SinoPac Financial Holdings Company Limited and Subsidiaries

Transcription

1 SinoPac Financial Holdings Company Limited and Subsidiaries Consolidated Financial Statements for the Nine Months Ended September 30, 2006 and 2005 and Independent Accountants Review Report

2 INDEPENDENT ACCOUNTANTS REVIEW REPORT The Board of Directors and the Stockholders SinoPac Financial Holdings Company Limited We have reviewed the accompanying consolidated balance sheets of SinoPac Financial Holdings Company Limited and its subsidiaries as of September 30, 2006 and 2005, and the related consolidated statements of income and cash flows for the nine months then ended. These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews. The financial statements of AnShin Card Services Co., Ltd., a consolidated subsidiary, were reviewed by the other independent accountants, and our review, insofar as it relates to the amounts as of September 30, 2005 and for the nine months then ended included for AnShin Card Service Co., Ltd., is based solely on the review reports of the other independent accountants. The total assets of AnShin Card Service Co. were 1.31% (NT$13,711,382 thousand) of the restated consolidated assets as of September 30, The total net revenues of AnShin Card Service Co. were 6.57% (NT$1,522,717 thousand) of the restated consolidated net revenues for the nine months ended September 30, As to the amounts related to AnShin Card Services Co., included in consolidated financial statements as of September 30, 2006 and for the nine months then ended, since we have thoroughly reviewed the other independent accountants work, thus, no shared review report was issued related to the consolidated financial statements as of September 30, 2006 and for the nine months then ended. We conducted our reviews in accordance with Statement of Auditing Standards No. 36 Review of Financial Statements of the Republic of China except that described in the next paragraph. A review of interim financial statements consists primarily of applying analytical procedures, comparisons and making inquiries. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is to express an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an audit opinion. As stated in Note 2 to the consolidated financial statements, some subsidiaries financial statements as of September 30, 2005 and for the nine months then ended, which were consolidated into the consolidated financial statements as of and for the nine months ended September 30, 2005, were unreviewed. As of September 30, 2005, the total assets and liabilities of those subsidiaries were 0.81% (NT$8,488,273 thousand) and 0.63% (NT$5,992,948 thousand) of the restated consolidated assets and liabilities, respectively. The total net income of those subsidiaries were 0.45% (NT$25,202 thousand) of the restated consolidated income for the nine months ended September 30, As to the financial statements of those subsidiaries consolidated into the consolidated financial statements as of and for the nine months ended September 30, 2006, were reviewed. Moreover, as stated in Note 13 to the consolidated financial statements, the carrying amounts of equity investments accounted for by the equity method as of September 30, 2005 amounted to NT$327,269 thousand, the related investment income for the nine months then ended amounted to NT$16,404 thousand, and additional disclosure of the Company and part of its investees stated in Note 47 to the consolidated financial statements, were based on the investees unreviewed financial statements

3 Based on our reviews and the reports of other independent accountants for the nine months ended September 30, 2005, except for the effects of such adjustments, if any, as might have been required had the financial statements of the subsidiaries and investees as mentioned in the preceding paragraph been reviewed by other independent accountants, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Criteria Governing the Preparation of Financial Reports by Financial Holding Companies, Criteria Governing the Preparation of Financial Reports by Public Banks, Criteria Governing the Preparation of Financial Reports by Securities Issuers, Criteria Governing the Preparation of Financial Reports by Securities Firms, Criteria Governing the Preparation of Financial Reports by Futures Commission Merchants and accounting principles generally accepted in the Republic of China. As stated in Note 2 to the consolidated financial statements, SinoPac Financial Holdings Company Limited acquired International Bank of Taipei through a share swap on December 26, Under an explanation issued by the Accounting Research and Development Foundation of the Republic of China, SinoPac Financial Holdings Company Limited applied the pooling of interest method and retroactively restated the consolidated financial statements as of September 30, 2005 and for the nine months then ended. As stated in Note 3 to the consolidated financial statements, effective January 1, 2006, SinoPac Financial Holdings Company Limited and its subsidiaries adopted the Statement of Financial Accounting Standards No. 34 Accounting for Financial Instruments, No. 36 Disclosure and Presentation of Financial Instruments and other standards amended for harmonizing with those two standards. October 24, 2006 Notice to Readers The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with 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. For the convenience of readers, the independent accountants review report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent accountants review report and financial statements shall prevail

4 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars, Except Par Value) (Reviewed, Not Audited) (Restated - Note 2) 2006 (Restated - Note 2) ASSETS Amount Amount % LIABILITIES AND STOCKHOLDERS EQUITY Amount Amount % CASH AND CASH EQUIVALENTS (Notes 2, 3 and 4) $ 27,557,751 $ 20,780, CALL LOANS AND DUE TO BANKS (Note 17) $ 96,401,181 $ 80,118, DUE FROM THE CENTRAL BANK AND OTHER BANKS (Note 5) 71,965,317 69,051,005 4 DUE TO THE CENTRAL BANK AND OTHER BANKS 7,989,778 4,910, FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 2, 3, 6, 11 COMMERCIAL PAPER PAYABLE, NET (Note 18) 9,843,664 11,445,396 (14 ) and 34) 68,056,948 40,691, FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (Notes 2, 3 SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (Notes 2 and 8) 22,831,485 15,613, and 6) 3,747,511 2,202, ACCOUNTS RECEIVABLES, NET (Notes 2, 3, 7, 32 and 34) 75,977,236 65,379, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Notes 2, 3, 6, 10, 12, 19 and 34) 39,094,773 35,798,512 9 DISCOUNTS AND LOANS, NET (Notes 2, 9 and 34) 639,793, ,465,088 1 ACCOUNTS PAYABLES (Notes 2, 20, 32 and 34) 43,823,308 31,633, AVAILABLE-FOR-SALE FINANCIAL ASSETS (Notes 2, 3, 10 and 11) 194,809, ,169, DEPOSITS AND REMITTANCES (Notes 21 and 34) 783,569, ,451, HELD-TO-MATURITY INVESTMENTS (Notes 2, 3 and 12) 4,933,538 7,143,082 (31 ) BANK DEBENTURES (Note 22) 36,457,323 33,247, EQUITY INVESTMENTS - EQUITY METHOD (Notes 2 and 13) 483, ,158 (7) EURO-CONVERTIBLE BONDS REDEEMABLE WITHIN ONE YEAR (Notes 2 and 24) 3,124, OTHER FINANCIAL ASSETS, NET (Notes 2, 3 and 14) Unquoted equity instruments 3,611,352 5,746,960 (37 ) BONDS PAYABLE (Notes 2, 23 and 26) 7,316,800 8,965,553 (18 ) Non-active market debt instruments 2,789, , Others 2,012,097 1,760, SHORT -TERM BORROWINGS (Notes 23 and 26) 12,087,924 15,280,488 (21 ) Other financial assets, net 8,412,892 7,965,798 LONG-TERM BORROWINGS (Note 25) 3,037,420 3,363,788 (10 ) PROPERTIES, NET (Notes 2, 15 and 35) OTHER FINANCIAL LIABILITIES (Notes 2 and 3) 890, ,209 (9) Land plus appreciation 6,408,682 6,526,047 (2) Buildings 5,323,947 5,225,204 2 OTHER LIABILITIES (Notes 2, 3, 31 and 32) 14,419,846 16,058,060 (10 ) Computer equipment 2,403,738 2,381,311 1 Transportation equipment 90, ,267 (11 ) Total liabilities 1,061,804, ,449,056 Office and other equipment 5,353,922 5,058, ,580,598 19,292,253 STOCKHOLDERS EQUITY OF PARENT COMPANY (Notes 2, 3, 13, 27, 28 and 34) Less: Accumulated depreciation 7,232,036 6,512, Capital stock 12,348,562 12,779,322 Common shares 71,480,556 72,182,808 (1) Advances for acquisitions of equipment and construction in progress 289, ,031 (8) Capital surplus Additional paid-in capital 1,452,345 1,419,613 2 Net properties 12,637,651 13,092,353 Treasury stock transactions 297, ,475 (60 ) Other 3,609 5,461 (34 ) OTHER ASSETS, NET (Notes 2, 3, 16, 32, 34 and 35) 22,566,035 23,219,501 (3) Total capital surplus 1,753,626 2,177,549 Retained earnings 17,296,786 18,073,847 (4) Other items on stockholders equity Revaluation increment on land 1,033,595 1,033,595 - Cumulative translation adjustment 45, ,470 (59 ) Unrealized gain on available-for-sale financial instruments 167, Treasury stock (3,414,754 ) (2,626,679 ) 30 Net loss not recognized as pension cost (227,904 ) (102,634 ) (122) Other adjustments on stockholders equity - (316,034 ) 100 Total other items on stockholders equity (2,396,696 ) (1,900,282 ) Total stockholders equity of parent company 88,134,272 90,533,922 MINORITY INTEREST 86, ,101 (20 ) CONTINGENCIES AND COMMITMENTS (Notes 2 and 36) TOTAL $ 1,150,025,209 $ 1,044,091,079 TOTAL $ 1,150,025,209 $ 1,044,091,079 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated October 24, 2006) - 3 -

5 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited) 2005 (Restated Note 2) Amount Amount % INTEREST REVENUE (Notes 2, 3 and 43) $ 32,720,052 $ 27,012, INTEREST EXPENSE (Notes 2, 3, 34 and 43) 17,478,269 12,661, NET INTEREST 15,241,783 14,351,296 NET REVENUES OTHER THAN INTEREST Commissions and fee revenues, net (Notes 2 and 43) 5,457,645 5,713,954 (4 ) Gains from financial assets and liabilities at fair value through profit or loss (Notes 2, 3 and 6) 1,186, , Realized gains from available-for-sale financial assets (Notes 2 and 3) 261, , Realized gains from held-to-maturity investments (Notes 2 and 3) - 9,929 (100) Income from equity investments - equity method, net (Notes 2 and 13) 13,113 11, Foreign exchange gains, net 320,486 1,746,553 (82 ) Provision for other overdue receivables (Note 2) (3,458,946 ) (1,209,852 ) ( 186 ) Realized gains from unquoted equity instruments (Notes 2 and 3) 33,212 5, Gain on warrants issued, net (Notes 2 and 6) 217, , Rental revenue (Note 2) 301, , Commission income (Note 2) 413, , Other revenues, net (Notes 2, 3 and 34) 901,685 1,000,639 (10 ) Total net revenues 20,889,481 23,170,350 PROVISION FOR LOAN LOSSES (Notes 2 and 9) 3,095,811 1,765, OPERATING EXPENSES (Notes 2, 29, 31 and 34) Personnel expenses 7,278,421 7,209,751 1 Depreciation and amortization 1,081,312 1,200,729 (10 ) Others 4,787,073 5,456,116 (12 ) Total operating expenses 13,146,806 13,866,596 INCOME BEFORE INCOME TAX 4,646,864 7,538,509 INCOME TAX EXPENSE (Notes 2 and 32) 1,158,356 1,905,861 (39 ) (Continued) - 4 -

6 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited) 2005 (Restated Note 2) Amount Amount % INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $ 3,488,508 $ 5,632,648 CUMULATIVE EFFECT OF ACCOUNTING CHANGES (NET OF TAX BENEFIT $2,539) (Note 3) 742, CONSOLIDATED INCOME $ 4,231,220 $ 5,632,648 ATTRIBUTABLE TO Stockholders of the parent company $ 4,233,103 $ 5,623,313 (25 ) Minority interests (1,883 ) 9,335 (120) $ 4,231,220 $ 5,632, (Restated - Note 2) After After Pretax Tax Pretax Tax EARNINGS PER SHARE (Note 33) Basic $ 0.77 $ 0.60 $ 1.07 $ 0.80 Diluted $ 0.73 $ 0.58 $ 1.01 $ 0.76 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated October 24, 2006) (Concluded) - 5 -

7 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited) (Restated - Note 2) CASH FLOWS FROM OPERATING ACTIVITIES Consolidated income $ 4,231,220 $ 5,632,648 Cumulative effect of accounting changes (742,712 ) - Adjustments to reconcile consolidated income to net cash provided by operating activities Depreciation and amortization 1,078,196 1,018,071 Impairment loss on goodwill - 6,888 Impairment loss on guarantee deposits 8,000 - Impairment loss on available-for-sale financial assets 1,284 - Impairment loss on unquoted equity instruments 24,538 29,510 (Reversal of) provision for allowance for decline in market value of collaterals assumed (33 ) 34,451 Provision for credit and trading losses 6,634,435 2,992,321 Other loss Amortization of Euro-convertible bonds deferred issuance cost - 9,668 Foreign exchange loss on bond payable 52,884 89,034 Accrued interest premium on Euro-convertible bonds 104, ,850 Amortization of premium or discount on held-to-maturity financial assets 9, ,729 (Gain) loss on disposal of unquoted equity instruments, net (43,049 ) 29,017 Unrealized loss on financial assets and liabilities at fair value through profit or loss 213, ,873 Cash dividends received from investments under equity method 10,753 33,213 Income from equity investments - the equity method, net (13,113 ) (11,284 ) Gain on warrants issued, net (217,381 ) (167,207 ) Loss on disposal of properties, net 8,113 8,650 Loss on disposal of leased assets, net 58 59,511 Gain on disposal of collaterals assumed, net (792 ) (31,061 ) Decrease in accrued pension cost 30,260 10,917 Change in deferred income taxes 154,655 (205,819 ) Change in securities brokerage accounts, net (48,662 ) (47,865 ) (Increase) decrease in held for trading financial assets (3,823,907 ) 20,208,785 Increase (decrease) in held for trading financial liabilities 2,071,164 (1,429,402 ) Decrease in other financial liabilities (192,689 ) (108,590 ) Proceeds from asset securitization 9,783,451 6,674,662 (Increase) decrease in accounts, interests and other receivables (16,995,735 ) 3,065,025 Increase (decrease) in accounts, interests and other payables 6,352,593 (4,587,216 ) Net cash provided by operating activities 8,691,233 34,042,379 (Continued) - 6 -

8 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited) (Restated - Note 2) CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in due from the Central Bank and other banks $ 28,734,932 $ (12,818,740 ) Decrease in financial assets designated at fair value through profit or loss 1,187, ,568 Decrease (increase) in discounts and loans 4,335,655 (56,538,832 ) Increase in unquoted equity instruments (370,080 ) (2,920,036 ) Proceeds from sale of unquoted equity instruments 450, ,642 Capital reduction on unquoted equity instruments 166,180 - (Increase) decrease in non-active market debt instruments (1,487,966 ) 2,914 (Increase) decrease in securities purchased under agreements to resell (6,926,825 ) 9,265,554 (Increase) decrease in available -for-sale financial assets (69,250,131 ) 4,530,698 Increase in held-to-maturity investments (1,285,376 ) (1,209,356 ) Proceeds from held-to-maturity investment matured 2,564,980 1,273,941 Proceeds from capital reduction of equity investments under equity method 1,800 - Decrease in equity investments - equity method 1,297 27,820 Acquisition of properties (511,286 ) (1,067,059 ) Proceeds from sale of properties 11, ,331 Increase in other financial assets (883,613 ) (1,461,854 ) Acquisition of leased assets (307,222 ) (257,800 ) Proceeds from sales of leased assets 66, ,327 Decrease (increase) in long-term lease and installment receivables 154,850 (199,420 ) (Increase) decrease in other assets (626,835 ) 896,828 Acquisition of collaterals assumed (2,812 ) (40,480 ) Proceeds from sales of collaterals assumed 76, ,410 Net cash used in investing activities (43,901,090 ) (58,772,544 ) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings (981,608 ) (1,966,179 ) Decrease in commercial paper payable (318,336 ) (1,457,500 ) Decrease in securities sold under agreements to repurchase (6,287,710 ) (14,429,337 ) Increase (decrease) in due to the Central Bank and other banks 3,401,324 (8,466,791 ) Increase in call loans and due to banks 22,558,048 9,638,219 Increase in deposits and remittances 27,386,012 45,201,311 Redemption of Euro-convertible bonds (65,720 ) (38,014 ) Decrease in long-term borrowings (3,091,464 ) (1,612,845 ) Increase in bonds payable 1,500,000 - Increase in other financial liabilities 148, ,646 (Decrease) increase in other liabilities (213,996 ) 5,922,980 (Continued) - 7 -

9 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited) (Restated - Note 2) Adjustments for the pooling of interest method applied $ - $ (2,223,312 ) Cash dividends paid (4,971,113 ) (3,617,573 ) Remuneration to directors and supervisors and bonus to employees (117,520 ) (91,630 ) Purchase of treasury stock (2,112,002 ) (2,292,706 ) Cash received from employees by exercising stock options 241, ,732 Minority interest (11,891 ) (18,071 ) Net cash provided by financing activities 37,063,476 25,088,930 INCREASE IN CASH AND CASH EQUIVALENTS 1,853, ,765 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,688,018 20,107,327 EFFECTS OF EXCHANGE RATE CHANGES 16, ,461 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 27,557,751 $ 20,780,553 SUPPLEMENTAL INFORMATION Interest paid $ 16,120,335 $ 11,083,445 Income tax paid $ 1,328,536 $ 3,117,198 NONCASH INVESTING AND FINANCING ACTIVITIES Euro-convertible bonds due within one year $ 3,124,610 $ - Cancellation of treasury stock $ 1,678,999 $ 1,490,917 Beneficiary certificates - retained interest of credit card receivables securitization $ 447,403 $ 425,372 Euro-convertible bonds converted to common stocks $ - $ 4,249,695 Current portion of long-term borrowings due within one year $ - $ 2,000,000 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated October 24, 2006) (Concluded) - 8 -

10 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited) 1. ORGANIZATION AND OPERATIONS SinoPac Financial Holdings Company Limited (the Company/SPH) was formed pursuant to the Financial Holding Company Act and related regulations on May 9, Following the incorporation, SPH issued stocks to swap for the shares of Bank SinoPac, National Securities Corporation (NSC), and SinoPac Securities Co., Ltd. (SPS), resulting in all three companies becoming wholly owned subsidiaries of SPH. The shares of Bank SinoPac and NSC then ceased to be traded on the Taiwan Stock Exchange (TSE) and GreTai Securities Market (GTSM), respectively, while SPH became listed on the TSE. SPH convened the provisional shareholders meeting on August 26, 2005 and reached the decision of share swap with International Bank of Taipei (IBT). As to the share swap between SP H and IBT, both parties agree that IBT will become a wholly owned subsidiary of SPH through share swap in accordance with Financial Holding Company Act. Through a swap at ratios of (with 1 representing the SPH s share), IBT became a wholly owned subsidiary of SPH on December 26, The shares of IBT were ceased to be traded on the TSE. On July 21, 2006, the boards of directors of Bank SinoPac resolved a merger with IBT in order to boost the operating performance through cross selling of pooling business channels, as well as harnessing the synergy of integration of diversified business operations. Under this merger, Bank SinoPac will acquire the assets and liabilities of IBT through a share swap at ratios of shares of Bank SinoPac to swap for 1 share of IBT, on which Bank SinoPac will be the surviving entity and IBT will be the company ceasing to exist. The preliminary effective date of the share swap and merger s recording date will be November 13, In order to provide the customer-leading products and services, pursue the growth of market share and profit, AnShin Card Services Co., Ltd. ( AnShin Card Services ) acquired IBT credit card business segment on the books pursuant to resolutions reached by the Boards of both companies in April and May, 2006, respectively. AnShin Card Services acquired the Financial Supervisory Commission of Executive Yuan (FSC) approved letter on June 22, 2006, and the credit card business and related net assets had been transferred on August 4, SPH engages in the business of investing and managing of the financial related institution. Bank SinoPac obtained government approval to incorporate on August 8, 1991 and started operations on January 28, Bank SinoPac, which engages in commercial banking and trust, established an International Division and Offshore Banking Unit to (OBU) manage foreign exchange operations allowed under the Banking Law. As of September 30, 2006, Bank SinoPac s operating units included Banking, Trust, International Division of the Head Office, an OBU, 44 domestic branches, 2 overseas branches and 1 overseas representative office. The operations of Bank SinoPac s Trust Department are: (1) trust planning, managing and operating; and (2) custody of nondiscretionary trust funds in domestic and overseas securities and mutual funds. These operations are regulated under both the Banking Law and the Trust Law

11 On August 15, 1997, Bank SinoPac acquired Far East National Bank (FENB), through SinoPac Bancorp, by purchasing 100% of its shares. FENB was established in Los Angeles in It is a commercial bank engaging mainly in the business of deposit taking and lending. As of September 30, 2006, FENB had 15 branches in Los Angeles and San Francisco areas, Ho Chi Minh City branch and Beijing representative office. It also had a wholly-owned subsidiary - Far East Capital Corporation. In 1978, the Taipei Regional Mutual Loans and Savings Company was converted into the Taipei Business Bank (TBB). In May 1998, the Ministry of Finance (the MOF) approved TBB s conversion into a commercial bank, and TBB changed its name to the International Bank of Taipei on May 14, As a commercial bank, IBT engages in the following: (a) businesses prescribed by the Banking Law and Trust Law; (b) operating an offshore banking unit (OBU); and (c) other businesses authorized by the MOF. IBT s Trust Department mainly engages in trust planning, managing and operating. SinoPac Life Insurance Agent Co., Ltd. ( SinoPac Life Insurance Agent ) and IBT Life Insurance Agent Co., Ltd. ( IBT Life Insurance Agent ) were incorporated on July 25, 2000 and March 21, 2001, respectively, in the Republic of China (R.O.C.). As their company names indicate, they are life insurance agents. On August 28, 2006, the boards of directors of SinoPac Life Insurance Agent and IBT Life Insurance Agent resolved to merge these two companies, with IBT Life Insurance Agent as the surviving entity. The effective merger date is November 13, SinoPac Property Insurance Agent Co., Ltd. ( SinoPac Property Insurance Agent ) and IBT Property Insurance Agent Co., Ltd. ( IBT Property Insurance Agent ) were incorporated on July 24, 2000 and May 28, 2001, respectively in the R.O.C. As their company names indicate, they are property insurance agents. On August 28, 2006, the boards of directors of SinoPac Property Insurance Agent and IBT Property Insurance Agent resolved to merge these two companies, with IBT Property Insurance Agent as the surviving entity. The effective merger date is November 13, SinoPac Leasing Corporation ( SinoPac Leasing ) obtained government approval to be incorporated by Bank SinoPac on September 2, SinoPac Leasing mainly leases out land, buildings, transportation equipment and machineries and also engages in the factoring business. Grand Capital International Limited ( Grand Capital ) is a wholly owned subsidiary of SinoPac Leasing and was incorporated in British Virgin Islands on January 2, It provides lease financing; installment sales of machinery and equipment and materials; factoring; and other financing activities. SinoPac Capital Limited ( SinoPac Capital ) was established in Hong Kong in It mainly engages in the business of lending and financing. Its 3 subsidiaries - SinoPac Capital (B.V.I.) Ltd. (incorporated in British Virgin Island, 1999), SinoPac Insurance Brokers Ltd. (incorporated in Hong Kong, 2004), and SinoPac (Hong Kong) Naminess Ltd. (incorporated in Hong Kong, 2004) mainly engage in financial advisory, insurance brokerage and custody securities business. SinoPac Securities was established on October 11, It engages in transactions involving marketable securities such as: (a) underwriting, dealing (securities and futures) and brokerage, (b) financing customers acquisitions and short-sales, (c) trading foreign securities on behalf of customers, (d) assistance activities in futures trading, and (e) bill financing business and other businesses approved by competent authority. As of September 30, 2006, the SinoPac Securities had 47 branches supporting its head office. AnShin Card Services Co., Ltd. ( AnShin Card Services ) was established on March 14, 2000, and its main business is to issue credit cards to card members and provide rela ted services. SinoPac Venture Capital Co., Ltd. ( SinoPac Venture ) was established on January 21, It mainly engages in venture capital investments and also provides advisory services on business operation and administration

12 SinoPac Securities Investment Trust Corporation ( SinoPac Securities Investment Trust, formerly named United Investment Trust Corporation) was established on September 15, Its main businesses are (1) issuing beneficiary certificates for raising securities investment trust fund; (2) investing in the securities and related products using the securities investment trust fund; (3) accepting consignment of discretionary account investment; and (4) other relevant businesses approved by competent authorities. SPH was approved by the FSC to acquire all the shares of United Investment Trust Corporation. On October 12, 2006, to meet the requirements under the Securities Investment Trust and Consulting Act, the board of directors of SinoPac Securities Investment Trust resolved to transfer all funds amounting to $6,244,257 as of October 11, 2006 to Grand Cathay Securities Investment Trust Co., a 24.7% subsidiary of IBT, free of charge. As of October 24, 2006, whether SinoPac Investment Trust will be liquidated or be merged with Grand Cathay Trust Securities Investment is to be decided. As of September 30, 2006 and 2005, SPH and the aforementioned consolidated subsidiaries had 7,832 and 8,185 employees, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cons olidation The consolidated financial statements include the accounts of the (1) SPH; (2) Bank SinoPac, as consolidated with SinoPac Bancorp and its subsidiaries SinoPac Financial Services (USA) Ltd. and FENB alone with its subsidiaries, SinoPac Leasing Corporation consolidated with Grand Capital International Limited (SinoPac Leasing and its subsidiary, thereafter), SinoPac Capital Limited consolidated with SinoPac Capital (B.V.I.) Ltd., SinoPac Insurance Brokers Ltd., SinoPac (Hong Kong) Naminess Ltd. (completed the legal dissolution process in June 2006), Cyberpac Holding Ltd. (completed the legal dissolution process in June 2006), Shanghai International Asset Management (Hong Kong) Co., Ltd., Pinnacle Investment Management Ltd., and RSP Information Service Company Limited (SinoPac Capital Limited and its subsidiaries, thereafter). Bank SinoPac and its subsidiaries thereafter refers to Bank SinoPac and FENB as consolidated with SinoPac Leasing and its subsidiaries and SinoPac Capital Limited and its subsidiaries; (3) IBT, as consolidated with IBT Life Insurance Agent and IBT Property Insurance Agent (IBT and its subsidiaries, thereafter); (4) SinoPac Securities and its subsidiaries SinoPac Futures consolidated with SinoPac Managed Futures Co., Ltd., SinoPac Capital Management Corporation, SinoPac Asset Management Corp. (B.V.I.) (completed the legal dissolution process in June 2005), SinoPac Securities (Cayman) consolidated with SinoPac Capital (Asia), SinoPac Futures (Asia) Ltd., SinoPac Securities (Europe) Ltd., SinoPac Asset Management (Asia) Ltd., SinoPac Securities (USA) Ltd., SinoPac Securities (Asia) Ltd. and its subsidiaries - SinoPac Securities (Asia) Nominess Ltd. and SinoPac (Asia) Nominess Ltd., SinoPac Asia Limited completed the legal dissolution process in September 2006, and SinoPac Asset Management (Asia) Ltd. and its subsidiaries - SPS Asset Management Limited; (5) SinoPac Life Insurance Agent; (6) SinoPac Property Insurance Agent; (7) AnShin Card Services; (8) SinoPac Venture and its subsidiaries; and (9) SinoPac Securities Investment Trust (the Company and its subsidiaries, thereafter). All significant inter-company transactions and balances have been eliminated for consolidation purposes. On December 26, 2005, SPH acquired IBT through a share swap, under an explanation issued by the Accounting Research and Development Foundation of the ROC (the ARDF of the ROC ), SPH adopted the pooling of interest method and retroactively restated the consolidated financial statements as of September 30, 2005 and for the nine months then ended. The Company s restated financial statements please refer to Tables 10 to

13 In order to simplify the Group s framework of investments, the Company decided to commence the reorganization in Thus, the SinoPac Capital s investees, Allstar Venture Ltd. (B.V.I.), Wal Tech International Corporation and Intellisys Corp. were transferred to SinoPac Venture Capital Co., Ltd., and became the subsidiaries of SinoPac Venture Capital Co., Ltd. The subsidiaries of SPH - SinoPac Call Center Co., Ltd., SinoPac Marketing Consulting Co., Ltd. and SinoPac Asset Management International, the subsidiary of Bank SinoPac- SinoPac Financial Consulting Co., Ltd. and the subsidiaries of SinoPac Securities (Cayman) - SPS Asia Ltd. were not included in the consolidated entities since the management of SPH consider those subsidiaries immaterial to the consolidated financial statements. The information regarding consolidated entities were summarized as Table 7, and the subsidiaries excluded from consolidated entities were summarized as Table 8. The accompanying consolidated financial statements have been prepared in conformity with the Criteria Governing the Preparation of Financial Reports by Financial Holding Companies, Criteria Governing the Preparation of Financial Reports by Public Banks, Criteria Governing the Preparation of Financial Reports by Securities Issuers, Criteria Governing the Preparation of Financial Reports of Securities Firms, Criteria Governing the Preparation of Financial Reports by Futures Commission Merchants, and accounting principles generally accepted in the Republic of China (ROC). In determining fair value of certain financial instruments, credit losses, depreciation for fixed assets and assets held for leasing, impairments, pension, income taxes, amortization of deferred charges, losses on suspended lawsuit and provision for losses on guarantees, the Company and its subsidiaries need to make estimates based on judgment and available information. Actual results could differ from those estimates based on judgement at available information. The significant accounting policies of SPH and consolidated subsidiaries are summarized as follows: Current and Noncurrent Assets and Liabilities Since the operating cycle in the banking industry cannot be reasonably identified, accounts included in the consolidated financial statements of Bank SinoPac, IBT and FENB are not classified as current or non-current. Nevertheless, these accounts are properly categorized according to the nature of each account and sequenced by their liquidity. Please refer to Note 43 for maturity analysis of assets and liabilities. In addition to cash equivalents mentioned in the next section, assets to be converted or consumed within one year are classified as current. Obligations to be liquidated or settled within one year are classified as current. All other assets and liabilities are classified as noncurrent. As the banking industry accounts for a large proportion in the consolidation, accounts in the consolidated financial statements are categorized according to the nature of each account and sequenced by their liquidity rather than classified as current or noncurrent assets/liabilities. Cash Equivalents Short-term bills, maturing within three months from the investing date, are classified as cash equivalents. The book value of short-term bills approximates to fair value. Repurchase and Reverse Repurchase Transactions Securities purchased under agreement to resell (reverse repurchase) agreements and securities sold under agreements to repurchase are generally treated as collateralized financing transactions. Interest earned on reverse repurchase agreements and interest incurred on repurchase agreements is recognized as interest income or interest expense over the life of each agreement

14 The proceeds from sale of government bonds which purchased under resale agreements by SinoPac Securities and its subsidiaries for trading purpose are accounted for as bonds purchased under resell agreements - short sales. Bonds purchased under resell agreement - short sales are stated at fair value. The fair value is based on the reference price on the balance sheet date published by the GreTai Securities Market (the GTSM ). Gains or losses from valuation on the balance sheet date are recognized in the current period as gains (or losses) from securities transaction - RS short covering. When bonds are repurchased, the difference between the covering cost and carrying value are accounted for as gain (or loss) from securities transactions - RS short covering. The cost of bonds is determined by the moving-average method. Securities Lending and Borrowing The proceeds from the sale of bonds or stocks borrowed by the SinoPac Securities and its subsidiaries for trading purposes are accounted for as borrowed securities payable - non-hedging. They are carried at fair value. The fair value is based on the reference price or closing price on the balance sheet date published by the GTSM. Gains or losses from valuation on the balance sheet date are recognized as gains (or losses) from valuation of securities lending and borrowing. When securities are returned, the difference between the covering cost and the carrying value are accounted for as gain (or loss) from short covering. Margin Loans and Stock Loans Margin loans pertain to the provision of funds to customers for them to buy securities. Margin loans receivable represents the amount given to customers. The securities bought by customers are used to secure these loans and are recorded through memo entries as collateral securities. The collateral securities are returned when the loans are repaid. The refinancing of margin loans with securities finance companies is recorded as refinancing borrowings, which are collateralized by securities bought by customers. The collateral securities are disposed of by SinoPac Securities when their market value fall below a pre-agreed level and the customer fails to maintain to this level. If the proceeds from the disposal of collateral security cannot cover the balance of the loan and the customer cannot timely settle the deficiency, then the balance of the margin loan is reclassified to overdue receivables. If a collateral security cannot be sold in the market, the balance of the loan is reclassified to other receivables or overdue receivables. Stock loans represent securities lent to customers for short sales. The deposits received from customers on securities lent out are credited to deposits on short sales. The securities sold short are recorded through memo entries as stock loans. The proceeds from sales of securities lent to customers less any dealer s commission, financing charges and securities exchange tax are recorded under short sales proceeds payable. When the customers return the stock certificates to SinoPac Securities, SinoPac Securities gives back to customers the deposits received and the proceeds from sales of securities. The margin deposited by securities firms to securities finance companies are recorded as loan from refinanced margin. The refinancing securities delivered to SinoPac Securities are recorded through memo entries as refinancing stock loans. A portion of the proceeds from the short-sale of securities borrowed from securities finance companies is retained by the securities finance companies as collateral and is recorded as refinancing deposits receivable. Customer Margin Account and Futures Traders Equity SinoPac Futures engages in futures brokerage business and received margin deposits from customers as required under existing regulations. The proceeds are deposited in a bank and presented as customer margin account and futures traders equity. Gains or losses from daily marking to market of the carrying amounts of the contracts and related commission are charged to customer margin account and futures

15 traders equity. Futures traders equity accounts cannot offset each other except when the kind of equity accounts are the same and belong to someone. The debit balance of futures traders equity, which results from losses on futures transactions in excess of the margin deposited, is recorded as accounts receivable - futures margin deposits. Financial Instruments at Fair Value Through Profit or Loss Financial instruments at fair value through profit or loss consist of any financial assets and liabilities that are designated on initial recognition as one to be measured at fair value with fair value changes in profit or loss and financial assets and liabilities which should be classified as held for trading. Those assets are required to be recognized at fair value and to be measured at fair value through profit or loss on the balance sheet date. The Company and its subsidiaries use trade date accounting when recording transaction, except for operating securities - bonds used settlement day accounting. Derivative instruments transaction which do not meet the specified criteria to obtain hedge accounting treatment are classified as financial assets or liabilities held for trading when the fair value of a derivative is positive, it is carried as an asset and where negative as a liability. Fair value are determined as follows: (a) listed stocks and GTSM stocks - closing prices as of the balance sheet date; (b) beneficiary certificates (open-end fund) - net asset values as of the balance sheet dates; (c) beneficiary certificates (index-stock fund) - closing prices as of the balance sheet date; (d) bonds - period-end reference prices published by the GTSM or Bloomberg; and (e) for the financial instruments without active markets, fair value is determined using valuation techniques. Any financial asset and any financial liability may be designated as financial instruments at fair value through profit or loss to eliminate measurement anomalies for items that provide a natural offset of each other. Besides, the set of financial assets, financial liabilities or combined by both of them managed according to the Company and its subsidiaries risk management policies and investment strategies will be designated as financial instruments at fair value through profit or loss. Available -for-sale Financial Assets Available-for-sale financial assets are carried at fair value. Unrealized gains or losses on available-for-sale financial assets are reported in equity attribute to the shareholders. On disposal of an available -for-sale financial asset, the accumulated, unrealized gain or loss in equity attributable to the shareholders is transferred to net profit and loss for the period. The Company and its subsidiaries use trade date accounting when recording available -for-sale portfolio transactions except for the SinoPac Securities and its subsidiaries investments in bonds are uses settlement date accounting. Dividend income from equity securities is recognized on ex-dividend dates. Cash dividends received a year after investment acquisition are recognized as income, otherwise as a reduction of the carrying value of the investments. The effective interest rate method of amortization and accretion is used, the straight line method is used if there is no significant difference. If an available-for-sale financial asset is determined to be impaired, the accumulative unrealized loss previously recognized in equity attributable to the shareholders is recognized as impairment loss and reported in income statement. For equity investments, loss reversal is adjusted to the equity attributable to the shareholders. For debt investments, loss reversal is credited to current income. Sales of Accounts Receivable AnShin Card Services has transferred its credit card receivables conforming to the following criteria and surrendered controls over the transferred assets and has recorded the transfer as sales of accounts receivable

16 a. Transferred accounts receivable has been isolated from AnShin Card Services. AnShin Card Services, along with its creditors, is unable to control the future economic benefits. b. The transferee has the right to pledge or transfer accounts receivable purchased, and there will be no condition constrains the transferee from its right to pledge or transfer. c. The transferee has no right to return the transferred accounts receivable purchased before their maturity. AnShin Card Services is neither obligated nor entitled to repurchase or redeem such accounts receivable. Where a repurchase transaction has been entered into, the amount of the repurchase price shall be the fair value of accounts receivable at the time the transaction occurs. AnShin Card Services derecognizes the credit card receivables sold at carrying value from its balance sheet on the transfer date. The difference between the amount of proceeds after deducting the estimated bad debt provision and the carrying value is recorded as income (loss) for the current period. Nonperforming Loans Under guidelines issued by the Banking Bureau of FSC (the Banking Bureau), the balance of loans and other credits extended by Bank SinoPac and IBT and the related accrued interest thereon are classified as nonperforming when the loan is overdue and shall be authorized by a resolution passed by the board of directors. Nonperforming loans reclassified from loans are classified as discounts and loans; otherwise, are classified as other financial assets. Receivables past due transferred to non-performing accounts and receivables deemed by AnShin Card Services to be uncollectible are written off upon the approval of the board of directors. Recovery of written-off receivables is recorded as non-operating income. Allowance for Credit Losses and Provision for Losses on Guarantees In determining the allowance for credit losses and provision for losses on guarantees, Bank SinoPac and its subsidiaries, together with IBT and its subsidiaries assesses the collectibility on the balances of discounts and loans, accounts receivables, interest receivables, other receivables, lease receivables, nonperforming loans, and other financial assets as well as guarantees and acceptances as of the balance sheet dates. Pursuant to Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans (the Regulations ) issued by the Banking Bureau, Bank SinoPac and its subsidiaries, together with IBT and its subsidiaries evaluate credit losses on the basis of its borrowers /clients financial positions, repayments for principal and interest by borrowers/clients, collateral provided, and estimated collectibility. In accordance with the Regulations stated above, the minimum provision for credit losses should not be less than the aggregate of 50% of the doubtful credits and 100% of the unrecoverable credits. Since July 2005, the Regulations amended the classification of loan assets, whic h divided the loan assets into different class subjects to assets that require special mention, assets that are substandard, assets that are doubtful, and assets for which there is loss. The minimum allowance for credit losses and provision for losses on guarantees for the aforementioned classes should be 2%, 10%, 50% and 100% of outstanding credits, respectively. The amendments on the classification of loan assets have insignificant impact on Bank SinoPac and its subsidiaries, together with IBT and its subsidiaries financial statements. For Bank SinoPac and its subsidiaries, together with IBT and its subsidiaries, write-offs of loans falling under the Banking Bureau guidelines, upon approval by the board of directors, are offset against the recorded allowance for credit losses

17 For AnShin Card Services, allowance for doubtful accounts of receivables and nonperforming accounts on the balance sheet date is provided based on the evaluation of their collectibility. For SinoPac Securities and SinoPac Futures, allowance for bad debts is provided on the basis of reviewing the collectibility of notes and accounts receivables, other receivables and nonperforming loans. After providing this allowance, pursuant to a directive of SFB, SinoPac Securities and SinoPac Futures set aside an additional amount as bad-debt reserve and allowance for bad debts, respectively, to save 3% on the value-added tax before July 1, According to a directive of the authority, SinoPac Securities and SinoPac Futures stop providing the aforesaid reserve since July 1, Those reserve can only be used to write off nonperforming loans. Ruled by Tai-Tsai-Zhen (4) of the MOF, SinoPac Securities Investment Trust set aside an additional amount as bad-debt reserve to save 3% on the value-added tax for four years since July 1, Under the ruling of Tai-Tsai-Zhen (4) , SinoPac Securities Investment Trust ceased making provision for the aforementioned reserve since July 1, Until June 30, 2003, the remaining reserve should be use for write-off the overdue claims. Held-to-maturity Investments Held-to-maturity investments are carried at amortized cost, which are valued by interest method, otherwise use the straight line method if there is no significant difference. At initial recognition, the costs of the financial assets are valued at fair value of the financial assets together with acquire or issue costs. The net profit and loss of the held-to-maturity investments for the period are reported in to income statement when on disposal, impairment or amortization. The Company and its subsidiaries use trade date accounting when recording transaction. If a held-to-maturity investment is determined to be impaired, the impairment loss is recognized and reported in income statement. For equity investments, loss reversal is adjusted to the equity attributable to the shareholders. For debt investments, loss reversal is credited to current income. Equity Investments - Equity Method Under an explanation issued by the ARDF of the ROC, a financial holding company should treat the investees net worth as paid-in capital if the holding company is incorporated through shares swap. The par value of stocks issued by the holding company is accounted for as capital stock, while any excess of par value is accounted for as capital surplus. Equity investments are accounted for by the equity method if the Company and its subsidiaries has significant influence over the investees. Under this method, investments are stated at cost plus (or minus) a proportionate share in net earnings (losses) or changes in net worth of the investees. Cash dividends received are accounted for as reduction in the carrying value of the investments. On the acquisition date, any difference between the acquisition cost and the equity in the investee is amortized on the straight-line basis over 5 to 15 years. Effective on January 1, 2006, goodwill is not amortized but test annually for impairment. Beginning with January 1, 2006, premium between the acquisition cost and the equity in the investee is not amortized but test for impairment annually, but discount between the acquisition cost and the equity in the investee is amortized. If an investee issues new shares and the Company and its subsidiaries does not acquire new shares in proportion to its current equity in the investee, the resulting increase of the Company s together with its subsidiaries equity in the investee s net asset is credited to capital surplus. Any decrease of the Company s together with its subsidiaries equity in the investee s net asset is debited to capital surplus. If capital surplus is not enough for the debiting purpose, the remaining is debited to unappropriated retained earnings

18 Properties and Non-operating Assets Properties and non-operating assets are stated at cost or cost plus appreciation and less accumulated depreciation. Cost of major addition, renovation and improvements are capitalized, while repairs and maintenance are expensed when incurred. Upon sale or disposal of properties, their cost and related accumulated depreciation are removed from the respective accounts. Any resulting gain or loss is accounted for in the current period. Depreciation computed using the straight-line method over service lives estimated as follows: buildings, 5 to 60 years; computer equipment, 3 to 15 years; transportation equipment, 2 to 15 years; office and other equipment, 3 to 15 years; leasehold improvement, 1 to 15 years. If the leasing period is shorter, depreciation is calculated over the leasing period. Depreciation on revalued property is computed on the basis of their remaining useful lives at the time of the revaluation. For assets still in use beyond their original service lives, depreciation is calculated over newly estimated useful lives. Upon the sale or other disposal of items of properties, the related cost, appreciation and accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to income. Borrowing interest expenses for acquiring lands and constructing buildings are capitalized and recognized as construction in progress during the construction period. Clearing and Settlement Fund According to the Regulations Governing Securities Firms, Regulations Governing Futures Firms and overseas clearing regulation, SinoPac Securities and its domestic subsidiaries, as well as overseas subsidiaries, accepting consignment for trading on the centralized securities exchange market shall deposit a settlement/clearing fund (included in other assets) to the Stock Exchange, GTSM, Taiwan Futures Exchange and overseas stock and futures exchange before or after commencement of business operation. Deferred Charges and Amortization of Issuance Costs of Euro-convertible Bonds For SPH, Bank SinoPac and SinoPac Investment Trust, costs of computer software (included in other assets) were amortized on the straight-line basis over 2 to 5 years. Deferred charges of SinoPac Securities (included in other assets), which include amounts paid for acquiring computer software as well as network construction and decoration or renovations, are capitalized and amortized over 3 to 5 years. AnShin Card Services deferred charges which are consisted of credit cards franchise fees, computer software and costs for the subsidy of utilities, arrangement fees for syndicated loans, fees arising from sales of accounts receivables on a revolving basis and asset securitization and the issue cost of corporate bonds are amortized using the straight-line method over the economic benefit period. Credit cards franchise fees are amortized over the estimated economic benefit period of 5 years. Computer software and utilities subsidy are amortized over 3 to 7 years. Arrangement fees paid by AnShin Card Services for syndicated loans are amortized over the loans term of 5 years. Fees arising from sales of accounts receivable on a revolving basis and asset securitization are amortized over the contract term of 3 to 4 years. For SPH and IBT, the direct and necessary costs related to the issuing of Euro-convertible bonds (included in other assets) are amortized using the straight-line method and recognized as issuance expenses over the period from its issuance date to the expiration date of the put option. Collateral Assumed Collateral assumed are recorded at cost (included in other assets) and revalued at the lower of cost or net fair value on the balance sheet dates, and resulting loss is charged to current income

