6,184,576 6,184,576

Liabilities



Call loans from banks and bank overdrafts - - - -


Savings deposits,Time deposits and demand deposits 1,865,467 1,865,467 5,346 5,346



Financial debentures payable - - 1,950,000 1,950,000


Interest rate sensitivity gap 10,386,282 10,386,282 4,229,230 4,229,230

December 31, 2009

Financial items


AmountEstimated

Receipt/Payment

AmountEstimated

Receipt/Payment

Amount

Assets


Financial assets measured at fair value through profit or loss - - - - 1,782,200








Total assets 5,946,217 5,946,217 5,314,458 5,314,458 1,112,850,014

Liabilities

Deposits from other banks (Note 3) - - - - 70,570


Call loans from banks and bank overdrafts - - - - 23,717,486


Savings deposits,Time deposits and demand deposits 218 218 125 125 942,740,467





Interest rate sensitivity gap (4,001) (4,001) 1,264,333 1,264,333 17,390,384



Note 3: Deposits from other banks amounted to $126,203 of which $70,570 is accrued interest and $ 55,633 is unaccrued interest.


B. Effective interest rates

As of December 31, 2010 and 2009, the effective interest rates of financial instruments held and issued

the Bank are as follows:

Finanical items December 31, 2010 December 31, 2009

Assets:

Cash in banks -% -%

Due from the Central Bank 0.36% 0.45%

Call loans to banks 0.64% 0.61%

Financial assets held for trading 0.58% 0.28%

Available-for-sale financial assets 1.50% 1.81%

Held-to-maturity financial assets 0.82% 0.75%

Discounts and loans 1.76% 1.87%

Liabilities:

Deposits from other banks 0.07% 0.09%

Call loans from bank 0.27% 0.12%

Deposits 0.62% 0.82%

Financial debentures 2.12% 2.01%

4. Control risk and hedging strategy

In order to respond to domestic and foreign economic and financial situation and to strengthen asset

and liability structure so as to obtain steady earnings and growth, the Bank set up assets liabilities

management committee which is responsible for corporate-wide capital liquidity risk and bank interest

rate risk management. In the Assets Liabilities Management Committee, the general manager pluralizes

director commissioner, the vice-general manager serves as vice-director commissioner, the heads

of deposits, loans, risk management, financial trade, and capital deployment are members of Assets

Liabilities Management Committee .To control liquidity risk effectively, the Bank conclude each type of

liquidity risk measure index, for example New Taiwan dollars maturity gap limited amount, U.S. dollars

maturity gap limited amount and liquidity preparation ratio, setting up capital announcement system, and

concluding emergency response measure, to deal with the Bank happening liquidity crisis.

The Bank has set up rules for risk measurement, supervision and control for the new business or

product development.

The Bank set up limits for all the risks and periodically discusses and amends the limits to strengthen

risk management. Also, the Bank handles the risk by using risk transfer, avoidance, control.

(5) RELATED PARTY TRANSACTIONS

(A) Names of Related Parties and Relationship with the Bank

Name of Related Party Relationship with the Bank

Bank of Taiwan Corporate director of the Bank

Ministry of Finance, R.O.C Corporate director of the Bank

Land Bank of Taiwan Corporate supervisor of the Bank

Mega Financial Holding Co, Ltd Corporate supervisor of the Bank

Mega International Commercial Bank Affiliate

Chung Kuo Insurance Company, Ltd. Affiliate

Primasia Investment Trust Co., Ltd. Investee company under the equity method(Sold on October 2010)

Taiwan Business Bank Insurance Agency Co. Ltd. Investee company under the equity method

Taiwan Business Bank Property Insurance Agency Co. Ltd. Investee company under the equity method

OthersMajor shareholders, directors, supervisors, president, executive vice president, managers and their second tier of kinship.

(B) Significant Related Party Transactions(a) Cash in Banks


Amount % Amount %

Bank of Taiwan $ 126,247 4.85 108,241 5.94

Land Bank of Taiwan 98 - 91 -

Mega International Commercial Bank 2,038 0.08 5,978 0.33

Total $ 128,383 4.93 114,310 6.27

Interest rates are the same as those with regular clients.

(b) Deposits from Other Banks


Amount % Amount %

Land Bank of Taiwan $ 1,038 0.07 452 0.36

Mega International Commercial Bank 86 - 170 0.13

Total $ 1,124 0.07 622 0.49


(c) Call Loans to Banks

For The YearEnded December 31, 2010

MaximumBalance

EndingBalance

InterestRevenue

AnnualInterest Rate

Bank of Taiwan $4,801,185 295,000 2,796 0.108%~1.00%

Land Bank of Taiwan 5,108,650 2,492,650 8,286 0.107%~1.32%

Mega International Commercial Bank 7,043,700 442,500 1,652 0.106%~4.68%

Total $16,953,535 3,230,150 12,734


MaximumBalance

EndingBalance

InterestRevenue

AnnualInterest Rate

Bank of Taiwan $12,848,338 - 11,367 0.095%~1.9%

Land Bank of Taiwan 9,303,970 321,760 7,238 0.098%~3.3%

Mega International Commercial Bank 6,437,255 - 3,462 0.13%~5.0%

Total $28,589,563 321,760 22,067


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B. Effective interest rates

As of December 31, 2010 and 2009, the effective interest rates of financial instruments held and issued

the Bank are as follows:

Finanical items December 31, 2010 December 31, 2009

Assets:

Cash in banks -% -%

Due from the Central Bank 0.36% 0.45%

Call loans to banks 0.64% 0.61%

Financial assets held for trading 0.58% 0.28%

Available-for-sale financial assets 1.50% 1.81%

Held-to-maturity financial assets 0.82% 0.75%

Discounts and loans 1.76% 1.87%

Liabilities:

Deposits from other banks 0.07% 0.09%

Call loans from bank 0.27% 0.12%

Deposits 0.62% 0.82%

Financial debentures 2.12% 2.01%

4. Control risk and hedging strategy

In order to respond to domestic and foreign economic and financial situation and to strengthen asset

and liability structure so as to obtain steady earnings and growth, the Bank set up assets liabilities

management committee which is responsible for corporate-wide capital liquidity risk and bank interest

rate risk management. In the Assets Liabilities Management Committee, the general manager pluralizes

director commissioner, the vice-general manager serves as vice-director commissioner, the heads

of deposits, loans, risk management, financial trade, and capital deployment are members of Assets

Liabilities Management Committee .To control liquidity risk effectively, the Bank conclude each type of

liquidity risk measure index, for example New Taiwan dollars maturity gap limited amount, U.S. dollars

maturity gap limited amount and liquidity preparation ratio, setting up capital announcement system, and

concluding emergency response measure, to deal with the Bank happening liquidity crisis.

The Bank has set up rules for risk measurement, supervision and control for the new business or

product development.

The Bank set up limits for all the risks and periodically discusses and amends the limits to strengthen

risk management. Also, the Bank handles the risk by using risk transfer, avoidance, control.

(5) RELATED PARTY TRANSACTIONS

(A) Names of Related Parties and Relationship with the Bank

Name of Related Party Relationship with the Bank

Bank of Taiwan Corporate director of the Bank

Ministry of Finance, R.O.C Corporate director of the Bank

Land Bank of Taiwan Corporate supervisor of the Bank

Mega Financial Holding Co, Ltd Corporate supervisor of the Bank

Mega International Commercial Bank Affiliate

Chung Kuo Insurance Company, Ltd. Affiliate

Primasia Investment Trust Co., Ltd. Investee company under the equity method(Sold on October 2010)

Taiwan Business Bank Insurance Agency Co. Ltd. Investee company under the equity method

Taiwan Business Bank Property Insurance Agency Co. Ltd. Investee company under the equity method

OthersMajor shareholders, directors, supervisors, president, executive vice president, managers and their second tier of kinship.

(B) Significant Related Party Transactions(a) Cash in Banks


Amount % Amount %

Bank of Taiwan $ 126,247 4.85 108,241 5.94

Land Bank of Taiwan 98 - 91 -

Mega International Commercial Bank 2,038 0.08 5,978 0.33

Total $ 128,383 4.93 114,310 6.27


(b) Deposits from Other Banks


Amount % Amount %

Land Bank of Taiwan $ 1,038 0.07 452 0.36

Mega International Commercial Bank 86 - 170 0.13

Total $ 1,124 0.07 622 0.49


(c) Call Loans to Banks


MaximumBalance

EndingBalance

InterestRevenue

AnnualInterest Rate

Bank of Taiwan $4,801,185 295,000 2,796 0.108%~1.00%

Land Bank of Taiwan 5,108,650 2,492,650 8,286 0.107%~1.32%

Mega International Commercial Bank 7,043,700 442,500 1,652 0.106%~4.68%

Total $16,953,535 3,230,150 12,734


MaximumBalance

EndingBalance

InterestRevenue

AnnualInterest Rate

Bank of Taiwan $12,848,338 - 11,367 0.095%~1.9%


Mega International Commercial Bank 6,437,255 - 3,462 0.13%~5.0%

Total $28,589,563 321,760 22,067



(d) Call Loans from Banks


MaximumBalance

EndingBalance

InterestRevenue

AnnualInterest Rate

Bank of Taiwan $12,696,500 1,121,000 9,749 0.1%~0.83%

Land Bank of Taiwan 2,826,000 295,000 406 0.12%~4.17%

Mega International Commercial Bank 12,068,799 3,253,850 18,488 0.107%~4.55%

Total $27,591,299 4,669,850 28,643


MaximumBalance

EndingBalance

InterestRevenue

AnnualInterest Rate

Bank of Taiwan $7,861,120 1,126,160 8,054 0.10%~1.11%


Mega International Commercial Bank 10,379,313 4,279,408 18,554 0.099%~3.44%

Total $23,720,529 6,209,968 28,207


(e) Bank Overdrafts


Maximum Balance(Note)

EndingBalance(Note)

InterestExpense

AnnualInterest Rate

Mega International Commercial Bank $ 145,738 41,364 3 2.50%


Maximum Balance(Note)

EndingBalance(Note)

InterestExpense

AnnualInterest Rate

Mega International Commercial Bank $ 170,226 14,167 2 1.837%~2.5%


Note: The differences between book balance and bank balance is due to the account in transit. The above

ending balance is the book amount and maximum balance, interest expense are according to bank

amount.

(f) Deposits


Amount % Amount %

Primasia Investment Trust Co., Ltd. $ - - 76,943 0.01

Taiwan Business Bank Insurance Agency Co., Ltd.

46,815 - 31,278 -

Taiwan Business Bank Property Insurance Agency Co., Ltd.

