FUBON FINANCIAL HOLDING CO., LTD. and SUBSIDIARIES Consolidated Financial Statements

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Financial Statements

June 30, 2010 and 2009 (With Independent Auditors’ Report Thereon)

WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

Independent Auditors’ Report

The Board of Directors Fubon Financial Holding Co., Ltd.:

We have audited the accompanying consolidated balance sheets of Fubon Financial Holding Co., Ltd. and its subsidiaries (the Company) as of June 30, 2010 and 2009, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for the six-month periods ended June 30, 2010 and 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue an opinion on these financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing standards and the “Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants” of the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements audited by us present fairly, in all material respects, the financial position of Fubon Financial Holding Co., Ltd. and its subsidiaries as of June 30, 2010 and 2009, and the results of their operations and their cash flows for the six-month periods then ended, in conformity with the “Principles for Compiling the Financial Statements of Financial Holding Companies”, the related financial accounting standards of the “Business Entity Accounting Act” and of the “Regulation on Business Entity Accounting Handling”, and Republic of China generally accepted accounting principles.

August 10, 2010

Note to Reader The accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China. The auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language auditors’ report and financial statements, the Chinese version shall prevail. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars)

Change of Change of Assets 2010 2009 percentage Liabilities and Stockholders’ Equity 2010 2009 percentage

Cash and cash equivalents (notes 4, 34 and 35) $ 133,007,569 69,115,858 92 Due to Central Bank and other banks $ 80,009,237 106,321,361 (25) Due from Central Bank and call loans to banks (note 5) 96,898,404 286,970,343 (66) Commercial paper payable, net (notes 19 and 35) 7,908,739 1,084,067 630 Financial assets measured at fair value through profit or loss Financial liabilities measured at fair value through profit or (notes 6, 34 and 35) 47,667,992 46,896,645 2 loss (note 18) 33,126,480 34,413,137 (4) Bonds and bills purchased under resell agreements (notes 7 Bonds and bills sold under repurchase agreements (notes 7 and and 34) 35,995,363 7,844,913 359 34) 15,120,171 12,497,526 21 Receivables, net (notes 8 and 27) 137,960,837 101,549,217 36 Payables (note 27) 100,786,768 51,922,686 94 Loan, net (notes 9 and 34) 1,052,210,779 1,016,795,323 3 Deposits (notes 20 and 34) 1,269,768,922 1,194,476,347 6 Available-for-sale financial assets, net (notes 10 and 35) 681,417,198 609,958,447 12 Bonds payable (notes 21 and 37) 80,878,169 71,464,872 13 Held-to-maturity financial assets, net (notes 11 and 35) 426,652,907 161,790,861 164 Other borrowings (notes 22 and 35) 5,600,000 3,800,000 47 Investments under equity method, net (note 12) 3,797,886 1,505,334 152 Other financial liabilities (notes 13 and 25) 165,477,961 151,406,129 9 Other financial assets, net (notes 13 and 25) 209,619,896 155,993,975 34 Reserve for operations and other liabilities (note 23) 1,260,419,238 997,691,738 26 Debt investments in non-active market (note 14) 291,770,014 259,625,534 12 Other liabilities (notes 24 and 26) 11,154,201 12,365,595 (10) Real estate investments, net (notes 15 and 34) 60,184,654 39,377,004 53 Total liabilities 3,030,249,886 2,637,443,458 15 Fixed assets, net (note 35) 23,645,844 23,979,446 (1) Total stockholders’ equity (note 28) Intangible assets, net (note 16) 11,935,890 10,933,704 9 Common stock 81,385,520 81,253,615 - Other assets, net (notes 17, 27, 34 and 35) 18,469,640 20,856,247 (11) Stock dividend to be distributed 4,069,298 - - Total stock 85,454,818 81,253,615 5 Capital surplus 54,185,938 53,917,063 - Retained earnings: Legal reserve 23,962,851 21,969,088 9 Special reserve 1,285,676 13,842,513 (91) Unappropriated retained earnings 20,847,274 6,213,732 236 Total retained earnings 46,095,801 42,025,333 10 Equity adjustments Cumulative foreign currency translation adjustments (409,049) (74,497) 449 Unrealized gain (loss) on financial assets 10,523,406 (5,592,534) (288) Net loss from unrecognized pension cost 712,827 (260,124 ) (374) Total equity adjustments 10,827,184 (5,927,155) (283) Treasury stock (195,220 ) (238,220 ) (18) Minority interest 4,616,466 4,718,757 (2) Total stockholders’ equity 200,984,987 175,749,393 - Total Assets $ 3,231,234,873 2,813,192,851 15 Total Liabilities and Stockholders’ equity $ 3,231,234,873 2,813,192,851 15

See accompanying notes to consolidated financial statements. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income

For the six-month periods ended June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars, except earnings per share)

Change of 2010 2009 percentage

Interest income (note 34) $ 30,139,523 27,548,191 9 Less: interest expense (note 34) 4,633,112 6,713,604 (31) Net interest income 25,506,411 20,834,587 22 Non-interest income, net Service fees income, net (note 34) 185,045 1,390,726 (87) Insurance income, net (notes 31 and 34) 206,516,677 123,298,923 67 Gain on financial assets or liabilities measured at fair value through profit or loss 5,150,015 2,797,749 84 Realized gain on available-for-sale financial assets 6,898,632 5,611,852 23 Income from equity investments under equity method (note 12) 76,532 63,991 20 Gain on real estate investments (note 34) 500,829 293,107 71 Foreign exchange loss (5,251,233) (1,211,509) 333 Impairment loss (notes 10, 13, 14 and 15) (176,633) (2,976,491) (94) Other non-interest income (note 34) 2,026,675 1,511,369 34 Net revenue 241,432,950 151,614,304 59 Bad debt expense (note 9) 393,316 2,456,854 (84) Provision for insurance reserves (note 32) 210,339,339 125,708,592 67 Operating expense: Personnel expenses 9,645,312 8,734,194 10 Depreciation and amortization expenses 1,055,748 1,069,082 (1) Other general and administrative expense 6,594,510 6,142,205 7 Total operating expense 17,295,570 15,945,481 8 Net income before income tax 13,404,725 7,503,377 79 Income tax expense (note 27) 2,460,445 1,166,926 111 Net income $ 10,944,280 6,336,451 73

Attribution: The Company’s income $ 10,694,098 6,213,732 72 Minority interest’s income 250,182 122,719 104 $ 10,944,280 6,336,451 73

Before tax After tax Before tax After tax Earnings per shares (EPS) (note 30): Earnings per share – basic $ 1.62 1.32 0.92 0.77 Earning per share – diluted $ 1.62 1.31 - -

See accompanying notes to consolidated financial statements. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

For the six-month periods ended June 30, 2010 and 2009 (expressed in thousands of New Taiwan dollars)

Retained Earnings Stock Cumulative Unrealized Stock Foreign Gains or Dividend Unappropriated Currency Losses Common to be Capital Legal Special Retained Translation Unrecognized on Financial Treasury Minority Stock Distributed Surplus Reserve Reserve Earnings Adjustments Pension Cost Instruments Stock Interest Total

Balance on January 1, 2009 $ 77,190,935 - 49,091,476 20,881,553 2,341,478 12,588,570 196,777 (260,124) (18,315,548) - 4,559,355 148,274,472 Capital increase by cash (note 28) 4,062,680 - 4,825,587 ------8,888,267 Net income - - - - - 6,213,732 - - - - - 6,213,732 Appropriations of retained earnings (note 28): - Legal reserve - - - 1,087,535 - (1,087,535) ------Special reserve - - - - 11,501,035 (11,501,035) ------Change in minority interest ------159,402 159,402 Cumulative foreign currency translation adjustments ------(271,274) - - - - (271,274) Unrealized gains or (losses) from remeasurement of financial instruments ------12,723,014 - - 12,723,014 Treasury stock ------(238,220 ) - (238,220 ) Balance on June 30, 2009 $ 81,253,615 - 53,917,063 21,969,088 13,842,513 6,213,732 (74,497 ) (260,124 ) (5,592,534 ) (238,220 ) 4,718,757 175,749,393 Balance on January 1, 2010 81,261,865 - 53,964,908 21,969,088 13,842,513 19,936,591 (424,573) 712,827 17,400,052 (195,220) 4,512,824 212,980,875 Issuing new shares for employee warrants exercise (note 28) 123,655 - 219,437 ------343,092 Net income - - - - - 10,694,098 - - - - - 10,694,098 Appropriations of retained earnings (note 28) (note): Legal reserve - - - 1,993,763 - (1,993,763) ------Special reserve - - - - (12,556,837) 12,556,837 ------Cash dividend - - - - - (16,277,191) - - - - - (16,277,191) Stock dividend - 4,069,298 - - - (4,069,298) ------Change in minority interest ------103,642 103,642 Additional paid-in capital from long-term equity investment by equity method - - 1,593 ------1,593 Cumulative foreign currency translation adjustment ------15,524 - - - - 15,524 Unrealized gains or (losses) from remeasurement of financial instruments ------(6,876,646 ) - - (6,876,646 ) Balance on June 30, 2010 $ 81,385,520 4,069,298 54,185,938 23,962,851 1,285,676 20,847,274 (409,049 ) 712,827 10,523,406 (195,220 ) 4,616,466 200,984,987

Note: Remuneration paid to directors and supervisors and provisions for employee, amounting to $26,000 and $4,000, respectively, and are deducted from the Statement of Income.