19 Collect Payment for Exercising Warrants and Subscription of Shares for an Underwriter Collect payment, which the SinoPac Securities receives from clients to exercise warrants and subscribe shares for an underwriter, are presented as other assets - cash and cash equivalents - collect payment for exercising warrants (or collect payment for subscription of shares for an underwriter and other liabilities - collect payment for exercising warrants or collect payment for subscription of shares for an underwriter). Asset Impairment The Company and its subsidiaries began applying ROC Statement of Financial Accounting Standards (SFAS) No. 35, Accounting for Asset Impairment, on January 1, 2005, which requires that cash-generating units (CGUs) and certain assets, including equity investments - equity method, properties, assets leased to others, goodwill, etc., be subject to an impairment review. SFAS No. 35 requires the impairment review on equity investments - equity method and properties to be made on each balance sheet date. If assets or CGUs are deemed impaired, then the Company and its subsidiaries must calculate their recoverable amounts. An impairment loss should be recognized whenever the recoverable amount of the assets or the CGUs is below the carrying amount, and this impairment loss either is charged to accumulated impairment or reduces the carrying amount of the assets or CGUs directly. After the recognition of an impairment loss, the depreciation (amortization) should be adjusted in future periods by the revised asset/cgus carrying amount (net of accumulated impairment), less its salvage value, on a systematic basis over its remaining service life. If the recoverable amount of the assets (excluding goodwill) are than its carrying amount, the carrying amount of the assets will be reduced to its recoverable amount. That reduction is an impairment loss. If the recoverable amount increases, the amount recovery is recognized as income. However, the increased carrying amount of the assets due to a reversal of an impairment loss should not exceed the carrying amount that would have been determined (net depreciation) had no impairment loss been recognized for the asset in prior years. An impairment loss on a revalued asset is recognized directly against capital surplus from revaluation for the asset to the same asset. A reversal of an impairment loss on a revalued asset is credited directly to capital surplus from revaluation under the heading capital surplus from revaluation. However, to the extent that an impairment loss on the same revalued asset was previously recognized as profit or loss, a reversal of that impairment loss is also recognized as profit or loss. Goodwill is tested for impairment annually, or more frequently if events or changes in circumstance indicate goodwill impairment. Impairment is recorded if the book value exceeds value in use. The increase in the recoverable amount of goodwill in the period following the recognition of an impairment loss is likely to be an increase in internally generated goodwill rather than the reversal of the impairment loss recognized for the acquired goodwill. Thus, reversal of impairment loss on goodwill is prohibited. Other Financial Assets Non-active market debt instruments are those which do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. Non-active market debt instruments are carried at amortized cost. The accounting treatment of non-active market debt instruments is similar to the one of held-to maturity investments but there s no prohibition on sale of non-active market debt instruments. Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measure, are measured at cost. If there is objective evidence that a financial asset is impaired, an impairment loss is recognized and reversal of impairment loss is prohibited. Interest Premium Euro-convertible bonds with put option can be redeemed according to the offering terms. If the bonds are to be redeemed at their principal amount plus interest premium on final redemption, the interest premium should be accrued over the life of bonds as expenses, and recorded as an adjunctive account of liability on the balance sheet

20 Euro-convertible Bonds The Euro-convertible bonds issued before December 31, 2005 were recognized as liabilities by its issued price. Under the book value method applied for the conversion of Euro-convertible bonds, the carrying value, interest premium and the related issuance costs were converted into capital stocks in the amount of face value, while the remaining amount were recorded into capital surplus on the conversion date. Upon repurchase of the Euro convertible bonds, the face amount plus the premium and bond issuance expense accrued to the date of repurchase are removed from the accounts, and any resulting gain or loss is credited or charged to income. Securities Brokerage Accounts These accounts pertain to open brokerage transactions. Under the Criteria Governing the Preparation of Financial Reports by Securities Firms, the following unsettled brokerage transactions are recorded as: (i) debit accounts (such as cash in bank - settlement, accounts receivable - customers purchases, net exchange clearing receivable, margin transaction, and accounts receivable - settlement) and (ii) credit accounts (such as accounts payable - customers sales, net exchange clearing payable, margin transaction, and accounts payable - settlement). These accounts are presented in the financial statements at net amounts. Reserve for Default Accounts As required by the Rules Governing Securities Firms, for securities traded for customers accounts, SinoPac Securities should allocate % of the transaction price of the traded securities as a reserve for default accounts every month. When the accumulated reserve for default accounts reaches $200,000, allocation will be suspended. This reserve should be used only for covering losses caused by breach of contracts for trading on customers account or for other purposes as approved by the SFB. As required by the Rules Governing Futures Commission Merchants, for futures traded for customers accounts, SinoPac Futures should allocate 2% of commission revenues from futures transactions as the reserve for default accounts. When the accumulated reserve for default accounts reaches the minimum paid-in capital of, allocation will be suspended. This reserve should only be used for covering the losses caused by breach of contracts for trading on customers accounts or for other purposes approved by the SFB. SinoPac Futures stopped allocating reserve for default account, as instructed by SFC, from July 1, 1999 to September 30, 2003 since the credit losses reserve had been provided by then. However, SinoPac Futures returned to original allocating policy started July 1, Reserve for Trading Losses An amount equal to 10% of the net gain from sale of securities and futures is recognized monthly as reserve for trading losses under the Rules Governing Securities Firms and Rules Governing Future Commission Merchants. This reserve is recognized until its accumulated balance reaches (a) $200,000 for the trading department, (b) the minimum paid-in capital of the SinoPac Securities and SinoPac Futures futures department, respectively. This reserve can be used only to offset actual losses from securities and futures dealings. Derivative Financial Instruments a. Foreign exchange forward Foreign-currency assets and liabilities arising from forward exchange contracts, which are mainly for accommodating customers needs or managing currency positions, are recorded at the contracted forward rates. Gains or losses arising from the differences between the contracted forward rates and spot rates on settlement are credited or charged to current income. Contracts outstanding on the balance sheet dates are measured at fair value through profit or loss

21 b. Forward rate agreements Forward rate agreements, which are mainly for accommodating customers needs or managing interest rate positions, are recorded by memorandum entries at the contract dates. Gains or losses arising from the differences between the contracted interest rates and actual interest rates upon settle ment are credited or charged to current income. On balance sheet dates, outstanding contracts are measured at fair value through profit or loss. c. Currency swaps Foreign-currency spot-position assets or liabilities arising from currency swaps, which are mainly for accommodating customers needs or managing currency positions, are recorded at spot rates when the transactions occur; while corresponding forward-position assets or liabilities are recorded at the contracted forward rates, with receivables netted against the related payables. The interest part of swap points is amortized during the contract period. On balance sheet dates, outstanding contracts are measured at fair value through profit or loss. d. Cross-currency swaps Cross-currency swaps, which are for the purposes of accommodating customers needs or managing exposures, are marked to market on the balance sheet dates. The interest received or paid at each settlement date is recognized as interest income or expense, which is credited or charged to current income. On balance sheet dates, outstanding contracts are measured at fair value through profit or loss. e. Options For Bank SinoPac and its subsidiaries together with IBT and its subsidiaries, options bought and/or held and options written, which are mainly for accommodating customers needs or managing currency positions, are recorded as assets and liabilities when the transactions occur. These instruments are marked to market as of the balance sheet dates. The carrying amounts of the instruments, which are recorded either as assets or liabilities, are charged to income when they are not exercised. Gains or losses on the exercise of options are also included in current income. For SinoPac Securities and its subsidiaries, premiums received from short options or paid for long options, which are used for trading purposes, are recognized as liabilities and assets, respectively. The margin deposited for short options is recognized as margin deposits - options. Gains or losses arising from daily marking to market of the carrying amounts of the options, from taking opposite trade positions, and from settlement of options are recognized as realized or unrealized gains or losses from options transactions - non-hedging. The fair value of options is based on the closing price on the balance sheet date. For SinoPac Securities and its subsidiaries, the notional amount of the bond option for trading purposes is recognized through a memo entry on the transaction date. Premiums received from short options or paid for long options are recognized as liabilities and assets, respectively, and marked to market. Gains or losses from changes in fair value are recognized in the current period as gains or losses from valuation of bond option-non-hedging. For SinoPac Securities and its subsidiaries, when the options are exercised or matured, the related assets and liabilities will be written off. If the option is exercised, SinoPac Securities and its subsidiaries acquire or deliver the underlying bond operating securities and recognizes the operating securities - bonds or proceeds from sale of securities according to the fair value of the underlying bond. For SinoPac Securities and its subsidiaries, all assets (liabilities) of the bond option are presented as financial assets and liabilities at fair value through profit or loss and all gains or losses resell are presented as gains (losses) from financial assets and liabilities at fair value through profit or loss

22 f. Interest rate swaps For Bank SinoPac and its subsidiaries together with IBT and its subsidiaries, interest rate swaps which do not involve exchanges of the notional principals, are not recognized as either assets and/or liabilities on the contract dates. The swaps are entered into mainly for accommodating customers needs or managing the interest rate positions. The interest received or paid at each settlement date is recognized as interest income or expense. These instruments are marked to market on the balance sheet dates. For SinoPac Securities and its subsidiaries, interest rate swap contracts used for trading purpose are recognized through memo entries on the contract date. The fair value of the contracts is presented as financial assets and liabilities at fair value through profit or loss and is written off on the settlement date. On balance sheet date, outstanding contracts are marked to market, and the change in fair value is recognized as gain or loss from financial assets and liabilities at fair value through profit or loss. The fair value of interest rate swap contracts is based on the theoretical price. AnShin Card Services enters into interest rate swaps with banks to hedge the exposure of interest rate fluctuations on its assets or liabilities. These contracts do not involve exchanges of the notional principals and are recognized by memorandum entries on the contract dates. If a cash flow hedges meets the conditions for the application of hedge accounting, the portion of the gain or loss, net of tax, on the hedging instrument that is determined to be an effective hedge shall be recognized directly in shareholders equity. The amounts had been recognized directly in shareholders equity shall be recognized in profit or loss in the same period or periods during which the hedged transactions affects profit or loss. g. Asset swaps and convertible bond swap transactions Bank SinoPac and its subsidiaries together with IBT and its subsidiaries enter into asset swaps involve exchanging the fixed interest of convertible bonds or fixed rate notes for floating interest. In addition, asset swaps involve exchanging the fixed or floating interest of credit link notes for floating or fixed interest. These transactions are recorded by memorandum entries at the contract dates. Net interest on each settlement is recorded as current income or expense. On balance sheet dates, outstanding contracts are measured at fair value through profit or loss. For SinoPac Securities and its subsidiaries, the convertible bond swap transactions have three types: Fixed income, short call options and combination of both types. In a fixed income transaction, instruments used are a convertible bond sold (or purchased) outright plus an interest rate swap contract and a long (or short) call option on the convertible bond. The notional amount of the swap contract is recognized through a memo entry. The accounting treatment for a convertible bond sold (or purchased) outright is the same as that for operating securities. The fair value of the interest rate swap contract and the premium paid (or received) for a long (or short) call option are both recognized as derivative financial assets (or liabilities) and marked to market. Gains or losses from changes in fair value are recognized in the current period as gains or losses from derivative financial products. For short call options, the notional amount is recognized through a memo entry on the transaction date, and the premium received is recognized as derivative financial liabilities. On the balance sheet date, outstanding option contracts are marked to market, and the resulting gains or losses are recognized in the current period as gains (losses) from derivative financial instruments. The fair value of interest rate swap contracts and options of the convertible bonds is based on the theoretical price. Gains or losses from asset swap transactions described above are recognized as gains or losses form financial assets and liabilities at fair value through profit or loss

23 h. Futures Margin deposits paid for interest rate futures contracts entered into for trading purpose are recognized as assets. Gains or losses resulting from marking to market and from the settlement of the interest rate futures contracts are classified as realized or unrealized gains or losses depending on whether the gains or losses had been realized. The gains and losses are included in current income. For SinoPac Securities and its subsidiaries, initial margin on futures contracts and margin deposits maintained to reflect the fluctuation of market price of futures contracts are recognized as margin deposits - futures. Gains or losses from daily marking to market of the carrying amounts of the futures contracts, from taking opposite trade positions, and from settlement of futures contracts are recognized as realized or unrealized gains or losses from futures transactions - non-hedging or realized or unrealized gains or losses from futures transactions - hedging depending on the transaction purpose. The fair value of futures contracts is based on the closing price on the balance sheet date. i. Credit default swaps Credit default swaps involve taking the credit risk of denominated bonds and notes. Such transactions are recorded by memorandum entries at the contract dates. The premium received for a credit default swap contract on each settlement or balance sheet date is recorded as current income by the accrual method. On balance sheet dates, outstanding contacts are measured at fair value through profit or loss. j. Commodity - linked and equity-linked interest rate swaps Commodity - linked and equity-linked interest rate swaps, which do not involve exchanges of notional principals, are recorded by memorandum entries at the contract dates. The gains and losses resulting from the swapped-in and swapped-out are included in current income on the maturity dates. On balance sheet dates, outstanding contracts are measured at fair value through profit or loss. k. Structured note transactions and operating securities - hedging There are two types of structured note transactions: Principal-guaranteed note transactions and equity-linked note transactions. For the principal-guaranteed note transactions, the SinoPac Securities and its subsidiaries receive the contract price from the investors. The SinoPac Securities and its subsidiaries guarantee that the investors will get a fixed income from their investment and gives the investors the right to share in the profits on the underlying assets. The contract price is recognized as follows: (a) principal-guaranteed note liabilities - fixed income instruments, for which SinoPac Securities and its subsidiaries amortize the principal and recognize the implied-interest expenses using the straight-line method and present the interest expense as losses from principal-guaranteed note transactions, and (b) principal-guaranteed note liabilities - options, for which the related price is marked to market, and gains (losses) from valuation are presented as gains (losses) from valuation of principal-guaranteed notes. For the equity-linked note transactions, SinoPac Securities and its subsidiaries receive the contract price from the investors. The SinoPac Securities and its subsidiaries simultaneously invest the investors funds in fixed-income instruments and in long put options on underlying assets. The contract price received is recognized as follows: (a) equity-linked note liabilities - fixed income instruments, for which the SinoPac Securities and its subsidiaries amortize the principal and recognize the implied interest expenses using the straight-line method and present the interest expense as loss from equity-linked note transactions, and (b) equity-linked note liabilities - premiums, which will be written off when the options are exercised or expired at maturity. The options acquired from the investors are recognized as equity-linked note assets - options and marked to market. Gains (losses) from valuation are presented as gains (losses) from valuation of equity-linked notes

24 All assets (liabilities) of the structured note transactions are presented as financial assets and liabilities at fair value through profit or loss and all gains or losses are recognized as gains (losses) from financial assets and liabilities at fair value through profit or loss. The securities invested in by SinoPac Securities and its subsidiaries for hedging purposes are stated at purchase cost, presented as operating securities - hedging, and revaluated at the fair value based on the related contract. The loss on decline in market value of these securities is charged to income. The cost of securities sold is determined by the moving-average method. l. Bond forward transactions The Company engages in bond forward transactions for trading purpose. The amounts of the sale or purchase of bonds are recognized through memo entries on the transaction date. The fair value of the contracts is presented as derivative financial assets - OTC. Gains or losses from change in fair value are recognized as gain (loss) from derivative transactions - OTC. On the settlement date, the Company recognizes the operating securities - bonds or proceeds of the sale of securities according to the fair value of the underlying bond. The fair value of bond forward is based on the theoretical price on the balance sheet date. Financial Asset Securitization Under the Regulations for Financial Asset Securitization, Bank SinoPac securitized part of its enterprise loans and entrusted those loans to the commissioned organization for the issuance of the related beneficiary certificates. Thus, Bank SinoPac derecognizes the loans and records gain or loss because the control of contractual rights - except for subordinated retained interests for credit enhancement, which were reclassified as available-for-sale financial assets - on the loans has been surrendered and transferred to a special purpose trustee. The gain or loss on the sale of the loans is the difference between the proceeds and carrying amount of the loans. The previous carrying amount of the loans should be allocated by applying the ratios of the retained subordinated beneficiary certificates and the part sold to their fair values on the date of sale. Because quotes are not available for loans and retained subordinated beneficiary certificates, Bank SinoPac estimates fair value at the present value of expected future cash flows, using management s key assumptions on credit losses and discount rates commensurate to the risks involved. Subordinated beneficiary certificates - retained interest of securitization are accounted for as available-for-sale financial assets. Interest revenue is recorded when received. The Bank evaluates retained interests by estimating present value of expected future cash flows, the difference will be recognized under the stockholders equity. If the substantive period the impairment is obviously related to the subject occurred after the recognition of impairment, the difference will be reversed and recognized as current income or loss. However, the book value with the reversal amount must not exceed the amortized cost without recognizing the loss. In accordance with the Regulations for Financial Assets Securitization, AnShin Card Services entrusted its credit card receivables and related rights to the trustee under the master trust structure. The trustee issued various series of beneficiary certificates during the revolving-period securitization, and the raised funds were transferred to AnShin Card Services. Under such securitization structure, AnShin Card Services surrendered its rights and control over these securitized credit card receivables, including the principal, related interests and other rights, such receivables are derecognized from its accounts, and the gain or loss from securitization is recognized thereon, except for the retained interests in the form of subordinated certificates necessary for credit enhancement, which are classified as financial assets designated as fair value through profit or loss. During the revolving-period securitization, AnShin Card Services transfers new credit card receivables to the trustee in an amount equivalent to the principal payments collected periodically. In order to maintain the balance of credit card receivables in the trust asset pool at the agreed balance to protect investors interests, AnShin Card Services transferred additional credit card receivables to

25 the trustee. Since AnShin Card Services retains its rights and control over those transferred credit card receivables, they are classified as credit card receivables - held for securitization during the revolving period. Gain or loss for revolving-period receivables sold to a securitization trust is limited to receivables that exist and have been sold. Gain or loss from securitization of credit card receivables is determined based on the differences between the proceeds from securitization and carrying value of the securitized receivables. The carrying value of credit card receivables is allocated in proportion to the fair value of transferred credit card receivables and the retained interests on the transfer date. Because the securitized receivables and retained interests have no quoted market price, the fair value is evaluated based on the present value of future cash flows considering the management s best estimates of key assumptions, including the expected credit loss, principal payment rate, yield rate and discount rate equivalent to the risk, and expected service costs on the receivables. AnShin Card Services adopted SFAS No. 34 Accounting for Financial Instruments starting from January 1, Subordinated certificates are classified as financial assets designated as at fair value through profit or loss because AnShin Card Services uses fair value as the management basis and evaluates the performance in order to obtain more relevant information. Revenue received from the trustee is recognized as investment income. As of September 30, 2005, the subordinated certificates are classified as other long-term investments. On the balance sheet date, the fair value of the subordinated certificates is evaluated based on the present value of expected future cash flow, and the resulting losses are recognized in the current period, but the resulting gains are not recognized. Revenue Recognition Loans and discounts are recognized according to outstanding principal which excludes revenue unearned. Interest income is recorded on accrual basis. However, no interest revenue is recognized in the accompanying financial statements on loans and other credits extended by Bank SinoPac and IBT that are classified as nonperforming loans. The interest income on those loans/credits is recognized upon collection. Under the regulations of the MOF, interest revenue on credits which agreements have been reached to extend their maturities is recognized upon collection. Under the guidelines of Criteria Governing the Preparation of Financial Reports by Public Banks, interest generated from financial assets should be included in interest revenue. Thus, the interest of negotiable certificate of deposit should be included in interest revenue. For the presentation of the financial statements, the income from securities for the nine months ended 2005 should be reclassified to interest revenue. Service fees are recorded as revenue upon receipt and substantial completion of activities involved in the earnings process. Dividend income from investing in cumulative and nonparticipating preferred stocks is accrued according to the related offering terms. For SinoPac Securities and its subsidiaries, revenue from rendering services - brokerage and underwriting commissions and fees, stock affairs agent fees, futures commissions and fees, and futures advisory fees, etc., is recognized according to the stage of completion as of the balance sheet date. Interest income is accrued on an accrual basis by referring to the principal outstanding and the effective interest rate. For AnShin Card Services, interest income on revolving credit card receivables and cash advance is recognized on an accrual basis. Service fee income is recognized when the provision of service is completed. Annual fee income is the member fee received from card members and is recognized when card members fail to meet the criteria for annual fee exemption

26 Pension Pension expense (including retirement and severance benefits cost, the pension expense thereon) is determined based on actuarial calculations except for that FENB, SinoPac Capital Limited and its subsidiaries, SinoPac Securities (Asia), SinoPac Securities (Europe), SinoPac Assets Management (Asia) and for SinoPac Leasing recognize their pension expense and make contributions to funds based on the specified ratio of employee salaries before September 30, 2005, according to their defined benefit pension plans. Pension expense of the Company and its subsidiaries under defined benefit pension plan is determined on the basis of actuarial calculations. Pension under defined contribution pension plan is expensed during the period the employees rendered their services. Treasury Stock Capital share acquired as treasury stock is carried at cost and presented as a separate deduction from stockholders equity. When the treasury stock is reissued to the employees, the difference between the reissue price and acquisition cost will be credited or charged to additional paid-in capital surplus - treasury stock, and to the retained earnings if there is any deficiency. Under a directive of the SFB, treasury stock originally owned by a financial institution that later becomes a subsidiary of a financial holding company through only shares swap, should continue to be treated as treasury stock in the subsidiary s books after the swap. But if the subsidiary owns shares of another subsidiary under the same financial holding company, and the shares are later exchanged for the financial holding company s shares, these shares should be treated as investments in the subsidiary s books, but as treasury stock in financial holding company s books. In accordance to the accounting principles generally accepted in ROC, a parent company should treat its shares held by subsidiaries as treasury stocks in preparing financial statements and recognizing investment income or losses. Thus, when the subsidiaries receive the cash dividends declared by the parent company, the parent company should adjust the investment income as the transaction of treasury stock, which are debited to investment income and credited to additional paid-in capital surplus - treasury stock transactions. Income Tax Inter-period income tax allocation is applied, whereby tax effects of deductible temporary differences, unused investment tax credits and unused loss carryforward are recognized as deferred income tax assets, and those of taxable temporary differences are recognized as deferred income tax liabilities. Valuation allowance is provided for deferred income tax assets that are not certain to be realized. Except for Bank SinoPac and its subsidiaries, FENB, and IBT, deferred income tax assets and liabilities are classified as current or noncurrent on the basis of the classification of the related assets or liabilities for financial reporting. A deferred income tax asset or liability that cannot be related to an asset or liability for financial reporting should be classified according to the expected realization date of the temporary difference. Tax credits for acquisitions of equipment or technology, research and development expenditures and personnel training expenditures are recognized as reduction of current income tax. Adjustments of prior years tax liabilities are included in the current year s tax provision. Income tax (10%) on unappropriated earnings is recorded as income tax in the year when the shareholders resolve the appropriation of earnings

27 The Company and its qualified subsidiaries adopted the linked-tax system. The accounting treatment applied by the Group to the income tax is to adjust in the Company s book the difference between the combined current/deferred taxes and the total of each Group member s current/deferred. Related payables and receivables were recorded in each of the Group members books. Income Basic Tax Act shall come into force on January 1, The amount of basic income of a profit-seeking enterprise shall be the sum of the taxable income as calculated in accordance with the Income Tax Act and income exempted due to suspension of income tax and other relevant la ws, and then multiplied by the tax rate (10%) prescribed by the Executive Yuan. The affect of which higher between regular income tax and basic tax had been considered in current income tax. Accounting for Leasing Business For capital leases, the costs of equipment leased and the interests imputed thereon are accounted for as lease receivable. The imputed interest is correspondingly treated as unearned interest income, and is periodically recognized as interest income when earned using the interest rate method. For operating leases, the contracted rentals are recognized as income when earned. Properties held for lease are stated at cost less accumulated depreciation. Depreciation is calculated by the straight-line method on the basis of service lives estimated as follows: buildings, 44 to 48 years; transportation equipment, 5 years, and others, 5 years. When properties held for lease are sold at the end of leasing period, any resulting gain (loss) from the differences between proceeds and book value of properties held for lease is credited (charged) to current income. Guarantee deposits received are the amounts retained under lease agreements. Interest expenses are computed during the lease terms. At the end of the lease terms, guarantee deposits received will be returned to the debtors. Account Receivable Factoring For SinoPac Leasing and its subsidiary, factoring receivables are account receivables purchased by them. Service fees and interest income are recognized during the factoring period. Contingencies A loss is recognized when it is probable that an asset has been impaired or a liability has been incurred, and the amount of loss can be reasonably estimated. If the amount of the loss cannot be reasonably estimated or the loss is possible, the related information is disclosed in the financial statements. Foreign-currency Translations The translation of the foreign operation institute s financial statement are as follows: The assets or liabilities accounts are translated at the spot rate on the balance sheet date; the stockholders equity accounts except the beginning balance of retained earnings are translated at the historical rate. The beginning balance of the retained earnings is translated equally as the ending balance of the aforementioned year. Dividends are translated at the spot rate on the declaration date; the revenue on expense accounts are translated at the weighted average rate. Foreign currency transactions are recorded at the rate of exchange on the date of the transaction. On the balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated into New Taiwan dollars equipment using the closing exchange rate. Exchange differences arising on the settlement of transactions at rates different from those on the date of the transaction, as well as unrealized foreign exchange differences on unsettled foreign currency monetary assets and liabilities, are recognized in the income statement

28 Unrealized exchange differences on non-monetary financial assets (investments in equity instruments) are a component of the change in their entire fair value. For a non-monetary financial asset classified as held for trading, unrealized exchange differences are recognized in the income statement. For non-monetary financial investments, which are classified as available -for-sale, unrealized exchange differences are recorded directly in equity until the asset is sold or becomes impaired. Gains or losses resulting from restatement at period-end of foreign-currency denominated long-term equity investments (except original investment cost) accounted for by the equity method are credited or charged to cumulative translation adjustment under stockholders equity. Hedge Accounting Non-trading derivatives, which are used primarily as a risk management tool for hedging interest rate risk arising on on-balance sheet liabilities, are accounted for on the same basis as the underlying items being hedged. In order to qualify as a hedge, a derivative must effectively reduce any risk inherent in the hedged item from potential movements in interest rates, exchange rates and market values. Changes in the fair value of the derivative must be highly correlated with changes in the fair value of the underlying hedged item over the life of the hedged contract. At the inception of the hedge, there must be formal designation and documentation of the hedging relationship, Bank SinoPac s risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged items, overall risk management objectives and strategies and how the entity will assess the hedging instrument s effectiveness. A fair value hedge that meets all the hedge accounting criteria is accounted for as follows: a. The gain or loss from re-measuring the hedging instrument at fair value (for a derivative hedging instrument) or the foreign currency component of its carrying amount (for a non-derivative hedging instrument) is recognised immediately in profit or loss, and b. The carrying amount of the hedged item is adjusted through profit or loss for the corresponding gain or loss attributable to the hedged risk. The purpose of holding derivative financial instruments is to hedge the interest rate risk exposure arising from the financial and investing activities. Accordingly, purposes of Anshin Card Services entered into derivative financial instruments transactions for hedging. The derivative instruments held which do not meet the specific criteria for hedge accounting treatment are classified as financial assets held for trading. If a cash flow hedge meets the conditions for the adoption of hedge accounting, the portion of the gain or loss, net of tax, on the hedging instrument that is determined to be an effective hedge shall be recognized directly in equity. The amounts that are recognized directly in equity shall be recognized in profit or loss in the same period or periods during which the hedged transactions affect profit or loss. Reclassifications Certain 2005 accounts have been reclassified to conform to the 2006 financial statements presentation. 3. ACCOUNTING CHANGES Effective January 1, 2006, the Company and its subsidiaries adopted the SFAS No. 34 Accounting for Financial Instruments, No. 36 Disclosure and Presentation of Financial Instruments and other standards amended for harmonizing with those two standards

29 a. The amount of the cumulative effect resulting from the change to new accounting principles The Company and subsidiaries properly reclassified the financial assets and financial liabilities when adopting aforementioned new accounting standards and related amendments to existing standards. The effects of the financial assets and liabilities at fair value through profit or loss and derivative financial instruments of fair value hedge are included in cumulative effect of accounting changes. The effects of the fair value change of available -for-sale financial assets are included in stockholders equity adjustments. The cumulative effect of accounting changes are as follows: Cumulative Effect of Accounting Changes (After Tax) Stockholders Equity Adjustments (After Tax) Financial assets at fair value through profit or loss $ 1,195,013 $ - Available-for-sale financial assets - 370,314 Financial liabilities at fair value through profit or loss (452,301 ) - b. Reclassification $ 742,712 $ 370,314 Under an explanation issued by ARDF of ROC, when the Company and its subsidiaries first adopted SFAS No. 34 effective on January 1, 2006, the Company and its subsidiaries need to reclassify the comparative financial statements for the nine months ended 2005, instead of restating. The Company and its subsidiaries shall state the different valuation method in the notes to the financial statements. The different valuation method of financial instruments the Company and its subsidiaries apply are summarized as follows: 1) Securities purchased Securities which are acquired principally for the purpose of sale in the near term are stated at the lower of cost or market value. Market prices are determined as follows: (a) listed stocks - average daily closing prices for the last month of the accounting period and; (b) GTSM stocks - average daily closing prices for the last month of the accounting period, published by GTSM. 2) Long-term investments Long-term equity investments are accounted for by the cost method if the Company and its subsidiaries do not have significant influence over the investees. For listed and GTSM stocks accounted for by the cost method, when the aggregate market value is lower than the total carrying amount, an allowance for decline in market value is provided and the unrealized loss is charged against stockholders equity. If a decline in the value of an unlisted stock investment is considered as permanent loss, the decline is charged to current income. 3) Foreign exchange forward Foreign-currency assets and liabilities arising from forward exchange contracts, which are mainly for accommodating customers needs or managing the Company and its subsidiaries currency positions, are recorded at the contracted forward rates. Gains or losses arising from the differences between the contracted forward rates and spot rates on settlement are credited or charged to current income. For contracts outstanding on the balance sheet dates, the gains or losses arising from the

30 differences between the contracted forward rates and the forward rates available for the remaining maturities of the contracts are credited or charged to current income. Receivables arising from forward exchange contracts are offset against related payables on the balance sheet dates. 4) Forward rate agreements Forward rate agreements, which are mainly for accommodating customers needs or managing the Company and its subsidiaries interest rate positions, are recorded by memorandum entries at the contract dates. Gains or losses arising from the differences between the contracted interest rates and actual interest rates upon settlement or on the balance sheet dates are credited or charged to current income. 5) Currency swaps Currency swaps, which are for the purposes of accommodating customers needs or managing the Company and its subsidiaries exposures, are marked to market on the balance sheet dates. The interest received or paid at each settlement date or balance sheet date is recognized as interest income or expense, which is credited or charged to current income. 6) Asset swaps Asset swaps involve exchanging the fixed interest of convertible bonds or fixed rate notes for floating interest. In addition, asset swaps involve exchanging the fixed or floating interest of credit link notes for floating or fixed interest. These transactions are recorded by memorandum entries at the contract dates. Asset swaps are entered into for hedging purposes; they are used to hedge interest rate exposure in convertible bonds, fixed rate notes and credit link notes denominated in foreign currency. Net interest on each settlement or balance sheet date is recorded as an adjustment to interest income or expense associated with the bonds or notes being hedged. 7) Interest rate swaps Interest rate swaps, which do not involve exchanging the notional principals, are not recognized as either assets and/or liabilities at the contract dates. The swaps are entered into for accommodating customers needs or managing the Company and subsidiaries interest rate positions. The interest received or paid at each settlement date is recognized as interest income or expense. These instruments are marked to market on the balance sheet dates. For swaps entered into for hedging purposes, the net interest on each settlement is recorded as an adjustment to interest revenue or expense associated with the item being hedged. 8) Cross-currency swaps Cross-currency swaps, which are for hedging purposes, are recorded at forward rates on the contract dates. The net interest upon each settlement is recorded as an adjustment to interest revenue or expense associated with the item being hedged. Cross-currency swaps, which are for the purposes of accommodating customers needs or managing the Company and subsidiaries exposures, are marked to market on the balance sheet dates. The interest received or paid at each settlement date or balance sheet date is recognized as interest income or expense, which is credited or charged to current income. 9) Operating securities Stocks - except for Emerging Stocks - held by SinoPac Securities Dealing and Underwriting departments are stated at the lower of aggregate cost or market value. Emerging Stocks are stated at cost

31 Allowance for loss is provided for the total cost of the securities in excess of their market value. Any subsequently recovery of the market values of the securities to the extent of their original carrying values is recognized as income. 10) Bonds sold under resell agreement - short sales The proceeds from sale of government bonds purchased by the Company and its subsidiaries that are under resale agreements are included in operating securities - dealing and carried at the lower of aggregate cost or market value. 11) Securities lending and borrowing The proceeds from the sale of bonds borrowed by the Company and its subsidiaries for trading purpose are carried at the higher of aggregate cost or market value. When the market value of borrowed securities is higher than carrying, the Company and its subsidiaries recognize losses and adjusts the value of borrowed securities payable. 12) Warrant liabilities and operating securities - hedging The amount received for the issuance of warrants is presented as warrant liabilities. The amount paid for the repurchase of warrants issued is presented as repurchase of warrants issued a contra-account of warrants liabilities. Warrants liabilities and warrants repurchased are marked to market. The gain/loss, presented as gain/loss on warrants issued, is recognized for the difference between the carrying values and the market values of both the warrant liabilities and warrants repurchased. However, the loss on revaluation of warrant liabilities is deferred to the extent of the unrealized gain on the related hedged securities, while the loss on revaluation of warrants liabilities in excess of the unrealized gain on hedged securities is charged to current income. Securities held as hedges for warrants issued are stated at purchase cost. Securities originally held as operating securities - dealing and then transferred to hedge position (presented as operating securities - hedging) are stated at the lower of cost, which is the book value of the transferred securities, or market value. These securities are stated at the lower of cost or market value based on individual warrants issued. The loss on decline in market value of these securities is charged to current income. 13) Structured note transactions and operating securities - hedging There are two types of structured note transactions: Principal - guaranteed note transactions and equity - linked note transactions. Principal - guaranteed note liabilities - options and equity - linked note transactions assets - options are stated at fair value and marked to market. Gains (losses) from valuation are presented as gains (losses) from valuation of principal - guaranteed note and equity - linked note. However, the valuation loss on equity - linked note assets - options is deferred to the extent of the unrealized gain on hedged securities, while the valuation loss on equity - linked note assets - option in excess of the unrealized gain on hedged securities is charged to current income. 14) Long-term investments in bonds Long-term investments in listed or GTSM bonds are stated at the lower of aggregate cost or market value, and the unrealized loss on decline in carrying value are recognized as adjustments under stockholders equity. Bonds held as operating securities and then transferred to long-term investments, or long-term investments transferred to bonds held as operating securities are stated at the lower of aggregate cost, which is the book value of the transferred bonds or long-term investment, or market value

32 Certain 2005 accounts have been reclassified to conform 2006 financial statements presentation and new accounting standards requirement: Balance sheets September 30, 2005 Restated - Before Restated - After Reclassification Reclassification Securities purchased $ 159,542,272 $ - Long options - non-hedging 7,647 - Accounts, interest and other receivables, net 2,507,656 - Operating securities, net 19,136,612 - Long-term equity investments - cost method 4,226,355 - Other long-term investments 11,721,803 - Securities sold under agreements to repurchase (787,955 ) - Warrant liabilities (23,620 ) - Short option liabilities - futures (23,546 ) - Other assets 7,732,420 - Other liabilities (1,652,151 ) - Financial assets at fair value through profit or loss - 40,691,188 Available-for-sale financial assets - 150,169,736 Held-to-maturity investments - 7,143,082 Other financial assets, net Non-active market debt instruments - 458,606 Unquoted equity instruments - 5,746,960 Cash and cash equivalents - 663,760 Other financial liabilities - (284,582 ) Financial liabilities at fair value through profit or loss - (2,202,228 ) $ 202,387,493 $ 202,387,493 Income statements For the Nine Months Ended September 30, 2005 Before After Reclassification Reclassification Interest revenue $ 25,679,310 $ - Loss on derivative financial instruments transactions (973,978 ) - Operating revenue - other 853,900 - Nonoperating income and gain 136,784 - Nonoperating expenses and losses (3,044 ) - Interest expense (12,466,054 ) - Income from securities, net 2,545,949 - Interest revenue - 27,012,932 Interest expense - (12,661,636 ) Gain from financial assets and liabilities at fair value through profit or loss - 774,834 Realized gains from held-to-maturity investment - 9,929 Realized gains from available-for-sale financial assets - 181,101 Realized gains from unquoted equity instruments - 5,606 Net revenues other than interest - 450,101 $ 15,772,867 $ 15,772,

33 4. CASH AND CASH EQUIVALENTS September 30 Due from other banks $ 9,499,626 $ 7,595,576 Notes and checks in clearing 8,730,725 3,012,139 Cash on hand 6,373,284 6,412,771 Deposits in bank 1,895,377 2,505,123 Commercial paper - due in October of 2006 and 2005, with interest rate from 1.47% to 1.65% and from 1.20% to 1.45%, respectively. 1,058,739 1,254,944 $ 27,557,751 $ 20,780, DUE FROM THE CENTRAL BANK AND OTHER BANKS September 30 Call loans to banks $ 46,331,423 $ 44,057,326 Due from the Central Bank 25,137,424 23,931,663 Balance at US Federal Reserve Bank 496,470 1,062,016 $ 71,965,317 $ 69,051,005 Due from the Central Bank consists mainly of New Taiwan dollar (NTD) and foreign currency deposit reserves. Under a directive issued by the Central Bank of the ROC, NTD - denominated deposit reserves of Bank SinoPac and IBT are determined monthly at prescribed rates on average balances of customers NTD - denominated deposits. These reserves amount to $17,379,203 and $16,422,620 as of September 30, 2006 and 2005, respectively, which are subject to withdrawal restrictions. In addition, the foreign-currency deposit reserves of Bank SinoPac and IBT are determined at prescribed rates on balances of additional foreign-currency deposits. These reserves may be withdrawn momentarily and are noninterest earnings. As of September 30, 2006 and 2005, the actual balances of foreign-currency deposit reserves were $102,575 and $79,617, respectively. 6. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Held for trading financial assets September 30 Operating securities - dealing $ 19,293,312 $ 14,888,084 Corporate bonds 12,201,966 7,391,875 Government bonds 7,274, ,775 Beneficiary certificates 7,057,224 5,730,452 Commercial papers 6,265,215 - Bank debentures 3,298,701 1,183,540 Forward contracts 2,510,998 1,973, (Continued)

34 September 30 Operating securities - underwriting $ 1,975,856 $ 1,907,129 Listed stocks 1,418,237 1,570,768 Negotiable certificates of deposit 1,205,093 - Interest rate swaps 1,088,126 12,193 Assets based securities 734, ,677 Premium paid on option contracts 674,706 1,220,891 Structured instruments 667,315 - Margin deposits 450, ,085 Operating securities - hedging 409, ,079 Cross currency swaps contract 95,304 53,628 Others 48,040 50,006 66,668,774 38,003,843 Financial assets designated at fair value through profit or loss Subordinated certificates 728, ,185 Corporate bonds 387,487 - Credit-linked bonds 165,987 2,323,160 Listed stocks 105,125 - Government bonds 1,003-1,388,174 2,687,345 $ 68,056,948 $ 40,691,188 (Concluded) As of September 30, 2006 and 2005, held for trading financial assets come from Bank SinoPac and its subsidiaries amounted to $3,045,265 and $3,101,324 has been sold under agreements to repurchase, respectively. As of September 30, 2006, Bank SinoPac s financial assets designated at fair value through profit or loss aggregating $1,003 had been pledged to the GTSM for the bond settlement reserves for electronic bond trading system. Held for trading financial liabilities September 30 Forward contracts $ 1,010,009 $ - Interest rate swap contracts 954,543 39,482 Premiums received on option contracts 647,087 1,264,505 Bond options 548, ,611 Warrant liability 349, ,780 Repurchased of warrants issued (281,896 ) (154,160 ) Bonds purchased under agreements to resell - short sales 248, ,285 Currency swap contracts 148,743 - Cross currency swap contracts 32,514 - Assets swap - options 28,314 78,334 Others 62,024 5,391 $ 3,747,511 $ 2,202,

35 As of September 30, 2006 and 2005, Bank SinoPac and its subsidiaries together with IBT and its subsidiaries engages in derivative transactions mainly for accommodating customers needs and managing its exposure positions. As of September 30, 2006 and 2005, the contract amounts (or notional amounts) of derivative transactions for accommodating customers needs and managing its exposure positions were as follows: Contract Amounts September 30 Cross currency swap contracts $ 22,869,950 $ 35,387,530 Interest rate swap contracts 233,664, ,035,769 Currency swap contracts 269,949, ,806,056 Asset swap contracts 2,661,913 2,424,271 Forward contracts Buy 93,062,212 77,249,948 Sell 83,188,648 72,420,784 Equity linked swap contracts 407,436 - Credit linked swap contracts 4,300,000 - Credit default swap contracts 628, ,475 Commodity linked interest rate swap contracts 103, ,822 Options contracts Long position 67,941,177 83,178,072 Short position 66,110,699 88,189,277 Margin trading - 21,565 Futures 125,850 1,089,792 As of September 30, 2006 and 2005, the net gain and loss from financial assets and liabilities of Bank SinoPac and its subsidiaries together with IBT and its subsidiaries were $910,496 and $560,353, respectively. Details of operating securities held by SinoPac Securities and its subsidiaries as of September 30, 2006 and 2005 were as follows: Dealing department September 30 Bonds Issued by the government (interest rates at 0% to 7.75% in 2006 and 1.25% to 7.75% in 2005) $ 1,542,847 $ 997,635 Issued by corporations (interest rates at % to 7% in 2006 and 1.20% to 8.25% in 2005) 5,079,542 2,406,727 Issued by banks (interest rates at 0% to 1.888% in 2006 and 0% to 1.689% in 2005) 1,090, ,500 Collateralized loans obligation (interest rates at 2.027% to 2.627% in 2006 and 1.682% to 2.282% in 2005) 608, ,902 8,321,558 4,305,764 Listed stocks and convertible bonds 1,046,111 1,271,478 Stocks and convertible bonds traded over the counter 5,023,498 6,866,133 (Continued)