3,688 - 794 -

Others 1,375,288 0.14 3,757,651 0.36

Total $ 1,425,791 0.14 3,866,666 0.37


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(g) Credit

December 31, 2010

Category

Number of clients

or name of related party

Maximum balance

Ending balance

Performing situations

Collaterals

Transaction terms are the

same as those with regular

clients

Performing loan

Non-performing

Loans

employee consumer loans

119 $258,507 239,353 239,353 - none/real estate none

Self-use residence collateral loans

103 308,628 282,620 282,620 - real estate none

Others Sun Tai 13,000 - - - real estate none

Yeh Hsiu Mei 3,500 3,500 3,500 - real estate none

Li Shuo Tian 7,948 1,797 1,797 - real estate none

Cheng Ching Loang 900 900 900 - real estate none

Wen Shi Chi 199 - - - real estate none

Lin Chi Chen 3,411 2,981 2,981 - real estate none

Li Huan Jang 4,700 3,677 3,677 - real estate none

Chen Ching Tsung 6,035 4,032 4,032 - real estate none

Huang Hsiu Chi 3,965 3,965 3,965 - real estate none

Hong Hui Na 2,636 - - - real estate none

Shih Ming Yu 12,410 12,410 12,410 - real estate none

Tsai Tsai Kun 3,386 - - - real estate none

Hsu Tien Liang 3,176 - - - real estate none

Wu Ying Che 60 - - - none none

Chen Nien Tzu 1,000 - - - real estate none

Hsiao Mao Te 978 - - - real estate none

Hsu Shan Chung 698 524 524 - real estate none

Chu Tsung Chou 3,199 3,148 3,148 - real estate none

Lu Wen 1,997 - - - real estate none

Lin Zeng Shou 1,990 1,990 1,990 - real estate none

Lin Ming Fu 200 - - - none none

Lin Show Chou 200 - - - none none

Lin en Shiang 100 - - - none none

Liao Ding Hwui 100 - - - none none

Song Ya Mang 10 - - - none none


December 31, 2009

Category

Number of clients

or name of related party

Maximum balance

Ending balance

Performing situations

Collaterals

Transaction terms are the

same as those with regular

clients

Performing loan

Non-performing

Loans

employee consumer loans

126 257,563 241,427 241,427 - none/ real estate none

Self-use residence collateral loans

103 257,624 239,056 239,056 - real estate none

Others Sun Tai 22,000 13,000 13,000 - real estate none

Yeh Hsiu Mei 3,500 3,500 3,500 - real estate none

Li Shuo Tian 7,458 7,183 7,183 - real estate none

Cheng Ching Loang 900 900 900 - real estate none

Wen Shi Chi 380 213 213 - real estate none

Lin Chi Chen 3,620 3,500 3,500 - real estate none

Li Huan Chang 6,700 4,700 4,700 - real estate none

Chen Ching Tsung 5,030 5,030 5,030 - real estate none

Huang Shu Chi 1,999 1,903 1,903 - real estate none

Wu Ying Che 79 62 - 62 none none

Hsiao Mao Te 949 4 4 - real estate none

Chu Tsung Chou 2,898 2,897 2,897 - real estate none

Shih Ming Yu 2,234 2,234 2,234 - real estate none

Jiang Zhen Fu 776 776 776 - real estate none

Hsu Tien Liang 2,402 2,402 2,402 - real estate none

Lu Wen 1,879 1,879 1,879 - real estate none

(h) Guarantees of Credit: None

(i) Commissions and Handling Fees:

The Bank received handling fee for the sale of beneficiary certificates of Chung Kuo Insurance Company,

Ltd. amounting to $1,203 and $504 for the years ended December 31, 2010 and 2009, respectively. The

Bank received manpower support fee of $246,168 and $155,038 for the years ended December 31, 2010

and 2009, respectively, for providing personnel and communication resources to the Taiwan Business

Bank Insurance Agency Co., Ltd. The Bank received handling fee for the sale of funds of Primasia

Investment Trust Co., Ltd., amounting to $187 and $142 for the years ended December 31, 2010 and

2009, respectively.

(j) Rental Revenue:

The Bank received rental revenue of $968 and $1,228 for the years ended December 31, 2010 and 2009,

respectively, for renting to the Taiwan Business Bank Insurance Agency Co., Ltd. The Bank received rental

revenue of $345 and $259, respectively, for the years ended December 31, 2010 and 2009, for renting to

the Taiwan Business Bank Property Insurance Agency Co., Ltd.

(k) Derivatives financial instrument transactions: None

(l) Sales of non – performing loans transactions: None

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(C) Remunerations of directors, supervisors, presidents and vice presidents In 2010 and 2009, information on remunerations paid to directors, supervisors, presidents and vice presidents

by the Company were as follows:

For the Year Ended December 31, 2010


Salaries $ 42,764 39,224

Incentives and compensation 6,671 6,773

Professional practice 68 111

employee Bonus 187 155

$ 49,690 46,263

The amount mentioned above included the estimation of employee bonuses and remuneration to directors

and supervisors. Please refer to the shareholders' equity for more details.

(6) PLEDGED ASSETS: please refer to notes 4(H) and (J) for more details.

(7) SIGNIFICANT COMMITMENTS AND CONTINGENCIES

(A) Securities sold under repurchase agreements

Assets

December 31, 2010

Par value Selling PriceDesignated repurchase

amount

Designated repurchase date

Financial assets measured at fair value through profit or loss $ 3,860,000 3,858,724 3,859,097 Prior to January 19,

2011

Available-for-sale financial assets 5,785,700 6,091,936 6,093,684 Prior to June 8, 2011

Total $ 9,645,700 9,950,660 9,952,781

Assets

December 31, 2009

Par value Selling PriceDesignated repurchase

amount

Designated repurchase date

Financial assets measured at fair value through profit or loss $ 1,735,000 1,733,815 1,733,896 Prior to

January 15,2010

Available-for-sale financial assets 2,215,800 2,396,233 2,396,685 Prior to June 14, 2010

Total $ 3,950,800 4,130,048 4,130,581

(B) As of December 31, 2010 and 2009, significant commitments and contingencies were as follows:


Marketable securities held for custody $ 4,892,865 4,895,694

Bills collected for others 93,013,266 86,780,964

Bills lent for others 15,786,615 14,655,289

Guarantees and letters of credit 26,201,152 28,064,622

Collaterals received 1,369 1,369

Trust liabilities 136,918,584 145,521,854

Travelers’ check in custody for sale 226,417 281,813

Items held for custody 13,770,905 14,540,024

Registered government bonds for sale 7,628,600 10,452,600

Registered short-term bills for sale 4,845,300 3,433,351

Notes held for custody 16,898,100 777,570


(C) As of December 31, 2010 and 2009, refundable deposits for operating leases amounted to $89,790 and $76,644, respectively. Estimated future rental commitments are as follows:

Period Amount

01.01.2011~12.31.2011 $ 257,401 01.01.2012~12.31.2012 180,307 01.01.2013~12.31.2013 152,338 01.01.2014~12.31.2014 110,844 01.01.2015~12.31.2015 52,374 Total $ 753,264

(D) Estimated rental revenues from rental assets for the next 5 years are as follows:

Period Amount

01.01.2011~12.31.2011 $ 5,738 01.01.2012~12.31.2012 3,816 01.01.2013~12.31.2013 2,934 01.01.2014~12.31.2015 1,359 Total $ 13,847

(E) As of December 31, 2010 and 2009, major constructions in progress and purchases amounted to $289,200 and $305,930, respectively, of which $187,683 and $128,328, respectively, remained unpaid.

(F) The Bank’s trust department plans, manages, and operates trust services in accordance with the Banking Law and Trust Law. Special purpose funds are used to invest in marketable securities and the Bank also manages trust funds. The balance sheet and property accounts of the trust accounts as of December 31, 2010 and 2009 and trust income statement for the year ended December 31, 2010 and 2009 were as follows:

December 31, 2010Trust Balance Sheet

Trust assets Trust liabilitiesCash in bank $ 402,893 Payables $ 239Short-term investments 52,204,247 Securities held for custody 80,773,146Receivables 53 Trust capital 56,167,468Prepayment 1 Reserves and retained earnings (1,816,216)Real estate 3,538,244 Net income 1,793,947Securities custody 80,773,146

Total trust assets $ 136,918,584 Total trust liabilities $ 136,918,584

December 31, 2010Trust Property Accounts

Investments in:Cash in bank $ 402,893Short-term investments Common stock 339,980 Funds 51,864,267Receivables 53Prepayment 1Real estate Construction in Progress 1,110,687 Land 2,425,568 Buildings 1,989Securities custody 80,773,146

Total $ 136,918,584

Note: The amounts above included OBU transaction on “foreign currency designated trust funds investment in

foreign negotiable securities business” amounting to $796,347.

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December 31, 2009Trust Balance Sheet

Trust assets Trust liabilitiesCash in bank $ 592,655 Payables $ 418Short-term investments 53,348,849 Securities held for custody 80,328,729Receivables 23 Trust capital 65,204,860Prepayment 2 Reserves and retained earnings (947,416)Real estate 11,251,596 Net income 935,263Securities custody 80,328,729

Total trust assets $ 145,521,854 Total trust liabilities $ 145,521,854

December 31, 2009Trust Property Accounts

Investments in:Cash in bank $ 592,655Short-term investments Common stock 253,854 Funds 53,094,995Receivables 23Prepayment 2Real estate Construction in Progress 8,542,347 Land 2,707,047 Buildings 2,202Securities custody 80,328,729

Total $ 145,521,854

Note: The amounts above included OBU transaction on “foreign currency designated trust funds investment in

foreign negotiable securities business” amounting to $728,666.

Trust Income Statements

Investment items December 31, 2010 December 31, 2009

Trust Revenue

Interest income $ 582 838

Realized capital gain-Fund 4,803 667

Realized capital gain-Stock 713 -

Cash dividend income of common stock 770,425 778,419

Gains on property transaction 2,242,489 1,580,856

Other revenue 691 639

Sub-total 3,019,703 2,361,419

Trust expense

Administrative expenses 36,469 20,869

Storage expenses 929 845

Postage and phone/fax expense 133 1

Duties 81,394 21,131

Other expense 12,120 1,947

Losses on property transaction 1,093,725 1,380,434

Sub-total 1,224,770 1,425,227

Net income before tax 1,794,933 936,192

Income tax expense (986) (929)

Net income after tax $ 1,793,947 935,263


(G)(a) In April 1996, the Bank’s World Trade Center Branch was sued for handling a letter of credit export

collection for Chin Seen Industrial Co., apparently because that company allegedly used a forged export

document and failed to ship the goods to the importer, the International Comagnie de Commercialisation et

d’Invertissement (I.C.C.I.) of the Republic of Zaire, suffered a loss thereon.

I.C.C.I., initiated a case with the Court of Commerce of Brussels in Belgium in November 1998, demanding

that the L/C opening bank (Banque Bruxelles Lambert, or BBL) and TBB jointly pay compensation for

the L/C in the amount of US$7,830 thousand plus interest, losses, and expenses. On August 31, 2005,

the Court of Commerce of Brussels rendered its judgment requiring the Bank to pay compensation of

US$7,674 thousand to I.C.C.I. The Bank has engaged a local attorney in Belgium to formally file an

appeal. The Bank has accrued the potential compensation of US$7,674 thousand in 2005.