See accompanying notes to consolidated financial statements. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six-month periods ended June 30, 2010 and 2009 (Expressed in thousands of New Taiwan dollars)

2010 2009

Cash flows from operating activities: Net income $ 10,944,280 6,336,451 Adjustments to reconcile net income to net cash flows provided by operating actives Depreciation 934,790 944,228 Amortization 367,345 330,910 Provision for bad debts 393,316 2,456,854 Provision for insurance reserves 210,339,339 125,708,592 Minority interest’s income (250,182) (122,719) Amortization of discount on financial assets (3,492,040) (4,244,723) Amortization of discount of financial debt 4,377 1,597 Investment income accounted for under equity method (76,532) (63,991) Cash dividend received on investments under equity method 36,984 23,508 Loss on disposal of fixed assets 823 2,478 Fixed assets transfer to expense 68 1,362 Loss on disposal of other assets 1,482 9,994 Gain on disposal of investments (6,705,992) (2,775,799) Gain on disposal of real estate investments - (71) Unrealized loss (gain) on financial assets and liabilities 30,548 (1,739,470) Loss on financial asset impairment 169,611 2,979,896 Reversed the gain on financial asset impartment (1,553) (17,284) Loss on non-financial asset impairment 8,575 13,879 Unrealized loss from foreign exchange 1,160,502 5,410,493 Change in operating assets and liabilities, net Change in operating asset, net Increase in receivables (24,876,330) (13,121,675) Decrease in financial assets measured at fair value though profit or loss 2,655,101 19,612,973 Increase in other financial assets (10,080,236) (82,465,073) Increase in other assets (51,717) (2,615,013) Change in operating liabilities, net Increase (decrease) in commercial paper payable 5,209,301 (11,297,756) Increase in payables 19,774,474 5,517,859 Increase (decrease) in financial liabilities measured at fair value through profit or loss 2,753,313 (12,167,491) Increase (decrease) in reserve for operating and other liabilities (71,790,902) 508,120,866 Increase (decrease) in other financial liabilities (4,232,255) 86,938,525 Increase (decrease) in other liabilities (9,472,378 ) 1,787,825 Net cash flows provided by operating activities 123,754,112 635,567,225 Cash flows from investing activities: Acquisition of available-for-sale financial assets (235,452,771) (771,034,531) Disposal of available-for-sale financial assets 221,039,267 278,544,963 Acquisition of debt investment in non-active market (73,571,984) (104,153,842) Disposal of debt investment in non-active market 62,131,471 46,642,763 Acquisition of held-to-maturity financial assets (271,390,604) (5,450,947) Disposal of held-to-maturity financial assets 2,404,958 5,467,412 Increase (decrease) in long-term investment by equity-method (1,876,156) 82,407 Proceeds of capital decrease of invested companies 36,324 - Purchase of fixed assets (352,534) (2,772,663) Disposal of fixed assets 92,303 9,327 Purchase of intangible assets (1,496,645) (9,616,693) Decrease (increase) in due from Central Bank and call loans to banks 239,372,000 (33,115,797) Increase in loans (21,771,714) (101,694,585) Purchase of real estate investments (6,943,549) (22,890,282) Decrease (increase) in bonds and bills purchased under resell agreements (24,194,379) 1,425,390 Proceeds of the liquidation of equity – method investees - 400,000 Net cash flows used in investing activities (111,974,013 ) (718,157,078 )

See accompanying notes to consolidated financial statements. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (continue)

For the six-month periods ended June 30, 2010 and 2009 (expressed in thousands of New Taiwan dollars)

2010 2009 Cash flows from financing activities: Increase (decrease) in short-term borrowings $ 4,540,000 (1,840,000) Bonds issued 11,000,000 11,111,847 Repayment of bonds (12,845,038) (400,000) Financial bonds issued 16,800,000 - Repayment of financial bonds (8,510,868) (12,694,205) Increase in long-term borrowings 70,000 350,000 Repayment of long-term borrowings - (175,000) Decrease in bonds and bills sold under repurchase agreements (3,723,047) (13,144,254) Capital increase by cash 343,092 8,888,267 Increase in due to Central Bank and other banks 2,014,923 41,125,742 Increase in deposits 4,835,405 42,901,971 Change in minority interest 105,235 159,402 Net cash flows provided by financing activities 14,629,702 76,283,770 Effect of exchange rate changes (32,005) (214,666) Net increase (decrease) in cash and cash equivalents 26,377,796 (6,520,749) Cash and cash equivalents at beginning of period 106,629,773 75,636,607 Cash and cash equivalents at end of period $ 133,007,569 69,115,858 Supplemental disclosure of cash flow information: Cash payments of interest $ 4,093,578 8,563,115 Cash payments of income tax $ 3,208,912 2,435,843

See accompanying notes to consolidated financial statements. WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 and 2009 (All amounts expressed in thousands of New Taiwan Dollars unless otherwise stated)

(1) Organization and Business Scope

Fubon Financial Holding Co., Ltd. (the Company) was established in December 2001 pursuant to the Financial Holding Company Law in Taiwan.

In connection with the formation of the Company, substantially all of the assets and liabilities and related operations of Fubon Insurance Co., Ltd. (Fubon Insurance) were transferred to a new wholly owned subsidiary named Fubon Insurance. The name of the “former” Fubon Insurance Co., Ltd. was changed to Fubon Financial Holding Co., Ltd. Secondly, shares of Fubon Securities Co., Ltd. (Fubon Securities), Fubon Commercial Bank Co., Ltd. (Fubon Bank), and Fubon Life Assurance Co., Ltd. (Fubon Life Assurance) were exchanged for shares in the Company on December 19, 2001.

On August 28, 2002, shares of Fubon Asset Management Co., Ltd. (Fubon Asset Management) were exchanged for shares in the Company.

On December 23, 2002, shares of Taipei Bank Co., Ltd. (Taipei Bank) were exchanged for shares in the Company.

In September 2003, shares of Fubon Direct Marketing Consulting Co., Ltd. (Fubon Direct Marketing) were acquired in cash by the Company.

In October 2003, shares of Fubon Holding Venture Capital Co., Ltd. (Fubon Holding Venture Capital) were acquired in cash by the Company.

In March 2004, 75% of the shares of International Bank of Asia, Limited renamed Fubon Bank (Hong Kong, Limited (Fubon Bank (Hong Kong)) were purchased in cash by the Company.

In August 2004, shares of Fubon Asset Management Service Co., Ltd. (Fubon AMC) and Fubon Investment Management Consulting Co., Ltd. (Fubon IMC) were purchased in cash by the Company.

In March 2008, shares of Taiwan Sport Lottery Co., Ltd. (Taiwan Sport Lottery) were purchased in cash by the Consolidated Company. In September 2008, the company owned 51% of the shares of Taiwan Sport Lottery.

On February 11, 2009, all of the equity shares of ING Life Insurance Co., Ltd. (ING Life Insurance) were exchanged for shares in the Company. On June 1, 2009, ING Life Insurance merged with Fubon Life Assurance Co., Ltd. and was renamed Fubon Life Insurance Co., Ltd.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The primary business of the Company is to own financial businesses including banking, financial bills, credit cards, trust, insurance, securities, futures, ventures, investments in foreign financial institutions approved by the government agency, and investments relevant to other financial services approved by the government authorities.

As of June 30, 2010, the Company and its subsidiaries had 28,201 employees.

The following describes the consolidated subsidiaries:

1) Fubon Insurance was incorporated on December 19, 2001, and assumed all rights and liabilities of the former Fubon Insurance Co., Ltd., which was incorporated in 1961. It is primarily engaged in the business of property and casualty insurance.

2) Fubon Securities was incorporated on July 11, 1988, as a company with an integrated securities firm license. Fubon Securities’ operations include brokerage, margin lending, securities financing and refinancing, securities trading, securities transfer services, securities underwriting, and futures.

3) Taipei Bank started as a financial institution of the Taipei City Government (TCG) in 1969. On July 1, 1984, it was reorganized into a limited liability corporation and it was renamed as City Bank of Taipei Co., Ltd. The bank’s name was subsequently changed to Taipei Bank Co., Ltd. on January 1, 1993. Fubon Bank was authorized to operate as a commercial bank on August 1, 1991, and commenced its operations on April 20, 1992.

On January 1, 2005, Taipei Bank merged with Fubon Bank to improve operational efficiency and reduce costs. Taipei Bank was the surviving entity from this merger. However, the name Taipei Bank was changed to Taipei Fubon Bank on the same day.

Taipei Fubon Bank mainly engages in

1. municipal treasuries of Taipei City;

2. management of municipal treasury bills of Taipei City;

3. all commercial banking operations authorized under the Banking Law;

4. trust and securities operations;

5. handling of the public-benefit lottery operations;

6. concurrent operation of futures dealing; and

7. other authorized operations.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

In addition to the aforementioned activities, Taipei Fubon Bank continues to handle certain functions for the Taipei City Government (TCG), primarily acceptance of payments for taxes, fines, and other fees, as well as the payments of principal and interest on bonds issued by the TCG.