36 September 30 Exchange traded funds - ETFS $ 137,234 $ - Beneficiary certificates 4,521,756 2,468,134 19,050,157 14,911,509 Unrealized gains (losses) from valuation 243,155 (23,425 ) Underwriting department $ 19,293,312 $ 14,888,084 Listed stocks $ 259,346 $ 103,695 Stocks and convertible bonds traded over the counter 1,646,440 1,918,775 1,905,786 2,022,470 Unrealized gains (losses) from valuation 70,070 (115,341 ) Securities held for hedging purposes $ 1,975,856 $ 1,907,129 Stocks held for warrants $ 387,353 $ 183,794 Structured notes linked position 8, , , ,525 Unrealized gains (losses) from valuation 13,927 (24,446 ) $ 409,532 $ 302,079 (Concluded) The aggregate market values of securities based on the closing prices and reference prices as of September 30, 2006 and 2005 were as follows: September 30 Dealing department - bonds $ 8,331,878 $ 4,329,987 Dealing department - listed and over-the-counter stocks and convertible bonds 6,206,886 8,095,971 Dealing department - exchange traded fund 141,040 - Dealing department - beneficiary certificates 4,613,508 2,474,134 Underwriting department - listed and over-the-counter stocks and convertible bonds 1,975,856 1,907,129 Securities held for hedging purposes - stock held for warrants 401, ,672 Securities held for hedged purposes - structured notes linked position 8, ,336 Bonds held by SinoPac Securities and its subsidiaries Dealing and Underwriting Department and purchased under resell agreements and beneficiary certificates were sold under repurchase agreeme nts with the face amounts of $17,879,022 and $12,189,148 as of September 30, 2006 and 2005, respectively

37 Bonds purchased under agreements to resell - short sales September 30 GTSM Taiwan Government Bond (A95106) $ 248,827 $ - Structured notes linked position (A94107) - 689, , ,351 Loss on change in market value (616 ) (1,066 ) Futures and options $ 248,211 $ 688,285 a. The objective of using futures and options and related strategies to achieve the objective: SinoPac Securities and its subsidiaries use futures and options contracts for trading purposes, to diversify its investment instruments, to aggressively develop various services and to enhance working capital efficiency. b. Carrying value and fair value September 30, 2006 Carrying Outstanding Value/ Positions Premium Long/ Paid Fair Items Transaction Type Short Volume (Received) Value Futures TAIFEX Futures Long 20 $ 27,490 $ 27,508 Electronic Sector Index Futures Long 4 4,712 4,706 Banking and Insurance Sector Index Long 22 20,459 21,028 Futures Mini-TAIFEX Futures Long 16 5,529 5,502 CBOT 10 Year U.S. Treasury Notes Long , ,680 Futures TAIFEX Futures Short , ,206 Electronic Sector Index Futures Short 32 38,029 37,645 SGX MSCI Taiwan Index Futures Short 35 33,267 33,139 TSE 10 Year JGB Futures Short 8 303, ,491 Options TAIFEX Options - call Long 798 4,193 4,135 TAIFEX Options - put Long 463 1, Stock Option (AUO) - put Long 5-1 Stock Option (ARO) - call Long Stock Option (AFO) - call Long TAIFEX Options - call Short 3,686 (6,021 ) (4,930 ) TAIFEX Options - put Short 1,349 (2,601 ) (2,259 ) Stock Option (ANO) - put Short 5 - (3) Stock Option (AFO) - call Short 5 (26 ) (25 ) Stock Option (AFO) - put Short 4 (71 ) (35 )

38 September 30, 2005 Carrying Outstanding Value/ Positions Premium Long/ Paid Fair Items Transaction Type Short Volume (Received) Value Futures Banking and Insurance Sector Index Long 5 $ 4,556 $ 4,560 Futures TAIFEX Futures Long , ,280 CME E-mini NASDAQ 100 Futures Long 2 2,124 2,183 Mini-TAIFEX Futures Long Electronic Sector Index Futures Long 22 22,426 22,528 SGX MSCI Taiwan Index Futures Short , ,588 Mini-TAIFEX Futures Short 16 4,814 4,876 Options TAIFEX Options - call Long 1,126 7,664 7,433 TAIFEX Options - put Long Electronic Sector Index Options - call Long Electronic Sector Index Options - put Long Banking and Insurance Sector Index Long Options - put TAIFEX Options - call Short 7,618 (9,024 ) (12,173 ) TAIFEX Options - put Short 7,065 (12,739 ) (10,629 ) Banking and Insurance Sector Index Short 11 (20 ) (4) Options - call Banking and Insurance Sector Index Short 111 (129 ) (135 ) Options - put Electronic Sector Index Options - call Short 42 (408 ) (603 ) Electronic Sector Index Options - put Short 120 (9) (2) The market values of futures contracts as of the balance sheet dates were based on the closing price published by the Taiwan Futures Exchange (TAIFEX), Hong Kong Exchange (HKEX) and Singapore Exchange Ltd. (SGX). As of September 30, 2006 and 2005, the fair values of premiums from option transactions were recognized at $5,024 and $7,647, paid for long options - non-hedging and at $7,251 and $23,546, respectively, received from short options - futures. 3) Gain (loss) from futures and options transactions Gains or losses for the nine months ended September 30, 2006 and 2005 are summarized as follows: For the Nine Months Ended September 30, 2006 Gains Gains (Losses) from from Futures Option Transactions Transactions Non-hedging and realized $ (130,105 ) $ 124,482 Non-hedging and unrealized 2,195 1,262 $ (127,910 ) $ 125,

39 For the Nine Months Ended September 30, 2005 Gains Losses from (Losses) from Futures Option Transactions Transactions Non-hedging and realized $ (5,954 ) $ 54,675 Non-hedging and unrealized (4,146 ) (1,524 ) Warrants liabilities $ (10,100 ) $ 53,151 Details of warrant liabilities of warrant issued by SinoPac Securities and its subsidiaries as of September 30, 2006 and 2005, were as follows: September 30, 2006 Price at Strike Issuance Price (in New (in New Leverage Units Taiwan Taiwan at Listing Date Underlying Securities Issued Dollars) Amount Dollars) Issuance SinoPac Securities - G5 June 15, 2006 Walsin Lihwa Corporation 20,000,000 $0.745 $ 14,900 $ SinoPac Securities - G6 June 15, 2006 Delta Electronics Inc. 20,000, , SinoPac Securities - G7 June 15, 2006 AU Optronics Corp. 20,000, , SinoPac Securities - G8 June 15, 2006 Unimicron Technology Corporation 20,000, , SinoPac Securities - G9 June 16, 2006 LITE-ON Technology Corporation 20,000, , SinoPac Securities - H1 June 16, 2006 MediaTek Inc. 20,000, , SinoPac Securities - H2 June 16, 2006 Shin Kong Financial Holding Co., 20,000, , Ltd. SinoPac Securities - H3 June 16, 2006 Chi Mei Optoelectronics 20,000, , Corporation SinoPac Securities - H4 June 16, 2006 Mitac International Corporation 20,000, , SinoPac Securities - H5 June 16, 2006 Hon Hai Precision Industrial Co., 20,000, , Ltd SinoPac Securities - H6 June 16, 2006 Siliconware Precision Industrial Co., 20,000, , Ltd SinoPac Securities - H7 June 16, 2006 Wistron Corporation 20,000, , SinoPac Securities - H8 June 19, 2006 ACER Incorporated 20,000, , SinoPac Securities - H9 June 19, 2006 Asustek Computer Inc. 20,000, , SinoPac Securities - I1 June 19, 2006 Quanta Computer Inc. 20,000, , SinoPac Securities - I2 June 19, 2006 Compal Communications Inc. 20,000, , SinoPac Securities - I3 June 20, 2006 Nan Ya Plastics Corporation 20,000, , SinoPac Securities - I4 June 20, 2006 China Steel Corporation 20,000, , SinoPac Securities - I5 June 20, 2006 Taiwan Semiconductor 20,000, , Manufacturing Co., Ltd. SinoPac Securities - I6 June 20, 2006 Cathay Financial Holding Co., Ltd. 20,000, , SinoPac Securities - I7 June 26, 2006 Everlight Electronics Co., Ltd. 20,000, , SinoPac Securities - I8 June 23, 2006 Premier Image Technology 20,000, , Corporation SinoPac Securities - I9 June 23, 2006 Sunplus Technology Co., Ltd 20,000, , SinoPac Securities - J1 June 23, 2006 LITE-ON IT Corporation 20,000, , SinoPac Securities - J2 June 27, 2006 Shihlin Electric & Engineering 20,000, , Corporation SinoPac Securities - J3 June 27, 2006 Eternal Chemical Co., Ltd. 20,000, , SinoPac Securities - J4 June 27, 2006 Taiwan Fertilizer Co., Ltd. 20,000, , SinoPac Securities - J5 June 27, 2006 Novatek Microelectronics 20,000, , Corporation SinoPac Securities - J6 June 28, 2006 Hon Hai Precision Industrial Co., 20,000, , Ltd. SinoPac Securities - J7 June 28, 2006 Compal Electronics, Inc. 20,000, , SinoPac Securities - J8 June 27, 2006 D-Link Corporation 20,000, , (Continued)

40 September 30, 2006 Price at Strike Issuance Price (in New (in New Leverage Units Taiwan Taiwan at Listing Date Underlying Securities Issued Dollars) Amount Dollars) Issuance SinoPac Securities - J9 June 27, 2006 U-Ming Marine Transport Corp. 20,000,000 $0.298 $ 5,960 $ SinoPac Securities K1 July 3, 2006 Cheng Loong Corp. 20,000, , SinoPac Securities K2 July 3, 2006 Sincere Navigation Corporation 20,000, , SinoPac Securities K3 July 3, 2006 EVA Airways Corporation 20,000, , SinoPac Securities K4 July 3, 2006 China Development Financial 20,000, , Holding Corp. SinoPac Securities K5 July 4, 2006 Feng Hsin Iron & Steel Co., Ltd 20,000, , SinoPac Securities K6 July 4, 2006 United Microelectronics Corp. 20,000, , SinoPac Securities K7 July 4, 2006 Yang Ming Marine Transport Corp. 20,000, , SinoPac Securities K8 July 4, 2006 Mega Financial Holding Co., Ltd. 20,000, , SinoPac Securities K9 July 6, 2006 Teco Electric & Machinery Co., Ltd. 20,000, , SinoPac Securities L1 July 6, 2006 Yieh Phui Enterprise Co., Ltd 20,000, , SinoPac Securities L2 July 6, 2006 Inventec Corporation 20,000, , SinoPac Securities L3 July 6, 2006 Evergreen Marine Corp. (Taiwan) 20,000, , Ltd. SinoPac Securities L4 July 11, 2006 Formosa Plastics Corporation 20,000, , SinoPac Securities L5 July 11, 2006 Realtek Semiconductor Corp. 20,000, , SinoPac Securities L6 July 11, 2006 Hua Nan Financial Holdings Co., 20,000, , Ltd. SinoPac Securities L7 July 10, 2006 E.Sun Financial Holding Company, 20,000, , Ltd. SinoPac Securities L8 July 13, 2006 Yulon Motor Co., Ltd. 20,000, , SinoPac Securities L9 July 13, 2006 Advanced Semiconductor 20,000, , Engineering, Inc. SinoPac Securities M1 July 20, 2006 Uni-President Enterprises Corp. 20,000, , SinoPac Securities M2 July 20, 2006 Far Eastern Textile Ltd. 20,000, , SinoPac Securities M3 July 24, 2006 ACER Incorporated 20,000, , SinoPac Securities M4 July 24, 2006 LITE-ON IT Corporation 20,000, , Less: Gain on change in market value of warrant liabilities as of September 30, 2006 (206,480) Market value $ 349,400 (Concluded) September 30, 2005 Price at Strike Issuance Price (in New (in New Leve rage Units Taiwan Taiwan at Listing Date Underlying Securities Issued Dollars) Amount Dollars) Issuance SinoPac Securities - 70 January 4, 2005 Far Eastern Textile Ltd. 30,000,000 $2.480 $ 74,400 $ SinoPac Securities - 71 January 4, 2005 Fuhwa Financial Holding Co., Ltd. 30,000, , SinoPac Securities - 72 January 5, 2005 CMC Magnetics Corporation 30,000, , SinoPac Securities - 74 January 7, 2005 Winbond Electronics Corp. 30,000, , SinoPac Securities - 75 January 7, 2005 TATUNG Co. 30,000, , SinoPac Securities - 84 March 3, 2005 Taiwan Fertilizer Co., Ltd. 60,000, , SinoPac Securities - 85 March 3, 2005 BENQ Corporation 80,000, , SinoPac Securities - 86 March 4, 2005 United Microelectronics Corp. 24,000, , SinoPac Securities - 87 March 10, 2005 Goldsun Development & 24,000, , Construction Co., Ltd. SinoPac Securities - 88 March 10, 2005 Premier Image Technology 60,000, , Corporation SinoPac Securities - 89 March 16, 2005 Chi Mei Optoelectronics 80,000, , Corporation SinoPac Securities - 90 July 29, 2005 Chunhwa Picture Tubes, Ltd. 20,000, , SinoPac Securities - 91 August 4, 2005 CMC Magnetics Corporation 20,000, , SinoPac Securities - 92 August 4, 2005 The Farmers Bank of China 20,000, , SinoPac Securities - 93 August 11, 2005 Advanced Semiconductor 20,000, , Engineering, Inc. SinoPac Securities - 94 August 12, 2005 Quanta Display Inc. 20,000, , SinoPac Securities - 95 August 16, 2005 China Development Financial Holding Corp. 20,000, , (Continued)

41 September 30, 2005 Price at Strike Issuance Price (in New (in New Leverage Units Taiwan Taiwan at Listing Date Underlying Securities Issued Dollars) Amount Dollars) Issuance SinoPac Securities - 96 August 19, 2005 Taiwan Business Bank 20,000,000 $0.634 $ 12,680 $ SinoPac Securities - 97 August 29, 2005 EVA Airways Corporation 20,000, , SinoPac Securities - 98 August 30, 2005 Ta Chong Bank Ltd. 20,000, , SinoPac Securities - 99 September 8, 2005 Chung Hung Steel Co., Ltd. 20,000, , SinoPac Securities - A1 September 8, 2005 United Microelectronics Corp. 20,000, , SinoPac Securities - A2 September 12, 2005 Unimicron Technology Corp. 20,000, , SinoPac Securities - A3 September 15, 2005 Walsin Lihwa Corporation 20,000, , SinoPac Securities - A4 September 15, 2005 Mega Financial Holding Co., Ltd. 20,000, , SinoPac Securities - A5 September 19, 2005 Sunplus Technology Co., Ltd. 20,000, , SinoPac Securities - A6 September 19, 2005 Evergreen Marine Corp. (Taiwan) 20,000, , Ltd. SinoPac Securities - A7 September 22, 2005 Hong Hai Precision Ind. Co., Ltd. 20,000, , SinoPac Securities - A8 September 26, 2005 Kinpo Electronics, Inc. 20,000, , SinoPac Securities - A9 September 26, 2005 Taiwan Business Bank 20,000, , SinoPac Securities - B1 September 28, 2005 Chi Mei Optoelectronics 20,000, , Corporation SinoPac Securities - B2 September 28, 2005 Taiwan Fertilizer Co., Ltd. 20,000, , Less: Gain on change in market value of warrant liabilities as of September 30, 2005 (478,276) Market value $ 177,780 (Concluded) The warrants are American-type warrants, which expire within six to nine months after their respective listing dates. SinoPac Securities and its subsidiaries can exercise a warrant either by issuing the underlying securities or paying in cash. The market values of warrant liabilities were calculated using their closing prices on September 30, 2006 and Repurchase of warrants issued September 30 Units Units Repurchased Amount Repurchased Amount SinoPac Securities 70 - $ - 20,190,000 $ 1,068 SinoPac Securities ,399, SinoPac Securities ,100, SinoPac Securities ,995, SinoPac Securities ,227, SinoPac Securities ,963,000 2,240 SinoPac Securities ,943,000 1,128 SinoPac Securities ,169, SinoPac Securities ,852, SinoPac Securities ,744,000 6,567 SinoPac Securities ,890,000 1,571 SinoPac Securities , SinoPac Securities ,944,000 1,722 SinoPac Securities ,145, (Continued)

42 September 30 Units Units Repurchased Amount Repurchased Amount SinoPac Securities 93 - $ - 16,886,000 $ 5,457 SinoPac Securities , SinoPac Securities ,777, SinoPac Securities , SinoPac Securities ,086,000 3,710 SinoPac Securities ,647,000 3,537 SinoPac Securities ,280,000 4,817 SinoPac Securities A ,299,000 3,652 SinoPac Securities A ,893,000 13,437 SinoPac Securities A ,103,000 4,197 SinoPac Securities A ,900,000 5,429 SinoPac Securities A ,512,000 23,997 SinoPac Securities A ,488,000 5,107 SinoPac Securities A ,937,000 5,841 SinoPac Securities A ,654,000 8,146 SinoPac Securities A ,045,000 7,165 SinoPac Securities B ,862,000 24,287 SinoPac Securities B ,161,000 16,904 SinoPac Securities G5 15,349,000 16, SinoPac Securities G6 15,464,000 6, SinoPac Securities G7 14,296,000 5, SinoPac Securities G8 12,624,000 2, SinoPac Securities G9 14,603,000 1, SinoPac Securities H1 18,872,000 28, SinoPac Securities H2 7,857, SinoPac Securities H3 16,571,000 4, SinoPac Securities H4 16,264,000 5, SinoPac Securities H5 13,175,000 11, SinoPac Securities H6 17,469,000 6, SinoPac Securities H7 12,526,000 3, SinoPac Securities H8 5,891, SinoPac Securities H9 12,051,000 3, SinoPac Securities I1 199, SinoPac Securities I2 16,152,000 11, SinoPac Securities I3 16,153,000 2, SinoPac Securities I4 11,213,000 1, SinoPac Securities I5 15,567,000 4, SinoPac Securities I6 12,611,000 1, SinoPac Securities I7 18,638,000 6, SinoPac Securities I8 16,666, SinoPac Securities I9 3,642, SinoPac Securities J1 2,246,000 16, SinoPac Securities J2 13,466,000 2, SinoPac Securities J3 19,284,000 11, SinoPac Securities J4 17,251,000 2, SinoPac Securities J5 18,015,000 35, SinoPac Securities J6 19,538,000 1, (Continued)

43 September 30 Units Units Repurchased Amount Repurchased Amount SinoPac Securities J7 13,048,000 $ $ - SinoPac Securities J8 14,260,000 19, SinoPac Securities J9 3,769,000 1, SinoPac Securities K1 12,267,000 4, SinoPac Securities K2 16,040,000 3, SinoPac Securities K3 17,765,000 4, SinoPac Securities K4 15,099,000 3, SinoPac Securities K5 107, SinoPac Securities K6 14,727,000 2, SinoPac Securities K7 14,418,000 3, SinoPac Securities K8 18,776,000 3, SinoPac Securities K9 14,430,000 2, SinoPac Securities L1 19,318,000 7, SinoPac Securities L2 19,310,000 15, SinoPac Securities L3 17,074,000 7, SinoPac Securities L4 16,874,000 3, SinoPac Securities L5 11,202,000 2, SinoPac Securities L6 17,467,000 5, SinoPac Securities L7 17,816,000 4, SinoPac Securities L8 19,041,000 2, SinoPac Securities L9 13,799,000 2, SinoPac Securities M1 18,311,000 5, SinoPac Securities M2 19,154,000 4, SinoPac Securities M3 16,347,000 6, SinoPac Securities M4 17,253,000 3, (Loss) gain on change in market value of warrants repurchased (34,104 ) 688 Market value $ 281,896 $ 154,160 (Concluded) The market values of warrants repurchased were calculated using the closing price of the warrants on September 30, 2006 and Gains and losses on warrants issued for the nine months ended September 30, 2006 and 2005 were $217,381 and $167,207, respectively. Related details are as follows: For the Nine Months Ended September 30 (Loss) gain on change in market value of warrant liabilities $ (716,061 ) $ 953,046 Gain from exercise of warrants before maturity 54,149 23,989 Gain (loss) on change in market value of warrants repurchased - realized 913,397 (810,516 ) (Loss) gain on change in market value of warrants repurchased - unrealized (34,104 ) 688 $ 217,381 $ 167,

44 Interest rate swaps a. The objective of engaging in interest rate swap (IRS) contracts and strategies to achieve this objective: SinoPac Securities and its subsidiaries entered into IRS contracts with counter-parties to profit from short-term interest rate fluctuations. b. The outstanding IRS contracts were as follows: Nominal Amount September 30 Nominal Fair Value Amount Fair Value For trading purposes $ 18,600,000 $ (20,862 ) $ 2,900,000 $ (15,761 ) The fair values of outstanding IRS contracts as of September 30, 2006 and 2005 were recognized as derivative financial assets - OTC at $108,260 and $129,122, respectively, and derivative financial liabilities - OTC at $9,143 and $24,904, respectively. c. In the nine months ended September 30, 2006 and 2005, losses of $11,023 and $8,256, respectively, from IRS valuation were recognized (presented as losses on derivative financial instruments - OTC) as follows: September 30 Unrealized loss on interest rate swap contracts $ (10,989 ) $ (8,256 ) Realized loss on interest rate option (20 ) - Realized gain on interest rate swap contracts 11 - Unrealized loss on forward contract agreements (25 ) - $ (11,023 ) $ (8,256 ) 7. ACCOUNTS RECEIVABLES, NET September 30 Accounts receivable - factoring $ 29,466,312 $ 20,774,812 Margin loans receivable 13,416,868 11,685,138 Credit card receivables 13,108,836 18,262,903 Accounts and notes receivable 6,896,170 2,345,421 Lease receivables due in one year 5,078,511 5,296,007 Acceptances 4,225,652 3,016,930 Interest receivable 3,513,057 3,097,003 Others 2,111,578 1,924,387 77,816,984 66,402,601 Less - allowance for credit losses 1,839,748 1,022,962 $ 75,977,236 $ 65,379,

45 Changes in allowance for accounts receivables for the nine months ended September 30, 2006 and 2005, respectively, were summarized below: September 30 Balance, January 1 $ 1,081,990 $ 872,430 Provision 2,994, ,789 Write-off (1,904,569 ) (731,856 ) Recovery of written-off credits 3,932 1,458 Reclassification (463 ) (50,411 ) Result from change of foreign exchange rate (4,976 ) 20,552 Others (330,323 ) - Balances, September 30 $ 1,839,748 $ 1,022,962 The credit card receivables as of September 30, 2006, consisted of AnShin Card Services credit cardholders who completed the debt workout mechanism, with credit card receivable amounting to $3,756,767. The credit card receivable that are included in the debt workout mechanism and have fulfilled the repayment obligation for three months or more are allowed to be excluded from the disclosed delinquency ratio. The amounts reported by AnShin Card Services that are excluded from the delinquency ratio amounted to $610 for this period. 8. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL As of September 30, 2006 and 2005, securities purchased under agreements to resell, were to be sold for $22,853,965 in September 2006 and $15,684,995 in September 2006, respectively. 9. DISCOUNTS AND LOANS, NET September 30 Negotiations $ 2,612,766 $ 3,217,633 Overdrafts 1,663,981 1,417,683 Accounts receivable - financing 3,495,253 3,797,723 Short-term loans 169,945, ,377,938 Medium-term loans 160,532, ,835,932 Long-term loans 295,613, ,977,609 Nonperforming loans transferred from loans 11,351,561 7,992, ,215, ,616,928 Less - allowance for credit losses 5,342,674 4,056,240 - unearned loan fees 78,820 95,600 $ 639,793,666 $ 630,465,088 Unearned loan fees are those pertaining to nonrefundable loan fees and certain direct costs associated with originating and acquiring loans. The fees collected are not recognized at the time of origination but are deferred and amortized using the effective interest method over the life of the loan as an adjustment of the yield on the related loan

46 As of September 30, 2006 and 2005, the Company and its subsidiaries balances of nonaccrual interest loans were $11,618,966 and $8,130,025, respectively. The unrecognized interest revenues on nonaccrual interest loans for the Company and its subsidiaries amounted to $335,280 and $241,315 for the nine months ended September 30, 2006 and 2005, respectively. For the nine months ended September 30, 2006 and 2005, Bank SinoPac and its subsidiaries together with IBT and its subsidiaries had not written off credits for which legal proceedings had not been initiated. The details of and changes in allowance for credit losses of discounts and loans for the nine months ended September 30, 2006 and 2005, respectively, were summarized below: For the Nine Months Ended September 30, 2006 Specific General Reserve Reserve Total Balance, January 1 $ 2,122,919 $ 2,259,046 $ 4,381,965 Provision 3,022,112 73,699 3,095,811 Write-off (2,271,902 ) - (2,271,902 ) Recovery of written-off credits 104, ,424 Reclassification 385,715 (356,679 ) 29,036 Result from change of foreign exchange rate 2,506 3,434 5,940 Others (564 ) (2,036 ) (2,600 ) Balance, September 30 $ 3,365,210 $ 1,977,464 $ 5,342,674 For the Nine Months Ended September 30, 2005 Specific General Reserve Reserve Total Balance, January 1 $ 1,108,557 $ 1,774,836 $ 2,883,393 Provision 1,432, ,746 1,765,245 Write-off (751,129 ) - (751,129 ) Recovery of written-off credits 199, ,636 Reclassification (30,073 ) 21,689 (8,384 ) Result from change of foreign exchange rate 8,763 (36,644 ) (27,881 ) Others (4,640 ) - (4,640 ) Balance, September 30 $ 1,963,613 $ 2,092,627 $ 4,056,240 As of September 30, 2006 and 2005, allowances for credit losses and provisions for losses on guarantees of the Company and its subsidiaries were $7,337,534 and $5,340,414, respectively. 10. AVAILABLE-FOR-SALE FINANCIAL ASSETS September 30 Negotiable certificate of deposit $ 153,416,907 $ 107,902,978 Government bonds 20,943,738 21,209,135 Commercial papers 9,359,801 12,566,501 Treasury bills 4,946,108 5,926,453 (Continued)

47 September 30 Corporate bonds $ 3,109,785 $ 1,036,971 Bank debentures 1,206,670 - Subordinated beneficiary certificates of securitization 1,014,243 1,014,300 Stocks 485, ,111 Beneficiary certificates 307, ,287 Others 18,499 - $ 194,809,277 $ 150,169,736 (Concluded) To comply with the Central Bank s RTGS, Bank SinoPac s negotiable certificates of deposit aggregating to $13,000,000 and $8,000,000 as of September 30, 2006 and 2005, respectively, had been provided as collaterals for the daytime overdraft, with pledged amounts that can be adjusted momentarily. Government bonds and corporate bonds included in the available-for-sale financial assets of FENB amounting to $3,760,612 and $2,950,721 as of September 30, 2006 and 2005 had been provided to America Union Bank and Union House-loan Bank as loans guarantee. Government bonds included in the available-for-sale financial assets of Bank SinoPac amounting to $251,920 and $371,844 as of September 30, 2006 and 2005 had been provided to GTSM as bond payment settlement reserves for electronic bond trading system and to court for provisional seizure. Government bonds included in available-for-sale financial assets of SinoPac Securities amounting to $50,038 and $50,303 as of September 30, 2006 and 2005 had been provided as operating deposit. The available-for-sale financial assets of IBT amounting to $2,218,700 and $4,508,500 as of September 30, 2006 and 2005 had been provided as collaterals for the daytime overdraft and debt lawsuit. The available-for-sale financial assets of Bank SinoPac amounting to $301,183 and $374,646 as of September 30, 2006 and 2005, respectively, had been sold under agreements to repurchase. 11. SECURITIZATION Bank SinoPac a. Characteristic, gain (loss) recognized and key economic assumptions used in measuring retained interests In August 2004, Bank SinoPac sold part of its enterprise loans under securitization transactions. Bank SinoPac entrusted these loans to Fuhwa Bank for issuing beneficiary certificates. The terms and key economic assumptions used in measuring retained interests were as follows: Terms Enterprise Loans Under Securitization Date of issuance August 3, 2004 Carrying amount of enterprise loans $4,900,000 Gain (loss) on securitization

48 September 30, 2006 Senior Subordinated First Second Third Fourth Fifth Series of Certificates Tranche Tranche Tranche Tranche Tranche Principal amount $ 1,188,100 $ 534,100 $ 441,000 $ 122,500 $ 1,014,300 Annual interest Floating interest rate plus 0.4% (Note) Floating interest rate plus 0.6% (Note) Floating interest rate plus 1.0% (Note) Floating interest rate plus 1.2% (Note) - Key assumptions used in measuring retained interests Expected weightedaverage life (in years) Expected credit losses (annual rate) Discounted rate for residual cash flows % September 30, 2005 Senior Subordinated First Second Third Fourth Fifth Series of Certificates Tranche Tranche Tranche Tranche Tranche Principal amount $ 1,190,041 $ 534,100 $ 441,000 $ 122,500 $ 1,014,300 Annual interest Floating interest rate plus 0.4% (Note) Floating interest rate plus 0.6% (Note) Floating interest rate plus 1.0% (Note) Floating interest rate plus 1.2% (Note) - Key assumptions used in measuring retained interests Expected weightedaverage life (in years) Expected credit losses (annual rate) Discounted rate for residual cash flows % Note: Floating rate is the average rate of the 90-day short-term bills in the secondary market of Telerate Information Inc., at 11:00 a.m. of Taipei time two working days prior to the first day of interest period of financial assets (shown on page 6165). The investors of the subordinated certificates have a right over any remaining interest paid after fixed interest has been paid to the holders of the senior certificates in accordance with the principal amount. Any prepayment of principal shall be paid to the tranche in the order mentioned above. When the debtors fail to pay on schedule, the investors and Fuhwa Bank have no recourse to the other assets of Bank SinoPac. Bank SinoPac has a right over the subordinated certificates. The value of the subordinated certificates is subject to credit and interest rate risks on the transferred financial assets

49 b. Sensitivity analysis As of September 30, 2006 and 2005, key economic assumptions and the sensitivity of the current fair value of residual cash flows to immediate 10 percent and 20 percent adverse changes in these assumptions were as follows: Enterprise Loans September 30 Carrying amount of retained interest $ 1,014,243 $ 1,014,300 Weighted-average life (in years) 3 years 3 years Discount rate of residual cash flows (annual rate) 1.691% 1.349% Impact on fair value of 10% adverse change (97 ) (63 ) Impact on fair value of 20% adverse change (257 ) (196 ) c. Bank SinoPac anticipates that credit losses would amount to $57 for the nine months ended September 30, d. Cash flows For the nine months ended September 30, 2005, the prepayments of principal before due date resulted in the cash inflow amounted to $1,598,059. AnShin Card Services a. Characteristics of, and gain (loss) recognized from securitization On January 25 and September 6, 2005, under the Regulations for Financial Assets Securitization, AnShin Card Services entrusted its credit card receivables with a book value of $4,000,000 and $1,000,000, respectively, and related rights to the trustee, Land Bank of Taiwan Co., Ltd. (Land Bank of Taiwan). The trustee issued series beneficiary certificates and privately placed them with investors, and issued series beneficiary certificates and publicly placed them with investors during the revolving-period securitization. On July 31, 2006, the trustee increase the issue of series C certificates and series C certificates by $272,000 and $68,000, respectively, in order to provide credit enhancement. The issuance of series beneficiary certificates amounted to $4,272,000, and their expected issuance period is from January 25, 2005, to February 20, The legal maturity date is February 20, The major terms of the series beneficiary certificates are as follows: Class of Issuance Certificate Expected Maturity Beneficiary Certificates Priority of Payment Amount Rate Date Series Class A certificates Series Class B certificates Series Class C certificates First priority $ 3,680, % February 20, 2009 Second priority 80, % February 20, 2009 Third priority/residual 512,000 - February 20,

50 The issuance of series beneficiary certificates amounted to $1,068,000, and their expected issuance period is from September 6, 2005, to September 20, The legal maturity date is September 20, The series class A1 beneficiary certificates amounted to $322,000 dued on September 20, 2006 and AnShin Card Service has paid issuance amount. The major terms of the series beneficiary certificates are as follows: Class of Issuance Certificate Expected Maturity Beneficiary Certificates Priority of Payment Amount Rate Date Series Class A2 certificates Series Class A3 certificates Series Class B certificates Series Class C certificates First priority $ 322, % September 20, 2007 First priority 276, % September 20, 2008 Second priority 20, % September 20, 2008 Third priority/residual 128,000 - September 20, 2008 In order to provide credit enhancement, AnShin Card Service retained the aforementioned subordinated series Class C certificates with a face amount of $512,000 and series Class C certificates with a face amount of $128,000. If the credit card debtors default, neither the investor nor Land Bank of Taiwan has a right of recourse to AnShin Card Services s other assets. The repayment of the principal of subordinated certificates is subordinate to the investors beneficiary certificates, and its value is affected by the credit risk, principal payment rate, and change in interest rate of the securitized credit card receivables. In accordance with the series and beneficiary certificates issuance plans for securitization, the trustee purchases new credit card receivables from AnShin Card Services for amounts equivalent to the daily collected principal amounts during the revolving period. After the revolving period, the trustee shall allocate principal collections during the related collection period in the agreed order. b. Key assumptions used in measuring retained interests As of September 30, 2006 and 2005, the key assumptions used in measuring retained interests were as follows: September 30 Expected principal payment rate (monthly rate) 22.63% 22% Expected weighted-average life (in years) 0.37 years 0.38 years Expected credit losses (annual rate) 5.75% 4.64% Discounted rate for residual cash flows (annual rate) Short-term bills rate in the secondary market or long-term IRS rate 2.04%

51 c. Sensitivity analysis As of September 30, 2006 and 2005, key economic assumptions and the sensitivity of the current fair value of residual cash flows with immediate 10% and 20% adverse changes in these assumptions were as follows: September 30 Carrying amount of retained interests $ 728,572 $ 364,185 Expected weighted-average life (in years) 0.37 years 0.38 years Expected principal payment rate (monthly rate) 22.63% 22% Impact on fair value of 10% adverse change (7,205 ) (5,651 ) Impact on fair value of 20% adverse change (13,259 ) (11,302 ) Expected credit losses (annual rate) 5.75% 4.64% Impact on fair value of 10% adverse change (10,699 ) (5,457 ) Impact on fair value of 20% adverse change (21,213 ) (10,913 ) d. Cash flows For the nine months ended September 30, 2006 and 2005, the cash flows received from and paid to securitization trusts were as follows: September 30 Proceeds from initial securitizations of credit card receivables $ - $ 4,700,000 Proceeds from reinvestment in securitization of credit card receivables 9,783,451 6,674,662 Servicing revenues received 1, Other cash flows received on retained interests 92, ,701 Service transfer reserve (classified as guarantee deposits) 3,685 2,849 e. Information on delinquencies, net credit losses and other unsecuritized financial assets was as follows: September 30, 2006 Principal of Credit Card Principal of Receivables Credit Card Past Due 60 Receivables Days or More Net Credit Losses Credit card receivables managed $ 18,126,836 $ 666,727 $ 2,207,258 Credit card receivables securitized (5,018,000 ) (89,200 ) (355,632 ) Credit card receivables $ 13,108,836 $ 577,527 $ 1,851,626 September 30, 2005 Principal of Credit Card Principal of Receivables Credit Card Past Due 60 Receivables Days or More Net Credit Losses Credit card receivables managed $ 16,398,809 $ 459,484 $ 784,005 Credit card receivables securitized (5,000,000 ) (117,252 ) (73,325 ) Credit card receivables unsecuritized $ 11,398,809 $ 342,232 $ 710,

52 f. As of September 30, 2006 and 2005, in order to maintain the balance of credit card receivables in the trust asset pool at the agreed balance to protect investors interests, AnShin Card Services transferred additional credit card receivables with a carrying amount of $893,303 and $547,096, respectively, to the trustee. AnShin Card Services holds the seller s interest certificates to represent the rights of unsold or unsecuritized credit card receivables in the trust assets. g. Land Bank of Taiwan convened a series and series certificate holders' meeting on April 17, The certificate holders resolved to amend the article regarding the removal of accounts of the master trust agreement, and to increase the removal of credit card accounts due to significant changes in credit card-related regulations. The Trustee may (but has no obligation to) sell to the Originator and the Originator may (but has no obligation to) accept all the right, title, interest and benefit in the receivables under the defaulted or high risk accounts. The certificate holders also resolved to amend the series and series supplements to increase the issue of series C certificates and series C certificates. The amendment of the master trust agreements and supplements obtained the approval of the FSC on June 13, AnShin Card Services removed the defaulted or high risk accounts on June 23, 2006, for accounts receivable (including financial revenue accounts receivables) amounting to $453,159, and AnShin Card Services plans to increase the issue of the series C certificates and series C certificates by $272,000 and $68,000, respectively on July 31, h. Credit card receivables securitization income for the nine months ended September 30, 2006 and 2005 was as follows: For the Nine Months Ended September 30 Gain recognized from securitization during the revolving period $ 100,487 $ 119,590 Valuation losses on subordinated certificates (89,853 ) (61,187 ) Investment income of subordinated certificates 98, ,980 $ 108,946 $ 296, HELD-TO-MATURITY INVESTMENTS September 30 Corporate bonds $ 3,171,434 $ 4,603,532 Bank debentures 858,008 1,636,045 Floating rate notes 366,445 - Government bonds 292, ,505 Negatiable certificates of deposit 165,490 - Beneficiary certificates - credit card receivables 80,000 80,000 $ 4,933,538 $ 7,143,082 To comply with Hong Kong branch s clearing system of real-time gross settlement, government bonds aggregating $207,839 and $776,508 had been provided as collaterals as of September 30, 2006 and 2005, respectively. The held-to-maturity investments of FENB amounting to $2,023,915 as of September 30, 2005 had been provided to America Union Bank and Federal House Loan Bank as loans guarantee

53 As of September 30, 2006 and 2005, the held-to-maturity investments of Bank SinoPac amounting $93,237 and $394,008 had been sold under agreements to repurchase. 13. EQUITY INVESTMENTS - EQUITY METHOD September 30 Amount % Amount % Grand Cathay Securities Investment Trust Co. $ 181, $ 191, SinoPac Asset Management International 112, , SinoPac Call Center Co., Ltd. 102, , SinoPac Marketing Consulting Co., Ltd. 32, , Telexpress 43, , Multiwin Asset Management Co., Ltd. 8, , SinoPac Financial Consulting Co., Ltd. 2, , SPS Asia Ltd , $ 483,413 $ 519,158 As of September 30, 2006 and 2005, the equity investments under equity method and the related investment income amounting $13,113 and $11,284, respectively, which were based on the investees unreviewed financial statements for the same period. The Company believes that the adjustment would have been immaterial to the equity investment and investment income even if such financial statements had been reviewed. The above subsidiaries were excluded from the consolidated financial statements since the Company considered those subsidiaries were immaterial. 14. OTHER FINANCIAL ASSETS, NET September 30 Unquoted equity instruments Unlisted equity investments $ 2,957,982 $ 5,046,514 Emerging stocks 523, ,812 Beneficiary certificates 129,627 - Venture fund - 339,743 Preferred stock - 24,891 Non-active market debt instruments Floating rate notes 1,210,890 52,603 Foreign corporate bonds - designated in USD 661,000 - Asset based securities 425,412 65,380 Trust beneficiary certificates for special purposes 293, ,623 Corporate bonds 198,588 - Others Cash surrender - officer life insurance 1,079,276 1,091,752 Hedged derivative financial instruments 488, Credit-linked securities 196, ,421 Nonperforming credits transferred from other than loans 121, ,133 Others 125,693 95,323 $ 8,412,892 $ 7,965,

54 Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured are measured at cost. 15. PROPERTIES, NET September 30 Cost and appreciation $ 19,580,598 $ 19,292,253 Accumulated depreciation Buildings 1,646,344 1,473,605 Computer equipment 1,737,711 1,547,712 Transportation equipment 67,245 66,754 Office and other equipment 3,780,736 3,424,860 7,232,036 6,512,931 Advances on acquisitions of equipment and construction in progress 289, ,031 $ 12,637,651 $ 13,092,353 Under government regulations, IBT revalued its properties in the following years: Land in 1961, 1964, 1967, 1974 and 2001; and properties other than land in OTHER ASSETS September 30 Properties held for lease, net $ 5,157,842 $ 4,863,432 Customer margin account 4,483,927 5,316,419 Guarantee deposits 3,186,090 3,066,887 Pledged time deposits 2,210,110 1,760,246 Intangible assets 1,552,763 1,710,102 Prepaid expense and others 1,111,323 1,272,358 Long-term lease receivables 968,892 1,157,769 Deferred income tax assets 796, ,600 Idle assets, net 628, ,529 Collaterals assumed, net 623, ,039 Other deferred assets 468, ,547 Computer system software 230, ,945 Pension prepayment 188, ,274 Others 959,834 1,022,354 $ 22,566,035 $ 23,219,501 As of September 30, 2006 and 2005, properties held for lease amounted to $2,876,791 and $1,159,165, respectively, which was pledged to bank as collaterals for SinoPac Leasing s borrowings. As of September 30, 2006 and 2005, guarantee deposits amounted to $13,600 and $1,700, respectively, which were pledged to bank as collaterals for SinoPac Leasing s borrowings and as part of the requirements for filing provisional seizure

55 Intangible assets include (1) on August 15, 1997, Bank SinoPac acquired FENB through SinoPac Bancorp and the acquisition was accounted for using the purchase method of accounting. The assets and liabilities of FENB were revalued to reflect the estimated fair market value as of the date of acquisition. The excess of purchase price over the fair market value of the net tangible assets acquired was recorded as intangible assets, and (2) the excess of purchase price over the fair market value of AnShin Card Service when the Company acquired An-Shin Card Service. Since January 1, 2006, the Company applying SFAS No. 35, which requires the impairment review on goodwill to be made on each balance sheet date. If goodwill is deemed impaired, the Company must calculate its recoverable amounts. The ceased goodwill amortization resulting from Bank SinoPac acquired FENB through SinoPac Bancorp and the Company acquired AnShin Card Service amounting to $58,548 and $51,475, respectively, for the nine months ended September 30, In assessing whether the equity investment with goodwill or unamortized difference between the acquisition cost and the equity was impaired, the Company and its subsidiaries consider each investee as a cash generating unit and estimate the recoverable amount by investee s value in use. The Company used investee s actual profitability and estimated salvage value as a key assumption to predict future cash flows in order to calculate investee s value in use. Under going concern assumption, the Company predicts the net cash flows provided by investee s operating activities in next five to ten years, and uses latest investor s weighted average funding cost as the discount rate to calculate the value in use. After assessing the value in use of investees based on the foregoing key assumptions, there was no material impairment loss on the goodwill or unamortized difference between the acquisition cost and the equity in investees on September 30, 2006 and DUE TO CENTRAL BANK AND OTHER BANKS September 30 Call loans from banks $ 80,672,855 $ 62,719,574 Redeposits from the directorate general of postal remittance 12,610,016 15,346,136 Due to banks 3,025,215 1,765,098 Overdrafts of banks 39, ,182 Due to the Central Bank 53,645 44,472 $ 96,401,181 $ 80,118, COMMERCIAL PAPER PAYABLE, NET September 30 Commercial paper payable $ 9,850,000 $ 11,463,000 Less - unamortized discount 6,336 17,604 $ 9,843,664 $ 11,445,396 Maturity date Discount rate 1.330%-2.448% 1.000%-2.256%