(b) Jin-ye Industry Corporation (JIC) was a checking account client of the Bank’s Tai Ping Branch. The JIC’

s accountant falsified the seal to write checks and steal the deposit from the company. JIC filed a lawsuit

with Taichung District Court according to the claim right of consumption deposit which required the Bank

to return the deposit of NT$61,751thousand plus the interest. The Bank lost the first trial and appealed

to Taiwan Taichung High Court. Taichung High Court ruled the case unfavorable to the Bank and the

Bank should pay compensation of NT$30,876thousand and interest with annual rate of 5% from April 1,

2008 to settlement date to JIC. However, the Bank and the JIC were not willing to accept the judgment

and appealed to theSupreme Court and the case had been sent back to Taiwan Taichung High Court to

remand. Taiwan Taichung High Court sentenced the Bank won the re-appeal lawsuit on July 2010. JIC

was not willing to accept the judgment and appealed and it is under the trial of Taiwan Supreme Court.

In consideration of the fact that the ruling is not yet final and for the sake of prudence, the Bank has

recognized the compensation loss amounted to NT$32,000 thousand based on the judgment of Taiwan

Taichung High Court in 2008.

(c) Kang-Cheng Corp., which purchased secured and unsecured non-performing loans receivable of Wei

Lei Food Corporation (WLF), argued that the Bank should allocate the payment that it received from Ge

Riu Wei Assets Management Corporation (GWAM).For this reason, Kang-Cheng Corp.filed a lawsuit to

Shihlin District Court to oblige the Bank to pay Kang-Cheng Corp. NT$65,399 thousand plus the interest.

Shihlin District court ruled that the Bank should pay compensation of NT$46,106 thousand and interest

with annual rate 5% from May 26, 2006 to settlement date to Kang-Cheng Corp in the first trial. However,

the Bank has appealed to Taiwan High Court and won the lawsuit. Kang-Cheng Corp. was unwilling to

accept the judgment and, considering the compensation of NTD$38,941 thousand and interest, appealed

to the Taiwan Supreme Court. The case had been send back to Taiwan High Court to remand, and Taiwan

High Court sentenced Kang-Cheng Corp.won the lawsuit and the Bank should pay compensation of

NTD$38,941 thousand and interest with annual rate 5% from May 26, 1996 to settlement date to Kang-

Cheng Corp. The Bank appealed to Taiwan Supreme Court and the case is still under the trial. Upon

learning from the above case, Hua Nan Bank has filed a lawsuit against the Bank in July 2008, stating that

the Bank should return NTD$15,594 plus the interest to Hua Nan Bank from what they received from the

GWAM. The Bank lost the first trial and appealed. Taiwan High Court ruled that the Bank lost the lawsuit

and should pay Hua Nan Bank 10,250 thousand plus the interest with annual rate of 5% from July 18,

2008. The Bank has filed an appeal and it is under the trial of Taiwan Supreme Court. In consideration of

the fact that the ruling is not yet final and for the sake of prudence, the Bank has accrued the compensation

losses amounted to NT$16,500 thousand based on the judgment by the Shinlin District Court in the first

half of 2009.

(d) In September, 2006, the Bank received a formal complaint from Shihlin District Court, resulting from a

lawsuit filed with Shinlin District Court by the HSE and its manager under which the Bank is required to

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pay Hong Sheng Corp. and Tsai-Zheng-Lang compensation of NT$590 million and NT$10,000 thousand

for the early termination of the contract of the check deposit as it damaged HSe’s credibility and goodwill.

The Shinlin District Court ruled the case in favor of the Bank and the Bank won the lawsuit. However, HSe

and Tsai-Zheng-Lang were not willing to accept the judgment and appealed to Taiwan High Court. The

compensation appointed by HSe and Tsai-Zheng-Lang amounted to NT$16,000 thousand and NT$1,000

thousand, respectively. Taiwan High Court ruled the case in favor of the Bank and the Bank won the

lawsuit. However, Hong Sheng Corp. was not willing to accept the judgment and appealed to Taiwan

Supreme Court and Taiwan Supreme Court rejected the appeal in April, 2010. The Bank confirmed to win

the lawsuit.

(e) In January 2007, the Bank received the plaint of Chang Zhou Industry Corporation (CZI) impaled to the

Xin Ying Branch, CZI asserted that the Bank’s Xin Ying Branch accepted CZI ‘s checks which signed

by its former chairman who did not have the authority to act on behalf of the corporation. Hence, CZI

asserted that the Branch’s personnel did not exhaust their obligation because they should know the former

chairman did not have the authority to act on behalf of the corporation, but they still accepted the 120

checks. Therefore CZI requested the Bank together with the bank’s 6 employees and supervisors and

employees of CZI to either return the checks or compensate CZI for the loss including check’s face value

(amounting to NT$73,282 thousand), interest and default charge. (The trial has continuously added new

assertions: eventually CZI requested the Bank to return 120 checks or compensate the check’s face value

of NTD$73,291 thousand, interest and loans amounted to NTD$83,200 thousand, and operation loss

including interest which amounted to NTD$110,714 thousand). Taiwan District Court and Taiwan Tainan

High Court ruled the case in favor of the Bank in the first and the second trial. CZI was not willing to accept

the judgment and appealed to Taiwan Supreme Court. Taiwan Supreme Court abandoned the previous

judgment and sent it back to Taiwan Tainan High Court to remand. Taiwan Tainan High Court still ruled

the case in favor of the Bank and CZI was still not willing to accept the judgment and appealed to Taiwan

Supreme Court and Taiwan Supreme Court rejected the appeal in April, 2010. The Bank won the lawsuit,

but the Bank was notified by CZI in September, 2010 that CZI will re-appeal to Taiwan Supreme Court.

Taiwan supreme court has rejected the appeal on November 2010.

(f) In October 2008, the Bank received a copy of petition filed by TCM Biotech International Corporation (TCM),

a client of the Bank’s Nei Hu Branch, to Shihlin District Court for requesting the Bank to return consumption

deposit plus the interest. TCM alleged that its deposits in the combinative account amounted to NT$20,632

thousand were transferred to third-party accounts. The foregoing was executed via fake fax withdraw slips

provided by the employee of TCM. Shinlin District Court ruled the case unfavorable to the Bank and the

Bank should pay compensation of NT$702 thousand and the interest with annual rate of 5% from October

21, 2008 to settlement date to TCM. However, the Bank was not willing to accept the judgment and

appealed and it is under the trial of Taiwan High Court.

(g) Since November 1999, a Taiwan Company Power (TPC) employee is suspected to peculate the electricity

fees handed in by customers. TPC investigated the case and claimed that in accordance with the

operating regulations which TPC authorized Taiwan Business Bank to act on the behalf of its receipts

and disbursements business contract, the Bank’s superintendent did not handle the authorized affair

personally, and this is against the contract. TPC indicted the Bank and filed a lawsuit to Shihlin District

Court, claiming a compensation loss which amounted to NT$32,568 thousand in August, 2009. Shihlin

District Court sentenced that the Bank won the lawsuit in June 2010. However, TPC was not willing to

accept the judgment and appealed to Taiwan High Court. It is under the trial of Taiwan High Court.


(8) SIGNIFICANT CATASTROPHIC LOSSES: None.

(9) SIGNIFICANT SUBSEQUENT EVENTS:

According to the letter No.0990073857 issued by SFC on January 11, 2011, the Rules Governing

Securities Firms has been modified. The governing rules has deleted No 11 and No 12 rulings which

regulated that securities firms should provide reserve for default losses and trading losses. The balance

which securities firms provided for default losses and trading losses until December 31, 2010 should be

transferred to special reserve. The special reserve may only be used to cover companies’ losses or be

used to capitalize earning when the amount reaches half of the paid-in capital.

(10) OTHERS

(A) Disclosures required for bank financial statements


(a) Domestic loans and advances:

Private businesses $ 470,180,947 431,124,941

State enterprises 50,175,292 56,514,908

Governmental institutions 132,476,085 135,699,036

Non-profit organizations 4,241,342 4,153,079

Natural person 241,202,329 265,693,942

Financial institutions - 8,688

Others - 172

Sub-total 898,275,995 893,194,766

Foreign loans and advances:

Financial institutions 1,464,198 -

Non-financial institutions 25,483,778 11,476,665

Sub-total 26,947,976 11,476,665

Total $ 925,223,971 904,671,431

The above loans and advances included foreign currency long positions but excluded the non-accrual

receivables. As of December 31, 2010 and 2009, non-performing loans amounted to $10,098,590 and

$16,319,421, respectively.



(b) Allowance for Credit Losses:

Beginning balance $ 8,418,224 8,481,082

Bad debts expense (Note1) 4,116,305 3,661,352

Transfer-in 274,198 42,420

Charge-offs and advances (3,978,090) (3,723,475)

exchange differences (238,165) (43,155)

Recovery from written-off loans and advances 1,410,830 1,470,422

Beginning balance overaccrual transferred into revenue (1,410,830) (1,470,422)

ending balance (Note 2) $ 8,592,472 8,418,224

Note1. The detail of bad debts expense for the year ended December 31, 2010 and 2009 are as follows:

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Discounts, loans and non-accrual loans $ 4,040,152 3,516,572

Receivables and non-accrual receivables 76,153 144,780

Sub-total 4,116,305 3,661,352

Reversal of reserve for guarantee 153 (5,704)

Total $ 4,116,458 3,655,648

Note2. The detail of allowance for doubtful account as for December 31, 2010 and 2009 are as follows:


Allowance for doubtful accounts–receivables $ 145,414 157,551

Allowance for doubtful accounts–discounts and loans 8,333,397 8,184,529

Allowance for doubtful accounts–non-accrual receivables 113,661 76,144

ending balance $ 8,592,472 8,418,224

(B) Personnel, Depreciation, and Amortization Expense

Categorized as:

Nature

For the YearEnded December 31,2010

For the YearEnded December 31,2009

Operatingexpense Total Operating

expense Total

Personnel expenses

Salary expense 5,703,041 5,703,041 5,457,864 5,457,864

Health and labor insurance expense 343,422 343,422 325,722 325,722

Pension expense 543,243 543,243 522,459 522,459

Other expense 174,493 174,493 128,153 128,153

Sub-Total 6,764,199 6,764,199 6,434,198 6,434,198

Depreciation expense 454,062 454,062 452,355 452,355

Amortization expense 67,591 67,591 53,855 53,855

Total 7,285,852 7,285,852 6,940,408 6,940,408


(C) Disclosures required under the Statement of Financial Accounting Standards No. 28:(a) Loan quality:

Momth/Year Items


Non-performing

loans Total loans

Non-performing loan ratio

Allowance for

doubtful accounts

Ratio of allowance

to non-performing

loans

Non-performing

loans Total loans

Non-performing loan ratio

Allowance for

doubtful accounts

Ratio of allowance

to non-performing

loans

Corporate finance

Secured $3,755,212 347,408,194 1.08% 2,554,750 68.03% 6,610,498 338,393,864 1.95% 976,508 14.77%

Unsecured 4,510,633 345,924,795 1.30% 4,510,445 100.00% 6,546,926 342,729,892 1.91% 6,126,734 93.58%

Customer finance

Residence mortgages (Note 4) 1,417,819 115,999,738 1.22% 688,689 48.57% 2,576,320 139,135,499 1.85% 549,981 21.35%

Cash cards 1,762 1,762 100.00% 1,762 100.00% 2,226 2,226 100.00% 2,226 100.00%

Small sum credit loans (Note 5) 48,000 107,349 44.71% 48,000 100.00% 102,106 226,216 45.14% 102,106 100.00%

Other (Note 6)

Secured 645,201 106,142,704 0.61% 382,273 59.25% 1,144,386 82,577,941 1.39% 161,550 14.12%

Unsecured 147,484 19,719,121 0.75% 147,478 100.00% 265,424 17,921,901 1.48% 265,424 100.00%

total 10,526,111 935,303,663 1.13% 8,333,397 79.17% 17,247,886 920,987,539 1.87% 8,184,529 47.45%

Overdue loans

Total receivables

Overdue ratio

Allowance for

doubtful accounts

Ratio of allowance to overdue

loans

Overdue loans

Total receivables

Overdue ratio

Allowance for

doubtful accounts

Ratio of allowance to overdue

loans

Credit cards 5,447 1,748,823 0.31% 30,756 564.64% 13,318 1,929,492 0.69% 13,309 99.93%

Factoring account receivables (Note 7) - 433,996 - 182 - - 116,798 - 44 -

Note 1. Non-performing loans are those reported according to the “Rules Governing the evaluation of Loss Reserve Provision on Bank Assets and Disposal of Overdue loans and Bad Debts”;The credit card-overdue loans are those reported according to the Bank Letter Ruling (4) 0944000378 dated July 6, 2005.