4) Fubon Asset Management was incorporated in September 1992. Its operations include raising securities investment trust funds through issuance of beneficiary certificates to invest in securities and related products, managing discretionary trust funds, and other operations as approved by the authorities for securities investment trusts.

5) Fubon Bank (Hong Kong) was founded in 1982. Fubon Bank (Hong Kong) engages in the following operations:

1. Retail and consumer banking;

2. Commercial banking;

3. Investment banking;

4. Investment and financial management services; and

5. Properties management and other services.

6) Fubon Life Assurance was incorporated on June 3, 1992, under the laws of the Republic of China. Fubon Life Assurance is engaged in the business of life insurance underwriting.

In March 2006, for the purpose of reorganization, ING Life Insurance (Taiwan) Co., Ltd. was set up from ING Life Insurance Company of America – Taiwan branch according to the Business Combination Law. The original parent company – ING Group signed a cooperative agreement with the Company on October 20, 2008 to sell 100% of ING Life Insurance (Taiwan) shares to the Company. In order to acquire ING Life Insurance (Taiwan), the Company issued new shares and subordinated corporate bonds aggregating to US$600,000 thousand to ING Group, and regarded February 11, 2009 as the acquisition date.

Fubon Life Assurance merged with ING Life Insurance (Taiwan) effective June 1, 2009, ING Life Insurance (Taiwan) was the surviving entity and then changed its name to Fubon Life Insurance Co., Ltd. Fubon Life Insurance is primarily engaged in life insurance, accident insurance, health insurance, and any business related to life insurance.

(2) Summary of Significant Accounting Policies

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

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company prepares the accompanying financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, the “Guidelines Governing the Preparation of Financial Reports by Securities Issuers”, the related financial accounting standards of the “Business Entity Accounting Act” and of the “Regulation on Business Entity Accounting Handling”, and ROC generally accepted accounting principles. The significant accounting policies used in preparing such financial statements are as follows:

1) Principles of consolidation

The consolidation of financial statements is made in accordance with the requirements of the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies” and ROC Statement of Financial Accounting Standards (ROC SFAS) No. 7 “Consolidated Financial Statements”. All material inter-company transactions have been eliminated in the consolidated financial statements.

The following entities have been included in the consolidated financial statements:

June 30, 2010 June 30, 2009

Fubon Insurance 100.00% 100.00% Taipei Fubon Bank 100.00% 100.00% Fubon Life Insurance 100.00% 100.00% Fubon Asset Management 100.00% 100.00% Fubon Securities 100.00% 100.00% Fubon Direct Marketing Consulting 100.00% 100.00% Fubon Financial Holding Venture Capital 100.00% 100.00% Fubon Bank (HK) 75.00% 75.00% Fubon AMC 100.00% 100.00% Fubon IMC 100.00% 100.00% Taiwan Sport Lottery 51.00% 51.00% Fubon Futures 100.00% 100.00% Fubon Investment Service 100.00% 100.00% Fubon Securities (BVI) 100.00% 100.00% Fubon Securities USA 100.00% 100.00% Fubon Capital (HK) Limited 100.00% 100.00% Taipei Fubon Bank Life Assurance Agent Co., Ltd. 100.00% 100.00% Fubon Insurance (Vietnam) 100.00% 100.00% Fubon Multimedia Technology 67.89% 67.89% Fubon Nominees (Hong Kong) (note) 100.00% 100.00% Fubon Bank Vanuatu (note) 100.00% 100.00% Fubon Credit (HK) (note) 100.00% 100.00% Fubon Trustee (HK) (note) 100.00% 100.00% FB Securities (HK) (note) 100.00% 100.00% FB Investment Management (HK) (note) 100.00% 100.00%

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note: This is one of the major subsidiaries held by the Fubon Bank (HK).

The following entities have not been included in the consolidated financial statements because their total assets and operating revenue are deemed immaterial to the Company:

June 30, 2010 June 30, 2009

Fubon Bank Insurance Agent 100.00% 100.00% Fu-Sheng Life Assurance Agent 100.00% 100.00% Fu-Sheng General Insurance Agent 100.00% 100.00% Fu-Sheng Travel Service 100.00% 100.00% Fuly Life Assurnace Agent 100.00% 100.00% Fuly General Insurance Agent 100.00% 100.00%

2) Use of estimates

The preparation of the accompanying financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues, expenses and losses during the reporting periods. Actual results may differ from these estimates.

3) Foreign currency transactions

The Company and domestic subsidiaries’ functional and reporting currency is New Taiwan Dollar. The non-derivative foreign currency transactions are translated by using the exchange rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the foreign exchange rate prevailing at the balance sheet dates. Translation gains and losses are recognized in profit or loss. Foreign currency non-monetary assets and liabilities that are measured in terms of historical cost are translated into the functional currency using the rate of foreign exchange at the date of the initial transaction. Foreign currency non-monetary assets and liabilities measured at fair value are translated into the functional currency using the rate of foreign exchange prevailing at the balance sheet date. Any exchange differences resulting from fair value variation through profit or loss are included in the income statement, and exchange differences resulting from fair value variation through equity are accounted for as adjustments to stockholders’ equity.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The financial statements of foreign subsidiaries reported in functional currencies are translated into New Taiwan Dollars at the exchange rates prevailing on the balance sheet date, with the exception of stockholders’ equity, which is translated at historical rates, and revenues, costs and expenses, which are translated at the weighted-average exchange rates during the reporting years. Translation differences resulting from the translation of these financial statements into New Taiwan Dollars, net of income taxes, are recorded as foreign currency translation adjustment, a separate component of stockholders’ equity.

4) Statement of cash and cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and have maturity dates which do not present significant risks of changes in value resulting from changes in interest rates.

5) Financial assets

Financial assets are classified into one of following categories: measured at fair value through profit and loss, available-for-sale, held-to-maturity, measured at cost, and bond investments in non-active market.

Financial instruments held by the Company are recorded on the trading date and initially recognized at fair value plus transaction costs, except for financial instruments measured at fair value through profit or loss, which are recognized at fair value only.

The financial instruments held by the Company are classified according to the purpose of holding as follows:

1. Financial assets measured at fair value through profit or loss are trading securities, and are bought and held principally for the purpose of selling them in the near term. Derivatives held by the Company, other than those designated and qualified as hedging items, are classified into this category. Financial assets or liabilities may be designated as financial instruments measured at fair value through profit or loss to eliminate measurement mismatches for items that naturally offset each other.

The fair value of financial assets held by the Company is determined as follows:

Fair value is determined based on the market closing prices on the balance sheet date for listed or OTC securities, based on net worth on the balance sheet date for open-end funds, based on reference price on the Over-the-counter Securities Market on the balance sheet date for domestic bonds, based on reference price on Bloomberg on the balance sheet date for foreign bonds, and based on quoted prices provided by financial market traders for financial instruments with a non-active market.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company and its subsidiaries adopted the second revision of ROC Statement of Financial Accounting Standards No. 34 “Financial Instruments: Recognition and Measurement”. This amended accounting standard, permits the Company to reclassify non- derivative financial assets (other than those designated at fair value through profit or loss by the Company upon initial recognition) out of the fair value through profit or loss category as follow:

(a) A financial asset, which qualified as loans and receivables, may be reclassified out of this category to the loans and receivables if the Company has the intention and ability to hold the financial asset for the foreseeable future or until maturity. The fair value of the financial asset on the date of reclassification becomes its new cost or amortized cost, whichever is applicable. Any gain or loss already recognized in profit or loss is not reversed.

(b) For financial assets which are reclassified as other than loans and receivables, the fair value of each of these financial asset on the date of reclassification becomes its new cost or amortized cost, whichever is applicable. Any gain or loss recognized in profit or loss is not reversed.

2. Available-for-sale financial assets are recorded at fair value, and the change in market value is adjusted against shareholders’ equity. The impairment loss is recognized if there is evidence indicating that a decline in the value of an investment is other than temporary. If the impairment loss in the following period is reduced, reversal of loss for equity securities investment is adjusted to stockholders’ equity, and reversal of loss for debt securities instrument is credited to current income if the reduction of impairment loss resulted from a subsequent event.

3. Held-to-maturity financial assets are recorded at amortized cost. Impairment loss is recognized when there is an indication of impairment. If the impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit and loss. The carrying value after the reversal should not exceed the realizable amount or the depreciated or amortized balance of the assets assuming no impairment loss was recognized.

4. Financial assets are recorded at cost if their fair values are not available. Impairment loss is recognized if there is an indication of impairment thereof, and this loss is non-reversible.

5. Debts investments in non-active market are recorded at amortized cost. Impairment loss is recognized when there is an indication of impairment thereof. If the impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit and loss. The carrying value after the reversal should not exceed the realizable amount or the depreciated or amortized balance of the assets assuming no impairment loss was recognized.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6) Derivative instruments and hedging activities

When derivatives are designated as hedges of operating, financing and investment risks and comform to the requirements of hedge accounting, these derivatives are accounted for hedging purposes. However, when derivatives are not intended for hedging purposes, they are classified as financial instruments held for trading.