56 SinoPac Securities entered into Notes Issuance Facility (NIF) transaction with International Bills Financial Corporation and China Bills Finance Corporation in June and July The credit line was $500,000 with fixed interest rate, respectively. The NIF contract took effect on the contract date. The contract, with a term of three years, required the maintenance of certain credit ratings during the term of the agreement. SinoPac Securities should use the credit before June and July of 2008, and the amount cannot be less than $400,000 and $500,000, respectively. On September 30, 2006, SinoPac Securities maintains its credit ratings. In addition, SinoPac Securities entered into NIF transaction with Chiao Tung Bank, Chung Hsing Bills Finance Corporation and The International Commercial Bank of China in December 2003 and February The credit line was $1,500,000. The NIF contract is effective within two years contract period started on the contract date. The contract required the maintenance of certain financial indicators during the term of the agreement. SinoPac Securities had not used the line of credit as of September 30, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE As of September 30, 2006 and 2005, securities sold under agreements to repurchase were to be repurchased for $39,169,174 and $36,198,072 in December 2006 and March 2006, respectively. 20. ACCOUNTS PAYABLES September 30 Accounts payable - factoring $ 13,379,870 $ 6,448,309 Notes and checks in clearing 9,706,840 3,557,527 Acceptances payable 4,225,652 3,029,101 Interest payable 4,122,716 3,116,180 Accounts and notes payable 2,297,480 4,310,935 Short sale proceeds payable 2,265,339 1,794,893 Accrued expense 1,940,652 2,229,743 Tax payable 1,754,685 2,609,521 Deposits on short sales 1,616,581 1,417,021 Collections for others 1,205,864 1,455,464 Others 1,307,629 1,664,706 $ 43,823,308 $ 31,633, DEPOSITS AND REMITTANCES September 30 Checking $ 17,294,759 $ 18,368,139 Demand 102,519, ,180,202 Savings - demand 155,882, ,431,012 Time 255,371, ,893,628 Negotiable certificates of deposit 47,444,700 51,861,400 Savings - time 203,971, ,103,678 Inward remittances 871, ,131 Outward remittances 213, ,857 $ 783,569,549 $ 709,451,047

57 22. BANK DEBENTURES Bank SinoPac September 30 Maturity Date Terms First dominant bank debenture issued in 2001 First subordinated bank debenture issued in 2002 First dominant bank debenture issued in 2003 Second dominant bank debenture issued in 2003 Third dominant bank debenture issued in 2003 Fourth dominant bank debenture issued in 2003 First subordinated bank debenture issued in 2003 Fifth dominant bank debenture issued in 2003 Sixth dominant bank debenture issued in 2003 Seventh dominant bank debenture issued in 2003 Eighth dominant bank debenture issued in 2003 Ninth dominant bank debenture issued in 2003 Tenth dominant bank debenture issued in 2003 Eleventh dominant bank debenture issued in 2003 Twelfth dominant bank debenture issued in 2003 Thirteenth dominant bank debenture issued in 2003 Fourteenth dominant bank debenture issued in 2003 Second subordinated bank debentures issued in 2003 First dominant bank debentures issued in 2004 Second dominant bank debentures issued in 2004 $ 5,000,000 $ 5,000, Principal is repayable on maturity date. 1,949,965 1,950, Principal is repayable on maturity date. 1,000,021 1,000, Principal is repayable on maturity date. 500, , Principal is repayable on maturity date. 1,502,984 1,500, Principal is repayable on maturity date. 418, , Principal is repayable on maturity date. 2,500,000 2,500, Principal is repayable on maturity date. 999,926 1,000, Principal is repayable on maturity date. 698, , Principal is repayable on maturity date. 799, , Principal is repayable on maturity date. 499, , Principal is repayable on maturity date. 300, , Principal is repayable on maturity date. 1,001,537 1,000, Principal is repayable on maturity date. 999,118 1,000, Principal is repayable on maturity date. 501, , Principal is repayable on maturity date. 499, , Principal is repayable on maturity date. 2,211,991 2,200, Principal is repayable on maturity date. 3,600,000 3,600, Principal is repayable on maturity date. 529, , Principal is repayable on maturity date. 300, , Principal is repayable on maturity date. Fixed interest rate of 3.08%. Interest is paid annually. Floating interest rate except for the first two years fixed at 2.15%. Interest is paid semiannually. 3.65% minus 6-month LIBOR. Interest is paid semiannually. 3.48% minus 6-month LIBOR. Interest is paid semiannually. 4.15% minus 6-month LIBOR except for the first year fixed at 2.50%. Interest is paid semiannually. 2% plus 180-day-NTD CP rate in secondary market and minus 6-month LIBOR. Interest is paid semiannually. 180-day CP rate in secondary market plus 0.3%. Interest is paid semiannually. Floating rate. Interest is paid semiannually Floating rate. Interest is paid semiannually Floating rate. Interest is paid semiannually Floating rate. Interest is paid semiannually Coupon rate at 2.55% for the first year of issuance and 5% minus index rate for the years thereon Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Floating rate except for the first year fixed at 4%. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Fixed interest rate of 2.3%, interest is paid semiannually. Floating rate. Interest is paid semiannually with simple interest based on actual days. Floating rate. Interest is paid semiannually. (Continued)

58 Bank SinoPac September 30 Maturity Date Terms Third dominant bank debentures issued in 2004 Fourth dominant bank debentures issued in 2004 Fifth dominant bank debentures issued in 2004 Sixth dominant bank debentures issued in 2004 Seventh dominant bank debentures issued in 2004 Eighth dominant bank debentures issued in 2004 Ninth dominant bank debentures issued in 2004 Tenth dominant bank debentures issued in 2004 Eleventh dominant bank debentures issued in 2004 Twelfth dominant bank debentures issued in 2004 Thirteenth dominant bank debentures issued in 2004 Fourteenth dominant bank debentures issued in 2004 Fifteenth dominant bank debentures issued in 2004 First subordinated bank debentures issued in 2004 Second subordinated bank debentures issued in 2004 First subordinated debentures issued in 2005 FENB $ 502,101 $ 500, Principal is repayable on maturity date. 200, , Principal is repayable on maturity date. 300, , Principal is repayable on maturity date. 503, , Principal is repayable on maturity date. 200, , Principal is repayable on maturity date. 519, , Principal is repayable on maturity date. 301, , Principal is repayable on maturity date. 509, , Principal is repayable on maturity date. 203, , Principal is repayable on maturity date. 516, , Principal is repayable on maturity date. 304, , Principal is repayable on maturity date. 511, , Principal is repayable on maturity date. 523, , Principal is repayable on maturity date. 1,549,880 1,500, Principal is repayable on maturity date. 500, , Principal is repayable on maturity date. 3,000, Principal is repayable on maturity date. Floating rate. Interest is paid semiannually with simple interest based on actual days. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually with simple interest based on actual days. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually with simple interest based on actual days. Floating rate. Interest is paid semiannually with simple interest based on actual days. Floating rate. Interest is paid semiannually with simple interest based on actual days. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Floating rate. Interest is paid semiannually. Index rate plus 0.50%. Interest is reset semiannually since the issuance date. Interest is paid semiannually. Index rate plus 0.35%. Interest is reset semiannually since the issuance date. Interest is paid semiannually. FENB second subordinated bank debentures FENB second subordinated bank debentures 330, , Principal is repayable on maturity date. 165, , Principal is repayable on maturity date. $ 36,457,323 $ 33,247,820 Floating rate. Interest is paid quarterly. Floating rate. Interest is paid quarterly. (Concluded)

59 23. SHORT-TERM BORROWINGS September 30 Short-term borrowings $ 12,087,924 $ 13,280,488 Current portion of corporate bonds payable (Note 26) - 2,000,000 $ 12,087,924 $ 15,280,488 As of September 30, 2006 and 2005, short-term borrowings had the last maturity dates in July 2007 and May 2006 with interest rates from 1.664% to 6.17% and from 1.35% to 4.82%, respectively. 24. EURO-CONVERTIBLE BONDS REDEEMABLE WITHIN ONE YEAR The Company had issued US$230,000,000 of Euro-convertible bonds (the Bonds ) at par in Luxembourg s main market on July 12, 2002 and transferred to Euro MTF since September of The Bonds are zero coupon and in the denomination of US$1,000 each. Other offering terms were as follows: a. Redemption terms Unless previously redeemed, purchased and cancelled or converted, the Bonds will be redeemed on the maturity date at the redemption value. The redemption value of the Bonds will be the principal amount plus yield of 4.45% per annum. 1) Early redemption at the option of the Company: The Bonds may be redeemed in whole at their early redemption amount including principal and interest premium, at the option of the Company. a) Provided that after the third anniversary of the issue date, the closing prices of the common shares on the TSE, for 20 consecutive trading days, exceed 130% of the conversion price. b) If at least 90% in principal amount of the Bonds have already been redeemed, converted, or purchased and cancelled. c) In the event of certain changes in ROC taxation which oblige the Company to pay such additional amounts of the Bonds. 2) Redemption at the option of the bondholders: The Company will, at the option of any bondholder, redeem all or any portion of the Bonds at the accreted value a) At the third anniversary of the issue date (the put date ) by submitting the Relevant Event Redemption Notice to the Company prior to the put date. The put rights will be expired after the put date. b) If the common shares of the Company cease to be listed or traded on the TSE. c) If there is a change in control (as defined in the Trust Deed) with respect to the Company. b. Maturity date: Five years after the issue date. The Bonds were issued on July 12, 2002 and will mature on July 12, c. Pledged: Negative

60 d. Conversion right and conversion period Except during a closed period or suspension period, the bondholders may convert the Bonds into common shares of the Company, at any time on or after the 30th day after the issuance date and before the date 20 days prior to the conversion date. Closed period means the period being (a) 60 days prior to an annual general shareholders meeting, (b) 30 days prior to a special shareholders meeting or (c) the day prior to the record date for the distribution of dividends or other distributions. In addition, the Bonds may not be converted (a) during a period of not less than 3 business days prior to the ex-dividend date or the ex-rights date and ending on the record date and (b) during the period commencing on the date a shareholders meeting resolves to declare distributions or approve a rights issue and ending on the relevant record date, such period being a suspension period. The Company undertakes that it will have sufficient common shares for conversion, following an adjustment to the conversion price. e. Conversion price The initial conversion price was set at NT$17.666, which was adjusted for several times due to stock dividends declared, employee stock option certificates and cash dividends. On July 11, 2006, the conversion price was reset at NT$ after the latest adjustment. For the nine months ended September 30, 2006, the bondholders had converted the Euro-convertible bonds with aggregate face amount of US$150,594 thousand into 344,288 thousand common shares of the Company. According to the aforementioned offering terms, the bondholders can exercise the put right by submitting the Relevant Event Redemption Notice to the Company prior to July 12, As of the put date, US$1,000 thousand convertible bonds had been redeemed. 25. LONG-TERM BORROWINGS September 30 Unsecured loans $ 3,037,420 $ 3,363,788 Interest rate per annum 1.79% % 1.2%-4.9% In 2004, AnShin Card Services entered into a medium- and long-term syndicated loan agreement with a total credit line of $7,300,000 with ABN AMRO Bank, the arranger, and seventeen other financial institutions. The period of the credit term is five years from the contract effective date (December 6, 2004), and the credit line of this agreement is revolving. In 2002, AnShin Card Services entered into a mediumand long-term syndicated loan agreement with a total credit line of $5,000,000 with ICBC, the arranger, and thirteen other financial institutions. The period of the credit term is five years from the contract effective date (April 26, 2002), and the credit line of this agreement is revolving. In July 2005, AnShin Card Services applied to reduce the credit spread and to adjust the credit line to $4,800,000. According to the above agreements, AnShin Card Services promises that the stockholders equity ratio (stockholders equity/total assets) will remain over 8% at year-end within the contract period, that the shares in AnShin Card Services held by AnShin Card Services s sole shareholder, SinoPac Financial Holdings Co., Ltd. (the Company), will not be lower than 51% of AnShin Card Services s total issued shares, and that the Company shall have over 50% of the seats on the board of directors of AnShin Card Services

61 26. BONDS PAYABLE September 30 Issuance of three-year unsecured bonds (May 12, 2006 to May 12, 2009) with annual simple interest rate of 1.96%, payable annually, bonds are repayable in full at face value on maturity date $ 1,500,000 $ - Issuance of three-year unsecured bonds (September 12, 2003 to September 25, 2006) with annual simple interest rate of 1.5%, payable annually, bonds are repayable in full at face value on maturity date - 2,000,000 Less: Current portion of bonds payable (Note 23) - 2,000,000 1,500,000 - Euro-convertible bonds 5,816,800 8,569,138 Add: Interest premium payable - 396,415 5,816,800 8,965,553 $ 7,316,800 $ 8,965,553 As of September 30, 2006, the Euro-convertible bonds were issued by IBT. As of September 30, 2005, the Euro-convertible bonds redeemable within one year and interest premium payable amounting to $2,998,553 were issued by the Company, and the Euro-convertible bonds amounting to $5,967,000 were issued by IBT. IBT IBT issued US$180,000 thousand in zero coupon Euro convertible bonds with par of US$1,000 on December 22, The terms of the bonds are as follows: a. Redemption method IBT will redeem the bonds on the maturity date at a price equal to 99.95% of the outstanding principal amount unless the bonds have been previously redeemed, repurchased and canceled, or converted. 1) Redemption at IBT s option a) At any time on or after December 22, 2006 and before December 22, 2009, IBT may redeem all the bonds at one time or make piecemeal redemptions at 100% of the principal if the average closing price of the shares, translated into U.S. dollars at the prevailing rate on the issue date, for at least 20 consecutive trading days immediately preceding the date of such notice of redemption, is at least 130% of the conversion price then in effect, translated into U.S. dollars at the fixed exchange rate. b) IBT may redeem all the bonds at one time, but not piecemeal, at 100% of the principal at any time if at least 90% of the principal of the bonds has already been redeemed, repurchased and canceled, or converted. c) IBT may redeem all the bonds at one time, but not piecemeal, at 100% of the principal at any time if any changes in ROC taxation would require IBT to gross up the payment of interest or premium. 2) Redemption at the holders option a) Each bondholder has the right to require IBT to redeem all or part of the bonds only on December 22, 2006 at 99.98% of the principal unless the bonds had been previously redeemed, repurchased and canceled, or converted

62 b) Each holder has the right to require IBT to buy all of the holder s bonds at 100% of the principal amount if the shares cease to be listed or admitted for trading on the TSE for at least five consecutive trading days. c) Each holder has the right to require IBT to buy all or a portion of the holder s bonds at 100% of the principal amount if there is change of control over IBT. d) On December 26, 2005, IBT became a wholly owned subsidiary of the Company. This development constitutes a change of control, on which the bond indenture has certain provisions. Thus, under the indenture, each holder has the right to require IBT to repurchase all or a portion of his/her bond holdings. In addition, IBT set February 22, 2006 as the change of control date and the change of put price at 100% of the unpaid principal of the bonds. b. Maturity date The maturity period is five years after bond issuance. Since the bonds were issued on December 22, 2004, the maturity date is on December 22, c. Pledged: Negative. d. Conversion period The bondholders can convert the bonds to IBT s stock between January 21, 2005 and December 12, They, however, will not be able to effect conversions during the closed period. A closed period is (i) 60 days before any general stockholders meetings; (ii) 30 days before any special stockholders meetings; (iii) 5 days before the declaration of dividends or other benefits; (iv) the period from the date following the third trading day before the date of IBT s notification to the Taiwan Stock Exchange of the record date for the determination of stockholders entitled to the receipt of dividends, subscription for new shares due to capital increase, or appropriation of other benefits and bonuses; and (v) such other periods during which IBT should suspend the trading of its stocks, as required by ROC laws and regulations. e. Conversion price 1) The conversion price on issuance is NT$26.26 per share. The conversion price in U.S. dollars is based on the exchange rate of US$1=NT$ The conversion price is subject to adjustment based on certain terms of the related indenture. (Effective July 8, 2005, the conversion price for distributing cash dividends was adjusted from NT$26.26 to NT$25.22.) 2) If the average closing price of the shares for any 30 consecutive trading days immediately before December 22, 2005, December 22, 2006, December 24, 2007 and December 22, 2008 (the special reset dates ), converted into U.S. dollars at the prevailing rate on the special reset dates, is less than the conversion price then in effect converted into U.S. dollars at the fixed exchange rate, the conversion price may be decreased up to 80% of original conversion price. Effective December 22, 2005, the conversion price was reset from NT$25.22 to NT$ Effective September 30, 2006, due to IBT s cash dividend payment, the conversion price was reset from NT$22.29 to NT$ f. Settlement option Instead of delivering to the holders some or all of the shares required for the valid exercise of a conversion right, IBT may elect to make a cash payment for all or any portion of a holder s bonds deposited for conversion

63 g. Supplemental agreements On December 26, 2005, IBT became a wholly owned subsidiary of the Company and IBT s common shares were ceased to be traded on the TSE. In the interest of the bondholders, IBT granted to the bondholders outside the United States the additional rights, after converting the bonds into common shares of IBT, and further exchanging IBT s common shares for the Company s shares at a certain ratio. If the bondholders do not choose to convert into the Company s common shares, their bonds still can be converted into IBT s common shares. On July 21, 2006, the board of directors of IBT resolved the merger with Bank SinoPac. The bondholders of unsecured Euro-convertible bond, which were issued by IBT on December 22, 2004, can choose to convert into Bank SinoPac s shares or the Company s shares after IBT acquired the approved of the authorities and the bondholders. For the nine months ended 2006 and 2005, IBT purchased bonds both with par value of US$2,000 thousand from the secondary market. As of September 30, 2006 and 2005, bonds with par value of US$176,000 thousand and US$180,000 thousand, respectively, were still outstanding. 27. STOCKHOLDERS EQUITY a. Capital stock The Company had a total of $100,000,000 authorized capital divided into 10,000,000,000 shares with par value at NT$10 per share. The authorized capital can be issued in installments upon resolution of the board of directors. Among such authorized capital, 1,000,000,000 shares had been reserved for issuing stock option certificates, stock warrants associated with preferred stock and stock warrants associated with corporate bonds. The subscription shares issued upon exercising employee stock option certificates were subject to the regulations of the SFB. As of December 26, 2005, the Company acquired IBT through a share swap, the capital stock increased to $72,300,383, which were divided into 7,230,038,260 common shares. For the nine months ended September 30, 2006, units of option issuance has been vested, amounting to $195,973, resulting in 19,597,300 shares of common stock issued. On December 26, 2005 and on March 21, 2006, in order to maintain the Company s credit and shareholders equity the board of the Company resolved to buy back the treasury stock amounted to 100,000,000 shares with $1,678,999 and canceled those capital stocks. The Company bought back the outstanding common shares from dissenting shareholders who disagreed with the resolution of shares swap amounted to 1,580 thousand shares and canceled those capital stocks. For the year ended December 31, 2005, the Euro-convertible bonds, amounting to $2,786,132 had been converted, resulting in an increase of 278,613,170 common shares of the Company. In September 2005, all shares had been changed to authorized capital. Pursuant to the Financial Holding Company Act, the 116,565,240 shares of the Company, which were held by Bank SinoPac for three years as of May 8, 2005, has been cancelled and subsequently decreased the Company s capital stock. In addition, the alteration registration has been completed. The Company had to cancel its capital according to the capital decrease ratio and the capital stock decreased by $1,165,652 (please see Note 28). b. Capital surplus Under the Company Law, capital surplus arising from stock issuance in excess of par can be transferred to capital stock if approved by the stockholders

64 Capital surplus arising from long-term equity investments accounted for by the equity method can not be distributed for any purpose. Under the Financial Holding Company Act and related SFB directives, if the capital surplus obtained by a financial holding company through the shares swap comes from its subsidiaries unappropriated retained earnings after legal and special reserves, the surplus is excluded from the restriction as prescribed in the Securities and Exchange Law. (Ref No. Tai-Tsai-Zong ) The subsidiaries unappropriated retained earnings before the shares swap amounted to $3,720,981 which the Company accounted for as capital surplus at the date of establishment. In their September 26, 2002 first provisional meeting, the stockholders resolved to capitalize $2,097,745 of this capital surplus by distributing 209,774,487 shares of stock dividends. In addition, under the appropriation of earnings $1,152,573 of the aforesaid capital surplus derived from the subsidiaries retained earnings was appropriated as cash dividend. c. Earnings distribution and dividend policy The Company s Articles of Incorporation provide that annual net income should be appropriated after deducting any accumulated losses and taxes, providing legal and special reserve, and offering employee bonus which should not be less than 1% of the balance. The board of directors will then propose to the stockholders meeting for appropriation of the remainder and retained earnings from previous year. Employee bonus can be distributed either in cash or in stock. If it is in stock, the beneficiaries can also include the employees of subsidiaries. The rules of distribution need to be resolved by the board of directors. To pursue growth and increase profitability, the Company will retain cash for capital needs. The dividend policy is to distribute most dividends in stocks. The cash dividends will be declared only when there is an excess of cash. However, except for the first three years after the Company started, cash dividends shall not be less than 10% of total dividend declared. Cash dividends and cash bonus are paid after the approval of the stockholders, while the distribution of stock dividends requires the additional approval of the authorities. The appropriation, as well as other distribution of earnings shall be resolved by the stockholders in the following year and reflect in the financial statements of that year. On June 9, 2006 and May 10, 2005, the board of directors resolved the appropriation of earnings for the year ended December 31, 2005 and 2004, respectively, as follows: Appropriation of Earnings Dividend Per Share (NT$) For the Year Ended For the Year Ended December 31 December Legal reserve $ 570,906 $ 462,347 Special reserve (32,505 ) 398,124 Bonus to employees - cash 51,707 37,630 Remuneration to directors and supervisors 65,813 54,000 Cash dividends 5,056,347 3,723,200 $ $ $ 5,712,268 $ 4,675,

65 Under the Company Law, legal reserve should be appropriated until the reserve equals the aggregate amount of the Company s outstanding capital stock. This reserve can only be used to offset a deficit. When the reserve reaches 50% of the aggregate amount of the Company s outstanding capital stock, and the Company have no earnings, the legal reserve over 50% can be distributed as stock dividend or bonus, or, the Company have no deficit, the Company can retain the legal reserve up to 25% of the outstanding capital and transferred the remaining legal reserve to common stock. Under a SFB s directive, a special reserve should be at an amount equal to the debit balance of accounts in the stockholders equity section (such as unrealized loss on long-term equity investments, unrealized revaluation loss on long-term equity investments and cumulative translation adjustments, but excluding treasury stock). The balance of the special reserve is adjusted to reflect any changes in the debit balance of the related accounts on the balance sheet dates. Except for the amount reversed due to the reduction in the total debit balance, the special reserve shall not be appropriated. The SFB has issued a directive to prevent a company from excessive earnings distribution, which will damage the Company s capital structure as well as stockholders interest. Thus, if a parent company s shares held by subsidiaries decline in market value, the parent company should appropriate a special reserve at an amount equal to the decline in market value multiplied by equity. If the market value recovers, the reserve can be reversed to the extent provided. Under the Integrated Income Tax System, non-corporate ROC-resident stockholders are allowed tax credits for the income tax paid by the Company. Tax credits allocated to stockholders are based on the balance of Imputation Credit Account (ICA) on the dividend distribution date. d. Employee stock option certificate On April 7, 2003, the board of directors of the Company resolved to award issuing the employee stock option certificates, in a total consideration of 224,888 units, to attract and retain its professional employees, to centralize and strengthen their affiliation, and to create the highest profit for the Company and its shareholders. Each unit of stock option certificate represents subscription right of 1,000 shares of common stock. Upon exercise of options under this plan, 224,888,000 new shares of common stock will be issued and authorized by chairman. The employee stock option plan had been approved by the SFB on July 16, 2003 and, at the chairman s approval, the Company launched the first 157,422 units of such stock option, which entitled the subscribers to acquire 157,422,000 shares of common stock. Related terms and conditions for issuing and exercising stock option are as follows: 1) Conditions of eligibility for subscription rights: This stock option plan is limited to full-time employees of the Company and its subsidiaries (both local and overseas) that are over 50% owned by the Company. Of those qualified employees, actual amount of options granted will be based on considerations of the individual s seniority, grade, performance, overall contribution, or other special rewards upon receipt of the board of directors approval. Each individual may not be granted more than 10% of the option certificates at each issuance. Also, for each individual, the acquired numbers of shares during each fiscal year may not exceed 1% of the total numbers of shares issued at the end of such fiscal year. 2) Exercise price: The chairman had ratified July 31, 2003 as the first date of the award of the stock option and NT$12 as the exercise price per share, which was based on the market closing price of the common share on the date of the award of the option

66 3) Terms and vesting of the rights: a) Two years after the option certificates have been granted, less than or equal to 50% of the total granted options may be vested; three years after, another 10% may be vested; four years after, a further 20% may be vested; five years after, the remaining 20% of the total granted options may be vested. b) The term of stock option certificates is seven years. No transfer, collateral, negotiability, or any other methods of disposal are allowed during this period, except to inheritors in case of death of eligible employees of stock options. c) The Company reserves the right to cancel the option certificates which have been granted but not vested when the eligible employees fail to meet the performance requirements, or committed a significant violation against the corporate regulations. 4) Type of shares obtained upon exercise: The Company s common stock 5) All rights and options are surrendered on the expiration date of the certificates. 6) Procedures for handling surrendered stock option certificate: For the surrendered rights of the stock option, the Company will withdraw and cancel the certificates. 7) Method for performance of exercise: Issuance of new shares. 8) Adjustment of exercise price: a) After issuance of stock option certificates, in case of changes in number of the Company s outstanding common shares (such as resulting from a rights offering, capitalization of retained earnings, capitalization of capital reserve, merger, stock split, share offering for GDR issuance, etc.), exercise price per share will be adjusted only accordin g to the following formula (rounded to NT$0.01) and the adjusted price should meet the requirement that the Company doesn t need to accrued any compensation cost according to the price adjustment. Adjusted exercise price = Exercise price before adjustment {Number of shares issued + [(Payment per new share Number of new shares)/exercise price before adjustment]}/(number of shares issued + Number of new shares) i. The aforementioned term, number of shares issued means the total number of common shares issued and the certificates of payment for exercising stock options, but not including the certificates of bond conversion. ii. The payment will be zero if the payment per new share is obtained from distribution of bonus shares or stock split. iii. In the case of a merger of the Company with another entity, payment per new share will be the average of the daily closing prices for the 30 consecutive trading days of the Company s common share, commencing 45 trading days before the record date of the merger. iv. No adjustment to exercise price will be made if the adjusted exercise price is higher than the exercise price before adjustment. b) After the issuance of stock option certificates, the exercise price will be adjusted accordingly if the Company is to distribute cash dividend

67 9) Rights and obligations after exercising options: Certificates of payment of shares for exercise of stock option delivered by the Company will bear the same rights and obligations as the Company s common shares. The board of directors resolved to launch the residual 67,466 units of stock option certificates to specified superintendents in the Group with the proportion of the first issuance. The conditions of eligibility for subscription rights in the second issuance are limited to superintendents with special contribution. The chairman had ratified the award of the stock option as of December 30, 2003, at the exercise price per share of NT$17.2, which was based on the market closing price of the common share on the date of the award of the option. After the appropriation of the 2005 earnings, the exercise prices of the first option issuance for 157,422 units and the second option issuance for 67,466 units were adjusted to NT$10.13 and NT$14.52, respectively. 28. TREASURY STOCK (Shares in Thousands) Shares at Shares Shares the Increase Decrease Shares at Beginning During During the End of Reasons of Period the Period the Period Period For the nine months ended September 30, 2006 Reissuance to employees - the Company 19, ,649 In order to maintain the Company s credit and shareholder s equity 20, ,950 (100,000 ) 51,700 Buy back shares of dissenting shareholder 1,580 - (1,580 ) - Shares held by the subsidiary - IBT 120, ,031 For the nine months ended September 30, 2005 Reissuance to employees - the Company 19, ,649 Shares held by the subsidiary - IBT - 120, ,031 Shares held by the subsidiary - BSP 116,565 - (116,565 ) - Under the Securities and Exchange Law, the Company should not acquire treasury stock in excess of 10% of its total shares outstanding. In addition, the Company should not spend more than the aggregate amount of the retained earnings, paid-in capital in excess of par value, and realized capital surplus arising from gains on disposal of properties and donated capital. The Company should not use treasury stock to secure any of its obligations and to exercise any shareholders rights on those stocks. The Company s capital stock held by subsidiaries is treated as treasury stock; thus, the subsidiaries may not exercise stockholders rights on the treasury stock excluding those of which bought by the subsidiaries before the shares swap that was made to establish the Company. Under the Financial Holding Company Act, the Company s shares held by the subsidiaries may only own the stockholders right on earnings appropriation, as well as the capitalization by legal reserve or capital surplus. In the years ended December 31, 2004, the Company acquired 19,649,000 shares of its outstanding stocks with $333,972. The Company intends to reissue these stocks to its employees in the next three years at one time or in installments from May 24,

68 The Company bought back 1,580,000 shares with $25,487 from dissenting shareholders who disagreed with the resolution of shares swap, and the Company canceled those capital stocks for the nine months ended September 30, On December 26, 2005, in order to maintain the Company s credit and shareholders equity with the allowed highest price at NT$20 per share the board of the Company resolved to buy back the treasury stock for 50,000,000 common shares from December 27, 2005 to February 26, For the nine months ended September 30, 2006, the Company bought back the outstanding common shares amounted to 50,000,000 shares with cost of $810,254, and the Company canceled those capital stocks for the nine months ended September 30, On March 21, 2006, in order to maintain the Company s credit and shareholders equity with the allowed highest price at NT$20 per share the board of the Company resolved to buy back the treasury stock for 50,000,000 common shares from March 22, 2006 to May 21, From March 22 to June 30, 2006, the Company bought back the outstanding common shares amounted to 50,000,000 shares with $843,258, and the Company cancelled those capital stocks for the nine months ended September 30, On July 20, 2005, the Company s board resolved to buy back its 50,000,000 outstanding common shares, with NT$18 per share as the allowed maximum price, between July 21, 2005 and September 20, The buyback cost was $761,269. To maintain the Company s credit and stockholders equity the Company s board resolved on September 22, 2006 to buy back its 60,000,000 outstanding common shares between September 25, 2006 and November 24, In the nine months ended September 30, 2006, the Company bought back 1,700,000 outstanding common shares for $26,302. Bank SinoPac had held 256,127,108 shares of SPS (which was merged with SinoPac Securities on July 22, 2002) prior to the shares swap. Those shares had been swapped for 204,106,675 shares of the Company, together with stock dividends totaling of 226,495,430 shares. To deal with the Company s shares held by Bank SinoPac, the Board of the Company resolved to sell 144,361,929 shares through the securities exchange market. In doing so, Bank SinoPac sold 109,929,965 shares on the securities exchange market in The remaining 116,565,240 shares of the Company held by Bank SinoPac did not pursuant to the Financial Holding Company Act, which requires (i) reissued to the employees of the Company or the Company s subsidiaries within three years, (ii) used for equity conversion, or (iii) sold on a stock exchange or GTSM. In the event that shares are not reissued or sold, such shares should be cancelled and decrease the Company s capital stock, in addition, the alteration registration should be completed. According to the directives of the ARDF of the ROC, if Bank SinoPac does not receive any proceeds from the Company for such cancelled shares, Bank SinoPac needs to reduce its capital based on the capital decrease ratio while the Company follows the regulation to cancel and decrease its capital stock. The Company and Bank SinoPac got approval from the authorities for the cancellation of capital stock, on which the capital stock of the Company and Bank SinoPac decreased by $1,165,652 and $1,135,324, respectively. The dates for capital decreasing are on August 25, 2005 and August 26, 2005, respectively. IBT has acquired 120,031,000 common shares of the Company with $2,292,706 before shares swap, thus, the Company treated those shares as treasury stock under accounting principles generally accepted in the ROC

69 29. PERSONNEL EXPENSE, DEPRECIATION AND AMORTIZATION For the Nine Months Ended September 30 Personnel expenses Salaries and wages $ 6,305,374 $ 6,244,198 Labor insurance and national health insurance 361, ,344 Pension 415, ,924 Other personnel expenses 196, ,285 Depreciation 900, ,971 Amortization 180, , CUSTOMER S COLLATERAL SECURITIES AND STOCK LOANS September 30 Shares in Market Shares in Market Thousands Value Thousands Value Collateral securities 902,611 $ 22,267, ,499 $ 18,742,035 Stock loans 68,834 2,317,947 67,142 1,836,349 Refinancing stock loans 77 4, ,675 The market values were based on the closing prices on the last trading days in September 2006 and PENSION The Labor Pension Act took effect on July 1, 2005, the Company s employees, who were on service before July 1, 2005, could choose the pension mechanism either under the Labor Standard Law or under this Act. For those employees who choose the pension mechanism regulated by the Labor Standard law, their seniority prior to the enforcement of Labor Pension Act shall be maintained. The newly hired employees, who were hired after July 1, 2005, could only regulated by the Labor Pension Act. The Company has a defined benefit pension plan for all regular employees. Before September 30, 2005, the Company makes monthly contributions, in the amount of 2% of employee salaries, to a pension fund, which is administrated by the employee s pension plan supervisors committee. For the Company s employees choosing the pension mechanism regulated by the Labor Standard Law, the retirement payments shall be paid to employees on the basis of the following standard: (i) a lump sum payment of retirement payments equal to two base units shall be paid for each year of service (ii) provided that each year of service exceeding fifteen years shall be entitled to only one base unit of wage (iii) and that the maximum payment shall be forty-five base units. Any fraction of a year which is equal to or more than nine months shall be counted as one year of service, and any fraction of a year which is less than nine months shall be counted as half a year of service. For the Company s employees choosing the pension mechanism regulated by the Labor Pension Act, the retirement payments is paid according to the related rulings of this Act

70 For Bank SinoPac s employees choosing the pension mechanism regulated by the Labor Standard Law, the retirement payments shall be paid to employees on the basis of the following standard: (i) a lump sum payment of retirement payments equal to two base units shall be paid for each year of service (ii) provided that each year of service exceeding fifteen years shall be entitled to only one base unit of wage (iii) and that the maximum payment shall be forty-five base units. Any fraction of a year which is equal to or more than nine months shall be counted as one year of service, and any fraction of a year which is less than nine months shall be counted as half a year of service. For Bank SinoPac s employees choosing the pension mechanism regulated by the Labor Pension Act, the retirement payments is paid according to the related rulings of this Act. Bank SinoPac s employees contribute a compulsory amount equivalent to 4% of their salaries to the employees pension fund, and the Bank also makes monthly contributions to the severance payment fund. The Labor pension Act took effect on July 1, 2005, therefore the aforementioned employees pension fund ceased to contribute, and the employees received their cumulative contributions and related interest thereon. Since July 1, 2005, for those employees who still choose to be subjected to the Labor Standard Law, Bank SinoPac makes monthly contributions, equal to 4% of employee salaries, to the severance payment fund. If the employees quit willingly, they still can receive the severance payment based on the severance payment criteria. For those employees who choose to be subjected to the Labor Pension Act, Bank SinoPac ceases to contribute into severance payment fund. The cumulated contributions generated before applying Labor Pension Act is summed up in the balance at that month and retained in the severance payment fund. The employees will receive severance payments according to severance payment criteria when they quit willingly. IBT also applied defined benefit plan regulated by Labor Standard Law, the retirement payments shall be paid to employees on the basis of the following standard: (i) a lump sum payment of retirement payments equal to two base units shall be paid for each year of service (ii) provided that each year of service exceeding fifteen years shall be entitled to only one base unit of wage (iii) and that the maximum payment shall be forty-five base units. Benefits under the plan are based on average gross salary during the length of service until the last month before retirement. For this plan, IBT established a pension fund, to which it makes monthly contributions equal to 2% of employees salaries. The fund is administered by the employees fund administration committee and deposited in its name in the Central Trust of China. Since July 1, 2005, for those employees who still choose to be subjected to the Labor Standard Law, SinoPac Leasing makes monthly contributions, equal to 7% of employee salaries, to the severance payment fund. FENB has a pension plan for regular employees who have been employed for at least one year. Under this plan, employees may contribute up to 15% of their annual salary with FENB matching up to 3% of the employee s contribution. SinoPac Securities has pension and severance plans under Labor Standard Law for all its regular employees belonging to Defined Benefit Pension Plan. Following employees are entitled to receive retirement benefits: (i) those who have served either 25 years or over 15 years and are 55 years old; and (ii) those hired on or before May 19, 1997 and with more than 20 service years. In addition, employees hired on or before March 15, 1996 and have served at least five years are eligible to receive severance benefits. The pension and severance benefits are based on the average nine months fixed salary or wage before retirement or termination. SinoPac Securities makes monthly contributions, equal to 6% of basic salaries and wages (net of bonuses and benefits), to a pension fund. The Fund is administered by the employee s pension plan supervisors committee and deposited in the committee s name

71 SinoPac Futures Corporation, SinoPac Capital Management Corporation and SinoPac Managed Futures Co. have defined benefit pension and severance plans under the Labor Standards Law for all regular employees. The pension benefits are based on the average six months fixed salary or wage before retirement. SinoPac Futures Corporation, SinoPac Capital Management and SinoPac Managed Futures Co. make monthly contributions of amounts based on a fixed ratio of gross salary to a pension fund. The fund is administered by the employee s pension plan committee and deposited in a bank in the committee s name. AnShin Card Services has set up a defined benefit retirement plan covering all regular employees. Pursuant to this plan, employees are eligible for retirement or are required to retire after meeting certain age or service requirements. The retirement benefits are based on number of years of service rendered and the last nine months average salary before retirement. Each employee will earn two months salary for each of the first fifteen years of service, and one month s salary for each service year from the sixteenth year onwards. The maximum is forty-five months of salary. Under this pension plan, all payment of the pension will be afforded by AnShin Card Services. Since the Labor Pension Act took effect on July 1, 2005, the employees who choose to be subjected to the Act or were hired after July 1, 2005 will be subjected to the defined contributed pension plan. The retirement payments of those employees will be contributed to the personnel account by AnShin Card Services which is no less than 6% of monthly wages. In accordance with the Labor Standards Law, AnShin Card Services contributes 2% of salaries to a pension fund maintained with the Central Trust of China on a monthly basis. Retirement benefits are paid firstly from the pension fund. For those who choose to be subjected to the defined benefit pension plan, AnShin Card Services completes the actuarial present value on the balance sheet date (the measurement date). The amount that the accumulated benefit obligation over the fair value of the pension assets will be recognized as the minimum pension liability. AnShin Card Services will also recognized net periodic pension cost, including current service cost, interest cost, gains on settlement, transition assets, and the amortization amount of the prior service cost and gains or losses on the pension by the average remaining service period. For the nine months ended September 30, 2006 and 2005, the pension expense under the defined contribution pension plan for the Company and its domestic subsidiaries amounting to $119,621 and $41,544, respectively. a. The changes in the pension fund were summarized below: For the Nine Months Ended September 30 Balance, January 1 $ 2,480,626 $ 2,714,119 Contributions 224, ,747 Benefits paid (565,011 ) (663,757 ) Interest income 29,414 45,461 Balance, September 30 $ 2,169,434 $ 2,419,

72 b. The changes in the accrued pension cost under the defined benefit plan For the Nine Months Ended September 30 Balance, January 1 $ 422,677 $ 287,424 Provision under defined benefit plans 249, ,247 Provision under defined contribution plans 119,621 41,544 Contributions (329,875 ) (293,265 ) Reversal of last period minimal pension liabilities (5,583 ) - Benefit paid (3,512 ) (15,609 ) Balance, September 30 $ 452,937 $ 298, INCOME TAX Under Article 49 of the Financial Holding Company Act and related directives issued by MOF, a financial holding company and its domestic subsidiaries that held over 90% of shares issued by the financial holding company for 12 months within the same tax year may choose to adopt the linked-tax system for income tax filings. For the year ended 2005, the Company intended to adopt the linked-tax system for income tax and unappropriated earnings tax filings with its qualified subsidiaries. a. The compositions of income tax were as follows: For the Nine Months Ended September 30 Current income tax payable $ 815,814 $ 1,931,090 Basic tax 65,550 - Changes in deferred income taxes 154,655 (205,819 ) Separation taxes on short-term bills interest revenue 247, ,860 Prior year s adjustment (57,146 ) 17,569 Tax on unappropriated earnings (10%) 48 31,514 Effect upon adoption of the linked-tax system (76,052 ) (21,353 ) Others 8,319 - Income tax $ 1,158,356 $ 1,905,861 Income tax was based on taxable income from all sources. Foreign income taxes paid can be used as credits against the domestic income tax obligations to the extent of domestic income tax applicable to the related foreign-source income

73 b. Reconciliations of tax on pretax income at statutory rate and current income tax payable: For the Nine Months Ended September 30 Tax on pretax income at statutory rate $ 2,648,132 $ 3,046,212 Add (deduct) tax effects of: Tax-exempt income (88,879 ) (38,883 ) Permanent difference (1,860,733 ) (1,289,788 ) Temporary difference (193,109 ) 216,802 Investment tax credit (2,659 ) (3,260 ) Loss carryforward 305,262 - Others 7,800 7 Currently income tax payable $ 815,814 $ 1,931,090 c. Deferred income tax assets (liabilities) consisted of the tax effects of the following: For the Nine Months Ended September 30 Provision for credit and trading losses $ 332,534 $ 352,036 Pension cost 272, ,097 Provision for bad debts beyond limits 265,594 54,141 Loss carryforward 220, ,834 Cumulated effects of accounting changes 17,232 - Unrealized foreign exchange loss 8, ,604 Others 181, ,309 Interest premium - 239,838 1,299,003 1,384,859 Allowance for deferred income tax assets (244,139 ) (310,627 ) Deferred income tax assets $ 1,054,864 $ 1,074,232 Investment income under the equity investments - equity method $ (949,818 ) $ (941,310 ) Deferred service charges (167,934 ) (175,292 ) Premium from issuance of warrants (75,345 ) (15,288 ) Pension cost (48,200 ) (54,050 ) Goodwill amortization (41,347 ) (48,517 ) Others (87,755 ) (89,978 ) Effect upon adoption of the linked-tax system - (45,030 ) Deferred income tax liabilities $ (1,370,399 ) $ (1,369,465 ) d. The Company adopted the linked-tax system for income tax of 2003 and unappropriated earnings tax of 2002 filing with its subsidiaries. As of September 30, 2006 and 2005, the receivables of the Company resulting from the linked-tax system to its subsidiaries were $3,038 and $683, respectively. As of September 30, 2006 and 2005 the payables of the Company resulting from the linked tax system to its subsidiaries were $6,041 and $5,488, respectively

74 e. Imputed tax credit information is as follows: Balances of ICA September 30 The Company $ 362 $ 582 Bank SinoPac 59,634 38,214 IBT 47,865 48,380 SinoPac Securities 18,919 25,742 SinoPac Life Insurance Agent 5 4,104 SinoPac Property Insurance Agent - - IBT Life Insurance Agent 101, IBT Property Insurance Agent 3,632 50,346 SinoPac Futures 34,401 31,530 SinoPac Leasing 17, AnShin Card Services 29,390 21,798 SinoPac Securities Investment Trust 5,549 5,320 SinoPac Capital Management 5,271 5,271 Wal Tech International - 1,181 Intellisys Corp. 2,701 1,673 SinoPac Venture Capital 1,114 5,908 The creditable tax ratios for earnings 2005 (Actual) 2004 (Actual) The Company 15.93% 15.89% Bank SinoPac 16.35% % IBT 27.15% 29.76% SinoPac Securities 2.06% 4.29% SinoPac Life Insurance Agent 3.46% 33.44% SinoPac Property Insurance Agent % IBT Life Insurance Agent 33.33% 13.31% IBT Property Insurance Agent 33.33% 33.02% SinoPac Futures 33.33% 22.10% SinoPac Leasing % SinoPac Securities Investment Trust 33.33% 33.33% SinoPac Venture Capital 33.33% - Intellisys Corp % 33.33% As of September 30, 2006 and 2005, the unappropriated retained earnings for IBT consist of earnings which were generated before January 1, 1998 amounting to $8,758 and $60,938, respectively. For the year ended 2005, AnShin Card Services and SinoPac Leasing have no distributable earnings due to the deficit, and the tax credit will be used to compute the creditable tax ratios in the following years. In addition, SinoPac Capital Management and Wal Tech International have no distributable earnings in 2005 and 2004 due to the deficit and creditable tax ratios were not applied. The Company s foreign shareholders are not entitled to the tax credit described in the preceding paragraph except those related to 10% taxes on undistrib uted retained earnings actually paid by the Company. Such taxes will be used to reduce the amount of the final withholding taxes on dividends paid to such foreign shareholders