Note 2. Non-performing loan ratio = Non-performing loans÷ total loans; Credit card overdue loans ratio = Overdue loans÷ total receivables

Note 3. Ratio of allowance to non-performing loans = allowance for doubtful accounts ÷ non-performing loans; Ratio of allowance to non-performing loan of credit card = allowance for doubtful accounts÷ overdue loans

Note 4. Residence mortgage is where the borrower applies for the loan for purposes of purchasing property, construction or for repairs and provides the property belonging to the borrower, spouse or minors as collateral for the loan.

Note 5. Small sum credit loans are defined in accordance with the Bank Letter Ruling (4)09440010950 dated December 19, 2005, and does not include small sum credit card or small sum cash card.

Note 6. Other consumer finance excludes residence mortgage, cash card and small sum credit loan of secured and unsecured consumer loans and credit card loans.

Note 7. In accordance with the Bank Letter Ruling (5) 0944000494 dated July 19, 2005, when factoring accounts receivable without the right of recourse and indemnification is rejected by the supplier or insurance company, these loans are reported as overdue loans within three months.

The information below shows supplemental disclosures of loans and receivables that may exempted from

reporting as non-performing loans and overdue receivables, respectively.

December 31, 2010 December 31, 2009Loans may be exempted from reporting as a

non-performing loan

Receivables may be exempted

from reporting as overdue receivables

Loans may be exempted from reporting as a

non-performing loan

Receivables may be exempted

from reporting as overdue receivables

Pursuant to a contract under a debt negotiation plan $ 11,664 56,981 15,165 77,149

Pursuant to a contract under a debt liquidation plan and a debt relief plan

104,712 93,295 71,613 89,221

Total $ 116,376 150,276 86,778 166,370

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Note A: In accordance with the Bank Letter Ruling (1) 09510001270 dated April 25, 2006, a bank is required to make supplemental disclosure reporting credit information which was approved under the debt coordination mechanism of unsecured consumer debts by R.O.C. Bankers Association.

Note B: In accordance with the Bank Letter Ruling (1) 09700318940 dated September 15, 2008, a bank is required to make supplemental disclosure reporting credit information once debtors apply for pre-negotiation, relief and liquidation under the “Consumer Debt Clearance Act.”

(b) Credit risk concentration

December 31, 2010

Ranking Group enterprise Credit amount

Credit amount to stockholders' equity ratio

1 A company. Railway transportation 36,349,996 82.88%

2 B group. Petroleum and coal products manufacturing 14,896,024 33.97%

3 C group. Iron and steel melting 7,721,122 17.61%

4 D group. Liquid crystal panel and components manufacturing 7,353,701 16.77%

5 e group. Integrated circuits manufacturing 5,050,642 11.52%

6 F group. Other optoelectronic materials and components manufacturing 4,755,413 10.84%

7 G group. Other amusement and recreation services 4,700,000 10.72%

8 H group. Other financial agency 3,964,500 9.04%

9 I company. Real estate for sale and rental with own or leased property 3,371,760 7.69%

10 J company. Universities and colleges 2,150,000 4.90%

December 31, 2009

Ranking Group enterprise Credit amount

Credit amount to stockholders' equity ratio

1 A company. Railway transportation 28,684,011 68.74%

2 B group. Petroleum and coal products manufacturing 17,594,949 42.17%

3 K group. Iron and steel melting 6,106,786 14.64%

4 F group. Other optoelectronic materials and components manufacturing 5,198,458 12.46%

5 D group. Liquid crystal panel and components manufacturing 5,143,411 12.33%

6 e group. Integrated circuits manufacturing 5,017,571 12.02%7 L group. Integrated circuits manufacturing 4,758,893 11.40%

8 I group. Real estate for sale and rental with own or leased property 3,423,620 8.20%

9 G company. Other amusement and recreation services 2,240,000 5.37%

10 J company. Universities and colleges 2,150,000 5.15%

Note 1. The above table lists the top ten non-government and non-state-operated group enterprises which are ranked by the group enterprises credit amount. If the borrowers belong to an enterprise group, the aggregate credit balance of the enterprise should be calculated and disclosed as a code number for each such borrower together with an indication of the borrowers’ line of business. In addition, if the borrowers are enterprise groups, the enterprise group’s industry sector with the maximum exposure to credit risk in its main industry sector should be disclosed, along with the “class” of the industry, in compliance with the Standard Industrial Classification System of the R.O.C. posted by the Directorate-General of Budget, Accounting and Statistics, executive Yuan, R.O.C.

Note 2. Group enterprise is defined in accordance with Clause 6 of the “Supplementary Provisions to the Taiwan Stock exchange Corporation Rules for Review of Securities Listings”.

Note 3. Consists of loans (foreign currency imports financing, foreign currency export financing, notes discounted, customer overdrafts, short-term unsecured loans, short-term secured loans, receivables from securities lending, medium-term unsecured loans, medium-term secured loans, long-term unsecured loans loan-term secured loans, non-performing loans), foreign currency long positions, accounts receivable-factoring discount, bankers’ acceptance receivable, guarantees receivable.

Note 4. In the calculation of Credit amount to stockholders' equity ratio, the domestic bank should be calculated in the net value of head office. The Foreign bank should be calculated in the net value of Taiwan branch.


(c) Interest sensitivity information

1. Analysis of interest rate-sensitive assets and liabilities (New Taiwan dollars in thousands)

1~90 days 91~180 days 181days~1year over 1 year total

Interest rate-sensitive assets $955,240,493 39,669,005 3,032,114 22,295,538 1,020,237,150

Interest rate-sensitive liabilities 474,900,012 447,261,606 44,104,614 27,298,716 993,564,948

Interest rate sensitivity gap 480,340,481 (407,592,601) (41,072,500) (5,003,178) 26,672,202

Net worth 43,856,026

Ratio of interest rate-sensitive assets to debt (%) 102.68%

Ratio of interest rate-sensitive gap to net worth (%) 60.82%

Note 1. Listed amounts are denominated in N.T. dollars of the head office and domestic branches, offshore banking unit, overseas branches. (i.e., excluding foreign currency amounts)

Note 2. Interest rate-sensitive assets and liabilities refer to revenue or cost of interest–yielding assets and interest–bearing liabilities, which are affected by interest rate fluctuations.

Note 3. Ratio of interest rate-sensitive assets to liabilities=Interest rate-sensitive assets÷ Interest rate-sensitive liabilities (New Taiwan dollars interest-rate-sensitive assets and New Taiwan dollars interest-rate-sensitive liabilities).

Note 4. Interest rate-sensitivity gap = Interest rate-sensitive assets - Interest-rate-sensitive liabilities.

2. Analysis of the interest-sensitive assets and liabilities (U.S. dollars)

1~90 days 91~180 days 181days~1year over 1 year total

Interest rate-sensitive assets $2,438,502 505,134 28,543 86,081 3,058,260

Interest rate-sensitive liabilities 1,509,566 1,858,932 132,742 70 3,501,310

Interest rate sensitivity gap 928,936 (1,353,798) (104,199) 86,011 (443,050)

Net worth 1,486,645

Ratio of interest-rate sensitive assets to debt (%) 87.35%

Ratio of interest-rate sensitivity exposure to net worth (%) (29.80%)

Note 1. Listed amounts are in U.S. dollars (i.e., excluding contingent assets and contingent liabilities) of the head office and domestic branches, offshore banking unit, overseas branches.

Note 2. Ratio of interest rate-sensitive assets to liabilities=Interest rate-sensitive assets÷ Interest rate-sensitive liabilities (U.S. dollars interest-rate-sensitive assets and U.S. dollars interest-rate-sensitive liabilities).

(d) Profitability

Item December 31, 2010 December 31, 2009

The ratio of return on assetsBefore tax 0.20% 0.14%

After tax 0.17% 0.12%

The ratio of return on shareholders' equity

Before tax 5.59% 3.98%

After tax 4.69% 3.53%

Net income ratio 12.35% 9.72%

Note 1. The ratio of return on assets=Income before (after) income tax expense÷ average assetsNote 2. The ratio of return on shareholders’ equity= Income before (after) income tax expense÷ average

shareholders’ equityNote 3. Net income ratio = Gain or loss before (after) income tax expense÷ Net incomeNote 4. Income before (after) income tax expense refers to income accumulated from January of the current year

to the current period.

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(e) The maturity analysis of assets and liabilities

1. Maturity analysis in New Taiwan dollars

December 31, 2010

Amount during the maturity period from the balance sheet date to due date

Total 1~30 days 31~90 days 91~180 days 181 days~1year Over 1 year

Major maturity capital inflow $1,125,168,194 156,989,329 110,891,326 188,472,864 108,072,959 560,741,716

Major maturity capital outflow 1,517,833,865 186,688,057 180,376,486 153,024,313 312,096,525 685,648,484

Gap (392,665,671) (29,698,728) (69,485,160) 35,448,551 (204,023,566) (124,906,768)

Note: Listed amounts are denominated in New Taiwan dollars (i.e., excluding foreign – currency amounts) of the head office and domestic branches, including commitment of credit agreement and estimates to outflow $395,541,155.

2. Maturity analysis in U.S. dollars

December 31, 2010

Amount during the maturity period from the balance sheet date to due date

Total 1~30 days 31~90 days 91~180 days 181 days~1year Over 1 year

Major maturity capital inflow $ 4,507,288 1,772,814 1,376,831 641,433 231,210 485,000

Major maturity capital outflow 5,925,279 1,779,478 1,138,844 475,037 694,195 1,837,725

Gap (1,417,991) (6,664) 237,987 166,396 (462,985) (1,352,725)

Note: Including commitment of credit agreement and estimates to outflow US$1,472,939.