When a fair value hedge, cash flow hedge, or hedge of net investment in foreign operations comforms to all the criteria for applying hedge accounting, the net effect of changes in the fair values of the hedging instruments and hedged items is charged to profit or loss.

1. Fair value hedge

The net effect of changes in the fair value of derivatives that qualified as fair value hedging instruments and changes in fair value of the hedged items is recognized in profit or loss.

2. Cash flow hedge

Where a derivative financial instrument is designated as a hedge of the variability in cash flow of a recognized asset or liability or a highly probable forecast transaction, the effective portion of any gain or loss on remeasurement of the derivative financial instrument to fair value is recognized directly in equity. When the hedged transaction actually affects the profit and loss, the profit or loss previously recognized in equity is recognized through current profit and loss. Any gain or loss from the change in fair value relating to an ineffective portion of the hedge transaction is recognized immediately through profit and loss.

3. Hedges of net investment in foreign operation

Hedges of net investment in foreign operation: The effective portion of any gain or loss on a hedging instrument relating to a hedge against foreign currency fluctuation in a foreign operation is recognized directly in equity until the disposal of the foreign operation, at which time the cumulative gain or loss recognized directly in equity is recognized in profit or loss.

7) Repo and reverse-repo bond transactions

Repo and reverse-repo bond transactions are the sale or purchase of a bond coupled with an agreement to repurchase or resell the same or substantially identical bond at a stated price. Such transactions are treated as collateral for financing transactions and not as the sale or purchase of trading securities.

Repo and reverse-repo bond transactions are recorded as bonds sold under repurchase agreements and bonds purchased under resell agreements, respectively.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The difference between the selling and purchase prices for repo and reverse-repo bond transactions is treated as interest expense or interest income.

8) Pecuniary and securities financing and refinancing

Pecuniary finance represents loans extended to securities investors and is accounted for as receivable from pecuniary finance. Such loans are secured by the securities purchased by investors. These securities are not reflected in the financial statements of the Company. These securities will be returned to investors when investors terminate pecuniary financing.

Securities finance is affected by lending securities custody that are received from pecuniary finance or borrowed from securities finance companies, to investors. Such securities finance is not reflected in the financial statements of the Company. The investors’ deposits for borrowing securities are held by the Company as collateral and are recorded under securities finance margin deposits received. In addition, investors are required to deposit the proceeds from sales of borrowed securities. Such deposits are accounted for as payables to securities financing.

Pecuniary refinancing represents loans from securities finance companies when the Company lacks sufficient funds to perform pecuniary financing. These loans are recorded as refinance borrowings.

Securities refinancing represents borrowing securities from securities finance companies when the Company does not have sufficient securities to perform securities financing. For securities refinancing, the Company pays margin deposits to securities finance companies. These margin deposits are recorded as refinance margin deposits. The Company also provides securities investors’ proceeds from selling borrowed securities to securities finance companies as collateral and records them under receivables from securities refinance.

9) Allowance for doubtful accounts

Allowance for doubtful accounts is determined by an evaluation of the collectability and collateral of loans and receivables (including overdue receivables and overdue loans) as well as by the relevant regulations. Doubtful accounts are written off when the possibility of recovery is remote.

10) Long-term equity investment

Long-term investments in which the Company has more than 20% of the investee’s voting shares or is able to exercise significant influence over the investee’s operating and financial policies are accounted for by the equity method.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The difference between investment cost and underlying equity in net assets of the investee is accounted for under the SFAS No. 5. If the difference comes from assets that can be depreciated, depleted or amortized, such differences are depreciated, depleted or amortized over estimated remaining economic lives. If the difference comes from discrepancies between the carrying amounts of assets and their fair market values, then an investor company shall write off all unamortized differences when conditions making such over- or under-valuation are no longer present. When the investment cost exceeds the fair value of identifiable net assets acquired, the excess is recorded as goodwill. Goodwill is not amortized but is evaluated on each balance sheet date for any indication of impairment. If any such indication exists, the Company estimates and recognized the impairment loss on goodwill. When the fair value of identifiable net assets acquired exceeds the cost, the difference is allocated to non-current assets acquired (except for financial assets not under equity method, assets to be disposed of, deferred tax assets, or prepaid pension or other retirement benefits cost) proportionate to their respective fair values. If these assets are all reduced to zero value, the remaining excess is recognized as an extraordinary gain.

If the Company has significant influence but not control over an investee company, and if the Company’s share of an investee company’s losses equals or exceeds the carrying amount of an investment accounted for under the equity method, plus advances made by an investor company, then the recognized investment losses shall be limited to the extent that makes the book value of a long-term investment and advances equal to zero.

For investees over which the Company has control ability, the Company recognizes full investment losses when the equity in net assets of such investees is negative except that the other shareholders of investees has a kindly obligation to, and is able to, provide additional capital to make up for the loss. The Company should recognize the losses of the investee; once the investee company starts to earn a profit should be recognized by the Company.

When a long-term investment under the equity method is sold, the difference between the cost and the selling price on the disposal date is recognized as gain (loss) on disposal of long-term equity investment. If there is any capital reserve arising from a long-term equity investment, capital reserve is adjusted against current income (loss) by the percentage sold.

If the Company holds between 20% to 50% of the voting shares of an investee company (or less than 20% but with significant influence), the equity method accounting is not required in preparing quarterly interim financial statements, unless the equity investment is more than 50% of the investee company’s outstanding voting common shares.

The shares of the Company held by its subsidiary are accounted for in compliance with Statement of Financial Accounting Standards No. 30, “Accounting for Treasury Stock”. Unrealized gains or losses from transactions between subsidiaries are deferred. Deferred gains or losses derived from transactions involving depreciable or amortizable assets are amortized over their useful lives; others are recognized in the year when they are realized.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

11) Other financial assets

1. Investment-type insurance policy

Fubon Life Insurance is engaged in selling investment-type insurance policies. The payment of premiums, net of administrative expenses, is recorded in a separate account and is used only in the way agreed to by the insured. The assets in this separate accounts are valued at market price on value date and the Company adopts related rules and ROC Financial Accounting Standards in determining the net asset value. According to the accounting practices of the insurance industry, the assets, liabilities, revenue and expenses are recorded as “investment-type insurance policy assets”, “investment-type insurance policy liabilities”, “investment-type insurance policy revenue” and “investment-type insurance policy expenses”, respectively.

2. Futures trading margins

Futures trading margins include trading margins deposited by customers and the gain (loss) generated from unsettled futures contracts based on daily market values.

12) Investments in real estate

Investments in real estate are recorded at cost when acquired; however, if a decline in the investment’s value is considered other than temporary, the investment is written down to reflect such a decline, and the resulting loss is recognized in the year when such decline occurs. The major renewals and improvements, which result in the prolonged service life or the increased value of real estate, are capitalized. Repairs and maintenance are expensed as incurred. The cost of an investment in real estate, its corresponding revaluation surplus, and accumulated depreciation are written off upon retirement or disposal. The gain or loss resulting from disposal of an investment in real estate is recognized as an operating gain or loss currently.

13) Fixed assets

Property, equipment and leasehold assets are stated at cost less accumulated depreciation. Major purchases, renewals and improvements are capitalized. Repairs and maintenance are expensed as incurred. Depreciation of fixed assets other than land is calculated on a straight- line basis over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the shorter of the terms of the leases or useful lives of such improvements.

The Company considered that the estimated demolition and restoration of the fixed assets in the unproductive period would be recognized as the fixed assets cost, and any larger part of the fixed assets in proportion should be depreciated individually. Residual value, useful life, and amortization method of fixed assets should be evaluated at least annually. Changes in estimated useful life, amortization method and residual value will be regarded as changes in accounting estimate.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following are the estimated useful lives for depreciation and amortization of fixed assets:

Transportation equipment 3 to 10 years Furniture, fixtures, and equipment 1 to 15 years Other facilities 1 to 20 years Leasehold improvements 3 to 5 years Buildings 3 to 60 years

14) Asset impairment

The Company assesses at each balance sheet date whether there is any indication that an asset (individual asset or cash-generating unit) other than goodwill may have been impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The Company recognizes impairment loss for an asset whose carrying value is higher than the recoverable amount.

The Company reverses an impairment loss recognized in prior years for assets other than goodwill if there is any indication that the impairment loss previously recognized no longer exists or has decreased. The carrying value after the reversal should not exceed the recoverable amount or the depreciated or amortized balance of the assets assuming no impairment loss was recognized in prior years.

The Company assesses the cash-generating unit to which goodwill is allocated on an annual basis and recognizes an impairment loss on the excess of carrying value over the recoverable amount.

15) Goodwill and intangible assets

1. Goodwill

The net assets of an acquired company are recorded at cost. The excess of acquisition costs over the fair value of tangible and identifiable intangible assets less the liabilities is recorded as goodwill. Impairment on goodwill is evaluated regularly. If there is any indication of impairment, the impairment loss on goodwill is recognized on the balance sheet date and such loss is not reversed.