75 f. As of December 31, 2005, income tax returns of the Company by the period from May 9, 2002 to December 31, 2002 had been examined by the tax authorities. g. For Bank SinoPac, income tax returns through 2002, except those for 1996, had been examined by the tax authorities. On the income tax returns for the aforementioned years, the tax authorities denied the creditability of 10% withholding tax on interest income on bonds pertaining to the period when those bonds were held by other investors. Bank SinoPac appealed the decision of the tax authorities. Nevertheless, on the basis of conservative principles, Bank SinoPac recognized $111,945 as part of income tax expenses to reflect accrued liabilities and any assets written off in relation to the foregoing withholding taxes. h. For IBT, IBT Life Insurance Agent Co., Ltd. and IBT Property Insurance Agent, income tax returns through 2003, 2003 and 2002, respectively, had been examined by the tax authorities. For the income tax returns for 1995 to 2001, the tax authorities denied the creditability of 10% withholding tax on interest income on bonds amounting to $173,382 in 2001, which pertained to the period those bonds were held by other investors. IBT accrued this liability and appealed the decision of the tax authorities. In 2003, IBT reached an agreement with the Taipei National Tax Administration (TNTA) on the above appealing cases, in which TNTA would refund 65% of the withholding tax denied on the interest income on bonds to IBT. The income tax return for 2003 and 2002 had been examined by the tax authorities according to the aforementioned refund percentage. Consequently, IBT accrued 35% of the withholding tax denied on the interest income on bonds as income tax expenses for 2004 to 2006, which were not refunded by tax authorities. i. For SinoPac Securities, the income tax returns through 2002, had been examined by the tax authorities. The tax authorities disallowed deduction against the SinoPac Securities income tax obligations from 1994 to 2002 on items such as operating expenses and interest expenses on dealing department and assessment of warrants. SinoPac Securities had filed an appeal for reconsideration of the assessments for the income tax returns from 1994 to However, SinoPac Securities accrued probable amounts assessed by the tax authorities as additional income tax expenses and income tax payable amounted to $594,166. The tax authorities disallowed deduction against SinoPac Securities income tax obligation from 2003 to 2005 on assessment of warrants. SinoPac Securities has accrued probable amounts assessed by the tax authorities as income tax expense and income tax payable amounted to $907,303. The income tax returns of SinoPac Securities through 2002 had been examined by the tax authorities. The tax authorities disallowed deduction against of SPS income tax obligations for 2002 on assessment of warrants. SinoPac Securities filed an appeal for reconsideration of the assessments. SinoPac Securities, however, accrued all amounts assessed by the tax authorities as additional income tax expenses and income tax payable amounted to $47,355. j. The income tax returns of SinoPac Futures through 2002 had been examined by the tax authorities. k. The income tax returns of SinoPac Asset Management through 2004 had been examined by the tax authorities. The income tax filings of NITC Asset Management, which was merged into SinoPac Asset Management, had been examined through 2001 by the tax authorities, excluding the 2000 unappropriated earnings tax

76 l. For AnShin Card Services, the income tax returns through 2004 had been examined by the tax authorities. According to the ROC Income Tax Law, assessed losses can be carried forward the following five years and used to deduct taxable income. As of September 30, 2006, AnShin Card Services loss carryforward were as follows: Year Occurred Expiration Year Amount 2001 (examined) 2006 $ 319, (examined) ,371 m. For SinoPac Venture Capital, SinoPac Property Insurance Agent, SinoPac Leasing, SinoPac Securities Investment Trust, and SinoPac Life Insurance Agent the income tax returns had been examined by the tax authorities through EARNINGS PER SHARE The numerators and denominators used in computing earnings per share (EPS) were summarized as follows: For the nine months ended September 30, 2006 Denominator EPS (NT$) Numerator (Amounts) (Shares in After Pretax After Tax Thousands) Pretax Tax Basic EPS Income before cumulative effect of accounting changes $ 4,648,747 $ 3,490,391 7,016,757 $ 0.66 $ 0.50 Cumulative effect of accounting changes 740, ,712 7,016, Net income of common stockholders 5,388,920 4,233,103 7,016,757 $ 0.77 $ 0.60 Influence on diluted common shares: Employee stock option certificates - - 8,770 Bonds payable 18,363 13, ,144 Diluted EPS $ 5,407,283 $ 4,246,875 7,376,671 $ 0.73 $ 0.58 For the nine months ended September 30, 2005 Basic EPS $ 7,529,174 $ 5,623,313 7,015,939 $ 1.07 $ 0.80 Influence on diluted common shares: Employee stock option certificates ,806 Bonds payable 159, , ,162 Diluted EPS $ 7,688,215 $ 5,777,723 7,630,907 $ 1.01 $

77 The pro forma information assuming the Company s shares holding by the subsidiaries wouldn t regard as treasury stocks were summarized as follows: For the nine months ended September 30, 2006 Denominator EPS (NT$) Numerator (Amounts) (Shares in After Pretax After Tax Thousands) Pretax Tax Basic EPS - attributable to parent company $ 5,388,920 $ 4,233,103 7,136,788 $ 0.76 $ 0.59 Influence on diluted common shares: Employee stock option certificates - - 8,770 Bonds payable 18,363 13, ,144 Diluted EPS $ 5,407,283 $ 4,246,875 7,496,702 $ 0.72 $ 0.57 For the nine months ended September 30, 2005 Basic EPS - attributable to parent company $ 7,529,174 $ 5,623,313 7,092,916 $ 1.06 $ 0.79 Influence on diluted common shares: Employee stock option certificates ,806 Bonds payable 159, , ,162 Diluted EPS $ 7,688,215 $ 5,777,723 7,707,884 $ 1.00 $ RELATED-PARTY TRANSACTIONS In addition to those disclosed in other notes to the financial statement, relationships with the Group and significant transactions between the Group and related parties and at amounts of over NT$100 million are summarized as follows: Related Party Relationship with the Group SinoPac Marketing Consulting Co., Ltd. (SinoPac Subsidiary of SPH Marketing Consulting) SinoPac Asset Management International (SinoPac Subsidiary of SPH Asset Management) SinoPac Call Center Co., Ltd. (SinoPac Call Center) Subsidiary of SPH Fuh Hwa Securities Investment Trust Co., Ltd. Bank SinoPac is the director of Fuh Hwa Securities Investment Trust Co., Ltd. Fuh-Hwa Yuli Bond Fund Managed by Fuh Hwa Securities Investment Trust Fuh-Hwa Small Capital Fund Managed by Fuh Hwa Securities Investment Trust Fuh-Hwa Digital Economy Fund Managed by Fuh Hwa Securities Investment Trust Fuh-Hwa Bond Fund Managed by Fuh Hwa Securities Investment Trust Fuh-Hwa Olympic Global Fund Managed by Fuh Hwa Securities Investment Trust SinoPac Securities Investment Trust Co., Ltd. (SinoPac Subsidiary of SPH Securities Investment Trust) Hong Yue Finance Co., Ltd. (Hong Yue Finance) Related party in substance of SinoPac Securities Hong Yue Investment Co., Ltd. (Hong Yue Investment) Supervisor of SPH (Continued)

78 Related Party Relationship with the Group Honghsin Investment Co., Ltd. (Honghsin Investment) Subsidiary of director of SPH Fortune Investment Co., Ltd. (Fortune Investment) The supervisor of SPH and the director of Bank SinoPac Ruentex Development Co., Ltd. (Ruentex Development) Related party in substance of Bank SinoPac National Electric Appliance Co., Ltd. (National Electric Same chairperson with SPH (the chairperson Appliance) resigned on May 2005) Other Bank SinoPac s and IBT s directors, supervisors, managers and their relatives, department chiefs, the investees accounted for by the equity method, etc. Other Related parties under the control of the Company but with no significant transactions with the Company (please see Table 6). (Concluded) a. Credit extended and deposits taken and placed September 30, 2006 For the Nine % of Months Ended Account September 30, 2006 Amount Balance Interest Rate (%) Discounts and loans $ 2,681, % 0%-10.77% Deposits 11,390, % 0.002% % September 30, 2005 For the Nine % of Months Ended Account September 30, 2005 Amount Balance Interest Rate (%) Discounts and loans $ 1,073, % 1.5%-12.8% Deposits 3,399, % 0%-13.10% b. Lease 1) As a lessee SPH leased certain office premises from National Electric Appliance for a period from May 2002 to December However, both parties agreed to terminate the contract on June 1, Rentals were paid annually at the beginning of each year. Rentals paid for the nine months ended September 30, 2005 was $937. SPH leased certain apartments as employees dormitory from Hong Yue Investment Co., Ltd. for a period from May 2002 to May 2005 with monthly rental payments. Rentals paid for the nine months ended September 30, 2005 was $1,469. Bank SinoPac leased certain office premises from Ruentex Development for periods ending September 2010, with rentals paid monthly. Rentals paid to the aforementioned related parties for the nine months ended September 30, 2006 and 2005 was $2,700 and $2,772, respectively

79 SinoPac Securities leased office premises from National Electric Appliance and Hong Yue Investment Co., Ltd. The rental contract of Po-Ai Building with National Electric Appliance lasts for 5 years ending May 2007, with annual rent of $7,623 for the first year, subject to a yearly adjustment based on the consumer price index. To expand the leased area, there was an additional contract which lasts for 3 years ending March The annual rent of the additional contract was $1,373 for the first year, subject to a yearly adjustment base on the consumer price index. SinoPac Securities also leased Wu-Tsans Building with National Electric Appliance for 1 year ending September 2004 with annual rent of $840. The rental contract with Hong Yue Investment lasts for 5 years ending July The annual rent amounted to $8,252 together with lease deposit of $2,708. The annual rent will adjust to market price yearly. 2) As a lessor Bank SinoPac leased certain office premises to SinoPac Marketing Consulting, SinoPac Call Center and SinoPac Asset Management for periods ending in May 2007, October 2006 and June 2010, respectively, with rentals received monthly. Rentals received for the nine months ended September 30, 2006 and 2005 were $3,837 and $3,535, respectively. c. Guarantees and securities purchased Guarantees and credits on Fortune Investment were collateralized by the following assets provided by Fortune Investment. September 30 Properties - carrying amount $ 40,064 $ 40,064 Stock - market value 74,419 9,545 d. Professional service fees and advisory charges Bank SinoPac had entered into several professional advisory contracts with its investees. The professional advisory charges paid for the nine months ended September 30, 2006 and 2005 amounted to $67,530 and $94,851, respectively. SinoPac Securities had entered into a contract with SinoPac Call Center for outsourcing customer call services. The contract lasts for one year starting January 2006 and the consulting fees were paid monthly in accordance with services actually provided. SinoPac Securities had offered brokerage and underwriting services (stock affairs agent fees) to its affiliates. The commissions and fees received for the nine months ended September 30, 2006and 2005 amounted to $24,194 and $4,956, respectively. AnShin Card Services entered into a contract with SinoPac Call Center for customer call and data processing services since June For the nine months ended September 30, 2006 and 2005, the professional service charges paid were $81,477 and $89,239, respectively, of which $8,847 and $9,150, remained unpaid as of September 30, 2006 and 2005, respectively. AnShin Card Services retained SinoPac Marketing Consulting to provide credit card distribution services. For the nine months ended September 30, 2006 and 2005, the distribution channel expenses was $1 and $14, respectively

80 SinoPac Futures received guarantee deposits and margins from its related parties on futures contract. The deposits are placed within a bank. The amounts for customers equity accounts-futures included in other liabilities as of September 30, 2006 and 2005 was $29,576 and $14,850, respectively. The amounts for accounts receivable futures guarantee deposits included in other assets as of September 30, 2006 and 2005 was $1,000,978 and $1,275,939, respectively. e. Due from affiliates For SPH, the receivables, as of September 30, 2006 and 2005, resulting from the linked-tax system to its subsidiaries were $3,038 and $683, respectively. The payables, as of September 30, 2006 and 2005, resulting from the linked-tax system to its subsidiaries were $6,041 and $5,488, respectively. f. Bonds purchased under resale agreements and bonds sold under repurchase agreements Short-term bonds sold under agreements to repurchase transactions between Bank SinoPac and IBT and related parties for the nine months ended September 30, 2006 and 2005 were as follows: Face Amount Cost September 30 September 30 Short-term bonds sold under agreements to repurchase $ 547,276 $ 288,600 $ 568,096 $ 316,960 Short-term bonds sold under agreements to repurchase transactions between SinoPac Securities and related parties for the nine months ended September 30, 2006 and 2005 were as follows: 2006 Interest Expense for the Nine Balance as of September 30 Months Face Ended Amount Cost September 30 Mutual fund managed by SinoPac Securities Investment Trust Co. $ 111,500 $ 118,017 $ 883 Honghsin Investment 25,400 27, Hanghsin Investment 11,400 11, National Electric Appliance 7,500 8, $ 155,800 $ 165,482 $ 1,396 Hong Yue Finance $ 6,500 $ 7,023 $ 44 National Electric Appliance $ 6,500 $ 7,023 $

81 g. Financial assets at fair value through profit or loss Ending Balance % of Total September 30 September 30 Beneficiary certificate Fuh-Hwa Yuli Bond Fund $ 206,188 $ 100, % 0.25% Fuh-Hwa Small Capital Fund 32, , % 0.29% Fuh-Hwa Digital Economy Fund 72, , % 0.41% Fuh-Hwa Bond Fund 175, % - Fuh-Hwa Olympic Global Fund - 202, % Others 318, , % 0.68% Except for the employees of Bank SinoPac and IBT, the above interest rates were similar to or approximate those offered to third parties. Based on the Banking Law, except for consumer loans and government loans, credits extended by Bank SinoPac and IBT to any related party should be fully secured, and the terms of those credits should be at arm s length. 35. PLEDGED OR MORTGAGED ASSETS In addition to those disclosed in other footnotes to the financial statement, the pledged or mortgaged assets of the Company as of September 30, 2006 and 2005 are summarized as follows: Assets pledged to financial institutions as guarantees for commercial paper issued, short-term and long-term borrowings and bank overdraft, and to the tax authorities as guarantees on petitions for tax reassessment filed by SinoPac Securities and its subsidiaries as of September 30, 2006 and 2005, are summarized as follows: September 30 Pledged time deposits (included in other assets) $ 2,210,110 $ 1,785,246 Properties, net 587, ,021 Properties held for lease, net (included in other assets) 276, ,062 $ 3,074,299 $ 2,654,329 As of September 30, 2006 and 2005, AnShin Card Service had placed cash amounting to $190,920 and $138,640, respectively, as refundable deposits for merchant payment in accordance with the Rules Governing Deposits with National Credit Card Center for merchant payment. 36. CONTINGENCIES AND COMMITMENTS Contingencies and commitments of the Company and its subsidiaries, in addition to those disclosed in other footnotes to financial statements, are summarized as follows:

82 a. Lease contracts Under different operating lease agreements, the Company and its subsidiaries leased certain office premises for periods ranging from one month to 15 years, with rentals paid monthly, quarterly or annually. Rentals for the next five years are as follows: Year Amount October 1 to December 31, 2006 $ 223, , , , ,907 Rentals for the years beyond 2011 amounted to $820,869, the present value of which is about $614,010, as discounted at the one-year time deposit rate in either Bank SinoPac, IBT and FENB of 2.13%-4.75%. b. Equipment purchase contracts Bank SinoPac has entered into contracts to purchase computer hardware and software for $143,629, of which $57,195 has been paid as of September 30, c. Interior decoration contract Bank SinoPac had entered into interior decoration contracts for $19,971, of which $17,976 had been paid as of September 30, d. The Securities and Futures Investors Protection Center (SFIPC) is believed by investors to be filing a lawsuit against Bank SinoPac in the ground that Procomp Informatics Ltd. provided US$10 million deposit with Bank SinoPac s Sungshan Branch and limited the usage as a condition for short-term loan to Addie International Limited granted by SPL and for helping Procomp Informatics Ltd. to window dress its financial statements. As of June 29, 2005, the SFIPC filed additional lawsuit against Bank SinoPac, SPL and all other parties related to Procomp Informatics Ltd. Case for compensation in the amount of $4,467,129. As a matter of fact, Bank SinoPac was authorized to engage in financing activities and did not help Procomp Informatics Ltd. to window dress the financial statements. According to Bank SinoPac attorney s opinion, the claims from SFIPC is without sufficient reason and the possibility for Bank SinoPac to compensate the investors for the damage is insignificant. e. The SFIPC is believed by investors to be filing a lawsuit against the Bank in the ground that National Aerospace Fasteners Corporation provided an accounts receivable - factoring with the Bank s Tunpei Branch and recorded the substantially loan transaction as an accounts receivable financing activity to window-dress its financial position which the investors made their investing decision based on since the third quarter, As of April 21, 2006, the SFIPC files lawsuit against the Bank and all other parties for compensation in the amount of $450,000. The Bank has entered a plea on such charges and the case is under trying in the count of first instance. f. In October 2003, IBT became a defendant in a civil lawsuit filed with the District Court of Shilin, Taipei. Involved in this lawsuit was one of its former branch officers, who allegedly participated in fraud leading to the loss of deposits of one of its customers. The amount of the claim against IBT is approximately NT$200 million. IBT is currently contesting the claim and has made a counter-claim against the plaintiff for contributory negligence. If IBT is found liable, IBT believes the convicted individual s funds under attachment, as well as its insurance for employee misconduct, would cover a substantial part of the claim. IBT believes this litigation will not materially affect its business and operations

83 As of October 17, 2006, the date of the accompanying accountants report, the District Court of Shilin had passed its decision on this civil lawsuit. That is, on September 15, 2006, IBT received the court s written decision, stating that the former branch officer had not violated the plaintiff s right and that IBT would cover only a small part of the claim. However, because this decision is still appealable to a higher court, the final outcome of this litigation is uncertain. g. On behalf of the investors of Cheng-Yi Food Co. (CYF) with respect to its initial public offering (IPO), the Securities and Futures Institute (SFI) filed a civil case against CYF and the major and sub-underwriters (SinoPac Securities being a sub-underwriter in the IPO) of CYF. The damages claimed by SFI amounted to $71,018 plus 5% interest. SinoPac Securities legal counsel believes that SinoPac Securities cannot be held liable for damages incurred by the investors since its role as sub-underwriter to the CYF IPO is limited only to the distribution of CYF shares and it did not advised CYF on matters related to the IPO. h. Mr. Chang sued SinoPac Securities and its two former employees, Mr. Lin and Mr. Huang, for embezzlement. Mr. Chang claimed from SinoPac Securities damages of $32,215 plus 5% interest. After the trial at the high court of second instance on June 30, 2004, the high court determined that SinoPac Securities should assume the related liability of $28,828 plus 5% interest and pay compensation. After the trial at the supreme court, the supreme court determined that the case be returned to the high court to rejudge. The high court determined that SinoPac Securities should assume the related liability of $22,422 plus 5% interest and pay compensation. In the opinion of SinoPac Securities management and legal counsel, clarification should be made that the damage claimed by Mr. Chang was not connected to SinoPac Securities brokerage affairs because Mr. Chang had authorized Mr. Lin to deal with money remittance for stock payment for a long time. In addition, SinoPac Securities claimed that Mr. Chang is also contributory negligence. Nevertheless, on the basis of the conservative principle, SinoPac Securities estimated a probable loss $23,000, recorded as other payables in the financial statements. i. Significant contingencies and commitments of subsidiaries 1) SinoPac Marketing Consulting SinoPac Marketing Consulting leased certain office premises for the period until October 31, 2008, with rentals paid monthly. Rentals for the future are as follows: Year Amount October 1 to December 31, 2006 $ , ) SinoPac Asset Management International SinoPac Asset Management International leased certain office premises for the period until September 30, 2010, with rentals paid quarterly. Rentals for the future are as follows: Year Amount October 1 to December 31, 2006 $

84 3) SinoPac Call Center SinoPac Call Center leased certain office premises for the period until October 31, 2006, with rentals paid quarterly. Rentals for the future are as follows: Year Amount October 1 to December 31, 2006 $ , SALES OF ACCOUNTS RECEIVABLE AnShin Card Services entered into a Receivables Revolving Purchases Agreement with ABN AMRO Bank, Taipei Branch (ABN AMRO Bank) in April 2003 to transfer credit card receivables on a continuous basis within three years. According to the Receivables Revolving Purchases Agreement, ABN AMRO Bank defers the payment of 15% of the face amount of sold credit card receivables. AnShin Card Services signed an extension agreement with ABN AMRO Bank on February 9, 2006 to extend revaluing periods for two years, and the final maturity date is December 9, The ratio of deferred payment was changed to 17.5%. Every month, AnShin Card Services sells new credit card receivables on a continuous basis equivalent to the amount collected from the sold credit card receivables. AnShin Card Services settles with ABN AMRO Bank on a monthly basis for the deferred payment balance after deducting the difference between proceeds from sale of accounts receivable and related carrying values. The total credit line of the Agreement amounted to $4 billion, equal to the aggregate amounts of credit card receivables sold to ABN AMRO Bank and still outstanding minus the deferred payment, and the credit line could be increased by $2 billion to a total of $6 billion within two years. As of September 30, 2006 and 2005, AnShin Card Services had an outstanding of $6 billion under the agreement. As of September 30, 2006 and 2005, in accordance with the Receivables Revolving Purchases Agreement, AnShin Card Services had provided a deposit totaling $186,210 and $88,210, as liquidity reserve for the revolving sales of credit card receivables. In addition, AnShin Card Services promised that all sold credit card receivables conformed to agreed terms (eligible terms) and that such accounts receivable were maintained at certain level of quality (such as restrictions on ratios for allowance for bad debts and overdue loans). Since the sold accounts receivable did not meet the agreed delinquent ratio, AnShin Card Services entered into a second amendment with ABN AMRO Bank on August 4, 2006, which required for an additional deposit of $98,000 as liquidity reserve for the revolving sales in order to maintain the credit rating and amended certain early termination clauses. As of September 30, 2006 and 2005, the receivable amount of the proceeds from the sale of credit card receivables amounting to $1,276,247 and $1,061,927, respectively, was recorded as other financial assets - current. The loss on sale of credit card receivables consists of the difference between the amount of proceeds calculated using the discount method and the carrying value, and of the amortization of the arrangement fees for revolving sales of accounts receivable, and amounted to $99,164 and $11,743, respectively, for the nine-month period ended September 30, 2006, and $105,589 and $12,193, respectively, for the nine-month period ended September 30, 2005, recorded as operating costs. AnShin Card Services also entered into a servicing agreement for account management and collection services with ABN AMRO Bank. Accordingly, AnShin Card Services collects the sold credit card receivables on behalf of ABN AMRO Bank, then transfers the collections to ABN AMRO Bank. AnShin Card Services charges the servicing fee for account management and collection services on a monthly basis. The servicing revenue and the servicing cost were expected to be equal, and therefore neither related service assets nor liabilities were recognized by AnShin Card Services. For the nine-month periods ended September 30, 2006 and 2005, the related servicing fee amounted to $857, and was recorded as operating income

85 The related cash flows generated from revolving sales of accounts receivable for nine-month periods ended September 30, 2006 and 2005, were as follows: For the Nine Months Ended September 30 Accumulated revolving accounts receivable sold - carrying value $ 21,479,989 $ 15,563,976 Add: Receivable amount of the proceeds from sale of accounts receivable at beginning of period 1,061,492 1,109,253 Less: Receivable amount of the proceeds from sale of accounts receivable at end of period (1,276,247 ) (1,061,927 ) Loss on sale of accounts receivable (110,907 ) (117,782 ) Proceeds from sale of accounts receivable $ 21,154,327 $ 15,493,520 Servicing fees $ 857 $ CAPITAL ADEQUACY RATIO Under the Financial Holding Company Act and related regulations, a financial holding company should maintain a consolidated capital adequacy ratio (CAR) of at least 100%. Thus, if a financial holding company s consolidated CAR falls below 100%, the authorities may prohibit it from declaring cash dividends or distributing other properties. In certain conditions, the authorities may impose other penalties on the company. As of June 30, 2006 and 2005, consolidated CARs of SPH were as follows: Entities June 30, 2006 (In Thousands of New Taiwan Dollars, %) Item Group s Net Eligible Capital Group s Statutory Capital Requirement SPH $ 86,773,389 $ 92,944,292 Bank SinoPac 37,562,670 23,507,528 IBT 34,220,668 22,876,719 SinoPac Securities 9,964,192 4,938,646 SinoPac Investment Trust 316, ,994 SinoPac Venture Capital 1,861, ,780 Other subsidiaries 2,584,947 1,097,884 Deduction (98,725,462 ) (89,207,116 ) (A) 74,559,083 (B) 57,266,727 Consolidated CARs of SPH (C) 130%

86 June 30, 2005 Entities (In Thousands of New Taiwan Dollars, %) Item Group s Net Eligible Capital Group s Statutory Capital Requirement SPH $ 54,172,480 $ 54,263,332 Bank SinoPac 32,867,401 22,606,380 SinoPac Securities 11,971,534 4,712,898 SinoPac Investment Trust 306, ,820 SinoPac Venture Capital 985, ,081 Other subsidiaries 2,048,812 1,324,406 Deduction (61,882,325 ) (53,770,695 ) (A) 40,469,672 (B) 29,793,222 Consolidated CARs of SPH (C) 136% Note 1: Note 2: The group capital adequacy ratio is calculated and reported in accordance with the Regulations Governing the consolidated capital adequacy of Financial Holding Companies. The group capital adequacy ratio = The group s net eligible capital/the group s statutory capital requirement. 39. SPECIFIC RISK FROM FUTURES DEALING AND FINANCIAL RATIOS, LIMITATIONS AND EXECUTION OF FUTURES COMMISSION MERCHANTS SUBSIDIARY a. The dealing of futures SinoPac Securities and its subsidiaries pay margin deposits when entering into futures contracts. SinoPac Securities also pays the margin deposits for short options contracts. The margin account of SinoPac Securities is re-evaluated on the basis of the market prices of the outstanding futures and options contracts. If the margin is less than the maintenance level, SinoPac Securities should either deposit additional margin or offset the contracts. For SinoPac Securities, there were 367 and 6,325 futures contracts outstanding as of September 30, 2006 and 2005, respectively; and 392 and 16,704 options contracts outstanding as of September 30, 2006 and 2005, respectively. Margin deposits paid amounted to $450,250 and $644,085 as of September 30, 2006 and 2005, respectively. b. The brokerage of futures Customers pay margin deposits when entering into futures transactions and short options contracts. Customers gain or loss a lot on the leverage resulting from the margin deposits. To protect SinoPac Futures from harm arising from customers huge losses, the margin accounts of customers are re-evaluated daily on the basis of the market prices of the outstanding futures and options contracts. SinoPac Futures will inform customers immediately to put in additional margin deposits when their margin accounts fall below an agreed level (the maintenance margin ). If the customers fail to do so, SinoPac Futures settles their position by offseting the contracts

87 As of September 30, 2006 and 2005, the outstanding futures and options held by customers of SinoPac Futures were as follows: September 30 Futures - carrying value $ 8,185,525 $ 4,576,298 - unrealized loss on outstanding contracts (7,149 ) (22,556 ) Options - market value of long options 26,935 90,583 - market value of short options 19,987 11,581 Customer margin account 4,483,927 5,316,419 c. Futures management The term discretionary futures trading means a managed futures enterprise accepting commissions from specified persons, performing analyses and making judgments with regard to futures trading, and on the basis of those analyses and judgments, and executing futures trading operations on behalf of, and with trading funds consigned by the principal. Before engaging in consignments with SinoPac Managed Futures Co. for discretionary futures trading, principles shall to note the characteristics of futures transaction - low margin and high finance-leverage. Due to the characteristics, principals could earn high profits or suffer serious losses. Therefore, principals shall to take their abilities to involve in the transaction into consideration. Discretionary futures trading is not transaction without risk and SinoPac Managed Futures Co. will not guarantee the minimum profitability according to the past trading performance. Excepting for carrying out confidentiality obligations and the duty of care of a good custodian, SinoPac Managed Futures Co. shall not be responsible for the profit or loss from executing discretionary futures trading and make guarantees of profitability to a principal. d. As of September 30, 2006 and 2005, the financial ratios of SinoPac Futures, computed according to the provisions of the Rules Governing Futures Commission Merchants, were as follows: September 30 Calculation Formula Equation Ratios (%) Benchmark Equation Ratios (%) Benchmark 1) Equities Total liabilities deducted futures client equity, default reserve, and futures trading loss reserve $1,074,195 $81,192 1, % $1,307,506 $90,037 1, % 2) Current assets Current liabilities $5,671,909 $4,882, % $6,778,662 $5,780, % 3) Equities Capital stock $1,074,195 $615, % 40% $1,307,506 $615, % 40% 4) Adjusted net capital Client and proprietary account $874,614 $928, % 15% $1,121,062 $1,196, % 15% e. SinoPac Managed Future Co. engaged in discretionary investment services, the multiple of amount of discretionary investment account dividend by stockholder s equity is conformity with Regulations Governing Managed Futures Enterprises and is summarized as follows: September 30 Calculation Formula Equation Multiple Equation Multiple Benchmark Amount of discretionary investment account Stockholder s equity $43,000 $182, $38,000 $194,

88 40. PUBLIC ANNOUNCEMENTS PRESCRIBED IN FINANCIAL HOLDING COMPANY ACT, ARTICLE 46 Information regarding the credit extensions, guarantees or other transactions engaged by the Company and its subsidiaries to the same person, the same related person or the same affiliate as of June 30, 2006 and 2005 was summarized as follows: (In Thousands of New Taiwan Dollars, %) June 30, 2006 Aggregate Amount of Credit % of Extensions, Financial Guarantees Holding or Other Company s Name Transactions Net Worth To the same person: Client A $ 16,505, % Client B 10,000, % Client C 8,132, % Client D 7,283, % Client E 6,013, % Client F 5,400, % Client G 4,500, % Client H 4,292, % Client I 4,059, % To the same affiliate: Shin Kong Financial Holding Co., Ltd. 8,142, % Formosa Plastics Corporation, Ltd. 7,580, % ABN AMRO Bank 7,283, % Cathay Financial Holdings Co., Ltd. 6,410, % Fubon Financial Holding Co., Ltd. 6,243, % Mega Financial Holdings Co., Ltd. 5,439, % BenQ Corporation, Ltd. 5,019, % June 30, 2005 Aggregate Amount of Credit % of Extensions, Financial Guarantees Holding or Other Company s Name Transactions Net Worth To the same person: Client A $ 20,548, % Client B 17,499, % Client C 13,987, % Client D 9,897, % Client E 8,770, % Client F 8,190, % Client G 7,794, % Client H 7,061, % (Continued)

89 June 30, 2005 Aggregate Amount of Credit % of Extensions, Financial Guarantees Holding or Other Company s Name Transactions Net Worth Client I $ 6,127, % Client J 5,851, % To the same affiliate: Cathay Financial Holdings and its affiliates 20,809, % Taipeifubon Commercial Bank Co., Ltd. and its affiliates 20,339, % Taiwan Semiconductor Manufacturing Company Limited and its affiliates 14,492, % BENQ Corporation and its affiliates 11,893, % Top Victory Investments Limited and its affiliates 11,428, % International Bills Finance Corporation and its affiliates 6,698, % Chung Hsing Bills Finance Corporation and its affiliates 6,422, % Ta Yu Internation Corporation and its affiliates 5,552, % (Concluded) Note: The percentage of Financial Holding Company s net worth as of June 30, 2005 is not re-calculated by the retroactively restated net worth owing to adoption the pooling of interest method. Pursuant to Article 46 of Financial Holding Company Act, the above information announced by the Company was summarized and calculated by the relevant accounts or transaction balances as of June 30, 2006 and 2005 provided by the Company and its subsidiaries. 41. BUSINESS SEGMENT FINANCIAL INFORMATION For the Nine Months Ended September 30, 2006 (In Thousands of New Taiwan Dollars) Business Segment Item Banking Security Credit Card Others Consolidated Net interest $ 12,960,721 $ 451,578 $ 1,938,004 $ (108,520) $ 15,241,783 Net revenues other than interest 4,502,863 3,423, , ,042 9,106,644 Total net revenues 17,463,584 3,875,249 2,640, ,522 24,348,427 Provision for loan losses 3,095, ,095,811 Provision for credit and trading losses (116,960) - 3,575, ,458,946 Operating expenses 8,921,849 2,769,178 1,067, ,306 13,146,806 Income before income tax expense 5,562,884 1,106,071 (2,003,302) (18,789) 4,646,864 Income tax expense 1,143, ,623 (348,524) 5,312 1,158,356 Cumulative effect of accounting changes 299, ,300 - (883) 742,712 Net income 4,718,234 1,192,748 (1,654,778) (24,984) 4,231,

90 42. AVERAGE AMOUNT AND AVERAGE INTEREST RATE OF INTEREST-EARNING ASSETS AND INTEREST-BEARING LIABILITIES Average amounts and average interest rates of interest-earning assets and interest-bearing liabilities of Bank SinoPac and FENB were as follows: Interest-earning assets For the Nine Months Ended September 30, 2006 Average Average Balance Rate (%) Due from other banks $ 5,662, Call loans (placement) 40,459, Due from the Central Bank 8,704, Financial assets at fair value through profit or loss 28,755, Available-for-sale financial assets 95,425, Discounts and loans 337,934, Accounts receivable - factoring 9,963, Held-to-maturity investments 4,226, Securities purchased under agreement to resell 13,079, Other financial assets 1,854, Interest-bearing liabilities Due to other banks 11,227, Call loans (taken) 25,592, Demand deposits 62,561, Savings - demand deposits 82,646, Time deposits 190,634, Savings - time deposits 78,230, Negotiable certificates of deposit 21,654, Securities sold under agreement to repurchase 9,661, Bank debentures 36,329, Financial liabilities at fair value through profit or loss 472, Interest-earning assets For the Nine Months Ended September 30, 2005 Average Average Balance Rate (%) Due from other banks $ 7,455, Call loans (placement) 36,672, Due from the Central Bank 7,460, Securities purchased 93,189, Securities purchased under agreement to resell 17,909, Loans, discounts and bills purchased 314,433, Accounts receivable from factoring 11,992, Other long-term investments 1,085, (Continued)

91 Interest-bearing liabilities For the Nine Months Ended September 30, 2005 Average Average Balance Rate (%) Due to other banks $ 83, Call loans (taken) 33,760, Demand deposits 74,613, Savings - demand deposits 75,366, Time deposits 159,712, Savings - time deposits 68,914, Negotiable certificates of deposit 29,848, Securities sold under agreement to repurchase 19,284, Bank debentures 33,297, (Concluded) Average balance is calculated at the daily average balance of IBT s interest-earning assets and interest-bearing liabilities. Interest-earning assets September 30 Average Average Average Average Balance Rate (%) Balance Rate (%) Due from other banks $ 1,923, $ 2,195, Call loans (placement) 13,762, ,777, Due from the Central Bank 11,751, ,779, Financial assets at fair value through profit or loss 4,160, ,405, Securities purchased under agreement to resell 9,985, ,493, Discounts and loans 291,355, ,510, Available-for-sale financial assets 62,753, ,681, Held-to-maturity investments 1,197, ,690, Non-active market debt instruments 679, , Accounts receivable - revolving credit card outstanding balance 3,095, ,055, Interest-bearing liabilities Securities sold under agreements to repurchase 20,432, ,393, Due to banks 21,148, ,086, Demand deposits 44,437, ,342, Savings deposits 77,032, ,078, Time deposits 50,505, ,773, Time-savings deposits 125,799, ,585, Negotiable certificates of deposit 27,582, ,074, Due to the Central Bank and other banks 8,653, ,703, Other liabilities - appropriated loan funds 378, , Average balances are calculated by the daily average balances of interest-earning assets and interest-bearing liabilities

92 43. FINANCIAL INSTRUMENTS a. Fair value of financial instruments 1) Bank SinoPac and its subsidiaries Assets Carrying Amount September 30 Estimated Carrying Estimated Fair Value Amount Fair Value Financial assets - with fair values approximating carrying amounts $ 113,721,637 $ 113,721,637 $ 96,441,079 $ 96,441,079 Financial assets at fair value through profit or loss 29,442,306 29,442,306 14,997,400 14,997,400 Available-for-sale financial assets 134,126, ,126,477 89,035,804 89,035,804 Discounts and loans 350,046, ,046, ,061, ,061,494 Held-to-maturity investments 3,660,579 3,660,298 5,370,739 5,355,780 Equity investments - equity method 2,376 2,376 69,472 69,472 Other financial assets 4,321,440 4,321,440 3,115,395 3,115,395 Liabilities Financial liabilities - with fair values approximating carrying amounts 605,636, ,636, ,240, ,240,920 Financial liabilities at fair value through profit or loss 3,078,936 3,078,936 1,269,835 1,269,835 Other financial liabilities 449, , , ,250 Other liabilities 7,580,525 7,580,525 7,497,693 7,497,693 2) IBT and its subsidiaries Nonderivative Financial Instruments Assets Carrying Amount September 30 Estimated Carrying Estimated Fair Value Amount Fair Value Financial assets - with fair values approximating carrying amounts $ 54,520,011 $ 54,520,011 $ 41,964,458 $ 41,964,458 Financial assets at fair value through profit or loss 13,645,921 13,645,921 5,764,241 5,699,938 Available-for-sale financial assets 62,036,103 62,036,103 62,875,905 63,287,642 Discounts and loans 290,755, ,755, ,572, ,572,602 Held-to-maturity investments 1,272,959 1,272,959 1,772,343 1,773,021 Equity investments - equity method 181, , , ,231 Other financial assets 1,547,416 1,547,416 1,022,603 1,022,603 Liabilities Financial liabilities - with fair values approximating carrying amounts 387,681, ,681, ,093, ,093,538 Financial liabilities at fair value through profit or loss 197, ,025 86,755 86,755 Other financial liabilities 393, , , ,020 Bonds payable 5,816,800 6,000,785 5,967,000 5,900,

93 3) SinoPac Securities and its subsidiaries Nonderivative Financial Instruments Assets Carrying Amount September 30 Estimated Carrying Estimated Fair Value Amount Fair Value Financial assets - with value approximating carrying amounts $ 31,568,386 $ 31,568,386 $ 30,507,275 $ 30,507,275 Financial assets at fair value through gain or loss 24,623,801 24,623,801 21,676,177 21,676,177 Equity investments - equity method - - 1,344 - Available-for-sale financial assets 760, , , ,303 Refundable deposits 1,731,561 1,731,561 2,000,470 2,000,470 Liabilities Financial liabilities - with fair values approximating carrying amounts 38,578,820 38,578,820 30,602,468 30,602,468 Financial liabilities at fair value through gain or loss 248, , , ,285 Bonds payable (including current portion) - - 2,000,000 2,000,000 Long-term borrowings 899, , , ,344 Guarantee deposits-in 1,009 1,009 2,962 2,962 Derivative financial instruments Assets Financial assets at fair value through profit or loss 122, ,524 66,597 66,597 Liabilities Financial liabilities at fair value through profit or loss 233, , , ,353 4) AnShin Card Services Assets Carrying Amount September 30 Estimated Carrying Estimated Fair Value Amount Fair Value Cash in bank $ 39,794 $ 39,794 $ 47,752 $ 47,752 Accounts receivable 12,081,965 12,081,965 11,206,336 11,206,336 Other financial assets - current 1,519,139 1,519,139 1,224,365 1,224,365 Subordinated certificates 728, , , ,185 Pou Chen Corporation corporate bond 77,393 77,393 80,000 80,000 Refundable deposits 388, , , ,935 Interest rate swap contracts Liabilities Short-term borrowings and short-term bills payable 3,319,631 3,319,631 3,755,117 3,755,117 Notes and accounts payable 563, , , ,701 Bonds payable 1,500,000 1,500, Long-term debt 799, ,457 5,758,057 5,758,057 Interest rate swap contracts 1,656 1,656 14,651 14,651 Account payable to IBT 5,171,081 5,171,

94 The gains (losses) on derivative financial instruments of Bank SinoPac for the nine months ended September 30, 2006 and 2005 were as follows: For the Nine Months Ended September 30 Account For hedging purposes: Cross-currency swap contracts - Realized Interest revenue $ 92,777 $ 202,959 Interest expense (517,845 ) (314,027 ) - Unrealized Income from derivative financial instruments transactions Foreign exchange loss (4,088 ) - 387,205 - Interest rate swap contracts - Realized Interest revenue 29,070 35,694 Interest expense (121,913 ) (52,424 ) Income from derivative financial instruments transactions - 12,791 Foreign exchange (loss) gain (10,104 ) 28,357 - Unrealized Loss on derivative financial (176,317 ) - instruments transactions For the purposes of accommodating customers needs or managing the Bank s exposures: Forward contracts - Realized Interest revenue 216, ,041 Interest expense (61,391 ) (53,571 ) - Realized Foreign exchange loss (17,781 ) (164,662 ) - Unrealized Foreign exchange (loss) gain (180,478 ) 758,059 - Unrealized (Loss on) income from derivative financial instruments transactions Forward rate agreements - Realized Loss on derivative financial instruments transactions - Unrealized Income from derivative financial instruments transactions (26,385 ) (486 ) Currency swap contracts - Realized Interest revenue 2,515,012 1,478,383 Interest expense (1,715,721 ) (1,223,271 ) - Unrealized Income from derivative financial instruments transactions Swap contracts - foreign exchange rate - Realized Income from derivative financial instruments transactions ,566 1,039 - (Continued)

95 For the Nine Months Ended September 30 Account Swap contracts - stock price - Realized Income from derivative $ 3,313 $ - financial instruments transactions Interest rate swap contracts - Realized Interest revenue 1,113, ,278 Interest expense (1,138,346 ) (502,108 ) - Realized (Loss on) income from (6,805 ) 28,857 derivative financial instruments transactions - Unrealized Income from derivative 515 6,568 financial instruments transactions Foreign-currency options contracts - Realized Loss on derivative financial (180,388 ) (483,211 ) instruments transactions - Realized Foreign exchange gain 776, ,787 - Unrealized Income from (loss on) 101,571 (641,404 ) derivative financial instruments transactions Interest rate futures contracts - Realized Income from (loss on) 28,257 (1,506 ) derivative financial instruments transactions - Realized Foreign exchange gain 1, Unrealized Income from derivative 2, financial instruments transactions Cross-currency swap contracts - Realized Interest revenue 219, ,783 Interest expense (219,190 ) (304,181 ) - Unrealized Loss on derivative financial (303 ) (2,480 ) instruments transactions Credit default swap contracts - Realized (Loss on) income from (7,550 ) 3,831 derivative financial instruments transactions - Unrealized Loss on derivative financial (16,118 ) - instruments transactions Commodity-linked interest rate swap contracts - Realized (Loss on) income from derivative financial instruments transactions (699 ) 1,125 (Concluded)

96 The gains (losses) on derivative financial instruments of IBT for the nine months ended September 30, 2006 and 2005 were as follows: September 30 Corporation bonds Unrealized $ (18,023 ) $ (12,036 ) Government bonds Realized 6,742 (24,361 ) Unrealized 1,777 - Listed stocks Realized 336,884 (3,348 ) Unrealized 27,479 - Beneficiary certificates Realized 70,572 65,032 Unrealized 18,872 (157 ) Bank debentures Unrealized 5,412 - Long options Realized (825,735 ) 1,195,670 Unrealized (22,047 ) - Assets swap contracts Unrealized 39,328 - Cross-currency swap contracts Realized 350, ,686 Unrealized 21,660 - Forward contracts Unrealized (3,929 ) - Interest rate swap contracts Realized 8,255 3,386 Unrealized (106 ) - Currency swap contracts Unrealized (153,127 ) - Short options Realized 746,232 (1,168,819 ) Unrealized 36,750 - Futures contracts Realized b. Methods and assumptions applied in estimating the fair values disclosures for financial instruments are as follows: 1) The carrying amounts of cash and cash equivalent, due from the Central Bank and other banks, securities purchased under agreements to resell, receivable, call loans and due to banks, payables, short-term borrowings, commercial paper payables, remittances, securities sold under agreements to repurchase, and due to the Central Bank and other banks approximate their fair values because of the short maturities of these instruments. 2) Since long-term borrowings are interest-bearing liabilities at floating interest rate, their carrying amounts represent fair values. 3) Long-term lease receivables are fixed interest-earning assets. Thus, their carrying amounts represent fair values