(f) Capital Adequacy

Item December 31, 2010 December 31, 2009

eligible capital

Tier 1 capital 44,163,618 38,039,425

Tier 2 captial 32,191,330 30,521,345

Tier 3 captial - -

eligible Capital 76,354,948 68,560,770

Risk- weighted assets

Credit risk

Standardized approach 649,541,639 640,678,593

Internal ratings-based approach - -

Securitisation 66,734 279,214

Operational risk

Basic indicator approach 27,584,963 28,589,263

Standardized approach - -

Advanced measurement approach - -

Market riskStandardized approach 6,271,788 6,286,588

Internal model approach - -

Total 683,465,124 675,833,658

Capital adequacy ratio 11.17% 10.14%

Tier 1 capital / Risk-weighted assets ratio 6.46% 5.63%

Tier 2 capital / Risk-weighted assets ratio 4.71% 4.52%

Tier 3 capital / Risk-weighted assets ratio - -

Common stock equity / Total assets ratio 3.32% 3.26%

Leverage ratio 3.68% 3.24%

Note 1. eligible Capital = Tier 1 Capital + Tier 2 Capital + Tier 3 CapitalNote 2. Total Capital = Credit risk weighted asset + (market risk charge + credit risk charge)×12.5Note 3. Capital adequacy ratio= eligible Capital ÷ risk weighted asset. Note 4. Tier 1 capital / Risk-weighted assets ratio= Tier 1 capital ÷ Risk-weighted assetsNote 5. Tier 2 capital / Risk-weighted assets ratio = Tier 2 capital ÷ Risk-weighted assetsNote 6. Tier 3 capital / Risk-weighted assets ratio = Tier 3 capital ÷ Risk-weighted assetsNote 7. Common stock equity / Total assets ratio = Common stock equity÷ Total assetsNote 8. Leverage ratio= Tier 1 capital / Average total consolidated assets.


(D) The maturity analysis of assets and liabilities, interest-yielding assets, interest-bearing liabilities, current average interest rates, and significant net positions of foreign currencies were as follows:(a) The maturity analysis of assets and liabilities: please refer to note (4)(Y)(C) to the financial statements.

(b) Interest-yielding assets, interest-bearing liabilities, and current average interest rates were as follows:



Average Value

Average Interest

Rate

Average Value

Average Interest

Rate

Assets

Cash in banks and call loans to banks $36,026,109 0.97% $ 51,756,389 1.39%

Deposits with the Central Bank 43,467,007 0.40% 48,833,682 0.46%

Bills purchased under resale agreement 1,457,178 0.38% 5,146,557 0.19%

Bonds purchased under resale agreement 138

Discounts and loans 895,497,159 1.80% 833,214,448 1.93%

Financial assets held for trading 1,649,251 0.42% 425,445 0.24%

Financial assets designated at fair value at initial recognition 1,827,914 2.07% 1,358,957 2.44%

Available-for-sale financial assets 15,133,969 1.62% 20,673,777 1.51%

Held-to- maturity financial assets 131,515,644 0.80% 129,752,836 0.87%

Liabilities

Deposits from the Central Bank 447,985 - $ 462,248 -

Deposits from other banks and call loans from banks 29,507,097 0.66% 27,208,832 0.68%

Demand deposits(including foreign currency) 448,009,412 0.27% 391,238,196 0.29%

Government deposits 12,809,805 0.38% 13,347,522 0.52%

Time deposits(including foreign currency) 235,564,864 0.70% 249,153,983 0.93%

Post office deposits 73,835,325 1.08% 86,278,738 1.15%

Time savings deposits 255,521,113 1.04% 263,421,927 1.45%

Bills sold under repurchase agreements 2,760,206 0.32% 5,232,725 0.13%

Bonds sold under repurchase agreements 5,078,643 0.31% 3,340,391 0.27%

Financial debentures 36,975,099 2.05% 30,292,338 2.36%

Funds appropriated for loans 10,123,617 0.34% 9,394,831 0.38%

(c) Significant net positions of foreign currencies

1. Significant net positions of foreign currencies

Currency


Foreign Currency Amount NT$ Amount Foreign Currency

Amount NT$ Amount

Significant net positions of foreign currency (Market risk)

USD 36,016 1,062,465 USD 37,603 1,209,898

JPY 251,401 91,057 CNY 19,875 93,670

CNY 18,480 82,540 AUD 1,612 46,555

HKD 14,354 54,403 eUR 692 31,992

AUD 1,348 40,463 JPY 70,178 24,422

Note 1. Main foreign currencies are the top five foreign currencies ranked in NTD value.Note 2. Net foreign currency is the absolute value of the net value of each foreign currency.

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2. Assets and liabilities of foreign currency


Amount Rate NT $ Amount Amount Rate NT$ Amount

Financial Asset

Monetary Item

USD $4,971,930 29.5000 146,671,935 4,081,166 32.1760 131,315,597

AUD 869,872 30.0281 26,120,560 582,701 28.8715 16,823,466

HKD 5,039,049 3.7900 19,098,097 3,258,127 4.1490 13,518,007

JPY 27,099,382 0.3622 9,815,000 25,719,131 0.3480 8,950,235

ZAR 2,105,749 4.4426 9,355,079 2,414,759 4.3425 10,486,171

eUR 199,103 39.2468 7,814,156 130,944 46.2305 6,053,607

NZD 126,994 22.7593 2,890,288 117,632 23.3437 2,745,965

GBP 36,966 45.5510 1,683,836 31,785 51.7358 1,644,422

CAD 35,938 29.5118 1,060,595 38,054 30.5856 1,163,903

CNY 71,741 4.4664 320,427 88,155 4.7129 415,467

SGD 7,975 22.8718 182,402 4,718 22.9239 108,155

KRW 5,762,080 0.0261 150,559 21,051,290 0.0275 579,672

CHF 4,203 31.5339 132,537 3,242 31.0789 100,758

THB 5,458 0.9788 5,342 120,307 0.9645 116,037

Other(Note) - - 17,468 - - 29,714

Non-Monetary item

USD $4,536 29.5000 133,804 2,855 32.1760 91,853

eUR 350 39.2468 13,735 10,485 46.2305 484,720

Other(Note) - - 96,304 - - 51,537


Amount Rate NT $ Amount Amount Rate NT$ Amount

Financial Liability

Monetary Item

USD $4,913,223 29.5000 144,940,079 4,037,733 32.1760 129,918,097

AUD 923,251 30.0281 27,723,427 575,238 28.8715 16,607,998

HKD 5,126,253 3.7900 19,428,602 3,418,799 4.1490 14,184,637

JPY 27,118,881 0.3622 9,822,062 25,719,818 0.3480 8,950,474

ZAR 2,105,504 4.4426 9,353,991 2,413,965 4.3425 10,482,723

NZD 126,981 22.7593 2,889,992 117,507 23.3437 2,743,047

GBP 36,942 45.5510 1,682,743 31,785 51.7358 1,644,422

CAD 36,043 29.5118 1,063,694 38,098 30.5856 11,652,248

CNY 53,254 4.4664 237,856 68,280 4.7129 321,798

SGD 7,664 22.8718 175,289 4,657 22.9239 106,757

KRW 5,761,150 0.0261 150,535 21,028,340 0.0275 579,040

CHF 4,360 31.5339 137,488 3,403 31.0789 105,762

THB 1,008 0.9788 987 123,179 0.9645 118,807

Other(Note) - - 19,700 - - 30,277

Non-Monetary Item

USD 3,952 29.5000 116,575 2,609 32.1760 83,953

Other(Note) - - 23,502 - - 10,553

Note: Consolidated disclosure is applied for other currencies not over NT$ 100,000,000


(E) Account reclassificationCertain accounts in the 2009 financial statements have been reclassified to conform to the financial

statements presentation adopted in 2010. The reclassification did not have significant impact on the 2009

financial statements.

(11) DISCLOSURES REQUIRED:

(A) Information on significant transactions(a) Accumulative purchases or sales of the same investee companies amounting to over $300,000 or 10% of

paid-in capital: None.

(b) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.

(c) Disposition of real estate amounting to over $300,000 or 10% of paid-in capital: None.

(d) Discount of commissions and handling fees with related parties amounting to over $5,000: None.

(e) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.

(f) Sale of non-performing loans information:

(1) Summary table of NPL disposal:

Trade date Counterparty Debt component Book value Sale price

Gains (losses) on

disposal

Additional term Relationship

2010.08.11UBS AG, London Branch

Unites the loan 128,653 101,980 (26,673) - -

2010.09.22 Goldman Sachs

Unites the loan - 88,113 88,113 - -

2010.10.04 Goldman Sachs

Unites the loan - 64,810 64,810 - -

(2) Disposal of a single batch of NPL up to $1,000,000 (excluding sales to related parties): None.

(g) Types of securitization goods and related information approved by financial assets securitization rules or

real estate securitization rules: None.

(h) Other significant transactions that might have influence over the decision making process of the financial

statements users: None.

(B) Information on investee companies:(a) Names, locations, and related information of investees on which the company exercises significant

influence:

Name of investee company

Address Main business scope

Shareholding ratio Book

Value

Investment gain or loss recognized

by the Company

Ownership as of December 31, 2010

NoteNumber of shares

Number of profoma shares

Total

Number of shares

Shareholding ratio

Taiwan Business Bank Insurance Agency Co., Ltd.

2F, No.158, Songjiang Rd Taipei City 104, Taiwan (R.O.C.)

Agent of personal insurance

100% 41,459 27,109 500,000 - 500,000 100% -

Taiwan Business Bank Property Insurance Agency Co., Ltd.

2F, No.158, Songjiang Rd Taipei City 104, Taiwan (R.O.C.)

Agent of property insurance

100% 3,815 2,872 300,000 - 300,000 100% -

Note 1: Shares of investee company held by the Bank, Director, Supervisor, President, Vice-President and related parties under the“Company’s Act”are included as profoma shares.

Note 2: (1) Proforma shares are the shares obtained from under the assumption that securities with right or derivative instrument contracts (have not been converted into stocks) can be converted into

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shares of investee company under Article 74 of“Company Act”for investment purposes.(2) Above mentioned “Securities with Right”is defined in Paragraph 1 of Article 11“Securities and Exchange

Law Enforcement Rules” for example, convertible corporate bonds and warrant certificates.(3) Above mentioned “Derivative Instrument Contract” conformed with the definition of derivative instrument of

SFAS No.34“Financial Instruments: Recognition and Measurement” for example, stock option.

(b) Loans to others: None.

(c) endorsement and guarantees for others: None.

(d) Marketable securities held as of December 31, 2010: None.

(e) Cumulative purchases or sales of the same marketable securities amounting to over $300,000 or 10% of

paid-in capital: None.

(f) Acquisition of real estate amounting to over $300,000 or 10% of paid-in capital: None.

(g) Disposition of real estate amounting to over $300,000 or 10% of paid-in capital: None.