2. Intangible assets

Intangible assets are recorded at cost except for donation from the government, which is measured at fair value. Subsequent to their initial recognition, the book values are stated at cost plus any incremental value resulting from revaluation minus accumulated amortization and impairment loss.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Amortization is computed using the straight-line method. The residual value, estimated useful lives, and amortization method are evaluated at least once every year and changes thereof are regarded as changes in accounting estimate. Major intangible assets are as follows:

(a) Operating rights incurred by merger of other securities firms and acquisition of Vietnam branches of Ching-Fon Bank are recorded at cost and amortized on a straight-line basis over 10 to 97 years.

(b) Customer relationships incurred by the acquisition of Vietnam branches of Ching-Fon Bank are amortized on a straight-line basis over 7 years.

(c) Core deposits incurred by the acquisition of Vietnam branches of Ching-Fon Bank are amortized on a straight-line basis over 10 years.

(d) Costs of computer software are capitalized and amortized on a straight-line basis over 3 to 5 years.

16) Other assets

1. Lease assets

Lease assets are stated at the lesser of fair value and the present value of lease payments (less the contract amount offered by lessor), or bargain purchase price, or guaranteed salvage value. If a lessee has the ownership of the property by the end of the lease term or a bargain purchase option, leased properties shall be amortized by the straight-line method over the estimated economic lives. Others shall be amortized over the lease years.

2. Deferred charges

Costs of telephone installation are capitalized and amortized on a straight-line basis over 1 to 6 years. In addition, costs of issuing bonds are recognized as deferred charges and amortized over the redemption period.

3. Collateral assumed

Costs of collateral assumed include the purchase price and other necessary expenses. Collateral assumed is stated at the lower of cost or net realizable value as of the balance sheet date.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

4. Nonperforming loans

Under “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing / Non-accrual Loans” (the “Regulations”) issued by the Ministry of Finance, when the loans are overdue, the amounts of loans and other credits extended by the Bank and the related accrued interest are classified as nonperforming loans based on a resolution passed by the board of directors.

Non-performing loans reclassified from loans are recognized as overdue loans; otherwise, are recognized as other financial assets.

Overdue loans for the life insurance company, which are outstanding for six months or more are transferred to nonperforming loans. Accrual of interest is suspended for nonperforming loans, only memo entries are made. Interest collected thereafter is included in earnings only to the extent of cash actually received.

Overdue receivables are transferred from receivables from pecuniary finance based on the Company’s evaluation of the pecuniary finance customer’s settling possibility. For the trading securities – bonds and related interest which were not settled after maturity, the defaulted-upon and remote recovery accounts receivable are transferred to overdue receivables.

5. Statutory deposits

In accordance with the ROC Insurance Law, the insurance subsidiaries deposit with the Central Bank of China an amount equal to 15% of its issued capital as guarantee for their insurance business. These deposits can be in the form of government bonds and financial bonds upon approval of the Ministry of Finance.

Investments in bonds and other financial assets are deposited with courts of justice as part of the requirements for pursuing various collection cases to recover overdue loans, the National Credit Card Center to secure Taipei Fubon Bank’s potential obligations on credit card activities, and the Central Bank of China to secure the Bank’s potential obligations on its trust activities. Negotiable certificates of deposits are also provided as collateral for day-term overdraft, a requirement for joining the Central Bank of China’s clearing system for real- time gross settlement (RTGS).

As stipulated in the Rules Governing Administration of Securities Firms (RGASF) and the Regulations for Securities Brokers Undertaking Pecuniary and Securities Financing, the securities subsidiary provided time deposits as operating deposits. As stipulated in the RGASF and OTC regulations, the securities subsidiary deposited time deposits in the Taiwan Stock Exchange Corporation and the Over-the-counter Securities Exchange.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

17) Commercial paper payable

Discount on commercial paper payable is recorded as a reduction of commercial paper payable. Net carrying value of commercial payable approximates its present value.

18) Financial liabilities

Financial liabilities for trading purposes are designated as financial liabilities for trading purposes at the time of initial recognition. The following are classified as financial liabilities for trading purposes:

1. Liabilities acquired primarily for the purpose of repurchase in the near term.

2. Part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. 3. Derivative financial liabilities.

4. Pecuniary and securities financing and refinancing

Proceeds received from reselling bonds purchased under agreements to resell are recorded as financial liabilities held for trading. Those bonds are valued at the market price corresponding to the trading securities – bonds. Market price represents the closing price on the balance sheet date. The costs are determined by the weighted-average method. Gain ((loss) from recovery of “bonds purchased under agreements to resell” is recognized as “recovering gain (loss) on trading securities – securities financing”.

Securities institutions recognize financial liabilities for the borrowed securities. The amount of borrowed securities in transactions is recorded as “financial liabilities at fair value through profit or loss – current” and is evaluated at fair value. Market value is the market closing price at the balance sheet date. The costs of recovery of borrowed securities are evaluated under the weighted-average method. Gain (loss) from recovery is recognized as “recovery gain (loss) on borrowed securities and RS securities financing or resale bond”. The margin deposits for borrowed securities placed with securities firms and non-securities firms are recorded as “collateral for borrowed securities” and “margin deposits-in for borrowed securities”, respectively.

Financial liabilities at fair value through profit or loss should be measured at fair value, and any change in their fair value is charged to current profit or loss. Fair value is the closing market price on the balance sheet date.

If liabilities are designated as financial liabilities at fair value through profit or loss at the time of initial recognition, those liabilities shall not be reclassified to other categories of financial instruments, and vice versa.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

19) Payable

1. Reinsurance due to/due from other insurance companies

Based on the criteria for reinsurance ceding and ceded, inward reinsurance premiums, outward reinsurance premiums, accrued reinsurance claims payable, and reinsurance recovery receivable are calculated according to the individual agreement entered into with other insurance companies, and are recorded monthly.

2. Payables to customers

Payables to customers classified under current liabilities are related to futures trading margins. A debit balance in this is classified as futures trading margins receivable.

3. Margin deposits-in for borrowed securities

The Company lends only the following securities in conducting securities lending business: the securities held for the Company’s own account, the securities borrowed through the securities lending system of a securities exchange and the collateral securities obtained in connection with customer margin purchases when conducting securities trading margin purchase and short sale business.

As of the securities held for the Company’s own account being conducted to lend to securities borrowers, these securities shall be transferred out from the original account to securities lent for securities financing and measured at fair value. The securities borrowed through the securities lending system of a securities exchange are not reflected on the financial statements of the Company. Both the collateral securities obtained in connection with customer margin purchases when conducting securities trading margin purchase and short sale business are not reflected on the financial statements of the Company, because these collateral securities are the collateral of the borrowers.

If the collateral from securities lending are other securities, the Company have to record them into each borrower’s account by every trade. On the other hand, the cash collateral will be recognized as margin deposit-in for borrowed securities. When the value of the collateral is insufficient, the Company will inform the borrower to make up for it.

The fee from the security lending business is recognized as “securities lending revenue”.

20) Reserve for operations

In accordance with the regulations of the respective authorities, reserve for operations includes provisions for guarantees and losses on breach of contract, etc., and such provisions are recognized and recorded as current expenses by the banking, insurance, securities and futures industries.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

21) Pension plan

The Company’s domestic subsidiaries maintain and fund a defined benefit retirement plan covering all regular employees. Under the Labor Standards Law, payments of pension benefits are calculated based on the employees’ average monthly salary for the last year prior to approved retirement and base point (b.p.) entitlement. The b.p. earned by each employee is based on 2 b.p. for the first 15 years of services and 1 b.p. from the 16 th year and thereafter. Under this retirement plan, the pension benefits obligation is fully compensated by the Company’s domestic subsidiaries.

The Labor Pension Act of the R.O.C. (“the Act”), effective from July 1, 2005, adopts a defined contribution pension plan. In accordance with the Act, employees of the Company’s domestic subsidiaries (who were hired before July 1, 2005) may elect to be subject to either the Act and maintain their service years before the enforcement of the Act, or the pension mechanism of the Labor Standards Law. Employees who are hired by the Company’s domestic subsidiaries after July 1, 2005, are required to be covered by the pension plan as defined by the Act. For employees subject to this Act, the Company’s domestic subsidiaries are required to make monthly cash contributions to the employees’ individual pension accounts at a rate not less than 6% of the employees’ monthly wages and deposit the contribution in a personal retirement benefit account.

For the define retirement benefit plan, an actuarial valuation of a pension asset or liability is performed on the balance sheet date, and a minimum pension liability is recorded in the financial statements based on the difference between the accumulated benefit obligation and the fair value of plan assets, in accordance with SFAS No. 18 “Accounting for Pension”. Pension cost recognized in accordance with SFAS No. 18 includes the current service cost, net transition asset or obligation, prior service cost, and unrecognized gain (loss) on the pension plan, which is amortized on a straight-line basis over the expected average remaining service years of the employees.

Pursuant to the Act, the Company’s domestic subsidiaries also make monthly cash contribution at the rate of 6% of gross salary of each employee to the Bureau of Labor Insurance. This contribution is recognized as pension expenses for the current year when the contribution is actually made. The pension expenses for foreign subsidiaries will be contributed based on the regulation of local government.

