2006 ANNUAL REPORT - Far East National Bank

A Message from theChairman and the PresidentAn International Community BankFar East National Bank (FENB) is a unique financial institution – a Californiacommunity bank with an international lineage and a global perspective. Becauseyou — our stakeholders — are an important part of our community, we wouldlike to take this opportunity to share some highlights from the past year.In 2006:• We achieved the key financial performancegoals that will allow us to furtherdevelop our original offerings as aleading financial services partner forcompanies and individuals doingbusiness in the Pacific Rim.• We also resolved outstanding regulatoryissues by adapting and streamliningour infrastructure. The resultingacknowledgment of our efforts bygovernment regulators paves the wayfor a more seamless internationalbanking experience for our customersand for the growth of innovativeproducts – like our InterContinentalFinancial Services accounts, ourRegional Service Platform, andthe investment products offeredthrough FENB Financial Services.• Our Vietnam Branch in Ho Chi MinhCity grew its assets by 150% anddeposits by 300%, which resulted in acommendable profit in its second fullyear of operation.Whether our customers are in LosAngeles, San Francisco, Hong Kong,Shanghai, or Ho Chi Minh City, our commitmentto them and to the places inwhich we all live and work allows FENBto provide the outstanding service thatis characteristic of community banks.Expanding our GlobalCapabilitiesWe continued to expand our global reachin 2006, providing our valued corporateand individual customers seamless accessto an extensive network of financialresources in the United States, Taiwan,China, Hong Kong, Macau, and Vietnam.In addition to our 15 Californiabranches, our Vietnam branchprovides customers withunparalleled access to resourcesin Southeast Asia and ourBeijing representative office isan important resource forcustomers doing business inChina’s capital.In November, FENB’s parent company,Bank SinoPac, finalized its merger withthe International Bank of Taipei. Thecombined company, Bank SinoPac andits SinoPac Holdings affiliates, has totalassets of over US$34 billion and servesmore than 2.5 million customers in Asiaand North America from more than 204service locations. Bank SinoPac nowranks as the fourth largest non-governmentalbank in Taiwan.In addition to our 15 Californiabranches, our Vietnam branch providescustomers with unparalleled access toresources in Southeast Asia, and ourBeijing representative office is animportant resource for customersdoing business in China’s capital. In2006, we also continued to workclosely with our strategic alliancepartner, First Sino Bank, in Shanghai.Financial PerformanceWe are pleased to report that, in 2006,FENB had a successful year in all majorfinancial categories.Some highlights:• We earned $18.3 million after tax in2006, the third consecutive year ofnet income increase.• Our net operating income during theyear increased 25%, from $14.4 millionto $18 million.• Revenue grew to $71 million, an 8%increase, while our operating expensedeclined 1%.04