(h) Discount of commissions of handling fees with related parties amounting to over $5,000: None.

(i) Receivables from related parties amounting to over $300,000 or 10% of paid-in capital: None.

(j) Investee companies’ financial derivatives transactions: None.

(k) Sales of non – performing loans amounting to over information: None.

(l) Types of securitization goods and related information approved by financial assets securitization rules or

real estate securitization rules: None.

(m) Other significant transactions that might have influence over the decision making process of the financial

statements users: None.

(12) BUSINESS SEGMENT FINANCIAL INFORMATION:

(A) Industry segments informationThe Bank's operation is only for banking business. Therefore, no disclosure of industry segment information is

required.

(B) Geographic segments informationDisclosure of financial information of the International Department is not required since the division's revenues

and identifiable assets represents less than 10% of total operating revenues and assets. Therefore, no

disclosure of geographic segment information is required.

(C) Export revenues informationThere are no export sales to individual customers that represent 10% or more of the Bank's operating

revenues. Therefore, no disclosure of export revenue information is required.

(D) Information on major customersNo single customer represents 10% or more of the Bank's operating revenue. Therefore, no disclosure of

export revenue information is required.

Implementation of Social Responsibility

Ⅶ Implementation of Social Responsibility

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Item Status of Operation

Divergence from Corporate Responsibility Rules for Listed Companies, and Reasons for Divergence

1. Realizing corporate governance(1) establishment by the

Company of a corporate social responsibility policy or system, and review of the results of implementation.

Corporate responsibility is clearly laid out in Article 1 of the Banks corporate charter.

No divergence.

(2) establishment and implementation by the Company of the operation of a unit in charge, either exclusively or concurrently, of corporate social responsibility.

This is under the centralized handling of the Administration Management Dept. and carried out by the different headquarters units within their scope of jurisdiction. The status of implementation is reported to the Board of Directors on an irregular basis.

No divergence.

(3) Implementation by the Company of corporate ethics training and education for directors and supervisors on a regular basis, incorporation of same into the performance assessment system, and establishment of a clear and efficient system of rewards and punishments.

1. The Bank provides information on education and training to directors and supervisors when necessary, and publishes information on their training on the Market Observation Post System

2. The bank provides instruction in corporate ethical standards and legal compliance in basic and professional training courses for new and on-the-job employees.

3. Clear provisions for punishment, up to dismissal, for corporate ethics violations, bribery, and corruption are written into the Bank’s guidelines for employee rewards and punishments and instructions for normal evaluation, and rewards are offered for the prevention or reporting of improper behavior or fraud, This encourages employees to follow the rules of corporate ethics and social responsibility.

No divergence

2. Development of a sustainable environment(1) efforts by the Company to

enhance the efficiency of resource utilization, and to use recyclable materials with a minimum impact on the environment.

1. Carbon powder ink cartridges are collected for recycling.

2. Used paper that is blank on the back is reused.

No divergence.

(2) establishment by the Company, in accordance with its industrial characteristics, of a suitable environmental management system

environmental cleaning and maintenance is carried out in accordance with the Bank’s “Cleaning and Maintenance Instructions for Business Units.”

No divergence.

(3) establishment of a dedicated environmental management unit or staff members to maintain the environment.

Business units carry out office environmental cleaning and disinfection on a regular basis, and the 17th of every month is designated as “TBB environmental Cleanliness Day” in order to maintain the working environment. The deputy chief of each unit is responsible for supervising this effort.

No divergence.




(4) Attention by the Company to the impact of climate change on operational activities, and formulation of a Company strategy for energy conservation, carbon reduction, and greenhouse gas reduction.

1. Bank-wide water conservation measures have been announced; use of water and electricity by the different units is monitored regularly, and is included in business performance evaluation.

2. The improvement of energy-saving measures is evaluated, the efficiency of equipment is enhanced, and the conservation of water and electricity is upgraded.

3. The Taipei City Government Statute for Autonomy in energy Conservation and Carbon Reduction is observed, and air conditioners in offices and business premises are set no lower than 26 degrees Celsius.

No divergence.

3. Maintenance of the public benefit(1) Conformity with labor

regulations, protection of employees’ legal rights, and establishment of appropriate management methods and procedures.

The Bank’s personnel regulations are written to conform to the relevant labor laws and regulations. Matters that affect the rights or welfare of the Bank’s employees are reported to the labor-management committee for discussion on a regular basis, or prior labor-management negotiations are carried out. There is also a channel for the expression of opinions by employees, fully protecting the legal rights of the Bank’s employees.

No divergence.

(2) Provision by the Company of a safe and healthy work environment for employees, and regular offering of safety and health education.

The Bank carries out three hours of worker safety education every three years, provides physical exams for new employees and, for existing employees, health exams every two years, taking care of employees’ physical health and reminding them of the importance of health.

No divergence.

(3) establishment and public announcement by the Company of a comsumer rights policy, and provision of a transparent and effective consumer complaint procedure for its products and services.

1. The Bank provides a standard contract for applications for its personal banking products, and the legal affairs unit reviews all product planning, marketing, and outsourced collection to assure compliance with regulations.

2. The Bank’s customer rights manual is published on its website, as well as model standard contracts and explanations of related fees.

3. The Bank has established a "TBB Procedure for Handling Customer Complaints" and has installed a toll-free service hotline, with information posted in prominent locations at business offices and ATMs. Complaints are accepted and processed immediately by the Administration Management Dept., Business Management Dept., and Credit Card Dept.

No divergence.

(4) The company cooperates with suppliers to enhance the fulfillment of corporate social responsibility.

In its procurement the Bank gives priority to products from domestic manufacturers of good reputation and with prominent brand names. Through the strict control of production processes by those companies, the Bank avoids procurement that has an unfavorable impact on the supplying communities, thereby fulfilling its corporate social responsibility.

No divergence.

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(5) The company uses commercial activities, the donation of materials, corporate volunteer services, and other free professional services to participate in community development and charity activities.

TBB and all of its employees acknowledge their responsibility for environmental protection. We not only comply with the environmental regulations of the locations where we operate, but also track new developments in global environmental issues and take the lead in adopting new environmentally-friendly measures.

As global climate change becomes more severe, development and allocation of water resources has become a key issue in many countries. It is particularly vital in Taiwan. Our first principle of water use is reduction, followed by recycling.

Typhoon Morakot Disaster Relief Project, Typoon Morakot struck south Taiwan, causing Taiwan's most severe flooding in 50 years. TBB and all its employees are deeply saddened by the suffering caused by this typhoon, and we have assembled a "Typhoon Morakot Project Team" and have decided to donate to provide some small measure ofrelief to the people and places affected by this disaster.

No divergence.

4. Strengthened information disclosure(1) Method of disclosing the

Company’s information related to the relevance and reliability of corporate social responsibility.

Information on corporate governance and guidelines for the disclosure of information on the evaluation system is disclosed on the Market Observation Post System and the Company’s corporate website.

No divergence

(2) The Company’s compilation of a corporate social responsibility report, and disclosure of the status of CSR implementation.

The Bank does not compile a CSR report, but discloses information on CSR implementatation in the relevant portions of its Annual Report.

No divergence

5. If the Company compiles its own CSR rules in accordance with the “Corporate Social Responsibility Best Practice Principles for TWSe/GTSM-listed Companies,” please describe its operation and divergences by the established rules: (1) The Company has not formulated its own CSR regulations; but, in accordance with Article 1 of the Bank’s corporate

charter, “In line with national financial policy, the Bank’s goals are to provide financing for the public and small and medium enterprises, and to help SMEs improve their production equipment and financial structure and strengthen their operational management.” In pursuit of these goals the Bank fulfills its CSR to stabilize finance and assist enterprises and individuals with financing.

(2) To provide employees a safe and healthy work environment, including necessary health and emergency aid facilities, to reduce hazards to employees’ work safety and health, and to prevent occupational accidents, the Bank established “Labor Safety and Health Work Rules” in February of 2003. Dedicated personnel are designated to carry out scheduled labor safety and health inspections covering work safety and health standards as well as maintenance and inspection methods for various items of equipment. This assures the normal opration of related equipment, reduces the incidence of accidents, and protects the safety of personnel. The operation of this system has no divergence from the established rules.

(3) To develop a sustainable environment, the Bank implements a policy of energy conservation and carbon reduction. Internal water- and electricity-saving measures were established in March of 2010 and entred as an item of evaluation, and the Bank carries out assessment of implementation in order to improve the performance of equipment and upgrade the efficiency of energy use. This operation does not diverge from the established rules.

6. For other information to aid understanding of the Bank’s CSR operations (including systems and measures, and status of implementation, of environmental protection, social contributions, social service, social benefit, consumer rights, human rights, safety and health, and other CSR activities), Please refer to section 3 item 5.

7. If the Company’s products or CSR report has passed the verification standards of a related verification institution, please explain: (1) The long-term subordinated financial bonds issued by the Bank in 2010—99-1 issuance (NT$1.05 billion) and 99-2

issuance (NT$6 billion) were given a credit rating of twA- by Taiwan Ratings, and the 99-1 A issuance (NT$3.2 billion) and 99-1 B issuance of non-cumulative subordinated bonds without maturity dates were given a rating of twBBB+, also by Taiwan Ratings.

(2) An information security management system conforming to ISO 27001 was introduced and ISO certification was obtained, strengthening the Bank’s information security capabilities.


(7) Implementation of honest operation, and measures adopted1. The Bank observes the relevant regulations in all its operating activities, and fulfills its tax obligations.

2. The Bank’s work rules state clearly that employees may not take advantage of their jobs to perpetrate fraud or

seek improper benefits for themselves or others, nor may they accept gifts or enjoy other improper benefits. The

Bank’s guidelines for employee rewards and punishments contain related punitive provisions to assure the Bank’

s honest operation.

3. For the Bank’s public tender projects, the “Guidelines for Construction Works and the Procurement and Sale of

Assets” state that “If companies that win bid tenders have a material relationship with the Bank, the matter must

be reported to the Bank’s Board of Directors for approval before the bidding result becomes effective” In addition,

the bidding company must assure that it has acted in accordance with the tender instructions, supplementary

explanations, and standards stipulated in the relevant laws and regulations, and that there was no fixing of bid

prices, borrowing of licenses to rig the bidding, or other illegal behavior, and confirm its material relationwhip with

the Bank during the bidding process; should there by any violation or concealing of facts, the bidder will allow the

Bank to confiscate the bid bond and discrepancy (performance) bond, and to cancel the business relationship,

without objection.

4. The above-mentioned Guidelines also stipulate work rules and ethics:

(1) The acceptance of construction work or procurement or sale of assets should be completed immediately after

acquisition or disposition, with no delay allowed, unless otherwise agreed with the counterparty.

(2) Personnel engaged in construction work or the procurement of property may not take charge of inspection

and acceptance of related cases, and accompanying inspection personnel may not supervise the inspection

of related cases. Personnel who handle the sale of property may not take charge of the inspection and

delivery of related cases.

(3) Personnel at all levels who handle or supervise construction or the procurement or sale of property are strictly

prohibited from accepting banquet invitations or gifts from related companies so as to assure cleanness and

integrity, and persons in charge of procurement should be regularly rotated.