For purpose of preparing its interim financial report, the Company adopted SFAS No. 23, “Interim Financial Reporting”, instead of adopting SFAS No. 18, “Accounting for Pension”.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

22) Revenue recognition

1. Banking subsidiaries

Interest income from the Company’s banking loans is accrued on unpaid principal balances in accordance with the terms of the loan. No interest revenue is recognized on loans and other credits that are classified as nonperforming loans until it is collected. Under the Ministry of Finance regulations, the interest revenue on credits covered by agreements that extend their repayment periods is recorded as deferred revenue and recognized as revenue upon collection.

Service fees are recognized as income upon receipt and substantial completion of activities involved in the earnings process.

2. Insurance subsidiaries

For Fubon Insurance, the direct written premiums are recognized when the policy becomes effective, and the policy-related expenses are estimated based on past experience and recognized at the end of each quarter. Reinsurance premiums assumed and reinsurance commission expenses are recognized upon assumption of reinsurance. Claim expenses for assumed reinsurance policies are recognized when notified to make claim payments.

3. Securities subsidiaries

Brokerage commissions, profit or loss from trading securities, and relevant brokerage securities transaction charges are recognized on the dealing date. Interest income or expense of margin loans, securities financing and refinancing, and bonds purchased under agreements to resell and sold under agreements to repurchase are recognized during the transaction period on an accrued basis.

23) Income tax

The amounts of income taxes expense and income tax payable for the current period, are calculated based on the taxable income. Deferred income tax is determined based on the differences between accounting income and taxable income, using statutory tax rates in effect during the years in which the differences are expected to reverse. The income tax effects due to temporary differences are recognized as deferred income tax assets or liabilities. The income tax effects of temporary differences arising from future tax-deductible items, unused loss carryforwards, and unused income tax credits are recognized as deferred income tax assets. The realization of deferred income tax assets is evaluated, and a valuation allowance is recognized accordingly. Deferred income tax assets and liabilities are classified as current or non-current based on the classification of the related assets and liabilities. If there are no related assets or liabilities, deferred tax assets and liabilities are classified based on the expected year of realization.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Interest income from short-tem bills and securitized products that receivable prior to January 1, 2010, are taxed separately and such tax is recorded as income tax expenses before 20%. The adjustment of prior year’s income tax is included in the current income tax.

Effective January 1, 2006, the Company adopted the “Income Basic Tax Act”. If the amount of regular income tax for a profit-seeking enterprise is greater than or equal to the amount of basic tax, the income tax of the current year for the enterprise is calculated in accordance with the Income Tax Act and other relevant laws. However, if the amount of regular income tax is less than the amount of basic tax, the amount of income tax payable shall be the amount of basic tax, in addition to the amount as calculated in accordance with the Income Tax Act and other relevant laws.

The 10% surtax on undistributed earnings, computed according to the ROC Income Tax Act, is charged to current income tax expense in the year when the stockholders decide not to distribute the earnings.

In accordance with the Financial Holding Company Act, Article 49, the Consolidated Company has designated Fubon Financial Holding as the taxpayer to file a consolidated corporate income tax return starting from the year 2002 and to pay the 10% surtax on undistributed earnings. When preparing its financial statements, the Consolidated Company accounted for its income tax in conformity with SFAS No. 22, “Income Taxes”. However, the Consolidated Company also adjusted the related income tax balance in a reasonable and systematic way to reflect the differences computed for purposes of filing a consolidated corporate income tax return with Fubon Financial Holding as the taxpayer. The adjustments resulting from using Fubon Financial Holding as the taxpayer to file a consolidated corporate income tax return are recorded under receivable from (payable to) related parties.

24) Earnings per share

Earnings per share are calculated by dividing net income after tax by the weighted-average number of shares outstanding in each year. The employees’ bonuses are regarded as potential common stock. If the potential common stock has dilutive effect, both basic earnings per share and diluted earnings per share shall be presented. On the contrary, the basic earnings per share shall be presented only. The consolidated net income and numbers of common stock outstandings shall be adjusted by all the effect of diluted potential common sotck under the assumption that all the potential common stock with dilutive effect are outstanding. The effect of any increase in outstanding shares due to the issuance of stock dividends from retained earnings or capital surplus approved in the shareholders’ meeting should be retroactively adjusted.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

25) Share-based payment

The employee share options and share incentive awards, granted to selected employees of Fubon Life Insurance, are equity-settled share-based payment transactions before February 11, 2009. The share-based awards are the rights in shares of the former parent company, ING Group, granted by the former parent company to ING Life Insurance’s participating employees. The vesting condition includes completion of continuing service with Fubon Life Insurance or affiliated for a specified period. Fubon Life Insurance measures the services received, and records the corresponding increase in equity as additional paid-in capital by the former parent company, based on the fair value of the equity instruments granted at the grant date. The fair value of the shares granted at the grant date is measured by appropriate valuation model.

The equity-settled share-based payment arrangement is only offered to eligible employees. Pursuant to R.O.C. SFAS No. 39, the goods or services received are measured by referring to the fair value of the equity instruments granted. When there is no limitation of vesting condition associated with the granted rights to the equity instruments, the granted rights are deemed as vested, and the costs of services received are recognized at grant date immediately. On the other hand, when the completion of continuing service for a specified period is required as vesting condition, then the cost of services received is recognized over the vesting period.

Vesting conditions, other than market conditions, are not taken into account when estimating the fair value of the share options at measurement date. Instead, vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount. Fubon Life Insurance recognizes an amount for the goods or services received during the vesting period based on the best available estimate of the number of equity instruments expected to vest and revises that estimate, if necessary, if subsequent information indicates that the number of equity instruments expected to vest differs from previous estimates. Ultimately, the amount recognized for goods or services received as consideration for the equity instruments granted are based on the number of equity instruments that eventually vest. When the grants of equity instruments comes with market conditions, Fubon Life Insurance recognizes the services received from a counterparty who satisfies all other vesting conditions, irrespective of whether that market condition is satisfied.

On the adoption date of R.O.C. SFAS No. 39 “Accounting for Share-based Payment”, Fubon Life Insurance retrospectively measured at the adoption date the fair value of granted shares which were granted before then and had not yet vested. The difference between the amount of liabilities arising from share-based payment transactions existing at the effective date of SFAS No. 39 and the original book value at the adoption date was recognized as “cumulative effect of changes in accounting principles”.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

26) Employees bonuses and Directors’ emoluments

Employees’ bonuses and directors’ and supervisors’ remuneration are accounted for by Interpretation No. (96)52 issued by the Accounting Research and Development Foundation. Under this Interpretation, the Company makes an estimate of the amount of employees’ bonuses and directors’ and supervisors’ remuneration and recognizes in each reporting period as operating expenses. Differences between the amounts approved in the shareholders’ meeting and recognized in the financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss.

27) Treasury stock

When the Company buys back issued stock, it applies the provisions of Statement of Financial Accounting Standards (SFAS) No. 30, “Accounting for Treasury Stock”, to debit the treasury stock account for the amount of cost paid. When the disposal price of treasury stock is higher than cost, the difference is credited to capital surplus – treasury stock; otherwise, the cost in excess of the price is debited to capital surplus generated from the same type of treasury stock transactions. If the capital surplus －treasury stock account is insufficient to cover the cost in excess of the price, retained earnings is debited for the remaining amount. The book value of each share of treasury stock is equal to its weighted – average cost and is calculated by each group according to the reason for purchase.

When treasury stock is retired, capital surplus and common stock are debited according to the ratio of retiring treasury stock to total issued stock. When the book value of the retiring treasury stock is higher than the sum of its par value and capital surplus, the difference is debited to capital surplus generated from the same type of treasury stock transactions. If the capital surplus – treasury stock account is insufficient to cover the difference, retained earnings is debited for the remaining amount. When the book value of the retiring treasury stock is lower than the sum of its par value and capital surplus, the difference is credited to capital surplus generated from similar treasury stock transactions.

According to ROC Statement of Financial Accounting Standard No. 30 “Accounting for Treasury Stocks”, the shares of the Company held by a subsidiary are treated as treasury stock. All inter-company investments in the shares of the Company held by its subsidiaries are treated as treasury stock.

28) Business combination

Business combinations are accounted for in accordance with SFAS No. 25 “Business Combinations”. Under SFAS No. 25, acquisition costs represent the amount of cash or cash equivalents paid and the fair value of the other purchase consideration given, plus any costs directly attributable to the acquisition. The excess of acquisition cost over the fair value of the net identifiable tangible and intangible assets is recognized as goodwill.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(3) Reasons for and Effects of Accounting Changes: None.

(4) Cash and Cash Equivalents

June 30, June 30, 2010 2009

Cash on hand and petty cash $ 7,936,388 7,771,079 Bank deposits 67,767,985 24,639,130 Cash equivalents 20,062,107 5,938,924 Notes and checks for clearing 1,775,550 7,002,734 Due from banks 35,504,513 23,834,521 Less: Guarantee deposits (38,974 ) (70,530 ) Total $ 133,007,569 69,115,858

The guarantee deposits are time deposits provided as pledged assets. Please refer to note 35 for details.