97 4) For financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity investments and hedged derivative financial instruments, fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company and its subsidiaries various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using available indirect data and appropriate valuation methodologies. 5) Discounts and loans, deposits, bank debentures and other financial liabilities are interest-earning assets and interest-bearing liabilities. Thus, their carrying amounts represent fair values. Fair value of nonperforming loans is based on the carrying amount, which is net of allowance for credit losses. 6) When unquoted equity instruments which the Company and its subsidiaries does not have significant influence over the investees, that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, are measured at cost. There are no quoted market prices for non-active market debt instruments, thus their carrying amounts represent fair values. 7) Bank SinoPac and its subsidiaries forward contracts and interest rate swap contracts fair values are based on estimates using present value techniques. Options fair value are based on estimates using Black Scholes model. 8) The fair values of Euro-convertible bonds and Euro-convertible bonds redeemable within one year are estimated based on the market prices. 9) Bank SinoPac and its subsidiaries fair value of forward contracts are estimated based on the forward rates provided by Reuters or the Associated Press. Fair value of structured instruments are provided by the counter parties. All outstanding contracts are based on match basis and market risks will be offset. Fair value of interest rate swap contracts and cross currency swap contracts are estimated based on the market quotation provided by Reuters. 10) IBT s fair value of forward contracts are estimated based on the forward rates provided by Reuters or the Associated Press. IBT also adopts counter parties and Bloomberg exchange quotation to estimate market value of each interest rate swap contract and cross-currency swap contract. 11) Fair values of refundable guarantee deposits and guarantee deposits received are estimated at their carrying amounts since such deposits do not have specific due dates. 12) Long-term borrowings and long-term lease receivables - since those financial instruments bear fixed rate, the fair value of those is derived by discounting the expected cash flows. The discount rate used is the rate of loans that have similar characteristics as the loans acquired by the Company and its subsidiaries. c. Commissions and fee revenues, net amounting to $5,457,645 is consisted of revenues of $6,183,683 and charges of $726,038 for the nine months ended September 30, d. For Bank SinoPac and its subsidiaries, interest revenues on financial assets and liabilities other than those at fair value through profit or loss were $19,034,623 and $13,675,198 in the nine months ended September 30, 2006 and 2005, respectively. Related interest expenses were $12,099,388 and $7,699,602 in the nine months ended September 30, 2006 and 2005, respectively. Unrealized gains or losses of $43,132 on available-for-sale financial assets in the nine months ended September 30, 2006 were charged to stockholders equity

98 IBT s interest revenues on financia l assets and liabilities other than those at fair value through profit or loss in the nine months ended September 30, 2006 and 2005 were $8,666,425 and $7,597,616, respectively. Related interest expenses were $4,077,221 and $3,089,620 in the nine months ended September 30, 2006 and 2005, respectively. Unrealized gains or losses on available-for-sale financial assets amounted to $391,743 were charged to stockholders equity and $241,920 deducted from adjustments of in the nine months ended September 30, For SinoPac Securities and subsidiaries, interest revenues on financial assets and liabilities other than those at fair value through profit or loss were $948,564 and $746,668 in the nine months ended September 30, 2006 and 2005, respectively. Rela ted interest expenses were $599,383 and $333,139 in the nine months ended September 30, 2006 and 2005, respectively. Unrealized gains or losses on available-for-sale financial assets amounted to $207 were charged to stockholders equity and $1,284 deducted from stockholder s equity recognized gain (loss) for the nine months ended September 30, e. Financial risk information Bank SinoPac 1) Market risk Bank SinoPac sets up risk managing indicators according to the characters of the products to achieve the goal of risk management. Bank SinoPac evaluates market risk exposure limits approved by the Board of Directors and informs related units when over the limits timely. Fair value of financial assets and financial liabilities determined based upon quoted market prices or estimates summarized as follows: Financial assets Quoted Market Prices September 30, 2006 Fair Value Based on Estimates September 30, 2006 Financial assets at fair value through profit or loss $ 21,563,275 $ 7,374,407 Available-for-sale financial assets 123,462,148 1,014,243 Held-to-maturity investments 905,264 80,000 Other financial assets 203,728 2,496,129 Financial liabilities Financial liabilities at fair value through profit or loss 2,396, ,147 Bank SinoPac establishes various specialist committees in head office and oversea branches to perform the role of implementing the risk management policies and procedures. Each sub-risk management team reviews limits on monitoring and managing risk exposures under the respective supervision and reports to head office management team. Market risk reports which include the monitor of outstanding position limitation of loss and quantitative measures of risk indicators are provided to risk management sector to manage risk exposure, risk premium and capital allocation. The indicators are calculated by the valuation models. Bank SinoPac uses the value-at-risk approach and Monte Carlo simulation method to derive quantitative measures for the trading book market risks under normal condition since

99 Bank SinoPac formally document in writing its intention to apply hedge accounting and follow the requirement of related accounting standards. Risk management sector should assess the effectiveness of the hedge relationship periodically. 2) Credit risk Bank SinoPac is exposed to credit risk in the event of default on contracts by counter-parties. Bank SinoPac makes credit commitments and issues financial guarantees and standby letters of credit only after careful evaluation of customers credit worthiness. On the basis of the result of the credit evaluation, Bank SinoPac may require collateral before drawings are made against the credit facilities. As of September 30, 2006 and 2005, ratios of secured loans to total loans were, 72% and 70%. Ratio of secured financial guarantees and standby letters of credits were from 20.2% to 19.2%. Collaterals held vary but may include cash, inventories, marketable securities, and other properties. When the customers default, Bank SinoPac will, as required by circumstances, foreclose the collaterals or execute other rights arising out of the guarantees given. Since most of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash demands. Bank SinoPac s maximum potential amount of future payments represents the notional amounts that could be lost under the guarantees if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or from collateral held or pledged. The maximum credit exposure of the financial instruments held Bank SinoPac and FENB equaled the book value except which analysed as follows: Items Carrying Amount September 30 Maximum Carrying Maximum Credit Exposure Amount Credit Exposure Off-balance-sheet credit risk Financial guarantees and standby letter of credit $ - $ 13,143,939 $ - $ 14,938,036 Undrawn loan commitments - 16,527,112-18,949,500 Credit card commitments for credit card - 58,986-74,310 The credit risk amounts of counter-party presented above were off-balance sheet credit risk contracts. When financial instruments transactions concentrated on counter-party, which engaged in similar business activities, had similar economic characteristics and abilities to execute contracts, the credit risk concentration arose. Concentrations of credit risk exist when changes in economic, industry or geographic factors similarly affect groups of counterparties whose aggregate credit exposure is material in relation to the Bank SinoPac s total credit exposure. Bank SinoPac maintains a diversified portfolio, limits its exposure to any one geographic region, country or individual creditor and monitors the exposure on a continuous basis. On September 30, 2006 and 2005, the Bank SinoPac s most significant concentrations of credit risk were summarized by counterparty, industry sector and region as follows: Credit Risk Profile by Counterparty Carrying Amount September 30 Maximum Carrying Maximum Credit Exposure Amount Credit Exposure Private sector $ 87,835,542 $ 87,835,542 $ 89,364,672 $ 89,364,672 Consumer 221,705, ,705, ,286, ,286,267 Government 668, ,474 2,645,567 2,645,567 $ 310,209,763 $ 310,209,763 $ 291,296,506 $ 291,296,

100 Credit Risk Profile by Industry Sector Carrying Amount September 30 Maximum Carrying Maximum Credit Exposure Amount Credit Exposure Electricity industry $ 23,981,885 $ 23,981,885 $ 25,489,843 $ 25,489,843 Wholesale trade 9,858,496 9,858,496 10,353,043 10,353,043 Insurance and real estate activities 6,627,593 6,627,593 3,862,608 3,862,608 $ 40,467,974 $ 40,467,974 $ 39,705,494 $ 39,705,494 Credit Risk Profile by Region Carrying Amount September 30 Maximum Carrying Maximum Credit Exposure Amount Credit Exposure Domestic area $ 296,688,229 $ 296,688,229 $ 280,417,517 $ 280,417,517 Asia 7,600,989 7,600,989 4,064,435 4,064,435 North America 4,261,334 4,261,334 4,323,567 4,323,567 3) Liquidity risk $ 308,550,552 $ 308,550,552 $ 288,805,519 $ 288,805,519 As of September 30, 2006 and 2005, the liquidity reserve ratio was 38.55% and 28.63%, respectively. The capital and working capital were enough to execute all the obligation of contract and had no liquidity risk. The possibility of the derivative financial instruments held by Bank SinoPac fail to liquidate quickly with minimal loss in value is low. The management policy of Bank SinoPac is to match in the contractual maturity profile and interest rate of its assets and liabilities. As a result of the uncertainty, the maturities and interest rates of assets and liabilities usually didn t fully match. The gap may arise potential gain or loss. Bank SinoPac and FENB applied appropriate way to group assets and liabilities. The maturity analysis of assets and liabilities was as follows: Assets September 30, 2006 Due in Due Between One Month and Due Between Three Months Due Between Six Months and Due Between One Year and Due After One Month Three Months and Six Months One Year Seven Years Seven Years Total Cash and cash equivalents $ 12,372,395 $ - $ - $ - $ - $ - $ 12,372,395 Due from the Central Bank and other banks 45,245,849 2,579,191 2,978, , ,134,782 Financial assets at fair value through profit or loss 27,033, , ,090 71,639 1,525,241-28,946,670 Accounts, interest and other receivables 18,771,818 13,111,418 3,678,265 1,094, ,950-37,352,243 Securities purchased under agreements to resell 6,120, , ,470,400 Discounts and loans 30,316,454 27,175,513 16,637,156 25,801,385 59,824, ,667, ,422,085 Non-active market debt instruments ,305, ,568 1,834,890 Available-for-sale financial assets 42,965,733 18,561,708 33,812,758 29,395,582 9,232,225 59, ,027,655 Held-to-maturity investments ,490-2,983, ,984 3,660,579 Hedged derivative financial assets , ,317 $ 182,826,334 $ 61,899,845 $ 57,466,526 $ 56,694,373 $ 76,054,307 $ 187,768,631 $ 622,710,016 (Continued)

101 Liabilities September 30, 2006 Due in Due Between One Month and Due Between Three Months Due Between Six Months and Due Between One Year and Due After One Month Three Months and Six Months One Year Seven Years Seven Years Total Call loans and due to banks $ 52,999,813 $ 3,598,785 $ 762,287 $ 1,901,133 $ - $ - $ 59,262,018 Securities sold under agreements to repurchase 6,443, , ,853,864 Payables 12,899,602 7,166,022 2,081,976 1,115, ,702-23,644,050 Financial liabilities at fair value through profit or loss 2,670, , ,177 69, ,078,942 Deposits and remittance 130,025, ,644,879 96,032, ,376,666 40,161, ,240,115 Bank debentures - 5,000, ,507,358-36,507,358 Hedge derivative financial liabilities , ,429 $ 205,038,597 $ 118,976,971 $ 99,058,510 $ 104,462,575 $ 72,327,123 $ - $ 599,863,776 (Concluded) Assets September 30, 2005 Due Between Due in One Year and Due After One Year Five Years Five Years Total Cash and cash equivalents $ 8,054,806 $ - $ - $ 8,054,806 Due from the Central Bank and other banks 49,963, ,963,517 Securities purchased 78,882,736 9,356, ,576 88,677,374 Receivables 25,122, ,122,385 Securities purchased under agreements to resell 7,438, ,438,043 Loans, discounts and bills purchased (excluding nonperforming loans) 101,265,725 44,734, ,963, ,963,759 Other long-term investments 9,792,376 1,094,300-10,886,676 Liabilities $ 280,519,588 $ 55,184,560 $ 178,402,412 $ 514,106,560 Call loans and due to banks $ 42,238,597 $ - $ - $ 42,238,597 Securities sold under agreements to repurchase 10,490, ,490,137 Payables 13,455,057 61, ,516,249 Deposits and remittances 386,795,185 17,574, ,369,446 Bank debentures 497,820 31,800,000 1,000,000 33,297,820 $ 453,476,796 $ 49,435,389 $ 1,000,064 $ 503,912,249 4) Cash flow risk and fair value risk arising from interest rate fluctuations IBT Interest rate risk is the risk to earnings and value of financial instruments caused by fluctuations in interest risk. The risk is considered to be material to Bank SinoPac, and Bank SinoPac enters into interest rate swap contracts to manage the risk. 1) Market risk IBT s board of directors approves various market risk management indexes according to IBT s risk tolerance and financial operating goal

102 IBT hedges its market risk using instrument with changes in market value that have a highly negative correlation with those of the hedged items. IBT also assesses the hedging effectiveness of the instrument periodically. Fair value of financial assets and financial liabilities determined based upon quoted market prices or estimates summarized as follows: Financial assets Quoted Market Prices Fair Value Based on Estimates September 30 September 30 Financial assets at fair value through profit or loss $ 13,487,357 $ 5,559,339 $ 158,564 $ 140,599 Available-for-sale financial assets 62,036,103 63,287, Held-to-maturity investments 1,271,458 1,773, Financial liabilities Financial liabilities - with fair values approximating carrying amounts 148,743-48,282 86,755 2) Credit risk IBT is exposed to credit risk from counter-parties defaults on contracts. Thus, IBT enters into contracts with customers that have satisfied the credit approval process and have provided necessary collaterals. The transactions are then made within each customer s credit limit; guarantee deposits may be required, depending on the customers credit standing. Transactions with other banks are made within the trading limit set for each bank based on IBT s credit rating and its worldwide ranking. The associated credit risk has been considered in the evaluation of the provision for credit losses. The estimated values of the financial instruments when considered with the credit risk exposure (except for fair value of collaterals) are as follows: (For the items not listed, their carrying amount and estimated values are the same.) Financial instruments Carrying Amount September 30 Carrying Credit Risk Amount Credit Risk Off-balance-sheet commitments and guarantees Noncancelable loan commitments $ - $ 17,706,903 $ - $ 17,615,075 Guarantees and issuance of letters of credit - 13,744,842-12,825,972 Credit card commitments ,445,441 The table includes off-balance-sheet commitments and guarantees as evaluating items. Credit risk concentration occurs when IBT deals mostly with the same counterparty; IBT deals with different counterparties that have similar commercial activities and economic properties (therefore they may not meet obligations under similar economic or other factors; and the borrowers industries. IBT doesn t have concentrated deals with the same counterparty or client. 3) Liquidity risk Besides the required reserve on deposit, IBT s required liquidity reserve ratio is 19.24% as of September 30, Capital and working capital are enough for covering and fullfilling all the contracts and obligations, so that there is low liquidity risk of failing to fullfill obligations because of capital shortage

103 The maturity of assets and liabilities of IBT is based on the remaining period from the balance sheet dates. The remaining term to maturity is based on maturity dates specified under agreements, and, if there are no specified maturity dates, on expected dates of collection. By adjusting interest rates and maturity dates, IBT can properly maintain and control its asset and liability level. Due to the variety and uncertainty nature of contractual terms, there will be potential benefits or loss accompanying with term changes. IBT assesses grouping methodology according to the properties of assets and liabilities to evaluate its liquidity. The maturity analysis of assets and liabilities was as follows: Assets September 30, 2006 Due Between After One Year Due in and Due After One Year Seven Years Seven Years Total Cash and cash equivalents $ 12,110,645 $ - $ - $ 12,110,645 Due from the Central Bank and other banks 20,830, ,830,535 Financial assets at fair value through profit or loss 5,075,715 3,143,702 5,426,504 13,645,921 Available-for-sale financial assets 52,748,732 3,433,352 5,854,019 62,036,103 Held-to-maturity investments 84,322 1,188,637-1,272,959 Other financial assets - 661, , ,553 Securities purchased under agreements to resell 10,791, ,791,358 Receivables - related party 4,343, ,373-5,171,080 Receivables 6,182, ,182,872 Discounts and loans 111,184,982 82,703,581 99,773, ,661,937 Liabilities $ 223,352,868 $ 91,957,645 $ 111,347,450 $ 426,657,963 Due to banks $ 28,091,710 $ - $ - $ 28,091,710 Payables 12,280, ,280,211 Deposits and remittances 318,848,098 7,064, ,912,913 Due to the Central Bank and other banks 7,989, ,989,778 Securities sold under agreements to repurchase 13,711, ,711,356 Bonds payable 5,816, ,816,800 $ 386,737,953 $ 7,064,815 $ - $ 393,802,768 Assets September 30, 2005 Due Between After One Year Due in and Due After One Year Seven Years Seven Years Total Cash and cash equivalents $ 8,011,038 $ - $ - $ 8,011,038 Due from the Central Bank and other banks 19,472, ,472,553 Financial assets at fair value through profit or loss 3,297,072 2,367,169-5,664,241 Available-for-sale financial assets 50,874,889 8,504,418 3,496,598 62,875,905 Held-to-maturity investments 592,981 1,179,362-1,772,343 Other financial assets , ,623 Securities purchased under agreements to resell 3,178, ,178,133 Receivables 11,968, ,968,089 Discounts and loans 94,330, ,085,602 98,198, ,614,994 $ 191,725,277 $ 120,136,551 $ 102,036,091 $ 413,897,919 (Continued)

104 Liabilities September 30, 2005 Due Between After One Year Due in and Due After One Year Seven Years Seven Years Total Due to banks $ 21,263,294 $ - $ - $ 21,263,294 Payables 8,287, ,287,076 Deposits and remittances 318,936,400 6,976, ,913,353 Due to the Central Bank and other banks 4,910, ,910,093 Securities sold under agreements to repurchase 14,761, ,761,720 Bonds payable - 5,967,000-5,967,000 4) Risks of cash flows and fair value on interest changes $ 368,158,583 $ 12,943,953 $ - $ 381,102,536 (Concluded) IBT s board of directors approves the acceptable risk tolerance range level of interest rate changes. IBT monitors the interest rate changes and reports to the board of directors periodically. The interest gaps of net interest income due to possible interest rate changes in future are within acceptable tolerance range level. SinoPac Securities 1) Market risk SinoPac Securities manages and monitors market risks of financial instruments through risk measurement and monitoring processes such as value at risk, stop loss, risk sensitivities, stress testing and hedging rules, etc. The risk management division of SinoPac Securities monitors and controls outstanding position, profits and losses, and value at risk. The division regularly reports the market risk to business units and the management to manage risks effectively. Value-at-Risk (VaR) is a methodology for assessing market risk exposure in a single number. VaR is a statistical measure that estimates potential losses, and is defined as the predicted worst case loss that might be caused by changes in risk factors under normal circumstance, over a specified period of time and at a specific level of statistical confidence. The VaR methodology adopted by SinoPac Securities and its subsidiaries for its VaR calculation is Historical Simulation, using one year of equally weighted historical data. The VaR is calculated at a 99% confidence level for a one-day holding period, using relative changes in historical rates and prices. The VaR is reported daily to the management of the Business Unit and responsible members of the managing board. According to this assumption, changes of gains or losses of SinoPac Securities and its subsidiaries financial instruments will be greater than the amounts as follows in one for 100 days. As of September 30, 2006 and 2005, the market risk value of SinoPac Securities and its subsidiaries were around $153,353 and $198,224, respectively, and 0.78% and 0.90% of SinoPac Securities and its subsidiaries net worth. For the Nine Months Ended September 30 Type of Market Risk Average Highest Lowest Average Highest Lowest Interest rate risk $ 78,000 $ 91,000 $ 64,000 $ 114,000 $ 140,000 $ 97,000 General 159, , , , , ,

105 For the nine months ended September 30, 2006, the market risk value of SinoPac Securities and its subsidiaries consist of all financial instruments; for the nine months ended September 30, 2005, the interest rate risk value of the SinoPac Securities included bonds position held (including convertible bonds), and the general market risk value of SinoPac Securities and its subsidiaries included financial instruments, equity instruments and mutual funds. Financial instruments held by SinoPac Securities and its subsidiaries are measured at fair value. Fair value for financial instruments are based on SinoPac Securities and its subsidiaries market prices or pricing models. The amounts of financial instruments measured by quoted market price or pricing models are presented as follows: Financial assets Quoted Market Prices Fair Value Based on Estimates September 30 September 30 Financial assets at fair value through profit or loss - current $ 23,649,112 $ 20,779,713 $ 117,500 $ 58,950 Available-for-sale financial assets - current and noncurrent 100, , Financial liabilities Financial liabilities at fair value through profit or loss 322, , , ,187 The market risks of the SinoPac Securities and its subsidiaries derivative financial instruments are described as follows: a) Futures and options Market risk is the fluctuation in market prices of futures and options. SinoPac Securities have appropriate risk control management and have set up stop-loss points to monitor price fluctuations and outstanding positions. When the balance of the trading margin account is lower than the maintenance margin, SinoPac Securities will recognize a loss by either settling the deal or putting in more deposits to the initial margin. b) Warrants Market risk on issued warrants comes mainly from changes in market prices of underlying securities. SinoPac Securities manages the market risk by adopting a dynamic hedging strategy to adjust the positions of warrants and underlying securities. c) Interest rate swap SinoPac Securities uses VaR, based on statistical analysis of market data and foreign industrial standards, in evaluating market risks of the IRS contracts. As of September 30, 2006 and 2005, the VaRs were $47,550 and $743, respectively. d) Asset swap transactions - convertible bonds SinoPac Securities and its subsidiaries uses VaRs, based on statistical analysis of market data (including interest rate, convertible bond market prices and theoretical value of options) and foreign industrial standards in evaluating market risks of convertible bond swap transactions. As of September 30, 2006 and 2005, the VaRs were $9,856 and $438, respectively

106 e) Structured note transaction The market risk on structured note transactions is mainly from adverse fluctuations of the underlying assets market price. Thus, option hedging models are used to hedge market risk. As of September 30, 2006 and 2005, the amounts corresponding to market risk were $162 and $8,195, respectively. f) Bond option transaction 2) Credit risk The price of bond option is determined by fluctuations of interest rate and structures of market interest rate. SinoPac Securities subsume the rate risk position resulting from the bond option transactions into interest position to evaluate the market risk and calculate the quantity of the position, analysis of rate-sensitive, duration and profit. As of September 30, 2006 and 2005, the amount corresponding to market risk was $4,689 and $3, respectively. Credit risk represents the loss that SinoPac Securities and its subsidiaries would incur in a counterparty or an issuer of securities or other instruments SinoPac Securities and its subsidiaries holds fails to perform under its contractual obligations, or upon a deterioration in the credit quality of third parties securities or obligations SinoPac Securities and its subsidiaries holds. Primary elements of credit risk of SinoPac Securities and its subsidiaries financial instruments include the degree of credit risk s centralization, components of financial instruments, amounts of contracts, and other receivables. SinoPac Securities and its subsidiaries measures the credit risk of financial assets with positive amounts on the balance sheet. The credit risk of SinoPac Securities and its subsidiaries financial assets, except for those as follows, are equal to their carrying value. Carrying Value September 30 Maximum Credit Carrying Exposure Value Maximum Credit Exposure Financial assets held for trading Interest rate swap contracts $ 108,260 $ 230,960 $ 9,143 $ 28,943 Asset swap - convertible bonds - interest rate swap contracts 3,450 45,221 22,942 47,958 Equity-linked note assets - options ,869 - Bond option - non-hedging ,116 1,117 7,530 $ 112,745 $ 299,297 $ 53,071 $ 84,431 To manage credit risk of financial assets, SinoPac Securities adopts credit risk ratings primarily. Guidelines and assessment procedures of credit risk are made to meet different types of business. The risk assessment procedures consider the entire contracts limits, positions, the credit lines of counter-parties, credit risk limits and process of assessment, etc. The risk management division analyzes the credit risk of positions SinoPac Securities holds regularly, and monitor the unusual changes or centralization of credit risk. SinoPac Securities management believes that the risk managed processes aforementioned are sufficient to monitor the credit risk. Concentrations of credit risk exist when changes in economic, industry or geographic factors similarly affect groups of counterparties whose aggregate credit exposure is material in relation to SinoPac Securities total credit exposure. SinoPac Securities mainta ins a diversified portfolio, limits its exposure to any one geographic region, country or individual creditor and monitors the exposure on a continuous basis

107 The credit risks of SinoPac Securities and its subsidiaries derivative financial instruments are presented as follows: a) Futures and options Credit risk is risk due to uncertainty in a counterparty s ability to meet its obligations. SinoPac Securities and its subsidiaries expected insignificant credit risks since the counter-party was the Taiwan Futures Exchange, Hong Kong Exchange and Singapore Mercantile Exchange. b) Warrants SinoPac Securities is not exposed to credit risk because premiums are received upon the issuance of warrants. c) Interest rate swap SinoPac Securities established high standards for screening the counter-parties and has rated their credits under strict criteria. It has also set upper limits for total value of credits granted to control credit risks. Thus, it does not expect significant exposure to credit risks. Fair value is the present value of future interest income and expense discounted at the yield rate. d) Asset swap transactions - convertible bonds SinoPac Securities and its subsidiaries have high standards for screening the counter-parties of fixed income transactions and rated their credits under strict criteria. SinoPac Securities have set upper limits for total value of credits granted to control credit risks. Thus, it does not expect significant exposure to credit risks. e) Structured note transactions SinoPac Securities has strict criteria on the types of fixed income assets to be used and controls the investment amounts. In addition, the premium from short option transactions is collected in advance. Thus, SinoPac Securities expects no exposure to credit risks. f) Bond option transactions The counter-parties of SinoPac Securities are reputable securities firms. In addition, SinoPac Securities has strict criteria for screening the counter-parties of bond option transactions. Thus, the possibility of exposure to credit risks is minimal. 3) Liquidity risk Since SinoPac Securities and its subsidiaries have sufficient working capital to meet the obligation requirement, the liquidity risk is insignificant. The possibility of the stocks other than listed and GTSM, nonderivative instruments and bonds fail to liquidate quickly with minimal loss in value is low

108 The liquidity risk of SinoPac Securities and its subsidiaries derivative financial instruments are as follows: a) Futures and options SinoPac Securities and its subsidiaries have paid initial margin for futures contracts and premiums for long options as well as margin for short options. More margin will be required since the balance of the trading margin account is lower than the maintenance margin. However, future cash demand is supported by sufficient working capital. Thus, the risk of cash flows is insignificant. b) Warrants The premium of the warrants issued by SinoPac Securities is collected in advance, and SinoPac Securities establishes a hedging position with its own capital when the warrants are issued. The liquidity risk on the underlying securities held for hedging is low because the authorities have set the market price and share distribution of the securities, and the probability that the securities cannot be sold for a reasonable price is quite low. SinoPac Securities has to manage any cash demand arising from adjustment of hedge position for any changes due to adverse fluctuation of market prices of the underlying securities. However, the market liquidity is high, so the risk to cash flows is low. Warrants will expire between October 2006 to January Except for the cash inflows and outflows arising from hedging, no additional cash is needed. c) Interest derivatives Net interest, equal to the notional amount of the interest derivatives multiplied by the difference in the interest rate bases received or paid upon each settlement date, is immaterial. The notional amounts are not exchanged on the final settlement date. Thus, the cash demand is insignificant. d) Asset swap transactions - convertible bonds The underlying convertible bonds, acquired from dealing and underwriting transactions, were sold to counter-parties and SinoPac Securities and its subsidiaries received related payments. In addition, SinoPac Securities and its subsidiaries took the pre-agreed interest rate in exchange for the coupon rate and the interest compensation of convertible bonds from counter-parties. Further, SinoPac Securities and its subsidiaries acquired the right to repurchase convertible bonds from counter-parties. Thus, there are insignificant liquidity risks and the cash demand is insignificant. e) Structured note transactions SinoPac Securities has strict criteria on the types of fixed income assets to be used and controls the investment amounts. In addition, the premium from short option transactions is collected in advance. Thus, SinoPac Securities expects no exposure to credit risks. f) Bond derivatives The bond derivatives held by SinoPac Securities is under risk control management. Future cash demand is supported by sufficient working capital. Thus, the risk of cash flows is insignificant

109 AnShin Card Services The liquidity risk value of AnShin Card Services derivative financial instruments are presented as follows: a) Market risk The purpose of the interest rate swap contracts is to hedge the interest risk of assets or liabilities. Therefore, the gains or losses resulting from changes in interest rates will be offset by those of the hedged item. Accordingly, the market risk is not deemed to be significant. b) Credit risk AnShin Card Services major potential credit risk arises from accounts receivable. AnShin Card Services performs strict credit assessment when issuing credit cards and providing cash advance services. Credit card commitments are unsecured, but AnShin Card Services policy is to sign standard credit card contracts with cardholders and to require suitable guarantors. Periodic reviews of cardholders creditworthiness are used to adjust card limits if necessary. AnShin Card Services entered into a revolving sale agreement of accounts receivable so that credit risk concentrated on one counterparty. But the counterparty is an international financial institution which has an excellent credit record. AnShin Card Services thinks the possibility of default risk for this counterparty is extremely small. AnShin Card Services does not have any other material concentration of credit risk with respect to any individual customer or counterparty, or any group of counterparties. AnShin Card Services enters into the interest rate swap contracts only with reputable, creditworthy financial institutions. AnShin Card Services believes that the risk that the financial institutions will default on these contracts is relatively low. c) Liquidity risk AnShin Card Services enters into the interest rate swap contracts only for the hedging purposes; AnShin Card Services believes the liquidity risk is not deemed to be significant. Because AnShin Card Services investment has no active market, therefore, AnShin Card Services expect to have liquidity risk. However, in order to provide credit enhancement, the Company retained the subordinated certificates in accordance with the related financial asset securitization agreements, AnShin Card Services will continuously to hold the subordinated certificates during the securitization period; therefore, the related liquidity risk will be reduced. d) Cash flow risk arising from interest rate change Floating rate assets held and floating rate liabilities assumed by AnShin Card Services may subject to future cash flow fluctuate due to the market interest rates volatility resulting in cash flow risk, therefore, AnShin Card Services entered into interest rate swap contracts to hedge the related risks. e) Risk management and hedge strategies The risk management and hedge strategy of AnShin Card Services is to optimize the recognition, measurement, monitoring, control and analysis of each of AnShin Card Services business risks. To achieve the objectives of risk management, AnShin Card Services applies the Company risk management policy to identify AnShin Card Services risks (including credit, market and operating risks) and to reduce potential negative effects on AnShin Card Services

110 e. Fair value hedge The risk management structure of AnShin Card Services is organized by the Risk Management Department, Finance Department and Operation Department. The Risk Management Department sets out the overall risk management strategies and principles, and the management, planning and monitoring of credit risk and fraud risk. The Finance Department sets out the market risk management strategies and principles and the monitor and control procedures for the credit limits, transactions limits, and control indicators. The Operation Department is responsible for information collection, supervises compliance operating risk management systems, and performs the function of recognition, evaluation and control of operation risks. Considering that the overall influence of the economic and competitive environment, market value risk, and net interest revenues, the prime objective of the market risk management of AnShin Card Services is to optimize the risk position, keep an adequate liquidity position, and manage the market risk centrally. To achieve the objective of market risk management, AnShin Card Services hedge transactions mainly focus on the variable net interest revenue. AnShin Card Services adopted cash flow hedging to hedge against the aforesaid variable. Under cash flow hedging, transactions with variable future cash flows will be converted into fixed cash flows in order to minimize the risk from the decrease in net interest income. AnShin Card Services used interest rate swaps as the major hedging instruments for cash flow hedge transactions. The fair value risk of the interest of Bank SinoPac debentures may fluctuate according to the change of market rate. Bank SinoPac evaluated the risk may be significant, and hedged by interest rate swap and cross currency swap contracts. September 30 Hedged Items Hedging Instruments Notion Amount Fair Value Notion Amount Fair Value Bank debentures Interest rate swap $ 11,200,000 $ (176,317 ) $ 17,460,320 $ 172,163 Cross currency swap 14,300, ,205 14,300, ,518 f. Cash flow hedge $ 25,500,000 $ 210,888 $ 31,760,320 $ 957,681 Floating rate liabilities assumed by AnShin Card Services may be subject to future cash flow fluctuation due to the market interest rates volatility resulting in cash flow risk; therefore, AnShin Card Services entered into interest rate swap contracts to hedge the related risks. As of September 30, 2006, the cash flow hedged items and the designated hedging instruments of AnShin Card Services are summarized as follows: Hedged Items Hedging Instruments Fair Value of Hedging Instruments Expected Period of Cash Flow Expected Recognition Period Floating rate debts Interest rate swap contracts $1,

111 The portion of the gain or loss, net of tax, on the hedging instrument that is recognized directly in equity are as follows: Items September 30, 2006 Equity effect of first-time adoption of SFAS No. 34 $ 4,361 Equity current period adjustments (1,529 ) Transfer from Equity to current income 5,122 On September 30, 2006, the fair value of the designated hedging financial instruments held by AnShin Card Services was recorded as hedging derivative assets - current to $162, hedging derivative assets - non-current amounting to $10, hedging derivative liabilities - current are $760 and hedging derivative liabilities - non-current amounting to $896. As of September 30, 2005, the interest rate swap contracts held by AnShin Card Services were for the purpose of hedging the risks that may result from changes in interest rates of assets or liabilities. Unrealized valuation losses based on fair value amounting to $14,048, were recognized as other liabilities and a deduction item for stockholders equity. In accordance with the (94) Chi-mi No. 016 issued by ARDF, certain accounts in the 2005 financial statements are reclassified to conform with SFAS No. 34 classification. Unrealized valuation losses amounting to $14,048 previously recognized as other liabilities were reclassified to hedging derivative assets - non-current amounting to $603 and hedging derivative liabilities - current amounting to $7,494 and hedging derivative liabilities - non-current amounting to $7, CONDENSED BALANCE SHEETS AND STATEMENTS OF INCOME OF BANK, SECURITIES, INSURANCE AND OTHER SUBSIDIARIES a. Condensed balance sheets Bank SinoPac and its Subsidiaries Condensed Consolidated Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities Cash and cash equivalents $ 12,490,587 $ 9,006,232 Call loans and due to banks $ 59,262,018 $ 47,804,355 Due from the Central Bank and Short-term borrowing 5,254,403 9,389,774 other banks 51,134,782 49,963,517 Commercial payable 249,625 1,448,607 Financial assets at fair value Financial liabilities at fair value through profit or loss 29,442,306 14,997,400 through profit or loss 3,078,936 1,269,835 Securities purchased under Securities sold under agreements agreements to resell 6,473,757 7,499,001 to repurchase 6,853,864 8,834,637 Accounts, interest and other Accounts, interest and other receivables, net 42,671,359 28,837,639 payables 23,936,157 13,841,232 Discounts and loans, net 350,046, ,061,494 Deposits and remittances 470,117, ,284,111 Available-for-sale financial Bank debentures 36,507,358 33,297,820 assets 134,126,477 89,035,804 Long-term borrowings 3,664,520 1,697,452 Held-to-maturity investments 3,660,579 5,370,739 Other financial liabilities 449, ,250 Equity investments - equity Deferred tax liabilities 816, ,912 method 2,376 69,472 Other liabilities 7,580,525 7,497,693 Other financial assets, net 4,321,440 3,115,395 Total liabilities 617,770, ,275,678 Properties, net 5,111,056 5,326,966 Properties held for lease, net 3,784,423 3,396,128 Stockholders equity Long-term lease and installment receivables 968,606 1,157,769 Capital stock 19,728,068 19,728,068 Other assets 2,825,884 3,324,788 Capital surplus 118, ,257 Retained earnings 9,423,604 8,143,624 Equity adjustments 1,451 (190,042 ) Minority interest 17,977 84,759 Total stockholders equity 29,289,504 27,886,666 Total $647,060,439 $554,162,344 Total $647,060,439 $554,162,

112 International Bank of Taipei Condensed Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities Cash and cash equivalents $ 12,110,941 $ 8,011,162 Securities sold under Due from the Central Bank and agreements to repurchase $ 13,711,356 $ 14,761,720 other banks 20,830,535 19,472,553 Call loans and due to banks 28,091,710 21,263,294 Financial assets at fair value Financial liabilities at fair value through profit or loss 13,645,921 5,764,241 through profit or loss 197,025 86,755 Securities purchased under Payables 12,320,526 8,344,061 agreements to resell 10,791,358 3,178,133 Deposits and remittances 325,568, ,814,370 Receivables, net 10,787,177 11,302,610 Due to the Central Bank and Discounts and loans, net 290,755, ,572,602 other banks 7,989,778 4,910,093 Available-for-sale financial Bonds payable 5,816,800 5,967,000 assets 62,036,103 62,875,905 Other financial liabilities 393, ,020 Held-to-maturity investments 1,272,959 1,772,343 Other liabilities 1,759,290 2,034,432 Equity investments - equity Total liabilities 395,847, ,536,745 method 181, ,819 Other financial assets 1,547,416 1,022,603 Stockholders equity Properties, net 4,777,637 4,850,083 Other assets, net 3,326,390 3,026,219 Capital stock 22,233,110 22,233,110 Capital surplus 1,321 1,321 Retained earnings 13,005,246 13,317,963 Equity adjustments 976, ,134 Total stockholders equity 36,215,832 36,503,528 Total $432,063,819 $420,040,273 Total $432,063,819 $420,040,273 SinoPac Securities and its Subsidiaries Condensed Consolidated Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities Current assets $ 56,446,155 $ 52,353,750 Current liabilities $ 40,937,508 $ 35,204,580 Funds and investments 710, ,676 Long-term interest bearing Properties, net 2,366,304 2,682,793 liabilities 899, ,344 Other assets 2,795,470 3,299,980 Other liabilities 858, ,945 Securities brokerage debit Total liabilities 42,695,923 37,071,869 account, net 132, ,928 Stockholders equity Capital stock 11,969,020 15,269,020 Capital surplus 2,342,425 2,342,425 Retained earnings 5,448,222 4,539,386 Equity adjustments (21,377 ) (3,915) Stockholders equity of parent company 19,738,290 22,146,916 Minority interest 16,492 23,342 Total stockholders equity 19,754,782 22,170,258 Total $ 62,450,705 $ 59,242,127 Total $ 62,450,705 $ 59,242,

113 AnShin Card Services Co., Ltd. Condensed Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities Current assets $ 14,018,505 $ 12,635,349 Current liabilities $ 9,132,371 $ 4,886,375 Funds and investments 806, ,788 Long-term liabilities 1,800,896 5,697,214 Properties, net 132, ,050 Accrued pension cost 17,326 16,892 Other assets 546, ,195 Total liabilities 827,373-11,777,966 10,600,481 Stockholders equity Capital stock 5,110,000 3,610,000 Capital surplus Accumulated deficits (1,381,157 ) (485,071 ) Unrealized gains or losses on financial instruments (2,723) (14,048 ) Total stockholders equity 3,726,140 3,110,901 Total $ 15,504,106 $ 13,711,382 Total $ 15,504,106 $ 13,711,382 SinoPac Securities Investments Trust Co., Ltd. Condensed Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities (Unreviewed) (Unreviewed) Current assets $ 261,684 $ 261,275 Current liabilities $ 13,633 $ 17,116 Properties, net 18,685 7,093 Other liabilities 9,753 9,753 Other assets 56,376 58,645 Total liabilities 23,386 26,869 Stockholders equity Capital stock 305, ,000 Capital surplus 5,000 - Retained earnings 2, Total stockholders equity 313, ,144 Total $ 336,745 $ 327,013 Total $ 336,745 $ 327,013 SinoPac Life Insurance Agent Co., Ltd. Condensed Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities Current assets $ 136,003 $ 162,624 Current liabilities $ 53,029 $ 66,383 Properties, net 8,205 8,714 Other assets 2,433 2,048 Stockholders equity Capital stock 3,000 3,000 Retained earnings 87, ,003 Equity adjustments 3,104 - Total stockholders equity 93, ,003 Total $ 146,641 $ 173,386 Total $ 146,641 $ 173,

114 SinoPac Property Insurance Agent Co., Ltd. Condensed Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities Current assets $ 17,782 $ 15,092 Current liabilities $ 3,263 $ 4,200 Other assets Stockholders equity Capital stock 3,000 3,000 Retained earnings 12,119 8,492 Total stockholders equity 15,119 11,492 Total $ 18,382 $ 15,692 Total $ 18,382 $ 15,692 SinoPac Call Center Co., Ltd. Condensed Balance Sheets September 30, 2006 and 2005 (Unreviewed) (In Thousands of New Taiwan Dollars) Assets Liabilities Current assets $ 77,433 $ 70,140 Current liabilities $ 19,175 $ 21,631 Properties, net 33,148 45,100 Intangible assets 11,328 12,100 Stockholders equity Other assets , ,000 Capital stock 2,833 5,869 Retained earnings 102, ,869 Total stockholders equity Total $ 122,008 $ 127,500 Total $ 122,008 $ 127,500 SinoPac Marketing Consulting Co., Ltd. Condensed Balance Sheets September 30, 2006 and 2005 (Unreviewed) (In Thousands of New Taiwan Dollars) Assets Liabilities Current assets $ 34,985 $ 53,369 Current liabilities $ 2,759 $ 5,970 Properties, net Other liabilities Intangible assets Total liabilities 2,916 6,581 Other assets Stockholders equity Capital stock 50,000 50,000 Accumulated deficits (17,392 ) (1,930) Total stockholders equity 32,608 48,070 Total $ 35,524 $ 54,651 Total $ 35,524 $ 54,

115 SinoPac Asset Management International Condensed Balance Sheets September 30, 2006 and 2005 (Unreviewed) (In Thousands of New Taiwan Dollars) Assets Liabilities Current assets $ 90,838 $ 82,584 Current liabilities $ 4,593 $ 1,869 Properties, net Long-term liabilities 7,622 10,198 Other financial assets 20,894 14,800 Other liabilities Intangible assets 12,866 16,586 Total liabilities 12,907 12,644 Other assets Stockholders equity Capital stock 100, ,000 Retained earnings 12,253 2,513 Equity adjustments Total stockholders equity 112, ,513 Total $ 125,331 $ 115,157 Total $ 125,331 $ 115,157 SinoPac Venture Capital Co., Ltd. Condensed Balance Sheets September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars) Assets Liabilities (Unreviewed) (Unreviewed) Current assets $ 737,055 $ 463,140 Current liabilities $ 788 $ 952 Equity investments - equity Long-term liabilities 1,325 - method 367,295 - Total liabilities 2, Other financial assets 770, ,519 Stockholders equity Capital stock 1,800,000 1,000,000 Capital surplus 2, Retained earnings 81,564 11,947 Equity adjustments (11,246 ) (16,733 ) Total stockholders equity 1,872, ,707 Total $ 1,874,740 $ 996,659 Total $ 1,874,740 $ 996,

116 b. Condensed statements of income Bank SinoPac and its Subsidiaries Condensed Consolidated Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Interest revenue $ 19,550,749 $ 14,616,389 Interest expense 12,448,495 8,175,775 Net interest 7,102,254 6,440,614 Net revenues other than interest 2,432,587 2,856,311 Net revenues 9,534,841 9,296,925 Provision for loan losses 889, ,312 Operating expenses 5,353,344 5,392,617 Income before income tax 3,292,194 3,324,996 Income tax expenses 685, ,979 Income before cumulative effect of accounting changes 2,606,396 2,545,017 Cumulative effect of accounting changes 253,523 - Consolidated income $ 2,859,919 $ 2,545,017 Pre-tax earnings per share $ 1.79 $ 1.60 After tax earnings per share $ 1.45 $ 1.22 International Bank of Taipei Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Interest revenue $ 10,350,364 $ 9,763,955 Interest expense 4,375,897 3,933,134 Net interest 5,974,467 5,830,821 Net revenues other than interest 1,226,639 2,245,482 Net revenues 7,201,106 8,076,303 Provision for loan losses 2,206,508 1,185,933 Operating expenses 3,434,123 3,971,350 Income before income tax 1,560,475 2,919,020 Income tax expenses 208, ,993 Income before cumulative effect of accounting changes 1,351,643 2,288,027 Cumulative effect of accounting changes 45,772 - Consolidated income $ 1,397,415 $ 2,288,027 Pre-tax earnings per share $ 0.73 $ 1.19 After tax earnings per share $ 0.63 $