5. The Auditing Dept. of the Board of Directors carries out general or special audits every year in accordance with

the regulations, comply by internal controls sytem and submits audit reports to the Board of Directors.

6. To identify, weigh, monitor, and report on major risks faced by the Bank, and to achieve the goals of rationalized

risk and compensation, the Bank has established a risk management policy and, in accordance with the

principles of that policy, has set up management systems for different kinds of risk.

(8) For information on corporate governance rules and related regulations, please visit the Market Observsation Post System website (http://newmops.tse.com.tw) and click on “corporate governance.”

(9) For a further understanding of the Bank’s governance operations, please visit the Bank’s website (http://www.tbb.com.tw) and click on “About TBB” and then “Investor Relations.”

Directory Of Head Office and Branch Units

Ⅷ Directory of Head Office and Branch Units

TBB’S OFFICES ADDRESS TEL NO. SWIFT ADDRESS

Head Office 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171

Banking Department 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171

Trust Department 15F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171

Securities Department (Banking Broker) 4F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171

International Banking Department 3F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP

Chi Lin Branch 46, Sec. 2, Min Chen e. Rd., Taipei, Taiwan, R.O.C. (02)25417171 MBBTTWTP001

Chung Ho Branch 634-10 Gin Pin Rd., Chung Ho Dist., New Taipei City, Taiwan, R.O.C. (02)22427171

Po Ai Branch 419 Min Cheng 2nd Rd., Zuoying Dist., Kaohsiung City, Taiwan, R.O.C. (07)5567171

North Taoyuan Branch 985 Chung Zi Rd., Taoyuan City, Taoyuan Hsien, Taiwan, R.O.C. (03)3567171 MBBTTWTP004

Nan Ken Branch 381 Chung Cheng Rd., Luo Chu Shiang, Taoyuan Hsien,Taiwan, R.O.C. (03)3227171 MBBTTWTP005

Si Tuen Branch 107, Sec. 3, Taichung Kang Rd., Taichung City, Taiwan, R.O.C. (04)23587171 MBBTTWTP006

Chung Min Branch 301 Chung Min S. Rd., Taichung City, Taiwan, R.O.C. (04)23057171

Ta Ya Branch 161 Ta Ya Rd., Ta Ya Dist., Taichung City, Taiwan, R.O.C (04)25687171 MBBTTWTP011

Jen Ta Branch 183 Fengnan Rd., Nanzi Dist., Kaohsiung City, Taiwan, R.O.C. (07)3537171

Jen Ai Branch 357, Sec. 4, Jen Ai Rd., Taipei, Taiwan, R.O.C. (02)27217171 MBBTTWTP020

Sung Shan Branch 147, Sec. 4, Nan King e. Rd., Taipei, Taiwan, R.O.C. (02)27167171 MBBTTWTP021

Chien Cheng Branch (Banking Broker) 76 Nan King W. Rd., Taipei, Taiwan, R.O.C. (02)25507171 MBBTTWTP022

Shih Lin Branch 601 Chung Cheng Rd., Shih-Lin Chiu, Taipei, Taiwan, R.O.C (02)28117171

Yung Ho Branch 168 Chu Lin Rd., Yung Ho Dist., New Taipei City, Taiwan, R.O.C. (02)29277171

Hsin Tien Branch 192, Sec. 2, Chung Hsing Rd., Hsin Tien Dist., New Taipei City,Taiwan, R.O.C. (02)29117171 MBBTTWTP025

Hsin Chuang Branch 1&2F, 16, Sec. 1, Chung Hwa Rd., Hsin Chuang Dist., New Taipei City, Taiwan, R.O.C. (02)29907171 MBBTTWTP026

Hwa Cheng Branch 1&2F,25, Tou Chian Rd.,Hsin Chuang Dist., New Taipei City, Taiwan,R.O.C. (02)29977171

Sung Kiang Branch 158 Sung Kiang Rd., Taipei, Taiwan, R.O.C. (02)25377171 MBBTTWTP040

Taipei Branch (Banking Broker) 72, Sec. 1, Chung King S. Rd., Taipei, Taiwan, R.O.C. (02)23717171 MBBTTWTP050

Wan Hua Branch 146 Kwang Chow St., Taipei, Taiwan, R.O.C. (02)23387171

South Taipei Branch 93, Sec. 2, Roosevelt Rd., Taipei, Taiwan, R.O.C. (02)23697171

Fu Hsin Branch 390, Sec. 1, Fu Hsing S. Rd., Taipei, Taiwan, R.O.C. (02)27057171 MBBTTWTP070

Chung Shan Branch 17 Chang Chuen Rd., Taipei, Taiwan, R.O.C. (02)25517171 MBBTTWTP080

Chien Kuo Branch 4, Sec. 3, Min Chen e. Rd., Taipei, Taiwan, R.O.C. (02)25097171 MBBTTWTP081

Nai Hu Branch 15, Alley 360, Sec. 1, Nai Hu Rd. Taipei, Taiwan, R.O.C. (02)27997171 MBBTTWTP082



Nan King east Road Branch 311, Sec. 3, Nan King e. Rd., Taipei, Taiwan, R.O.C. (02)27127171 MBBTTWTP090

Chung Hsiao Branch 267, Sec. 3, Chung Hsiao e. Rd., Taipei, Taiwan, R.O.C. (02)27727171 MBBTTWTP100

east Taipei Branch 135, Sec. 4, Pa Te Rd., Taipei, Taiwan, R.O.C. (02)87877171 MBBTTWTP101

World Trade Center Branch 547 Kuang Fu S. Rd., Taipei, Taiwan, R.O.C. (02)23457171 MBBTTWTP102

Yung Trin Branch 552, Sec. 5, Chung Hsiao e. Rd., Taipei, Taiwan, R.O.C. (02)23467171

Nan Kang Branch 19-2 San Chung Rd., Nan Kang Dist., Taipei, Taiwan, R.O.C. (02)26553771 MBBTTWTP105

Sung Nan Branch 161, Sec. 1, Keelung Rd., Taipei, Taiwan, R.O.C. (02)27647171 MBBTTWTP110

Dong Hu Branch 152, Sec. 6, Min Chuan e. Rd., Taipei, Taiwan, R.O.C. (02)87929771

Ta An Branch 92, Sec. 2, Tun Hwa S. Rd., Taipei, Taiwan, R.O.C. (02)27007171 MBBTTWTP120

Shuang Ho Branch 356 Chung Ho Rd., Chung Ho Dist., New Taipei City, Taiwan, R.O.C. (02)22327171

Jim Ho Branch 403, Sec. 2, Chung Shan Rd., Chung Ho Dist., New Taipei City, Taiwan, R.O.C. (02)22287171

Wu Ku Branch 95 Wu Kung Rd., Wu Ku Industrial Zone, Hsin Chuang Dist., New Taipei City,Taiwan, R.O.C. (02)22987171 MBBTTWTP130

Lin Kuo Branch 1F-2, 188 Chung Shan Rd., Lin Kuo Dist., New Taipei City, R.O.C. (02)26037171 MBBTTWTP131

Pan Chiao Branch 2-1 Ming Te St., Pan Chiao Dist., New Taipei City, Taiwan, R.O.C. (02)29687171 MBBTTWTP140

Shu Lin Branch 1&2F-1,217, Sec. 1, Chung Shan Rd., Shu Lin Dist., New Taipei City, Taiwan, R.O.C. (02)26757171 MBBTTWTP141

Tu Cheng Branch 126, Sec. 2, Chung Yang Rd., Tu Cheng Dist., New Taipei City, Taiwan, R.O.C. (02)22737171 MBBTTWTP142

Hwei Long Branch 933 Chung Cheng Rd., Hsin Chuang Dist., New Taipei City, Taiwan, R.O.C. (02)82097171 MBBTTWTP143

Xi Zhi Branch 75, Sec. 1, Shin Tai 5th Rd., Xizhi Dist., New Taipei City, R.O.C. (02)26987171 MBBTTWTP144

Kee Lung Branch 9 Ai 3rd Rd., Keelung, Taiwan, R.O.C. (02)24237171

Pu Chya Branch(Banking Broker)

62-1, Sec. 2, Chung Shan Rd., Pan Chiao Dist., New Taipei City, Taiwan, R.O.C. (02)29547171

North San Chung Branch

137, Sec. 4, San Ho Rd., San Chung Dist., New Taipei City, Taiwan, R.O.C. (02)22867171

South San Chung Branch

232, Sec. 1, Chi Cheng Rd., San Chung Dist., New Taipei City, Taiwan, R.O.C. (02)29827171 MBBTTWTP153

Lu Chow Branch 42 Yeong Loh St., Lu Chow Dist., New Taipei City, Taiwan, R.O.C. (02)28477171

I Lan Branch 305 Sec. 2,Chung Shan Rd., I Lan City, I Lane Hsien, Taiwan, R.O.C. (03)9367171

Lo Tung Branch 15 Chung Cheng N. Rd., Lo Tung Chen, I Lan Hsien, Taiwan, R.O.C. (03)9567171

Su Aw Branch 96-1,Sec. 1, Chung Shan Rd., Su Aw Chen, I Lan Hsien, Taiwan, R.O.C. (03)9965051

Yang Mei Branch 146 Ta Cheng Rd., Yang Mei Chen, Taoyuan Hsien, Taiwan, R.O.C. (03)4786111

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Hu Kou Branch 76, Sec. 1, Chung Cheng Rd., Hu Kou Shiang, Hsin Chu Hsien, Taiwan, R.O.C. (03)5997171

Taoyuan Branch (Banking Broker) 99 Chung Hwa Road Tao Yuan City, Taiwan, R.O.C. (03)3317171 MBBTTWTP300

Ta Yuan Branch 80 Chung Shan S. Rd., Ta Yuan Shiang, Taoyuan Hsien, Taiwan, R.O.C. (03)3857171 MBBTTWTP301

Ta Shi Branch 80 Fu Hsin Rd., Ta Shi Chen, Taoyuan Hsien, Taiwan, R.O.C. (03)3887171

Chung Li Branch 157 Chung Shan Rd., Chung Li City, Taoyuan Hsien, Taiwan, R.O.C. (03)4277171 MBBTTWTP310

Nei Li Branch 74 Chung Hsiao Rd., Chung Li City, Taoyuan Hsien, Taiwan, R.O.C. (03)4557171 MBBTTWTP311

Hsin Ming Branch 282 Min Tsu Rd., Chung Li City, Taoyuan Hsien, Taiwan, R.O.C. (03)4027171

east Taoyuan Branch 1223, Sec. 2, One Shou Rd., Guei Shan Shiang, Taoyuan Hsien, Taiwan, R.O.C. (03)3297171

Hsin Wu Branch 257 Chung Shan Rd., Hsin Wu Shiang, Taoyuan Hsien,Taiwan, R.O.C. (03)4777171

Hsin Chu Branch 154 Tung Men St., Hsin Chu City, Taiwan, R.O.C. (03)5277171 MBBTTWTP320