(5) Due from Central Bank and Call Loans to Banks

June 30, June 30, 2010 2009

Due from Central Bank $ 10,517 30,375 Call loans to banks 48,777,617 68,101,052 Deposit reserves for checking and settlement accounts 17,095,522 9,144,711 Deposit reserves 27,099,011 24,166,488 Deposit reserves for foreign currency account 272,655 180,502 Due from Central Bank – certificate of deposits 3,000,000 184,690,000 Others 643,082 657,215 Total $ 96,898,404 286,970,343

According to the rules stipulated by the Central Bank of China, the deposit reserves are determined monthly at prescribed rates based on the average balances of customers’ NT Dollar deposits. The required deposit reserves are subject to withdrawal restrictions, but other deposit reserves (checking and settlement accounts) can be withdrawn anytime.

The deposit reserves for foreign currency account are determined at prescribed rates based on customers’ foreign currency deposits and can be withdrawn anytime.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(6) Financial Assets Measured at Fair Value through Profit or Loss

June 30, June 30, 2010 2009

Financial assets held for trading: Government bonds $ 2,466,987 3,206,852 Commercial paper 5,264,172 4,167,655 Treasury bonds 2,392,893 398,920 Convertible bonds 1,518,198 2,692,004 Listed and OTC stocks and beneficiary certificates 2,730,558 5,133,193 Beneficiary securities 256,520 249,058 Corporate and financial bonds 3,007,329 1,515,218 Trading securities 2,689,847 4,667,211 Others 297 2,973 Sub-total 20,326,801 22,033,084 Derivative financial instruments: Interest rate contracts 12,382,058 14,837,060 Foreign exchange contracts 11,302,584 4,532,554 Others 1,561,980 3,632,025 Sub-total 25,246,622 23,001,639 Financial assets designated at fair value through profit or loss: Financial bonds 895,138 1,861,922 Credit structured bonds 1,199,431 - Sub-total 2,094,569 1,861,922 Total $ 47,667,992 46,896,645

Taipei Fubon Bank trades derivatives to meet clients’ needs and to make payments in different currencies.

Part of interest rate swaps are intended to reduce the market risk and credit risk, and are designated for trading purpose. Accordingly, their underlying financial assets are also designated as financial assets measured at fair value through profit or loss.

For details of pledged financial assets designated as financial assets reported at fair value through profit or loss, please refer to note 35.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(7) Bonds and Bills Purchased under Resell Agreements and Sold under Repurchase Agreements

As of June 30, 2010 and 2009, the bonds and bills purchased under resell agreements and bonds and bills sold under repurchase agreements were as follows:

June 30, 2010 Margin lending (borrowed) Period to resell Interest amount (repurchase) rate (%)

Bonds and bills purchased under resell $ 35,995,363 2010.07.01~ 0.18~0.35 agreements 2010.08.02 Bonds and bills sold under repurchase $ (15,120,171 ) 2010.07.01~ 0.13~8.00 agreements 2010.11.30

June 30, 2009 Margin lending (borrowed) Period to resell Interest amount (repurchase) rate (%)

Bonds and bills purchased under resell $ 7,844,913 2009.07.01~ 0.105~0.14 agreements 2009.07.30 Bonds and bills sold under repurchase $ (12,497,526 ) 2009.07.01~ 0.10~0.14 agreements 2009.09.21

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(8) Receivables, Net

June 30, June 30, 2010 2009

Credit card fees receivable $ 21,735,424 22,189,010 Accounts receivable, notes receivable and acceptance 11,012,530 13,307,123 Factoring receivable 47,779,417 21,326,703 Tax refund receivable 1,478,187 1,478,187 Interest receivable 3,618,765 4,253,375 Revenues receivable 11,899,155 10,556,936 Premiums receivable 4,552,704 4,863,467 Reinsurance recoverable 5,641,589 5,098,516 Due from reinsures and ceding companies 625,287 616,665 Reinsurance premiums receivable 431,451 392,814 Margin loan receivable 20,406,229 15,179,139 Derivative settlement receivable 7,306,122 246,362 Others 2,891,862 3,159,178 Subtotal 139,378,722 102,667,475 Less: allowance for doubtful accounts 1,417,885 1,118,258 Total $ 137,960,837 101,549,217

(9) Loans

June 30, June 30, 2010 2009

Discounts and overdrafts $ 3,585,330 4,567,743 Short-term advances 5,609,734 4,479,472 Short-term loans 208,455,773 169,000,620 Short-term secured loans 54,682,409 47,205,041 Medium-term loans 165,438,078 185,318,722 Medium-term secured loans 125,005,064 148,821,150 Long-term loans 55,153,500 59,930,712 Long-term secured loans 393,497,660 357,212,751 Insurance policy loans 39,525,288 36,136,456 Letters of credit 3,394,783 2,302,193 Nonperforming loans 5,577,973 7,675,093 Subtotal 1,059,925,592 1,022,649,953 Less: allowance for doubtful accounts – domestic bank 5,230,624 4,287,592 subsidiary allowance for doubtful accounts – other subsidiaries 2,484,189 1,567,038 Total $ 1,052,210,779 1,016,795,323 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2) The movements in allowance for loans for the domestic banking subsidiary for the six-month periods ended June 30, 2010 and 2009 were as follows:

2010 For allowance on overall loan For portfolio For For allowance on (excluding allowance on allowance on accounts particular particular overdue Guarantee receivable loans) loans Subtotal receivables reserve Total

Balance at January 1, 2010 $ 1,116,684 2,079,030 2,895,914 4,974,944 292,195 243,237 6,627,060 Provision for (reversal of) doubtful accounts 93,945 617,346 (457,335) 160,011 56,102 (114,199) 195,859 Write-off (26) - (675,905) (675,905) (482,279) - (1,158,210) Recovery of written-off - - 540,649 540,649 333,768 - 874,417 Effects of exchange rate changes 794 - 9,896 9,896 712 (1,980) 9,422 Effects of merging Hanoi branch of Chinfon Bank - - 221,029 221,029 - - 221,029 Balance at June 30, 2010 $ 1,211,397 2,696,376 2,534,248 5,230,624 200,498 127,058 6,769,577

2009 For allowance on overall loan For portfolio For For allowance on (excluding allowance on allowance on accounts particular particular overdue Guarantee receivable loans) loans Subtotal receivables reserve Total

Balance at January 1, 2009 $ 1,053,186 1,727,843 2,694,601 4,422,444 350,718 61,060 5,887,408 Provision for (reversal of) (157,076) 16,111 995,398 1,011,509 710,093 18,138 1,582,664 doubtful accounts Write-off (3,319) - (1,687,268) (1,687,268) (1,025,637) - (2,716,224) Recovery of written-off - - 612,506 612,506 255,658 - 868,164 Effects of exchange rate (285) - (10,081) (10,081) - 3 (10,363) changes Reclassification - - (61,518 ) (61,518 ) 61,518 - - Balance at June 30, 2009 $ 892,506 1,743,954 2,543,638 4,287,592 352,350 79,201 5,611,649

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(10) Available-for-sale Financial Assets

June 30, June 30, 2010 2009

Negotiable certificates of deposit $ - 1,082,531 Government bonds 290,707,331 279,867,599 Corporate and financial bonds 227,989,844 203,015,978 Listed and OTC stocks 122,396,193 101,815,900 Beneficiary certificates 43,717,909 26,988,564 Commercial paper 644,284 1,054,137 Treasury bonds 1,305,118 2,292,816 Subtotal 686,760,679 616,117,525 Less: guarantee deposits 3,974,749 4,045,692 accumulated impairment 1,368,732 2,113,386 Net $ 681,417,198 609,958,447

For the six-month periods ended June 30, 2010 and 2009, the consolidated company recognized the impairment losses on available-for-sale financial assets amounting to $75,696 and $198,203 respectively.

(11) Held-to-maturity Financial Assets

June 30, June 30, 2010 2009

Corporate bonds $ 7,726,619 6,802,323 Government bonds 167,996,910 152,054,418 Bank debentures 5,131,167 3,134,429 Negotiable certificates of deposits 246,166,013 170,656 Subtotal 427,020,709 162,161,826 Less: guarantee deposits 367,802 370,965 Net $ 426,652,907 161,790,861

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(12) Investments under Equity Method

June 30, 2010 June 30, 2009 Amount % Amount %

Fubon Venture Capital Co., Ltd. $ 36,957 45.00 36,957 45.00 Fubon Brokers (Thailand) Co., Ltd. 817 25.00 409 25.00 Fubon Construction Management Co., 73,450 30.00 64,953 30.00 Ltd. Fubon Insurance Agent Co., Ltd. 4,623 100.00 4,710 100.00 Sinostar Venture Capital Co., Ltd. 63,430 45.83 63,430 45.83 Fu-Sheng Life Assurance Agent Co., 10,716 100.00 13,860 100.00 Ltd. Fu-Sheng General Insurance Agent (15,312) 100.00 4,846 100.00 Co., Ltd. Fu-Sheng Travel Service Co., Ltd. 1,561 100.00 3,349 100.00 Fuly Life Assurance Agent Co., Ltd. 12,995 100.00 13,787 100.00 Fuly General Insurance Agent Co., 12,764 100.00 10,027 100.00 Ltd. Xiamen City Commercial Bank 1,674,437 19.99 1,233,405 19.99 Chung-ke Venture Capital Co., Ltd. 45,292 22.40 55,601 22.40 Prepayment for investment 1,876,156 - - - $ 3,797,886 1,505,334

Sinostar Venture Capital Co., Ltd. applied to dissolve after a stockholders’ meeting on November 24, 2006 when the effective date of dissolution was also set on December 31, 2006. In accordance with Interpretation (88) No. 233 issued by Accounting Research & Devlopment Foundation, the Consolidated Company adjusted the investment amounts thereof based on the recoverable value.