117 SinoPac Securities and its Subsidiaries Condensed Consolidated Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Operating revenues and gains $ 4,953,342 $ 4,494,324 Operating costs, expenses and losses 3,851,027 3,368,262 Operating income 1,102,315 1,126,062 Nonoperating income and gains 311, ,714 Nonoperating expenses and losses 234, ,466 Income before income tax 1,179,455 1,191,310 Income tax expense 357, ,118 Income before cumulative effect of accounting changes 821, ,192 Cumulative effect of accounting changes 444,300 - Consolidated income $ 1,266,132 $ 675,192 Pre-tax earnings per share $ 1.29 $ 0.74 After tax earnings per share $ 1.04 $ 0.44 AnShin Card Services Co., Ltd. Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Operating revenues and gains $ 2,746,464 $ 2,711,229 Operating costs, expenses and losses 3,763,548 2,351,263 Operating (losses) income (1,017,084 ) 359,966 Nonoperating income and gains 3,788 6,383 Nonoperating expenses and losses (Losses) income before income tax $ (1,013,440 ) $ 366,288 Net (losses) income $ (914,231 ) $ 352,600 Pre-tax (deficit) earnings per share $ (4.30 ) $ 1.73 After tax (deficit) earnings per share $ (3.90 ) $

118 SinoPac Securities Investments Trust Co., Ltd. Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Unreviewed) Operating revenues and gains $ 54,563 $ 33,088 Operating costs, expenses and losses 70,700 49,373 Operating losses (16,137 ) (16,285 ) Nonoperating income and gains 3,343 2,633 Nonoperating expenses and losses 3 1,035 (12,797 ) (14,687 ) Losses before income tax 3,287 2,878 (9,510 ) (11,809 ) Cumulative effect of accounting changes 42 - Net losses $ (9,468 ) $ (11,809 ) Pre-tax deficit per share $ (0.42 ) $ (0.49 ) After tax deficit per share $ (0.31 ) $ (0.39 ) SinoPac Life Insurance Agent Co., Ltd. Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Operating revenues and gains $ 233,987 $ 301,217 Operating costs, expenses and losses 128, ,840 Operating income 105, ,377 Nonoperating income and gains 670 3,353 Income before income tax $ 105,806 $ 127,730 Net income $ 79,451 $ 95,798 Pre-tax earnings per share $ $ After tax earnings per share $ $

119 SinoPac Property Insurance Agent Co., Ltd. Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Operating revenues and gains $ 20,106 $ 16,134 Operating costs, expenses and losses 6,729 6,345 Operating income 13,377 9,789 Nonoperating income and gains Income before income tax $ 13,613 $ 9,948 Net income $ 10,218 $ 7,484 Pretax earnings per share $ $ After tax earnings per share $ $ SinoPac Call Center Co., Ltd. Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (Unreviewed) (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Operating revenues and gains $ 117,166 $ 124,783 Operating costs, expenses and losses 115, ,472 Operating income 1,195 6,311 Nonoperating income and gains Income before income tax $ 1,898 $ 6,594 Net income $ 1,546 $ 5,065 Pre-tax earnings per share $ 0.19 $ 0.66 After tax earnings per share $ 0.15 $

120 SinoPac Marketing Consulting Co., Ltd. Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (Unreviewed) (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Operating revenues and gains $ 15,528 $ 63,326 Operating costs, expenses and losses 31,493 61,081 Operating (losses) income (15,965 ) 2,245 Nonoperating income and gains Nonoperating expenses and losses (11 ) - (Losses) income before income tax $ (15,771 ) $ 2,528 Net (losses) income $ (11,914 ) $ 1,906 Pre-tax (deficit) earnings per share $ (3.15 ) $ 0.51 After tax (deficit) earnings per share $ (2.38 ) $ 0.38 SinoPac Asset Management International Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (Unreviewed) (In Thousands of New Taiwan Dollars, Except Earnings Per Share) Operating revenues and gains $ 21,868 $ 19,170 Operating costs, expenses and losses 10,755 18,467 Operating income 11, Nonoperating income and gains 1,755 1,642 Nonoperating expenses and losses 9 2,607 Income (losses) before income tax $ 12,859 $ (262 ) Net income $ 9,709 $ 35 Pre-tax earnings (deficit) per share $ 1.29 $ (0.03 ) After tax earnings per share $ 0.97 $

121 SinoPac Venture Capital Co., Ltd. Condensed Statements of Income For the Nine Months Ended September 30, 2006 and 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Unreviewed) Operating revenues and gains $ 111,362 $ 47,928 Operating costs, expenses and losses 38,479 27,952 Operating losses 72,883 19,976 Nonoperating income and gains 6,424 2,132 Nonoperating expenses and losses Income before income tax $ 79,257 $ 21,300 Net income $ 81,564 $ 21,300 Pre-tax earnings per share $ 0.44 $ 0.21 After tax earnings per share $ 0.45 $ ASSET QUALITY, CONCENTRATION OF CREDIT EXTENSIONS, INTEREST RATE SENSITIVITY, PROFITABILITY AND MATURITY ANALYSIS OF ASSETS AND LIABILITIES - BANK SINOPAC AND IBT a. Asset quality 1) Bank SinoPac Item (In Thousands of New Taiwan Dollars, %) September 30, 2006 September 30, 2005 Overdue Amount Loans/ Outstanding Amount Loan Balance Overdue Loans/ Outstanding Loan Balance Overdue loans - class A $ 3,665, % $ 2,759, % Overdue loans - class B 445, % 200, % Total overdue loans 4,111, % 2,959, % Overdue loans with debt negotiation exempted from reporting as a non-performing loan Overdue receivables with debt negotiation exempted from reporting as a non-performing loan

122 2) IBT Item (In Thousands of New Taiwan Dollars, %) September 30, 2006 September 30, 2005 Overdue Amount Loans/ Outstanding Amount Loan Balance Overdue Loans/ Outstanding Loan Balance Overdue loans - class A $ 7,512, % $ 6,004, % Overdue loans - class B 981, % - - Total overdue loans 8,494, % 6,004, % Overdue loans with debt negotiation exempted from reporting as a non-performing loan Overdue receivables with debt negotiation exempted from reporting as a non-performing loan 3,063, Note 1: Overdue loans represent the amounts of reported overdue loans pursuant to Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrued Loans issued by the MOF. Note 2: Overdue loans - class A and class B represent the amounts of reported overdue loans as required by the Banking Bureau letters dated April 19, 2005 (Ref. No ). Note 3: Overdue loans ratio = Overdue loans/outstanding loans balance. Note 4: Overdue loans and receivables with debt negotiated terms which have been perform are exempted from reporting as non-performing loan under the requirement issued by the Banking Bureau dated April 25, 2006 (Ref. No ). b. Concentration of credit extensions 1) Bank SinoPac (In Thousands of New Taiwan Dollars, %) September 30, 2006 September 30, 2005 Credit extensions to interested parties $4,972,975 $4,053,194 Ratios of credit extensions to interested parties Ratios of credit extensions secured by pledged stocks Industry concentration Industry Percentage Industry Percentage Consumer 79.56% Consumer 76.76% Manufacturing 9.07% Manufacturing 9.58% Wholesaling and retailing 3.58% Wholesaling and retailing 4.64%

123 2) IBT (In Thousands of New Taiwan Dollars, %) September 30, 2006 September 30, 2005 Credit extensions to interested parties $6,064,948 $2,447,608 Ratios of credit extensions to interested 2.00% 0.79% parties Ratios of credit extensions secured by pledged stocks Industry concentration 0.51% 1.23% Industry Percentage Industry Percentage Consumer 45.44% Consumer 48.12% Manufacturing 22.72% Manufacturing 19.95% Wholesaling and retailing 9.28% Wholesaling and retailing 9.20% The interest parties mentioned above are governed by Article 33-1 of Banking Law in ROC. Note 1: Consist of loans, discounts and bills purchased (including import and export bill negotiations), acceptances and guarantees. Note 2: Ratio of credit extensions to interested parties = Credit extensions to interested parties/total credit extensions. Note 3: Ratio of credit extensions secured by pledged stocks = Credit extensions secured by pledged stocks/total credit extensions. Note 4: Consist of the following industries required by the Central Bank: Agriculture, forestry, fishing and grazing; mining and soil excavation; manufacturing; utility and gas; construction; wholesale, retail, food and beverage; shipping, storage and communications; finance, insurance and real estate; general services and other. c. Interest rate sensitivity information 1) Bank SinoPac Interest Rate Sensitivity (New Taiwan Dollars) September 30, 2006 (In Thousands of New Taiwan Dollars, %) Total Items 1 to 90 Days 91 to 180 Days 181 Days to One Over One Year (Included) (Included) Year (Included) Interest-rate sensitive assets $ 328,500,283 $ 39,025,857 $ 36,063,070 $ 14,156,210 $ 417,745,420 Interest-rate sensitive liabilities 173,252, ,269,031 42,134,416 16,601, ,257,510 Interest-rate-sensitive gap 155,247,728 (102,243,174 ) (6,071,346 ) (2,445,298 ) 44,487,910 Net worth 28,909,869 Ratio of interest-rate sensitive assets to liabilities % Ratio of interest-rate sensitive gap to net worth % Note 1: The above amounts included only New Taiwan dollar amounts held by the onshore branches of Bank SinoPac (i.e., excluding foreign currency). Note 2: Interest-rate sensitive assets and liabilities mean the revenues or costs of interest-earnings assets and interest-bearing liabilities are affected by interest-rate changes. Note 3: Interest-rate sensitive gap = Interest-rate sensitive assets liabilities. Interest-rate sensitive Note 4: Ratio of interest-rate sensitive assets to liabilities = Interest-rate sensitive assets/ Interest-rate sensitive liabilities (in New Taiwan dollars)

124 Interest Rate Sensitivity (USD) September 30, 2006 (In Thousands of U.S. Dollars, %) Total Items 1 to 90 Days 91 to 180 Days 181 Days to One Over One Year (Included) (Included) Year (Included) Interest-rate sensitive assets $ 2,393,624 $ 281,004 $ 226,593 $ 175,788 $ 3,077,009 Interest-rate sensitive liabilities 2,647,699 1,202, , ,451 4,508,985 Interest-rate-sensitive gap (254,075 ) (921,000 ) (1,238 ) (255,663 ) (1,431,976 ) Net worth 5,890 Ratio of interest-rate sensitive assets to liabilities 68.24% Ratio of interest-rate sensitive gap to net worth (24,311.99% ) Note 1: The above amounts include only USD amounts held by the onshore branches, OBU and offshore branches of Bank SinoPac, excludes contingent assets and contingent liabilities. Note 2: Interest-rate sensitive assets and liabilities mean the revenues or costs of interest-earnings assets and interest-bearing liabilities are affected by interest-rate changes. Note 3: Interest-rate sensitive gap = Interest-rate sensitive assets liabilities. Interest-rate sensitive Note 4: Ratio of interest-rate sensitive assets to liabilities = Interest-rate sensitive assets/ Interest-rate sensitive liabilities (in U.S. dollars). 2) IBT Interest Rate Sensitivity (New Taiwan Dollars) September 30, 2006 (In Thousands of New Taiwan Dollars, %) Total Items 1 to 90 Days 91 to 180 Days 181 Days to One Over One Year (Included) (Included) Year (Included) Interest-rate sensitive assets $ 216,409,000 $ 34,931,000 $ 28,054,000 $ 64,544,000 $ 343,938,000 Interest-rate sensitive liabilities 168,891, ,754,000 31,424,000 4,314, ,383,000 Interest-rate-sensitive gap 47,518,000 (86,823,000 ) (3,370,000 ) 60,230,000 17,555,000 Net worth 35,035,000 Ratio of interest-rate sensitive assets to liabilities % Ratio of interest-rate sensitive gap to net worth 50.11% Note 1: The above amounts included only New Taiwan dollar amounts held by the onshore branches of IBT (i.e., excluding foreign currency). Note 2: Interest-rate sensitive assets and liabilities mean the revenues or costs of interest-earnings assets and interest-bearing liabilities are affected by interest-rate changes. Note 3: Interest-rate sensitive gap = Interest-rate sensitive assets Interest-rate sensitive liabilities. Note 4: Ratio of interest-rate sensitive assets to liabilities = Interest-rate sensitive assets/ Interest-rate sensitive liabilities (in New Taiwan dollars)

125 Interest Rate Sensitivity (USD) September 30, 2006 (In Thousands of U.S. Dollars, %) Total Items 1 to 90 Days 91 to 180 Days 181 Days to One Over One Year (Included) (Included) Year (Included) Interest-rate sensitive assets $ 717,602 $ 239,551 $ 112 $ 5,000 $ 962,265 Interest-rate sensitive liabilities 858,699 67,137 68, ,937 Interest-rate-sensitive gap (141,097 ) 172,414 (67,989 ) 5,000 (31,672 ) Net worth 30,470 Ratio of interest-rate sensitive assets to liabilities 96.81% Ratio of interest-rate sensitive gap to net worth (103.94% ) Note 1: The above amounts include only USD amounts held by the onshore branches, OBU and offshore branches of IBT, excludes contingent assets and contingent liabilities. Note 2: Interest-rate sensitive assets and liabilities mean the revenues or costs of interest-earnings assets and interest-bearing liabilities are affected by interest-rate changes. Note 3: Interest-rate sensitive gap = Interest-rate sensitive assets liabilities. Interest-rate sensitive d. Profitability Note 4: Ratio of interest-rate sensitive assets to liabilities = Interest-rate sensitive assets/ Interest-rate sensitive liabilities (in U.S. dollars) 1) Bank SinoPac Items For the Nine Months Ended September 30, 2006 (%) For the Nine Months Ended September 30, 2005 Return on total assets Before income tax After income tax Return on net worth Before income tax After income tax Profit margin ) IBT (%) Items For the Nine Months Ended September 30, 2006 For the Nine Months Ended September 30, 2005 Return on total assets Before income tax 0.35% 0.69% After income tax 0.32% 0.55% Return on net worth Before income tax 4.20% 7.91% After income tax 3.84% 6.31% Profit margin 19.64% 28.64% Note 1: Return on total assets = Income before (after) income tax/average total assets

126 Note 2: Return on net worth = Income before (after) income tax/average net worth. Note 3: Profit margin = Income after income tax/total operating revenues. Note 4: Income before (after) income tax represents income for the nine months ended September 30, 2006 and e. Maturity analysis of asset and liabilities 1) Bank SinoPac Maturity Analysis of Asset and Liabilities (In New Taiwan Dollars) September 30, 2006 (In Thousands of New Taiwan Dollars) Total The Amount of Remaining Period to Maturity 1-30 Days Days Days Days Over 1 Year Main capital inflow on maturity $536,598,978 $132,525,277 $ 48,625,437 $ 53,644,148 $ 58,570,238 $243,233,878 Main capital outflow on maturity 538,080, ,250,494 92,898, ,551, ,709, ,670,088 Gap (1,481,508 ) 15,274,783 (44,273,083 ) (51,907,520 ) (56,139,478 ) 135,563,790 Note: The above amounts included only New Taiwan dollar amounts held in the onshore branches of Bank SinoPac (i.e. excludes foreign currency). Maturity Analysis of Assets and Liabilities (In U.S. Dollars) September 30, 2006 (In Thousands of U.S. Dollars) Total The Amount of Remaining Period to Maturity 1-30 Days Days Days Days Over 1 Year Main capital inflow on maturity $ 7,598,204 $ 2,419,607 $ 1,883,705 $ 1,754,822 $ 1,401,707 $ 138,363 Main capital outflow on maturity 7,666,957 3,112,642 1,698,388 1,174,457 1,246, ,495 Gap (68,753 ) (693,035 ) 185, , ,732 (296,132 ) Note 1: Included above are book value held by the onshore branches and offshore banking unit of Bank SinoPac in U.S. dollars, without off-balance amounts (for example, the issuance of negotiable certificate of deposits, bonds or stocks). Note 2: If the overseas assets amounting to at least 10% of the total assets, there should be additional disclosures. 2) IBT Maturity Analysis of Asset and Liabilities (In New Taiwan Dollars) September 30, 2006 (In Thousands of New Taiwan Dollars) Total The Amount of Remaining Period to Maturity 1-30 Days Days Days Days Over 1 Year Main capital inflow on maturity $400,842,000 $ 96,561,000 $ 52,944,000 $ 36,013,000 $ 33,249,000 $182,075,000 Main capital outflow on maturity 422,047,000 77,861,000 52,452,000 37,121,000 72,987, ,626,000 Gap (21,205,000 ) 18,700, ,000 (1,108,000 ) (39,738,000 ) 449,

127 Note: The above amounts included only New Taiwan dollar amounts held in the onshore branches of IBT (i.e. excludes foreign currency). Maturity Analysis of Assets and Liabilities (In U.S. Dollars) September 30, (In Thousands of U.S. Dollars) Total The Amount of Remaining Period to Maturity 1-30 Days Days Days Days Over 1 Year Main capital inflow on maturity $ 1,735,253 $ 397,476 $ 272,576 $ 226,368 $ 87,117 $ 751,716 Main capital outflow on maturity 1,747, , , ,191 69, ,003 Gap (12,136 ) (91,346 ) (119,290 ) 75,177 17, ,713 Note A: Included above are book value held by the onshore branches and offshore banking unit of IBT in U.S. dollars, without off-balance amounts (for example, the issuance of negotiable certificate of deposits, bonds or stocks). Note B: If the overseas assets amounting to at least 10% of the total assets, there should be additional disclosures. f. Statement of capital adequacy 1) Bank SinoPac (In Thousands of New Taiwan Dollars, %) September 30, September 30, Net eligible capital $ 37,562,670 $ 32,867,401 Total risk-weighted assets 293,844, ,579,747 Capital adequacy ratios Ratios of tier 1 capital to risk-weighted assets Ratios of tier 2 capital to risk-weighted assets Ratios of tier 3 capital to risk-weighted assets - - Ratios of the deduction from capital to risk-weighted assets (0.09 ) (1.28 ) Ratios of common stockholders equity to total assets ) IBT (In Thousands of New Taiwan Dollars, %) September 30, September 30, Net eligible capital $ 34,220,668 $ 34,966,611 Total risk-weighted assets 285,958, ,298,831 Capital adequacy ratios 11.97% 12.09% Ratios of tier 1 capital to risk-weighted assets 12.03% 11.97% Ratios of tier 2 capital to risk-weighted assets 0.48% 0.53% Ratios of tier 3 capital to risk-weighted assets - - Ratios of common stockholders equity to total assets 8.27% 8.31% Pursuant to the Banking Law and related regulations, the capital adequacy ratio should be computed at the end of June and December, respectively, thus the aforementioned figures were the capital adequacy ratios as of June 30, 2006 and 2005.

128 46. INFORMATION RELATED TO BORROWERS, GUARANTORS AND COLLATERAL PROVIDERS AS INTEREST PARTIES a. Bank SinoPac September 30, 2006 Category Account Situation of Exercise Amounts Volume Normal Overdue Consumer loans (Note 1) 253 $ 238,086 $ - - Loans for employees house mortgage , Other borrowers (Note 2) 627 3,944, Guarantees 465 1,862, Collateral providers 1,046 8,081, September 30, 2005 Category Account Possibility of Loss Amounts Volume (Note 3) Consumer loans (Note 1) 332 $ 248,730 None Loans for employees house mortgage ,368 None Other borrowers (Note 2) 648 3,841,118 None Guarantees 518 1,846,612 None Collateral providers 1,110 6,855,297 None Note 1: Consumer loans were regulated in the Banking Law Article 32. Note 2: Except for consumer loans and loans for employees house mortgage, the credits that borrowers as interest parties. Note 3: The interest parties mentioned above is regulated in the banking Law Article b. IBT September 30, 2006 Category Account Situation of Exercise Amounts Volume Normal Overdue Consumer loans 90 $ 36,928 $ 36,114 $ 814 Loans for house mortgage , ,013 - Other borrowers 147 5,478,007 5,475,290 2,717 Guarantees , ,384 3,551 Collateral providers 374 2,590,900 2,590, September 30, 2005 Category Account Situation of Exercise Amounts Volume Normal Overdue Consumer loans 127 $ 46,881 $ 46,881 $ - Loans for house mortgage , ,830 - Other borrowers 180 1,744,902 1,742,185 2,717 Guarantees 296 1,167,913 1,164,567 3,346 Collateral providers 409 1,703,808 1,701,553 2,

129 47. ADDITIONAL DISCLOSURES a. Followings are the additional disclosures required by the SFB for the Company and investees: 1) Financing provided: Table 1; 2) Endorsement/guarantee provided: Table 2; 3) Marketable securities held: Table 3 (the related disclosures for SinoPac Securities are excluded from disclosure requirement under the Criteria Governing the Preparation of Financial Reports by Securities Firms); 4) Marketable securities acquired and disposed of, at costs or prices of at least NT$300 million or 10% of the issued capital: Table 4 (the related disclosures for SinoPac Securities are excluded from disclosure requirement under the Criteria Governing the Preparation of Financial Reports by Securities Firms); 5) Acquisition of individual real estate at costs of at least NT$300 million or 10% of the issued capital: None; 6) Disposal of individual real estate at prices of at least NT$300 million or 10% of the issued capital: None; 7) Allowance for service fees to related-parties amounting to at least NT$5 million: None; 8) Financial asset securitization: Please refer to Note 11; 9) Receivables from related parties amounting to at least NT$300 million or 10% of the issued capital: Table 5; 10) Sale of nonperforming loans from subsidiaries amounting to at least NT$5,000 million: None; 11) Names, locations, and other infor mation of investees on which the Company exercises significant influences: Table 6; 12) Derivative financial transactions: Please refer to Notes 6 and 43. b. Information related to investment in Mainland China: None

130 TABLE 1 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES FINANCING PROVIDED NINE MONTHS ENDED SEPTEMBER 30, 2006 (In Thousands of New Taiwan Dollars) No. Financing Name Counter-party Financial Statement Account Maximum Balance for the Period Ending Balance Interest Rate Financing Type Transaction Amount Financing Reasons Collateral Allowance for Bad Debt Item Value Financing Limit for Each Borrowing Company Financing Company s Financing Amount Limits 1 SinoPac Leasing Corporation Wal-Tech International Corporation Other receivable - related parties $ 184,000 $ 170, %-2.40% Short-term financing $ - Repay of borrowings $ $ - $ 300,000 (Note 1) $ 913,319 (Note 2) Note 1: According to the Operational Procedures for Making Loans to Others, the financing limit for the borrowing company is 30% of the reviewed net asset value ($2,283,297) of SinoPac Leasing Corporation as of September 30, The maximum amount passed by the board of directors is $300,000. Note 2: According to the Operational Procedures for Making Loans to Others, the financing company s financing amount limits are 40% of the reviewed net asset value ($2,283,297) of SinoPac Leasing Corporation as of September 30,

131 TABLE 2 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES ENDORSEMENT/GUARANTEE PROVIDED NINE MONTHS ENDED SEPTEMBER 30, 2006 (In Thousands of New Taiwan Dollars) No. Endorsement/Guarantee Provider Name Counter-party Nature of Relationship Limits on Individual Endorsement/ Guarantee Amounts Maximum Balance for the Period Ending Balance Endorsement/ Guarantee Amount Collateralized by Properties Ratio of Accumulated Amount of Endorsement/ Guarantee to Net Asset Value of the Latest Financial Statement (Note 4) Maximum Endorsement/ Guarantee Amounts Allowable 1 SinoPac Leasing Corporation Grand Capital International Limited Wal Tech International Corporation Subsidiary (Note 3) $ 3,515,888 $ 3,184, % (Note 5) Affiliate (Note 3) 20,000 17, % (Note 5) Note 1: Foreign-currency amounts were translated to New Taiwan dollars at the exchange rate as of September 29, Note 2: The reviewed net asset value of SinoPac Leasing Corporation as of September 30, 2006 is $2,283,297. Note 3: The limit on individual endorsement or guarantee amounts is up to 200% of the net asset value (Note 4) of the Corporation. But no limit applied on any subsidiary of the Corporation. As of September 30, 2006, the limit was $4,566,594. Note 4: The net asset value of SinoPac Leasing Corporation was based on its reviewed financial statements as of September 30, Note 5: The maximum amount of endorsement or guarantee amounts is up to 500% of the net asset value (Note 4) of the Corporation. But no limit applied on any subsidiary of the Corporation. As of September 30, 2006, the limit was $11,416,

132 TABLE 3 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES MARKETABLE SECURITIES HELD SEPTEMBER 30, 2006 (In Thousands of New Taiwan Dollars) Name of Holding Company Type and Issuer of Marketable Securities Relationship with Holding Company Financial Statement Account Shares/Units/ Face Amount (In Thousands) September 30, 2006 Carrying Amount (Note 1) Percentage of Ownership Market Value or Net Asset Value (Note 1) Note SinoPac Financial Holdings Stock (common stock) Company Limited International Bank of Taipei Subsidiary Equity investments - equity method 2,223,311 $ 34,319, % $ 36,215,832 Note 4 Bank SinoPac Subsidiary Equity investments - equity method 1,972,807 29,271, % 29,271,527 Note 4 SinoPac Securities Corporation Subsidiary Equity investments - equity method 1,196,902 19,738, % 19,738,290 Note 4 AnShin Card Services Co., Ltd. Subsidiary Equity investments - equity method 343,000 2,787, % 2,787,051 Note 4 SinoPac Venture Capital Co., Ltd. Subsidiary Equity investments - equity method 180,000 1,872, % 1,872,627 Note 4 SinoPac Securities Investment Trust Co., Ltd. Subsidiary Equity investments - equity method 30, , % 313,359 Note 4 SinoPac Call Center Co., Ltd. Subsidiary Equity investments - equity method 10, , % 102,833 Note 4 SinoPac Asset Management International Subsidiary Equity investments - equity method 10, , % 112,424 Note 4 SinoPac Life Insurance Agent Co., Ltd. Subsidiary Equity investments - equity method , % 93,612 Note 4 SinoPac Marketing Consulting Co., Ltd. Subsidiary Equity investments - equity method 5,000 32, % 32,608 Note 4 SinoPac Property Insurance Agent Co., Ltd. Subsidiary Equity investments - equity method , % 15,119 Note 4 Stock (preferred stock) AnShin Card Services-A - Equity investments - equity method 48, , % 480,000 Note 5 AnShin Card Services-B - Equity investments - equity method 120,000 1,200, % 1,200,000 Note 5 SinoPac Leasing - Equity investments - equity method 100,000 1,000, % 1,000,000 Note 5 Stock (common stock) Li-Seng Develop company Investee accounted for by the cost method Unquoted equity investments 2,709 25, % 25,000 Note 5 Debt Instruments Depository and Clearing Co., Ltd., Taiwan Investee accounted for by the cost method Unquoted equity investments 230 4, % 4,639 Note 5 IBT Life Insurance Agent Bond Co., Ltd. Taiwan Government Bond (A88103) - Refundable guarantee deposits Pledged Note 7 IBT Property Insurance Bond Agent Co., Ltd. Taiwan Government Bond (A88103) - Refundable guarantee deposits Pledged Note 7 SinoPac Bancorp Stock Far East National Bank Subsidiary Equity investments - equity method 180 6,499, % 6,499,806 Note 3 SinoPac Financial Service (USA) Ltd. Subsidiary Equity investments - equity method , % 27,976 Note 3 (Continued)

133 Name of Holding Company Type and Issuer of Marketable Securities Relationship with Holding Company Financial Statement Account Shares/Units/ Face Amount (In Thousands) September 30, 2006 Carrying Amount (Note 1) Percentage of Ownership Market Value or Net Asset Value (Note 1) Note Far East Capital Corporation Stock (common stock) PCRS Capital Partners, LLC - Unquoted equity investments - $ 1, % $ 1,363 Note 5 TVIA, Inc. - Unquoted equity investments 33 1, % 1,522 Note 5 Metropolos Digital - Unquoted equity investments 1, % - Note 5 Stock (preferred stock) AgraQuest, Inc. - Unquoted equity investments % 897 Note 5 Silicon Motion, Inc. - Unquoted equity investments 11 6, % 6,032 Note 5 Zone Reactor, Inc. - Unquoted equity investments 23 1, % 1,115 Note 5 iphysician Net, Inc. - Unquoted equity investments % - Note 5 Softknot Corporation - Unquoted equity investments % - Note 5 SinoPac Leasing Corporation Stock Grand Capital International Limited Subsidiary Equity investments - equity method 29, , % 664,673 Note 4 Fund SinoPac Global Fixed Income Portfolio Fund Affiliate Trading financial assets - current 10, , ,809 Note 6 SinoPac Capital Limited Stock ((Hong Kong) SinoPac Capital (B.V.I.) Ltd. Subsidiary Equity investments - equity method 4, , % 184,788 Note 3 SinoPac Insurance Brokers Ltd. Subsidiary Equity investments - equity method 100 1, % 3,235 Note 3 HC-shares - Trading financial assets 7,998 53, % 61,160 Note 2 Suga International - Trading financial assets 5,674 34, % 12,293 Note 2 ZZNode - Trading financial assets 12,004 30, % 19,379 Note 2 Norstar - Trading financial assets 6,908 57, % 76,009 Note 2 Hans Energy - Trading financial assets 21,000 49, % 37,024 Note 2 TPV - Trading financial assets , % 19,491 Note 2 FIH - Trading financial assets , % 24,776 Note 2 China-Metal - Trading financial assets 300 1, % 3,505 Note 2 Wealthmark - Trading financial assets 15,327 35, % 36,463 Note 2 MagnaChip - Available-for-sale financial assets ,196-66,196 Note 2 Bestfield Enterprises Ltd. - Financial assets at fair value through 38 49,647-57,407 Note 2 profit or loss FerroChina Ltd. - Financial assets at fair value through profit or loss 2,300 33,586-50,969 Note 2 Fund China Enterprise Capital - Available-for-sale financial assets 20 33,098-33,098 Note 5 SinoPac Capital (B.V.I.) Ltd. Stock Shanghai International Asset Management Subsidiary Equity investments - equity method 4,800 37, % 23,102 Note 3 (Hong Kong) Co., Ltd. Bank of China - Trading financial assets Note 2 Pinnacle Investment Management Ltd. Subsidiary Equity investments - equity method 200 6, % 3,765 Note 3 RSP Information Service Company Limited Subsidiary Equity investments - equity method 1,000 4, % 1,769 Note 3 (Continued)

134 Name of Holding Company Type and Issuer of Marketable Securities Relationship with Holding Company Financial Statement Account Shares/Units/ Face Amount (In Thousands) September 30, 2006 Carrying Amount (Note 1) Percentage of Ownership Market Value or Net Asset Value (Note 1) Note SinoPac Futures Corporation Stock Taiwan Future Exchange Co., Ltd. - Available-for-sale financial assets 499 $ 4, % $ 4,990 Note 5 SinoPac Managed Futures Co., Ltd. Investee accounted for by the equity method Equity investments - equity method 14, , % 128,049 Note 5 Stock fund Transcend Prosperity Fund - Open-end mutual funds and money tools SinoPac Columbus Fund - Open-end mutual funds and money tools Fuh-Hwa Small Capital Fund - Open-end mutual funds and money tools Fuh-Hwa Omni Fund - Open-end mutual funds and money tools Balanced fund Grand Cathay Balance Fund - Open-end mutual funds and money tools Fuh-Hwa Aegis Fund - Open-end mutual funds and money tools Fuh-Hwa Asian Pacific Balance Fund - Open-end mutual funds and money tools Overseas Fund SinoPac New Century Fund - Open-end mutual funds and money tools 398 5, % 5,263 Note 6 1,190 14, % 14,762 Note , % 14,032 Note 6 1,000 10, % 10,300 Note , % 11,020 Note 6 1,000 10, % 10,634 Note , % 7,098 Note 6 1,898 10, % 10,285 Note 6 SinoPac Capital Management Combined fund Corporation Grand Cathay World Bond Selection Fund - Trading financial assets 650 6, % 6,500 Note 6 Balanced fund Skit Strategy Balanced Fund - Trading financial assets 1,364 15, % 15,083 Note 6 Jin Sun Formulae Balanced - Trading financial assets 481 5, % 4,973 Note 6 Fund of funds Jin Sun Japan Strategy Fund - Trading financial assets 500 5, % 5,000 Note 6 AnShin Card Services Co., Ltd. Pou Chen Corporation Corporate Bond - Available-for-sale financial assets - noncurrent 80,000 77,393-77,393 Note 7 SinoPac Life Insurance Agent Beneficiary certificate Co., Ltd. Fuh-hwa Bond Fund - Available-for-sale financial assets 6,460 85,517-85,808 Note 6 Fuh-hwa Yu-Li Fund - Available-for-sale financial assets 1,328 15,015-16,415 Note 6 Prudential Aggressive Growth 2 Bond Fund - Available-for-sale financial assets 1,689 24,746-26,159 Note 6 (Continued)

135 Name of Holding Company Type and Issuer of Marketable Securities Relationship with Holding Company Financial Statement Account Shares/Units/ Face Amount (In Thousands) September 30, 2006 Carrying Amount (Note 1) Percentage of Ownership Market Value or Net Asset Value (Note 1) Note SinoPac Venture Capital Beneficiary certificate Co., Ltd. SinoPac Genesis Fund - Available-for-sale financial assets 5,568 $ 43, % $ 46,009 Note 6 SinoPac Global Fixed Income Portfolio Fund - Available-for-sale financial assets 10, , % 100,707 Note 6 Stock Ampire Co., Ltd. - Available-for-sale financial assets , % 4,518 Note 6 Princo Corp. - Available-for-sale financial assets 388 7, % 2,201 Note 6 FuPo Electronics Corporation - Available-for-sale financial assets , % 3,794 Note 6 Donpon Precision, Inc. - Available-for-sale financial assets , % 10,257 Note 6 De Poan Pneumatic Corp. - Available-for-sale financial assets , % 30,666 Note 6 FEEI Cherng Enterprise Co., Ltd. - Available-for-sale financial assets , % 15,186 Note 6 Sigurd Microelectronics Corp. - Available-for-sale financial assets , % 14,265 Note 6 Walton Advanced Engineering Inc. - Available-for-sale financial assets 1,009 7, % 16,766 Note 6 Alpha Microelectronics Corp. - Available-for-sale financial assets 775 8, % 20,925 Note 6 Convertible bonds Ardentec Corporation - Available-for-sale financial assets 75 7,500-8,828 Note 6 Creative Sensor Inc. - Available-for-sale financial assets 75 7,500-9,090 Note 6 Stock Telexpress Corp. Investee accounted for by the equity method Equity investments - equity method 3, % 43,685 Note 4 Wal Tech International Corporation Investee accounted for by the equity method Equity investments - equity method 26, , % 141,827 Note 4 Allstar Venture Ltd. (B.V.I.) Investee accounted for by the equity method Equity investments - equity method , % 179,996 Note 4 SinoPac Leasing Corporation Investee accounted for by the equity method Equity investments - equity method 410 2, % 2,916 Note 4 SinoPac Financial Consulting Corporation Investee accounted for by the equity method Equity investments - equity method % 73 Note 4 SinoPac Capital Limited (Hong Kong) Investee accounted for by the equity method Equity investments - equity method % 9 Note 4 ATM Electronic Corp. - Unquoted equity investments , % 10,000 Note 5 Micro Square Technology Inc. - Unquoted equity investments , % 10,000 Note 5 Pandisk Technology Company Ltd. - Unquoted equity investments 695 9, % 9,980 Note 5 Taimide Tech, Inc. - Unquoted equity investments 2,735 46, % 46,353 Note 5 Proconn Technology Co., Ltd. - Unquoted equity investments 1,289 14, % 14,395 Note 5 Bcom Electronics Inc. - Unquoted equity investments 384 6, % 6,226 Note 5 TennRich International Corp. - Unquoted equity investments 587 9, % 9,988 Note 5 Exploit Technology Co., Ltd. - Unquoted equity investments , % 11,773 Note 5 Asia Electronic Material Co., Ltd. - Unquoted equity investments 2,824 37, % 37,534 Note 5 Light Master System, Inc. - Unquoted equity investments 150 8, % 8,936 Note 5 Global Strategic Venture - Unquoted equity investments 3,000 30, % 30,000 Note 5 G-Tech Optoelectronics Corporation - Unquoted equity investments 1,135 19, % 19,936 Note 5 Laster Tech Ltd. - Unquoted equity investments , % 19,735 Note 5 Etrend Hightech Corporation - Unquoted equity investments 1,670 19, % 19,975 Note 5 Luminous Town Electric Co. Ltd. - Unquoted equity investments 1,658 19, % 19,978 Note 5 International United Technology - Unquoted equity investments 1,473 18, % 18,713 Note 5 Add Microtech Corporation - Unquoted equity investments 277 8, % 8,827 Note 5 E-One MOLI Energy Corporation - Unquoted equity investments 1,400 16, % 16,800 Note 5 Uni Light Technology - Unquoted equity investments , % 18,438 Note 5 Ritdisplay Corporation - Unquoted equity investments % 892 Note 5 AMIC Technology Corporation - Unquoted equity investments , % 10,032 Note 5 (Continued)

136 Name of Holding Company Type and Issuer of Marketable Securities Relationship with Holding Company Financial Statement Account Shares/Units/ Face Amount (In Thousands) September 30, 2006 Carrying Amount (Note 1) Percentage of Ownership Market Value or Net Asset Value (Note 1) Note ID Solutions Inc. - Unquoted equity investments 833 $ 8, % $ 8,275 Note 5 Ultra Chip, Inc. - Unquoted equity investments 1,119 28, % 28,817 Note 5 Skymedi Corporation - Unquoted equity investments 55 1, % 1,000 Note 5 Goyatek Technology Inc. - Unquoted equity investments 500 6, % 6,075 Note 5 Uniwill Computer International Corporation - Unquoted equity investments 880 9, % 9,944 Note 5 Prudence Venture Investment Corp. - Unquoted equity investments 5,000 35, % 35,600 Note 5 Z-com - Unquoted equity investments 1,561 10, % 10,439 Note 5 Taiwan Leader Advanced Technology Corp. - Unquoted equity investments 1,103 10, % 10,766 Note 5 e21 - Unquoted equity investments 200 3, % 3,310 Note 5 Chain Yarn Co., Ltd. - Unquoted equity investments 2,279 27, % 27,570 Note 5 Telexpress Corp. - Unquoted equity investments 525 5, % 5,226 Note 5 Tekcon, Corp. - Unquoted equity investments % 944 Note 5 Coxonprecise Industrial Co., Ltd. - Unquoted equity investments 1,800 85, % 85,500 Note 5 Giga Solution Tech. Co., Ltd. - Unquoted equity investments 655 6, % 6,885 Note 5 Jarllytec Co., Ltd. - Unquoted equity investments , % 14,000 Note 5 Gatetech Technology Inc. - Unquoted equity investments 1,250 12, % 12,500 Note 5 MOSA Industrial Corporation - Unquoted equity investments , % 12,500 Note 5 Celxpert Energy Corporation - Unquoted equity investments , % 13,311 Note 5 Fund BioAsia BDF IV Fund - Unquoted equity investments - 36, % 36,695 Note 5 Source One - Unquoted equity investments - 92, % 92,933 Note 5 SinoPac Asset Management Stock International Powerchip Semiconductor Corp. - Available-for-sale financial assets 252 5, % 5,328 Note 2 Evergreen Marine Corp. (Taiwan) Ltd. - Available-for-sale financial assets 118 3, % 2,219 Note 2 U-Ming Marine Transport Corp. - Available-for-sale financial assets 120 5, % 4,332 Note 2 Career Technology (MFG) Co., Ltd. - Available-for-sale financial assets 133 5, % 3,838 Note 2 National Venture Capital Corp. Investee accounted for by the cost method Unquoted equity investments 4,500 20, % 20,894 Note 5 SinoPac Securities Investment Beneficiary certificate Trust Co., Ltd. Jih Sun Foresight Balance Fund Balanced Fund - Trading financial assets 300 3,000-3,040 Note 6 Global Balanced Fund of Funds - Trading financial assets 500 5,000-5,030 Note 6 Global Fixed Income Portfolio Fund - Trading financial assets 1,500 15,000-15,121 Note 6 Note 1: Foreign-currency amounts were translated to New Taiwan dollars at the exchange rate as of the balance sheet date. Note 2: Market prices of listed and GreTai Securities Market stocks were determined by closing prices in September 30, Note 3: Note 4: Note 5: Net asset values were based on the investees unaudited or unreviewed financial statements for the latest period. Net asset values were based on the investees audited or reviewed financial statements for the latest period. Net asset values were based on the carrying amounts. Note 6: Market prices were determined at the closing prices or NAV on September 30, Note 7: The closing price provided by GreTai Securities Market as of September 30, (Concluded)

137 TABLE 4 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 10% OF THE ISSUED CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) Company Name Type and Issuer of Marketable Securities Financial Statement Account Counter-party Relationship Beginning Balance Acquisition Disposal Ending Balance Shares/Units/ Shares/Units/ Shares/Units/ Carrying Gain (Loss) on Shares/Units/ Face Value Amount Face Amount Amount Face Amount Amount Amount Disposal Face Amount Amount (in Thousands) (in Thousands) (in Thousands) (in Thousands) SinoPac Financial Holdings Stocks (preferred) Company Limited SinoPac Leasing Corporation Equity investments - equity method Stocks (common) AnShin Card Services Co., Ltd. Equity investments - equity method - Affiliate - $ - 100,000 $ 1,000,000 - $ - $ - $ - 100,000 $ 1,000, ,000 1,500, ,000 1,500,

138 TABLE 5 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$300 MILLION OR 10% OF THE ISSUED CAPITAL SEPTEMBER 30, 2006 (In Thousands of New Taiwan Dollars) Company Name Related Party Relationship Ending Balance Turnover Overdue Rate Amount Action Taken Amounts Received in Subsequent Period Allowance for Bad Debts SinoPac Financial Holdings Company Limited SinoPac Securities Bank SinoPac SinoPac Life Insurance Agent Co., Ltd. SinoPac Property Insurance Agent Co., Ltd. SinoPac Venture Capital SinoPac Call Center SinoPac Asset Management International SinoPac Marketing Consulting Co., Ltd. SinoPac Securities Investment Trust Corporation Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited Subsidiary of SinoPac Financial Holdings Company Limited $ 655,482 - $ - - $ - $ - 1, , , , International Bank of Taipei Grand Capital International Affiliate 528, Limited Anshin Card Services Subsidiary of SinoPac Financial 5,171, Holdings Company Limited Board Tek Related parties in substance 359, SinoPac Call Center Anshin Card Services Subsidiary of SinoPac Financial Holdings Company Limited 8, SinoPac Leasing Corporation Wal-Tech International Corporation Affiliate of SinoPac Financial Holdings Company Limited 170, Note: The receivable mainly comes from the adoption of the linked-tax system for tax filing, dividend income from preferred stock and other receivable - related parties