Chu Pei Branch (Banking Broker)

128 Hsien Cheng 9th Rd., Chu Pei City, Hsin Chu Hsien, Taiwan, R.O.C. (03)5517171 MBBTTWTP321

Hsinchu Science BasedIndustrial Park Branch

489, Sec. 1, Guang Fu Rd., Hsin Chu City, Taiwan, R.O.C. (03)5637171 MBBTTWTP322

Pa Te Branch 789, Sec. 1, Chien Shou Rd., Pa Te City, Taoyuan Hsien, Taiwan, R.O.C. (03)3767171

Luong Tan Branch 64 Luong Yuan Rd., Luong Tan Shiang, Taoyuan Hsien, Taiwan, R.O.C. (03)4807171

Chu Tung Branch 6 Tung Lin Rd., Chu Tung Chen, Hsin Chu Hsien, Taiwan, R.O.C. (03)5947171

Chu Nan Branch 29 Po Ai St., Chu Nan Chen, Maio Li Hsien, Taiwan, R.O.C. (037)467171

Tou Fen Branch 90 Hsin Yi Rd., Tou Fen Chen, Maio Li Hsien, Taiwan, R.O.C. (037)687171 MBBTTWTP351

Maio Li Branch 606 Chung Cheng Rd., Maio Li City, Taiwan, R.O.C. (037)327171

Feng Yuan Branch (Banking Broker)

1 San Feng Rd., Feng Yuan Dist., Taichung City, Taiwan, R.O.C. (04)25267171 MBBTTWTP460

Houli Branch 1F., No.51, Wenming Rd., Houli Dist., Taichung City 421, Taiwan, R.O.C. (04)25587171

Tai Ping Branch (Banking Broker)

27 Chung Hsin e. Rd., Tai Ping Dist., Taichung City, Taiwan, R.O.C. (04)22707171 MBBTTWTP470

Ta Chia Branch 14 Chen Cheng Rd., Ta Chia Dist., Taichung City, Taiwan, R.O.C. (04)26867171

Sha Lu Branch 355 Chung Chew Rd., Sha Lu Dist., Taichung City, Taiwan, R.O.C. (04)26657171

Wu Jih Branch 616 Chung Hwa Rd., Wu Jih Dist., Taichung City, Taiwan, R.O.C. (04)23387171

Taichung Branch (Banking Broker) 224 Chung Cheng Rd., Taichung City, Taiwan, R.O.C. (04)22297171 MBBTTWTP490



Min Chen Branch 84 Min Chen Rd., Taichung City, Taiwan, R.O.C. (04)22267171 MBBTTWTP491

Hsing Chung Branch 136 Taichung Rd., Taichung City, Taiwan, R.O.C. (04)22877171

Pei Tuen Branch 53 Chin Hwa N. Rd., Taichung City, Taiwan, R.O.C. (04)22307171

Nan Tou Branch 139 Fu Shing Rd., Nan Tou City, Nan Tou Hsien, Taiwan, R.O.C. (049)2237171

Tsao Tuen Branch 604 Chung Cheng Rd., Tsao Tuen Chen, Nan Tou Hsien, Taiwan, R.O.C. (049)2357171

Pu Li Branch 434 Chung Cheng Rd., Pu Li Chen, Nan Tou Hsien, Taiwan, R.O.C. (049)2997171

Tan Tze Branch 135, Sec. 2, Chung Shan Rd., Tan Tze Dist., Taichung City, Taiwan, R.O.C. (04)25317171

Chu Shan Branch 919, Sec. 3, Chi Shan Rd., Chu Shan Chen, Nan Tou Hsien,Taiwan, R.O.C. (049)2637171

Chang Hwa Branch 61 Kuang Fu Rd., Chang Hwa City, Chang Hwa Hsien, Taiwan, R.O.C. (04)7257171 MBBTTWTP540

Ho Mei Branch 8 Ho An St., Ho Mei Chen, Chang Hwa Hsien, Taiwan, R.O.C. (04)7558131

Yuan Lin Branch 16 Min Chuan St., Yuan Lin Chen, Chang Hwa Hsien, Taiwan, R.O.C. (04)8377171 MBBTTWTP550

Pei Tou Branch 62 Kung Chien St., Pei Tou Chen, Chang Hwa Hsien, Taiwan, R.O.C. (04)8877171

erh Lin Branch 2 Chung Cheng Rd., erh Lin Chen, Chang Hwa Hsien, Taiwan, R.O.C. (04)8957171

Tou Liu Branch 109 Ta Tung Rd., Do Lui City, Yun Lin Hsien, Taiwan, R.O.C. (05)5347171

Pei Kang Branch 65 Wen Hwa Rd., Pei Kang Chen, Yun Lin Hsien, Taiwan, R.O.C. (05)7827171

Hu Wei Branch 45 Ho Ping Rd., Hu Wei Chen, Yun Lin Hsien, Taiwan, R.O.C. (05)6337171

Chia Yi Branch (Banking Broker) 132 Kuang Hwa Rd., Chia Yi City, Taiwan, R.O.C. (05)2287171 MBBTTWTP680

Ming Hsiung Branch (Banking Broker)

83, Sec. 3, Chien Kuo Rd., Ming Hsiung Shiang, Chia Yi Hsien, Taiwan, R.O.C. (05)2207171

South Chia Yi Branch 766 Shin Min Rd., Chia Yi City, Taiwan, R.O.C. (05)2867171

Hsin Ying Branch 216 Chung Shan Rd., Hsin Ying Dist., Tainan City, Taiwan, R.O.C. (06)6357171

Kai Yuan Branch 12 Chung Hwa Rd., Yun Kang Dist., Tainan City, Taiwan, R.O.C. (06)3117171

Yun Kang Branch 79 Chung Cheng S. Rd., Yun Kang Dist., Tainan City, Taiwan, R.O.C. (06)2517171 MBBTTWTP700

Shiue Chia Branch 87 Chung Shan Rd., Shiue Chia Dist., Tainan City, Taiwan, R.O.C. (06)7837171

Shan Hwa Branch 352 Chung Shan Rd., Shan Hwa Dist., Tainan City, Taiwan, R.O.C. (06)5816111

Yung Ta Branch 1532, Sec. 2, Yung Ta Rd., Yun Kang Dist., Tainan City, Taiwan, R.O.C. (06)2337171

Tainan Branch (Banking Broker) 185 Chung Cheng Rd., Tainan City, Taiwan, R.O.C. (06)2247171 MBBTTWTP710

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Jen Te Branch 339 Chung Shan Rd., Jen Te Dist., Tainan City, Taiwan, R.O.C. (06)2797171 MBBTTWTP711

Cheng Kung Branch 25 Kuong Yuan Rd., Tainan City, Taiwan, R.O.C. (06)2217171 MBBTTWTP720

east Tainan Branch 75, Sec. 2, Chung Hwa e. Rd., Tainan City, Taiwan, R.O.C. (06)2687171

An Ping Branch 67, Sec. 1, Chung Hwa W. Rd., Tainan City, Taiwan, R.O.C (06)2657171 MBBTTWTP730

Hua Lien Branch 247 Chung Shan Rd., Hua Lien City, Hua Lien Hsien, Taiwan, R.O.C. (03)8357171 MBBTTWTP760

Taitung Branch 335, Sec. 1, Chung Hwa Rd., Taitung City, Taitung Hsien, Taiwan, R.O.C. (089)327171

east Kaohsiung Branch 249 Chung Cheng 1st Rd., Kaohsiung City, Taiwan, R.O.C. (07)7167171 MBBTTWTP820

Kang Shan Branch (Banking Broker)

412 Kang Shan Rd., Kang Shan Dist., Kaohsiung City, Taiwan, R.O.C. (07)6227171 MBBTTWTP830

North Feng Shan Branch

28, Sec. 3, Chien Kuo Rd., Feng Shan Dist., Kaohsiung City,Taiwan, R.O.C. (07)7767171

Ling Ya Branch 31 Chingnian 1st Rd., Ling Ya Dist., Kaohsiung City, Taiwan, R.O.C. (07)5377171

Kaohsiung Branch 79 Wu Fu 3rd Rd., Kaohsiung City, Taiwan, R.O.C. (07)2717171 MBBTTWTP850

North Kaohsiung Branch (Banking Broker)

90 Fu Shing 1st Rd., Fu Shing Dist., Kaohsiung City, Taiwan, R.O.C. (07)2387171

Ta Chang Branch 116 Ta Chang 2nd Rd., Kaohsiung City, Taiwan, R.O.C. (07)3827171

Chien Chen Branch 378-3 Min Chien 2nd Rd., Chien Chen Dist., Kaohsiung City, Taiwan, R.O.C. (07)5355171

Jeou Ru Branch (Banking Broker) 255 Jeou Ru 2nd Rd., Kaohsiung City, Taiwan, R.O.C. (07)3137171 MBBTTWTP860

San Ming Branch(Banking Broker) 153 Chung Shan 1st Rd., Kaohsiung City, Taiwan, R.O.C. (07)2867171

Feng Shan Branch 157 Chung Shan Rd., Feng Shan Dist., Kaohsiung City,Taiwan, R.O.C. (07)7107171

Ta Fa Branch 1 Hwa Chung Rd., Ta Fa Industrial Zone, Ta Liao Dist., Kaohsiung City,Taiwan, R.O.C. (07)7887171

Ping Tung Branch(Banking Broker)

7 Han Kou St., Ping Tung City, Ping Tung Hsien, Taiwan, R.O.C. (08)7327171

Xiao Gang Branch 718 Hongping Rd., Xiaogang Dist., Kaohsiung City, Taiwan, R.O.C. (08)8016171

Chiao Chou Branch 100 Hsin Sheng Rd., Chiao Chou Chen, Ping Tung Hsien,Taiwan, R.O.C. (08)7807171

Offshore Banking Branch 3F, 30 Ta Cheng St., Taipei, Taiwan, R.O.C. (02)25597171 MBBTTWTP893

Los Angeles Branch 633, West 5TH St. Suite 2280 L.A. C.A. 90071 U.S.A. 213-8921260 MBBTUS6L

Hong Kong Branch Suite 2705-9,27/F,Tower The Gateway, Harbour City, Kowloon, H.K. 852-29710111 MBBTHKHH

Sydney Branch Suite3, Level24, 363 George Street Sydney, N.S.W.2000 Australia 612-92623356 MBBTAU2S

Shanghai Representative Office

47/F, Hong Kong New World Tower, 300 Huaihai Zhong Road, Shanghai 200021, China 86-21-51162893


Chairman

Taiwan Business Bank, Ltd.

Stock Code: 2834Taiwan Stock Exchange Market Observation Post System：http：//newmops.twse.com.twTBB's annual report is available at：http：//www.tbb.com.tw

PUBLISHED IN MARCH 2011

臺灣中小企業銀行

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Annual Report 2010

http://www.tbb.com.tw

NOTICE TO READERSThis English version annual report is a summary translation of the Chinese version and is not an official document of the shareholders' meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail.

臺灣中小企業銀行 - mz asia-pacific€¦ · title: v.p.& general manager, general...

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