139 TABLE 6 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (In Thousands of New Taiwan Dollars, Unless Otherwise Specified) Investor Company Investee Company Location Main Businesses and Products September 30, 2006 (Note 1) Original Investment Amount Balance as of September 30, 2006 December 31, 2005 (Note 1) Shares (Thousands) Percentage of Ownership Carrying Amount (Note 2) Net Income (Loss) of the Investee (Note 2) Investment Gain (Loss) (Note 2) Invested by the Same Person, the Same Related Person Note SinoPac Financial Holdings International Bank of Taipei Taipei Commercial bank $ 35,159,843 $ 35,159,843 2,223, $ 34,319,342 $ 1,397,415 $ 1,062,058 None Subsidiary Company Limited Bank SinoPac Taipei Commercial bank 23,976,716 23,976,716 1,972, ,271,527 2,860,514 2,816,913 None Subsidiary SinoPac Securities Corporation Taipei Brokerage, dealing and underwriting of securities 18,266,517 21,566,517 1,196, ,738,290 1,573,456 1,226,552 None Subsidiary AnShin Card Services Co., Ltd. Taipei Credit card business 3,219,164 1,719, , ,787,051 (914,230 ) (946,631 ) None Subsidiary SinoPac Life Insurance Agent Co., Ltd. Taipei Life insurance agent 81,909 81, ,612 79,451 78,268 None Subsidiary SinoPac Property Insurance Agent Co., Taipei Property insurance agent 3,918 3, ,119 10,218 10,138 None Subsidiary Ltd. SinoPac Venture Capital Co., Ltd. Taipei Venture capital investment 1,800,000 1,800, , ,872,627 81,564 81,563 None Subsidiary SinoPac Call Center Co., Ltd. Kaohsiung Data processing, manpower and agency services 100, ,000 10, ,833 1,546 1,502 None Subsidiary SinoPac Asset Management International Taipei Business management advisory, investment and 100, ,000 10, ,424 9,709 9,703 None Subsidiary venture capital investment advisory SinoPac Marketing Consulting Co., Ltd. Taipei Agent service, investment advisory and overdue 50,000 50,000 5, ,608 (11,914 ) (11,914 ) None Subsidiary SinoPac Securities Investment Trust Corporation Taipei accounts receivable management Establish and manage securities investment trust funds by issuing beneficiary certificates and render discretionary investment service. 323, ,500 30, ,359 (9,469 ) 5,018 None Subsidiary International Bank of Taipei Grand Cathay Securities Investment Trust Taipei Securities investment 225, ,000 8, ,423 49,555 None Co. IBT Life Insurance Agent Co., Ltd. Taipei Life insurance agent 2,000 2, ,371 93,777 None Affiliate IBT Property Insurance Agent Co., Ltd. Taipei Property insurance agent 2,000 2, ,318 5,931 None Affiliate Bank SinoPac SinoPac Bancorp California Stock holding US$ 112,306 US$ 112, ,287, ,435 None Affiliate SinoPac Leasing Corporation Taipei Leasing and installment sales 999, , , ,230, ,073 None Affiliate SinoPac Capital Limited Hong Kong Financial advisory HK$ 229,998 HK$ 229, , ,013, ,597 None Affiliate SinoPac Financial Consulting Co., Ltd. Taipei Investment advisory and business management advisory $ 1,940 $ 1, , None Affiliate SinoPac Bancorp Far East National Bank California Commercial bank US$ 112,714 US$ 112, ,499, ,269 None Affiliate SinoPac Financial Service (USA) Ltd. California Securities brokerage US$ 25 US$ ,976 (21,263 ) None Affiliate Far East National Bank Far East Capital Corporation California Investment bank US$ 3,500 US$ 3, ,865 2,080 None Affiliate SinoPac Leasing Corporation Grand Capital International Limited British Virgin Islands Leasing and installment sales US$ 29,900 US$ 29,900 29, , ,863 None Affiliate SinoPac Capital Limited (Hong SinoPac Capital (B.V.I.) Ltd. British Virgin Islands Financial advisory US$ 4,450 US$ 4,450 4, ,580 9,824 None Affiliate Kong) SinoPac Insurance Brokers Ltd. Hong Kong Insurance brokerage HK$ 300 HK$ ,274 1,368 None Affiliate SinoPac Capital (B.V.I.) Ltd. Shanghai International Asset Management Hong Kong Asset management HK$ 10,000 HK$ 10,000 4, ,350 (1,326 ) None Affiliate (Hong Kong) Co., Ltd. Pinnacle Investment Management Ltd. Hong Kong Asset management, trust and consulting US$ 1,560 US$ 1, , None Affiliate RSP Information Service Company Limited Hong Kong General trading and providing internet - based service HK$ 1,000 HK$ 1,000 1, ,243 (299 ) None Affiliate (Continued)

140 Investor Company Investee Company Location Main Businesses and Products September 30, 2006 (Note 1) Original Investment Amount Balance as of September 30, 2006 December 31, 2005 (Note 1) Shares (Thousands) Percentage of Ownership Carrying Amount (Note 2) Net Income (Loss) of the Investee (Note 2) Investment Gain (Loss) (Note 2) Invested by the Same Person, the Same Related Person Note SinoPac Securities Corporation SinoPac Futures Corporation Taipei Brokerage and dealing of futures contracts $ 816,037 $ 1,107,881 68, $ 1,057,703 $ 129,743 $ None Affiliate SinoPac Securities (Cayman) Holdings Cayman Islands, Stock holding 3,066,055 3,066,055 87, ,887, ,284 None Affiliate Ltd. British West Indies SinoPac Capital Management Corporation Taipei Investment consulting 112, ,028 17, ,129 (8,294 ) None Affiliate SinoPac Managed Futures Co., Ltd. Taipei Render discretionary investment service of future 200, ,000 20, ,899 (4,853 ) None Affiliate SinoPac Securities (Cayman) SinoPac Securities (Europe) Ltd. London, UK European agent business US$ 3,353 US$ 3,353 2, US$ 2,212 US$ (175 ) None Affiliate Holdings Ltd. SinoPac Securities (Asia) Ltd. Hong Kong Hong Kong stock brokerage, dealing and US$ 57,920 US$ 57, US$ 73,854 US$ 5,316 None Affiliate underwriting of securities SinoPac Futures (Asia) Ltd. Hong Kong Futures brokerage business US$ 1,205 US$ 1,205 10, US$ 2,323 US$ 4 None Affiliate SinoPac Capital (Asia) Ltd. Hong Kong Derivatives instruments business US$ 3,862 US$ 3,862 30, US$ 5,888 US$ 563 None Affiliate SPS Asia Ltd. British Virgin Islands Derivatives instruments business US$ - US$ US$ (5 ) None Affiliate SinoPac Asset Management (Asia) Ltd. Hong Kong Asset management and investment consulting US$ 4,367 US$ 4,367 10, US$ 2,378 US$ (997 ) None Affiliate SinoPac Securities (U.S.A.) Ltd. California U.S.A. agent business US$ 1,848 US$ 1, US$ 87 US$ (68 ) None Affiliate SinoPac Asia Limited British Virgin Islands Securities brokerage, investment advisory and consulting US$ 6,000 US$ 6,000 6, US$ 20,501 US$ 2,560 None Affiliate SinoPac Asset Management (Asia) Ltd. SPS Asset Management Limited British Virgin Islands Asset management and investment consulting HK$ 39 HK$ HK$ (2,504 ) HK$ (7,627 ) None Affiliate SinoPac Securities (Asia) Ltd. SinoPac Securities (Asia) Nominees Ltd. Hong Kong Hong Kong stock trust business HK$ HK$ HK$ None Affiliate SinoPac (Asia) Nominees Ltd. Hong Kong Nominee trust account for overseas stock HK$ HK$ HK$ None Affiliate holdings SinoPac Venture Capital Co., Ltd. Allstar Venture Ltd. (B.V.I.) British Virgin Islands Investment corporation US$ 5,462 US$ 5, ,996 US$ 455 None Affiliate Telexpress Cayman Islands, British West Indies Investment corporation US$ 1,337 US$ 1,337 3, ,334 US$ 297 None Investee under significant influence held by the Company s affiliate Wal Tech International Corp. Taipei Leasing, international trading, and sale of 147, ,341 26, ,966 (8,013 ) None Affiliate machinery equipment SinoPac Leasing Corporation Taipei Leasing and installment sales 4,670 4, , ,073 None Affiliate SinoPac Capital Limited (Hong Kong) Hong Kong Financial advisory ,597 None Affiliate SinoPac Financial Consulting Co., Ltd. Taipei Investment advisory and business management advisory None Wal Tech International Corporation Intellisys Corp. Taipei Computer and peripheral system integration 227, ,544 7, ,097 (8,956 ) None Affiliate engineering, software development and design Multiwin Asset Management Co., Ltd. Taipei Asset management 16,200 10,800 1, ,340 (2,691 ) None Investee under significant influence held by the Company s affiliate Note 1: The original investment amounts were expressed in respective foreign currencies denominated. Note 2: Foreign-currency amounts were translated at the exchange rate as of the balance sheet date, except for foreign-currency-denominated income and expenses, which are translated to New Taiwan dollars at the average exchange rate for the nine months ended September 30, (Concluded)

141 TABLE 7 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES CONSOLIDATED ENTITIES NINE MONTHS ENDED SEPTEMBER 30, 2006 Investor Company Subsidiaries Main Businesses No. Percentage of Ownership September 30, September 30, No Note SinoPac Financial Holdings Company Limited SinoPac Financial Holdings Company Holding company % % - Limited International Bank of Taipei Commercial bank % - - Note 1 Bank SinoPac Commercial bank % % - SinoPac Securities Corporation Brokerage, dealing and underwriting of securities % % - AnShin Card Services Co., Ltd. Credit card business % % - SinoPac Life Insurance Agent Co., Ltd. Life insurance agent % % - SinoPac Property Insurance Agent Co., Ltd. Property insurance agent % % - SinoPac Venture Capital Co., Ltd. Venture capital investment % % - SinoPac Securities Investment Trust Corporation Establish and manage securities - investment - trust funds by issuing beneficiary certificates and render discretionary investment service % % - International Bank of Taipei IBT Life Insurance Agent Co., Ltd. Life insurance agent % IBT Property Insurance Agent Co., Ltd. Property insurance agent % Bank SinoPac SinoPac Bancorp Bank stock holding % % - SinoPac Leasing Corporation Leasing and installment sales % % - SinoPac Capital Limited (Hong Kong) Financial advisory % % - SinoPac Bancorp Far East National Bank Commercial bank % % - SinoPac Financial Services (USA) Ltd. Securities brokerage % % - Far East National Bank Far East Capital Corporation Investment bank % % - SinoPac Leasing Corporation Grand Capital International Limited Leasing and installment sales % % - SinoPac Capital Limited (Hong Kong) SinoPac Capital (B.V.I.) Ltd. Financial advisory % % - SinoPac Insurance Brokers Ltd. Insurance brokerage % % - SinoPac (Hong Kong) Nominees Ltd. Custody securities % None 3 SinoPac Capital (B.V.I.) Ltd. Shanghai International Asset Management Custody assets % % - (Hong Kong) Co., Ltd. Pinnacle Investment Management Ltd. Asset management, trust and consulting % % - RSP Information Service Company Limited General trading and providing internet - based service % % - SinoPac Securities Corporation SinoPac Futures Corporation Brokerage and dealing of futures contracts % % - SinoPac Capital Management Corporation Investment consulting % % - SinoPac Securities (Cayman) Holdings Ltd. Stock holding % % - SinoPac Managed Futures Co., Ltd. Futures management % (Continued)

142 Investor Company Subsidiaries Main Businesses No. Percentage of Ownership September 30, September 30, No Note SinoPac Futures Corporation SinoPac Managed Futures Co., Ltd. Render discretionary investment service of futures % % - SinoPac Securities (Cayman) SinoPac Capital (Asia) Ltd. Derivatives instruments business % % - Holdings Ltd. SinoPac Futures (Asia) Ltd. Futures brokerage business % % - SinoPac Securities (Europe) Ltd. European agent business % % Note 2 SinoPac Asset Management (Asia) Ltd. Asset management and investment consulting % % - SinoPac Securities (U.S.A.) Ltd. U.S.A. agent business % % Note 4 SinoPac Securities (Asia) Ltd. Hong Kong stock brokerage, dealing and under writing of securities % % - SinoPac Asia Limited Securities brokerage, investment advisory and consulting business % % - SinoPac Asset Management (Asia) Ltd. SPS Asset Management Limited Asset management and investment consulting % % - SinoPac Securities (Asia) Ltd. SinoPac Securities (Asia) Nominees Ltd. Hong Kong stock trust business % % - SinoPac (Asia) Nominees Ltd. Nominee trust account for overseas stock holdings % % - SinoPac Venture Capital Co., Ltd. Wal Tech International Corporation Leasing, international trading, and sale of machinery equipment % - - Allstar Venture Ltd. (B.V.I.) Investment corporation % - - Wal Tech International Corporation Intellisys Corp. Computer and peripheral system integration engineering, software development and design % % - Note 1: SinoPac Financial Holdings Company Limited acquired International Bank of Taipei through a share swap on December 26, Under an explanation issued by the Accounting Research and Development and Foundation of the R.O.C., SinoPac Financial Holdings Company Limited applied the pooling of interest method to this acquisition and retroactively restated the financial statements as of and for the nine months ended September 30,2005. Note 2: In June 2005, SinoPac Securities (Cayman) subscribed for all the new shares issued by SinoPac Securities (Europe), which amounted to GBP1,000 thousand (approximately US$1,839 thousand). Note 3: SinoPac (Hong Kong) Nominees Ltd. was liquidated in Note 4: SinoPac Securities (U.S.A.) Ltd. was liquidated in October (Concluded)

143 TABLE 8 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES SUBSIDIARIES EXCLUDED IN CONSOLIDATED ENTITIES NINE MONTHS ENDED SEPTEMBER 30, 2006 Investor Company Subsidiaries Main Businesses No. Percentage of Ownership September 30, September 30, No Note SinoPac Financial Holdings Company SinoPac Call Center Co., Ltd. Data processing, manpower and agency services % % Note 1 Limited SinoPac Asset Management International Business management advisory, investment and venture capital investment advisory % % Note 1 SinoPac Marketing Consulting Co., Ltd. Agent service, investment advisory and overdue accounts receivable management % % Note 1 SinoPac Securities (Cayman) Holdings Ltd. SPS Asia Ltd. Derivatives instruments business % % Note 2 Bank SinoPac SinoPac Financial Consulting Co., Ltd. Investment advisory and business management advisory % % Note 3 Cyberpac Holding Ltd. (B.V.I.) Telexpress Investment corporation % Note 4 SinoPac Venture Capital Telexpress Investment corporation % Wal Tech International Corporation Multiloin Asset Management Co., Ltd. Asset management % % - Note 1: Note 2: The management consider those subsidiaries are immaterial to the consolidated financial statements, and are not included in the consolidated entities. As of December 31, 2005, SinoPac Securities (Cayman) Holdings Ltd. owns 100% ownership and has ability to control SPS Asia Ltd. However, the total assets of SPS Asia Ltd. amounted to $1,315, representing only 0.002% of total assets of SinoPac Securities Corporation. Moreover, SPS Asia Ltd. was not operating since 2004, and generated no operating revenues for the nine months ended September 30, 2006 and The SPS Asia Ltd. is not included in the consolidated entities. Note 3: Bank SinoPac acquired 97% ownership of and had ability to control SinoPac Financial Consulting Co., Ltd. However, the total capital of SinoPac Financial Consulting Co., Ltd. amounted to $2,000, representing less than 1 of the Company, and the total assets is less than 0.5 of the total assets of the Company. Thus, the SinoPac Financial Consulting Co., Ltd. is not included in the consolidated entities. Note 4: Cyberpac Holdings Ltd. (B.V.I.) was liquidated in

144 TABLE 9 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED AND INVESTEES RELATED PARTIES TRANSACTIONS NINE MONTHS ENDED SEPTEMBER 30, 2006 (In Thousands of New Taiwan Dollars) 2006 No. (Note 1) Transaction Company Counter-party Description of Transactions Nature of Relationship (Note 2) Financial Statement Account Transaction Amount Transaction Item Percentage of Consolidated Revenue/Assets (Note 3) 0 SinoPac Financial Holdings Company Bank SinoPac and subsidiaries 1 Cash and cash equivalents $ 357,218 Note % Limited Bank SinoPac and subsidiaries 1 Securities purchased under 29,500 Note 4 - agreements to resell Bank SinoPac and subsidiaries 1 Interest revenues 87,407 Note % Bank SinoPac and subsidiaries 1 Other receivables 1,002 Note 4 - Bank SinoPac and subsidiaries 1 Other assets 27,980 Note 4 - Bank SinoPac and subsidiaries 1 Financial assets at fair value through 10,092 Note 4 - profit or loss Bank SinoPac and subsidiaries 1 Gain on financial assets at fair value 623 Note 4 - through profit or loss Bank SinoPac and subsidiaries 1 Operating and administrative 13,355 Note 4 - expenses SinoPac Securities and subsidiaries 1 Interest revenues 652 Note 4 - SinoPac Securities and subsidiaries 1 Other receivables 1 Note 4 - SinoPac Securities and subsidiaries 1 Securities purchased under agreements to resell 1,500 Note 4-1 Bank SinoPac and subsidiaries SinoPac Financial Holdings Company Limited 2 Deposits and remittances 357,218 Note % SinoPac Financial Holdings Company Limited 2 Securities purchased under 29,500 Note 4 - agreements to resell SinoPac Financial Holdings Company Limited 2 Interest expenses 77,938 Note % SinoPac Financial Holdings Company Limited 2 Other payables 1,002 Note 4 - SinoPac Financial Holdings Company Limited 2 Other liabilities 27,980 Note 4 - SinoPac Financial Holdings Company Limited 2 Nonoperating income and gains 13,355 Note % SinoPac Financial Holdings Company Limited 2 Financial liabilities at fair value 10,092 Note 4 - through profit or loss SinoPac Financial Holdings Company Limited 2 Loss on financial liabilities at fair 623 Note 4 - value through profit or loss SinoPac Securities and subsidiaries 3 Deposits and remittances 2,160,714 Note % SinoPac Securities and subsidiaries 3 Other payables 2,456 Note 4 - SinoPac Securities and subsidiaries 3 Other payables 623 Note 4 - SinoPac Securities and subsidiaries 3 Bank debentures 50,035 Note % SinoPac Securities and subsidiaries 3 Discounts and loans 65,000 Note % SinoPac Securities and subsidiaries 3 Interest revenues 4,522 Note % SinoPac Securities and subsidiaries 3 Interest expenses 67,032 Note % (Continued)

145 No. (Note 1) Transaction Company Counter-party Description of Transactions Nature of Relationship (Note 2) Financial Statement Account Transaction Amount Transaction Item Percentage of Consolidated Revenue/Assets (Note 3) SinoPac Securities and subsidiaries 3 Nonoperating income and gains $ 30,574 Note 4 - AnShin Card Services 3 Deposits and remittances 13,371 Note 4 - AnShin Card Services 3 Other receivables 33,810 Note 4 - AnShin Card Services 3 Other receivables 2,066 Note 4 - AnShin Card Services 3 Interest expenses 119 Note 4 - AnShin Card Services 3 Nonoperating income and gains 4,160 Note % AnShin Card Services 3 Nonoperating income and gains 3,130 Note % SinoPac Life Insurance Agent 3 Deposits and remittances 4,999 Note 4 - SinoPac Life Insurance Agent 3 Nonoperating income and gains 10,030 Note % SinoPac Life Insurance Agent 3 Service revenues 9,128 Note % SinoPac Life Insurance Agent 3 Interest expenses 245 Note 4 - SinoPac Property Insurance Agent 3 Deposits and remittances 17,782 Note 4 - SinoPac Property Insurance Agent 3 Interest expenses 163 Note 4 - SinoPac Venture Capital 3 Deposits and remittances 506,488 Note % SinoPac Venture Capital 3 Other payables 469 Note 4 - SinoPac Venture Capital 3 Interest expenses 4,143 Note 4 - SinoPac Venture Capital 3 Discounts and loans 17,000 Note 4 - SinoPac Venture Capital 3 Other receivables 121 Note 4 - SinoPac Venture Capital 3 Other receivables 170,000 Note % SinoPac Venture Capital 3 Interest revenues 3,275 Note % SinoPac Venture Capital 3 Other receivables 121 Note 4 - SinoPac Venture Capital 3 Operating and administrative 4,828 Note % expenses SinoPac Investment Trust 3 Deposits and remittances 1,914 Note 4 - SinoPac Investment Trust 3 Nonoperating income and gains 6,031 Note % International Bank of Taipei 3 Cash and cash equivalents 5,840 Note 4 - International Bank of Taipei 3 Other payables 8,288 Note 4 - International Bank of Taipei 3 Short-term borrowings 927,100 Note % International Bank of Taipei 3 Interest expenses 33,491 Note % International Bank of Taipei 3 Interest revenues 7 Note 4 - International Bank of Taipei 3 Guarantee deposits 1,473 Note 4-2 SinoPac Securities and subsidiaries SinoPac Financial Holdings Company Limited 2 Other payables 1 Note 4 - SinoPac Financial Holdings Company Limited 2 Interest expenses 652 Note 4 - SinoPac Financial Holdings Company Limited 2 Securities purchased under 1,500 Note 4 - agreements to resell Bank SinoPac and subsidiaries 3 Cash and cash equivalents 1,430,714 Note % Bank SinoPac and subsidiaries 3 Pledged time deposits 730,000 Note % Bank SinoPac and subsidiaries 3 Other receivables 2,456 Note 4 - Bank SinoPac and subsidiaries 3 Other receivables 632 Note 4 - Bank SinoPac and subsidiaries 3 Short-term borrowings 65,000 Note % Bank SinoPac and subsidiaries 3 Interest revenues 67,032 Note % Bank SinoPac and subsidiaries 3 Interest expenses 4,522 Note % Bank SinoPac and subsidiaries 3 Available for sale financial assets 50,035 Note 4 - Bank SinoPac and subsidiaries 3 Operating and administrative expenses 30,574 Note % (Continued)

146 No. (Note 1) Transaction Company Counter-party Description of Transactions Nature of Relationship (Note 2) Financial Statement Account Transaction Amount Transaction Item Percentage of Consolidated Revenue/Assets (Note 3) International Bank of Taipei 3 Cash and cash equivalents $ 556 Note 4 - International Bank of Taipei 3 Interest revenues 2,736 Note % SinoPac Investment Trust 3 Nonoperating income and gains 1,941 Note % 3 SinoPac Life Insurance Agent Bank SinoPac and subsidiaries 3 Cash and cash equivalents 4,999 Note 4 - Bank SinoPac and subsidiaries 3 Operating and administrative 10,030 Note % expenses Bank SinoPac and subsidiaries 3 Operating and administrative 9,128 Note % expenses Bank SinoPac and subsidiaries 3 Nonoperating income and gains 245 Note 4 - AnShin Card Services 3 Operating and administrative expenses 12,832 Note % 4 SinoPac Property Insurance Agent Bank SinoPac and subsidiaries 3 Cash and cash equivalents 17,782 Note 4 - Bank SinoPac and subsidiaries 3 Interest revenues 163 Note 4 - AnShin Card Services 3 Operating and administrative expenses 2,612 Note % 5 AnShin Card Services Bank SinoPac and subsidiaries 2 Cash and cash equivalents 13,371 Note 4 - Bank SinoPac and subsidiaries 3 Other payables 33,810 Note 4 - Bank SinoPac and subsidiaries 3 Other payables 2,066 Note 4 - Bank SinoPac and subsidiaries 3 Interest revenues 119 Note 4 - Bank SinoPac and subsidiaries 3 Operating and administrative 4,160 Note % expenses Bank SinoPac and subsidiaries 3 Operating and administrative 3,130 Note % expenses SinoPac Life Insurance Agent 3 Operating revenues 12,832 Note % SinoPac Property Insurance Agent 3 Operating revenues 2,612 Note % International Bank of Taipei 3 Interest expenses 15,669 Note % International Bank of Taipei 3 Other payables 5,171,081 Note % International Bank of Taipei 3 Interest payables 15,669 Note 4-6 SinoPac Venture Capital Bank SinoPac and subsidiaries 3 Cash and cash equivalents 506,488 Note % Bank SinoPac and subsidiaries 3 Interest revenues 4,143 Note % Bank SinoPac and subsidiaries 3 Other receivables 469 Note 4 - Bank SinoPac and subsidiaries 3 Long-term borrowings 17,000 Note 4 - Bank SinoPac and subsidiaries 3 Other payables 121 Note 4 - Bank SinoPac and subsidiaries 3 Short-term borrowings 170,000 Note % Bank SinoPac and subsidiaries 3 Interest expenses 3,275 Note % Bank SinoPac and subsidiaries 3 Other payables 121 Note 4 - Bank SinoPac and subsidiaries 3 Nonoperating income gains 4,828 Note % (Continued)

147 No. (Note 1) Transaction Company Counter-party Description of Transactions Nature of Relationship (Note 2) Financial Statement Account Transaction Amount Transaction Item Percentage of Consolidated Revenue/Assets (Note 3) 7 SinoPac Investment Trust Bank SinoPac and subsidiaries 3 Operating and administrative $ 6,031 Note % expenses Bank SinoPac and subsidiaries 3 Cash and cash equivalents 1,914 Note 4 - SinoPac Securities and subsidiaries 3 Operating and administrative expenses 1,941 Note % 8 International Bank of Taipei Bank SinoPac and subsidiaries 3 Deposits and remittances 5,840 Note 4 - Bank SinoPac and subsidiaries 3 Other receivables 8,288 Note 4 - Bank SinoPac and subsidiaries 3 Discounts and loans 927,100 Note % Bank SinoPac and subsidiaries 3 Interest revenues 33,491 Note % Bank SinoPac and subsidiaries 3 Interest expenses 7 Note 4 - Bank SinoPac and subsidiaries 3 Guarantee deposits 1,473 Note 4 - SinoPac Securities and subsidiaries 3 Deposits and remittances 556 Note 4 - SinoPac Securities and subsidiaries 3 Interest expenses 2,736 Note % SinoPac Securities and subsidiaries 3 Service charges 1,436 Note % AnShin Card Services 3 Interest revenues 15,669 Note % AnShin Card Services 3 Other receivables 5,171,081 Note % AnShin Card Services 3 Interest receivables 15,669 Note No. (Note 1) Transaction Company Counter-party Description of Transactions Nature of Relationship (Note 2) Financial Statement Account Transaction Amount Transaction Item Percentage of Consolidated Revenue/Assets (Note 3) 0 SinoPac Financial Holdings Company Bank SinoPac and subsidiaries 1 Cash and cash equivalents $ 2,294,164 Note % Limited SinoPac Securities and subsidiaries 1 Interest revenues 1,664 Note % Bank SinoPac and subsidiaries 1 Securities purchased under 250,000 Note % agreements to resell Bank SinoPac and subsidiaries 1 Other receivables 14,802 Note 4 - Bank SinoPac and subsidiaries 1 Other payables 14,811 Note 4 - Bank sinopac and subsidiaries 1 Interest receivables 37,779 Note % SinoPac Securities and subsidiaries 1 Securities purchased under 145,230 Note % agreements to resell Bank SinoPac and subsidiaries 1 Operating and administrative 8,234 Note % expenses SinoPac Securities and subsidiaries 1 Other receivables 81,304 Note % SinoPac Venture Capital 1 Other receivables 933 Note 4 - SinoPac Venture Capital 1 Other payables 5,453 Note 4 - Bank sinopac and subsidiaries 1 Other assets 27,980 Note 4 - SinoPac Securities and subsidiaries 1 Operating and administrative expenses 2,378 Note % (Continued)

148 No. (Note 1) Transaction Company Counter-party Description of Transactions Nature of Relationship (Note 2) Financial Statement Account Transaction Amount Transaction Item Percentage of Consolidated Revenue/Assets (Note 3) 1 Bank SinoPac and subsidiaries SinoPac Financial Holdings Company Limited 2 Deposits and remittances $ 2,294,164 Note % SinoPac Securities and subsidiaries 3 Deposits and remittances 2,512,023 Note % SinoPac Life Insurance Agent 3 Deposits and remittances 108,945 Note % AnShin Card Services 3 Deposits and remittances 31,704 Note % SinoPac Property Insurance Agent 3 Deposits and remittances 12,405 Note 4 - SinoPac Venture Capital 3 Deposits and remittances 250,843 Note % SinoPac Life Insurance Agent 3 Nonoperating income and gains 7,985 Note % SinoPac Securities and subsidiaries 3 Financial liabilities at fair value 146,600 Note % through profit or loss AnShin Card Services 3 Other receivables 44,323 Note % AnShin Card Services 3 Operating revenues 2,608 Note % AnShin Card Services 3 Operating revenues 3,951 Note % SinoPac Securities and subsidiaries 3 Other receivables 85,017 Note % SinoPac Life Insurance Agent 3 Operating revenues 14,061 Note % SinoPac Financial Holdings Company Limited 2 Operating revenues 8,234 Note % SinoPac Securities and subsidiaries 3 Bank debentures 50,000 Note % SinoPac Financial Holdings Company Limited 2 Other liabilities 27,980 Note 4 - SinoPac Financial Holdings Company Limited 2 Other receivables 14,811 Note 4 - SinoPac Securities and subsidiaries 3 Loan, discount and bills purchased 438,000 Note % SinoPac Financial Holdings Company Limited 2 Other payables 14,802 Note 4 - SinoPac Securities and subsidiaries 3 Operating revenues 28,773 Note % SinoPac Securities and subsidiaries 3 Operating revenues 2,302 Note % SinoPac Securities and subsidiaries 3 Interest revenues 5,174 Note % SinoPac Financial Holdings Company Limited 2 Interest expenses 37,779 Note % SinoPac Securities and subsidiaries 3 Securities purchased under 60,944 Note % agreements to resell International Bank of Taipei 3 Due from other banks 385,065 Note % International Bank of Taipei 3 Cash and cash equivalents 1,472 Note 4 - International Bank of Taipei 3 Long-term borrowings 731,008 Note % International Bank of Taipei 3 Interest expenses 15,008 Note % International Bank of Taipei 3 Other payables 4,355 Note 4 - International Bank of Taipei 3 Interest revenues 2 Note 4 - SinoPac Investment Trust 3 Operating expenses 2,994 Note % SinoPac Financial Holdings Company Limited 2 Securities purchased under 250,000 Note % agreements to repurchase SinoPac Securities and subsidiaries 3 Interest expenses 33,475 Note % SinoPac Venture Capital 3 Interest expenses 1,152 Note 4-2 SinoPac Securities and subsidiaries Bank SinoPac and subsidiaries 3 Cash and cash equivalents 1,657,023 Note % Bank SinoPac and subsidiaries 3 Pledged time deposits 855,000 Note % Bank SinoPac and subsidiaries 3 Short-term borrowings 438,000 Note % Bank SinoPac and subsidiaries 3 Operating expenses 28,773 Note % SinoPac Financial Holdings Company Limited 2 Other payables 81,304 Note % Bank SinoPac and subsidiaries 3 Other payables 85,017 Note % Bank SinoPac and subsidiaries 3 Interest revenues 33,475 Note % Bank SinoPac and subsidiaries 3 Interest expenses 5,174 Note % (Continued)

149 No. (Note 1) Transaction Company Counter-party Description of Transactions Nature of Relationship (Note 2) Financial Statement Account Transaction Amount Transaction Item Percentage of Consolidated Revenue/Assets (Note 3) Bank SinoPac and subsidiaries 3 Operating and administrative $ 2,302 Note % expenses SinoPac Financial Holdings Company Limited 2 Interest expenses 1,664 Note % Bank SinoPac and subsidiaries 3 Securities purchased under 60,944 Note % agreements to repurchase SinoPac Financial Holding Company Limited 2 Securities purchased under 145,230 Note % agreements to repurchase Bank SinoPac and subsidiaries 3 Other liabilities 146,600 Note % SinoPac Financial Holding Company Limited 2 Stock affairs agent fees 2,378 Note % Bank SinoPac and subsidiaries 3 Securities purchased 50,000 Note % 3 SinoPac Life Insurance Agent Bank SinoPac and subsidiaries 3 Cash and cash equivalents 108,945 Note % Bank SinoPac and subsidiaries 3 Operating and administrative 7,985 Note % expenses Bank SinoPac and subsidiaries 3 Operating and administrative 14,061 Note % expenses AnShin Card Services 3 Operating and administrative 30,844 Note % expenses AnShin Card Services 3 Other payables 18,015 Note 4-4 SinoPac Property Insurance Agent Bank SinoPac and subsidiaries 3 Cash and cash equivalents 12,405 Note 4-5 AnShin Card Services Bank SinoPac and subsidiaries 3 Cash and cash equivalents 31,704 Note % Bank SinoPac and subsidiaries 3 Operating expenses 2,608 Note % Bank SinoPac and subsidiaries 3 Other payables 44,323 Note % Bank SinoPac and subsidiaries 3 Service charges 3,951 Note % SinoPac Life Insurance Agent 3 Operating revenues 30,844 Note % SinoPac Life Insurance Agent 3 Other receivables 18,015 Note % 6 SinoPac Venture Capital Bank SinoPac and subsidiaries 3 Cash and cash equivalents 250,843 Note % Bank SinoPac and subsidiaries 3 Interest revenues 1,152 Note 4 - SinoPac Financial Holdings Company Limited 2 Other payables 933 Note 4 - SinoPac Financial Holdings Company Limited 2 Other receivables 5,453 Note 4-7 SinoPac Investment Trust Bank SinoPac and subsidiaries 3 Operating revenues 2,994 Note % 8 International Bank of Taipei Bank SinoPac and subsidiaries 3 Due to other banks 385,065 Note % Bank SinoPac and subsidiaries 3 Deposits and remittances 1,472 Note 4 - Bank SinoPac and subsidiaries 3 Loans and discounts, net 731,008 Note % Bank SinoPac and subsidiaries 3 Interest revenues 15,008 Note % Bank SinoPac and subsidiaries 3 Other receivables 4,355 Note 4 - Bank SinoPac and subsidiaries 3 Interest expenses 2 Note 4 - (Continued)

150 Note 1: Transactions between parent company and subsidiaries should be distinguished as follows: 1. Parent company: Subsidiaries are numbered in sequence from 1. Note 2: Types of transactions with related parties were classified as follows: 1. Parent company to subsidiaries. 2. Subsidiaries to parent company. 3. Subsidiaries to subsidiaries. Note 3: In the computation of percentage of consolidated revenue/assets, if the amount is the ending balance of assets or liabilities, the accounts percentage will be calculated by dividing the consolidated assets or liabilities; if the amount is the amount of income or expense, the accounts percentage will be cumulated by dividing the consolidated revenues in the same period. Note 4: For the transactions between the Company and related parties, the terms are similar to those transacted with unrelated parties. (Concluded)

151 TABLE 10 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED BALANCE SHEETS SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars) ASSETS (Restated) CASH AND CASH EQUIVALENTS $ 357,230 $ 2,694,165 FINANCIAL ASSETS AT FARI VALUE THROUGH PROFIT OR LOSS, NET 10,092 - SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL 144, ,171 RECEIVABLES, NET 950, ,653 EQUITY INVESTMENTS - EQUITY METHOD, NET 91,338,793 89,883,812 PROPERTIES, NET 53,503 48,339 OTHER FINANCIAL ASSETS, NET 29, ,000 OTHER ASSETS 48,491 92,923 TOTAL $ 92,933,146 $ 94,011,063 LIABILITIES AND STOCKHOLDERS EQUITY PAYABLES $ 778,707 $ 205,189 OTHER FINANCIAL LIABILITIES Short-term borrowings 869, ,988 Euro-convertible bonds redeemable within one year 3,124,610 - Euro-convertible bonds - 2,998,553 OTHER LIABILITIES 25,779 23,411 Total liabilities 4,798,874 3,477,141 STOCKHOLDERS EQUITY Capital stock 71,480,556 72,182,808 Additional paid-in capital 1,753,626 2,177,549 Retained earnings 17,296,786 18,073,847 Other Revaluation increment on land 1,033,595 1,033,595 Cumulative translation adjustment 45, ,470 Unrealized loss on available-for-sale financial instruments 167,129 - Treasury stock (3,414,754 ) (2,626,679 ) Net loss not recognized as pension cost (227,904 ) (102,634 ) Other adjustments on stockholders equity - (316,034 ) Total stockholders equity 88,134,272 90,533,922 TOTAL $ 92,933,146 $ 94,011,

152 TABLE 11 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Restated) REVENUES Income from equity investments - equity method $ 5,834,638 $ 5,954,143 Gains from valuation of financial assets at fair value through profit or loss Others 153, ,451 EXPENSES AND LOSSES Loss on equity investments - equity method (1,501,468 ) (99,627 ) Operating and administrative expenses (145,999 ) (229,686 ) Others (128,557 ) (188,490 ) INCOME BEFORE INCOME TAX 4,213,031 5,553,791 INCOME TAX BENEFIT 20,072 69,522 NET INCOME $ 4,233,103 $ 5,623,313 (Restated) After After Pretax Tax Pretax Tax EARNINGS PER SHARE Basic $ 0.60 $ 0.60 $ 0.79 $

153 TABLE 12 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars, Except Cash Dividends) Unrealized Capital Surplus Loss on Capital Stock Additional Retained Earnings Revaluation Cumulative Available-for- Net Loss Not Total Shares in Paid-in Treasury Special Increment on Translation sale Financial Treasury Recognized as Other Equity Stockholders' Thousands Amount Capital Stock Other Total Legal Reserve Reserve Unappropriated Total Land Adjustment Assets Stock Pension Cost Adjustments Equity BALANCE, JANUARY 1, ,230,038 $ 72,300,383 $ 1,427,784 $ 855,052 $ 3,609 $ 2,286,445 $ 11,900,290 $ 624,487 $ 5,712,773 $ 18,237,550 $ 1,033,595 $ (5,115 ) $ - $ (2,981,246 ) $ (227,902 ) $ (34,765 ) $ 90,608,945 Appropriation of 2005 earnings Legal reserve ,906 (570,906) Special reserve (32,505) 32, Remuneration to directors and supervisors (65,813) (65,813) (65,813) Bonus to employees - cash (51,707) (51,707) (51,707) Cash dividends - $ per share (5,056,347) (5,056,347) (5,056,347) Net income for the nine months ended September 30, ,233,103 4,233, ,233,103 Reversal of unrealized gain on equity investments - equity method recognized from subsidiaries ,765 34,765 Unrealized revaluation gain on available-for-sale financial assets recognized from subsidiaries , ,129 Adjustment of cash dividends from treasury stock received by the subsidiary ,234-85, ,234 Change in cumulative translation adjustment on equity investments - equity method recognized from subsidiaries , ,353 Net loss not recognized as pension cost recognized from subsidiaries (2 ) - (2 ) Capital decrease and cancellation resulting from treasury stock write-off (101,580 ) (1,015,800 ) (20,585 ) (642,614 ) - (663,199 ) ,678, Stock warrants converted into common stocks 19, ,973 45, , ,119 Treasury stock transactions (2,112,002 ) - - (2,112,002 ) Treasury stock transactions recognized from subsidiaries (505 ) - - (505 ) BALANCE, SEPTEMBER 30, ,148,055 $ 71,480,556 $ 1,452,345 $ 297,672 $ 3,609 $ 1,753,626 $ 12,471,196 $ 591,982 $ 4,233,608 $ 17,296,786 $ 1,033,595 $ 45,238 $ 167,129 $ (3,414,754 ) $ (227,904 ) $ - $ 88,134,272 BALANCE, JANUARY 1, ,988,082 $ 39,880,826 $ 8,320,023 $ 705,137 $ 2,288 $ 9,027,448 $ 574,180 $ 93,299 $ 4,667,680 $ 5,335,159 $ - $ (193,406 ) $ - $ (1,824,890 ) $ (3,049 ) $ (294,968 ) $ 51,927,120 Retroactive adjustments for shares swap 3,033,930 30,339,302 (8,106,192 ) 105,627 1,321 (7,999,244 ) 10,863, ,064 33,109 11,029,936 1,033,595 17,124 - (2,292,706 ) (99,585 ) - 32,028,422 Appropriation of 2004 earnings Legal reserve ,347 - (462,347) Special reserve ,124 (398,124) Remuneration to directors and supervisors (54,000) (54,000) (54,000) Bonus to employees - cash (37,630) (37,630) (37,630) Cash dividends - $0.88 per share - - (11,337) - - (11,337) - - (3,711,863) (3,711,863) (3,723,200) Net income for the nine months ended September 30, 2005 (restated) ,623,313 5,623, ,623,313 Euro-convertible bonds converted into common stock 278,614 2,786,132 1,463, ,463, ,249,695 Reversal of unrealized gain (loss) on equity investments - equity method recognized from subsidiaries (21,066) (21,066) Change in capital surplus recognized from subsidiaries ,852 1, ,852 Change in cumulative translation adjustment on long-term equity investments recognized from subsidiaries , ,752 Stock warrants converted into common stocks 34, ,200 20, , ,732 Capital decrease and cancellation resulting from treasury stock write-off (116,565 ) (1,165,652 ) (266,976 ) (58,289 ) - (325,265 ) - - (111,068 ) (111,068 ) ,490, (111,068 ) BALANCE, SEPTEMBER 30, ,218,281 $ 72,182,808 $ 1,419,613 $ 752,475 $ 5,461 $ 2,177,549 $ 11,900,290 $ 624,487 $ 5,549,070 $ 18,073,847 $ 1,033,595 $ 111,470 $ - $ (2,626,679 ) $ (102,634 ) $ (316,034 ) $ 90,533,922 Note: The financial figures for the nine months ended September 30, 2005 have been retroactively restated

154 TABLE 13 SINOPAC FINANCIAL HOLDINGS COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (In Thousands of New Taiwan Dollars) (Restated) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,233,103 $ 5,623,313 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 7,561 8,861 Increase in financial assets at fair value through profit or loss (10,092 ) - Reclassified expense to properties (10 ) - Accrued pension cost 1,643 3,378 Amortization of Euro-convertible bonds deferred issuance cost - 9,668 Accrued interest premium on Euro-convertible bonds 104, ,850 Cash dividend from equity investments - equity method 3,590,981 2,105,894 Change in deferred income taxes 38,228 (65,814 ) Loss on sale of properties, net - 5,165 Foreign exchange gain on Euro-convertible bonds 19,444 (159,726 ) Income from equity investments - equity method, net (4,333,170 ) (5,854,512 ) Decrease of other financial assets 115,361 - Decrease (increase) in receivables (115,986 ) 24,257 Decrease (increase) in receivables - related party (100,715 ) 921,545 Decrease in prepaid and other current assets Decrease in payables (344,678 ) (1,083,819 ) Net cash provided by operating activities 3,206,119 1,669,753 CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in securities purchased under agreements to resell 240,378 1,569,738 Increase in equity investments - equity method (2,500,000 ) - Proceeds from capital reduction of SinoPac Securities 3,300,000 - Acquisition of properties (11,276 ) (32,588 ) Decrease (increase) in other assets 2,274 (28,894 ) Net cash provided by investing activities 1,031,376 1,508,256 CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings 150,000 (450,000 ) Decrease in commercial paper payable (29,419 ) - Redeem from convertible bonds - (38,014 ) Proceeds from exercising of employee stock option 241, ,732 Cash dividends (5,056,347 ) (3,723,200 ) Bonus to employees (51,707 ) (37,630 ) Remuneration to directors (65,813 ) (54,000 ) (Continued)

155 (Restated) Purchase of treasury stock $ (2,112,002 ) $ - Increase in other liabilities 3,275 - Net cash used in financing activities (6,920,894 ) (3,940,112 ) DECREASE IN CASH AND CASH EQUIVALENTS (2,683,399 ) (762,103 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,040,629 3,456,268 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 357,230 $ 2,694,165 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 43,113 $ 26,607 Income tax paid $ 7,407 $ 982,751 NONCASH INVESTING AND FINANCING ACTIVITIES Euro-convertible bonds converted to common stocks $ - $ 4,249,695 Treasury stock write-off $ 1,678,999 $ 1,490,917 Proceeds from investments payable $ - $ 109,764 Euro-convertible bonds/euro-convertible bonds redeemable within one year $ 3,124,610 $ - (Concluded)