Fubon Venture Capital Co., Ltd. applied to dissolve after a stockholders’ meeting on May 18, 2007 when the effective date of dissolution was also set on July 30, 2007. In accordance with Interpretation (88) No. 233 issued by Accounting Research & Development Foundation, the Consolidated Company adjusted the investment amounts thereof based on the recoverable value.

Fubon Insurance Agent Co., Ltd. applied to dissolve after a board of directors’ meeting on April 19, 2010 when the effective date of dissolution was also set on April 30, 2010. The liquidation procedure started from May 1, 2010.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As the Company and its subsidiaries have significant influence on Chung-ke Venture Capital Co., Ltd. since the second quarter of 2009, the investment was recognized as investment under equity method rather than financial asset carried at cost. On June 3, 2009, Chung-ke Venture Capital’s board meeting resolved to reduce its capital with cash by $50,220 and set the effective date of capital decrease on July 16, 2009. The cash returned was $9,375 calculated in proportion to the number of shares held.

Fubon Insurance Co., Ltd. and Fubon Life Insurance Co., Ltd. plan to establish Fubon Property Insurance Co., Ltd. and the prepayment for investment amounted to $1,876,156. As of June 30, 2010, this investee company was not yet incorporated.

2) For the six-month periods ended June 30, 2010 and 2009, the Consolidated Company’s original investment costs and investment income (loss) from investments under the equity method were as follows:

June 30, 2010 Original Investment investment cost (loss) income

Fubon Venture Capital Co., Ltd. $ 90,000 - Fubon Brokers (Thailand) Co., Ltd. 412 266 Fubon Construction Management Co., Ltd. 30,000 4,331 Fubon Insurance Agent Co., Ltd. 2,013 96 Fu-Sheng Life Assurance Agency Co., Ltd. 3,000 4,171 Fu-Sheng General Insurance Agency Co., Ltd. 3,000 3,248 Fu-Sheng Travel Service Co., Ltd. 6,000 (3,429) Fuly Life Assurance Agency Co., Ltd. 3,000 6,006 Fuly General Insurance Agency Co., Ltd. 3,000 7,268 Xiamen City Commercial Bank 1,234,904 55,015 Chung-ke Venture Capital Co., Ltd. 63,750 (440 ) Total $ 1,439,079 76,532

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Original Investment investment cost (loss) income

Fubon Venture Capital Co., Ltd. $ 90,000 - Fubon Brokers (Thailand) Co., Ltd. 412 - Fubon Construction Management Co., Ltd. 30,000 4,679 Fubon Leasing Co., Ltd. 999,946 3,129 Fubon Insurance Agent Co., Ltd. 2,013 233 Fu-Sheng Life Assurance Agent Co., Ltd. 3,000 8,812 Fu-Sheng General Insurance Agent Co., Ltd. 3,000 1,358 Fu-Sheng Travel Service Co., Ltd. 6,000 (380) Fuly Life Assurance Agency Co., Ltd. 3,000 8,024 Fuly General Insurance Agency Co., Ltd. 3,000 5,685 Xiamen City Commercial Bank 1,242,248 32,501 Chung-ke Venture Capital Co., Ltd. 75,000 (50 ) Total $ 2,457,619 63,991

(13) Other Financial Assets

June 30, June 30, 2010 2009

Financial assets carried at cost $ 6,102,248 6,348,033 Hedging derivative financial assets 978,635 1,486,011 Separate account – insurance instrument assets 152,073,199 132,611,350 Futures trading margins 6,504,680 4,301,833 Margin deposits paid for borrowed securities 2,279,731 5,987 Linked deposits 41,478,085 11,093,288 Overdue receivables 237,986 361,855 Less: Allowance for overdue receivables (200,498) (352,350) Others 165,830 137,968 Total $ 209,619,896 155,993,975

1) Financial assets carried at cost

June 30, June 30, 2010 2009

Investment in unlisted stocks $ 6,102,248 6,348,033

The unlisted stocks held by the Company are measured by the cost method because they do not have an active market quoted price.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the six-month period ended June 30, 2009, the Consolidated company recognized the impairment loss on financial assets carried at cost amounting to $2,619,268.

2) For details of hedging derivative financial assets, please refer to note 25.

3) Investment-type insurance policy

June 30, June 30, 2010 2009

Investment-type insurance policy assets: Receivables $ 400,675 817,830 Securities 143,319,242 126,841,086 Bank deposits 8,353,282 4,952,434 Total $ 152,073,199 132,611,350

2010 2009

Investment-type insurance policy revenues: Gross written premiums $ 9,999,833 13,979,949 Reserve release for investment-type insurance policy 8,754,672 4,714,272 Disposal investment and evaluation gain - 3,486,311 Gain on foreign exchange - 10,133,750 Interest income 148,816 115,619 Total $ 18,903,321 32,429,901

2010 2009

Investment-type insurance policy expense: Claim $ 7,945,187 7,191,540 Provision for reserve 3,273,934 23,639,627 Loss on investment 4,346,157 - Administrative expense 1,555,254 1,598,734 Loss on foreign exchange 1,782,789 - Total $ 18,903,321 32,429,901

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(14) Debt Securities Investment in Non- active Market

June 30, June 30, 2010 2009

Corporate bonds – domestic $ 3,313,419 5,027,410 Financial bonds – domestic 18,893,905 27,898,855 Corporate bonds – foreign 74,518,377 74,126,267 Financial bonds – foreign 152,393,837 119,634,648 Structured bonds – foreign 28,067,991 16,407,016 Preferred stock – domestic 5,700,394 5,700,394 Security documents 4,586,797 5,562,688 Securitization of beneficiary certificates 9,192,277 9,610,211 Foreign securities 743,850 486,625 Sub-total 297,410,847 264,454,114 Accumulated impairment (5,640,833 ) (4,828,580 ) Total $ 291,770,014 259,625,534

For the six-month periods ended June 30, 2010 and 2009, the Consolidated Companies recognized the impairment losses on debt investment in non-active market amounting to $92,362 and $141,891, respectively.

(15) Real Estate Investment

June 30, June 30, 2010 2009

Cost: Land $ 42,462,893 27,343,048 Revaluation surplus on land 18,331 18,331 Buildings 15,775,028 9,759,335 Construction payment 65,826 - Prepayment for equipment 38,288 5,283 Right of land usage, net 3,558,408 3,632,029 Sub-total 61,918,774 40,758,026 Accumulated depreciation: Building 1,504,529 1,178,660 Accumulated asset impairment 229,591 202,362 Real estate investment, net $ 60,184,654 39,377,004

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2) As of June 30, 2010, the Consolidated Company’s rental income from real estate investments for the next five years are approximate as follows:

Years Amount

July 1, 2010 ~ June 30, 2011 $ 2,166,605 July 1, 2011 ~ June 30, 2012 2,300,308 July 1, 2012 ~ June 30, 2013 2,317,623 July 1, 2013 ~ June 30, 2014 2,706,804 July 1, 2014 ~ June 30, 2015 2,630,856 $ 12,122,196

(16) Intangible Assets

June 30, June 30, 2010 2009

Goodwill $ 9,502,623 9,153,043 Operating rights 572,648 9,202 Computer software 1,177,450 1,590,136 Deferred pension costs 143,237 181,323 Core deposits 539,489 - Customer relationships 443 - Total $ 11,935,890 10,933,704

1) ING Life Insurance

On February 11, 2009, the Company has completed the share swap of ING Life Insurance by issuing debt securities of US$338,590 thousand and 406,268 thousand shares in exchange for 100% equity ownership of ING Life Insurance.

The acquisition was accounted for in accordance with ROC SFAS No. 25 “Business Combinations”. The Consolidated Companies recognized goodwill which represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following represents the allocation of the purchase price to the acquired assets and the assumed liabilities of ING Life Insurance Co., Ltd. on February 11, 2009:

Purchase price $ 20,437,201 Current assets $ 66,437,512 Loans 62,503,591 Funds and investments 444,899,365 Fixed assets 2,299,004 Intangible assets 654,229 Other assets 66,897,348 Current liabilities (18,335,344) Long-term liabilities (3,000,055) Reserve for operations and other liabilities (548,622,369) Other liabilities (61,929,080 ) The fair value of identifiable net assets acquired 11,804,201 Acquiring proportion 100% 11,804,201 Goodwill $ 8,633,000

The reviewed pro forma year consolidated results of operations assume that the acquisition of ING Life Insurance Co., Ltd. was completed as of January 1, 2009 for the six-month period ended June 30, 2009 shown below.

2009

Revenues $ 152,354,051 Consolidated net income for continuing operations before 8,774,533 income tax Consolidated net income from continuing operations after 6,953,479 income tax Basic earnings per common share (in dollar) 0.87

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2) Hanoi Branch and Ho Chi Minh Subbranch of ChinFon Bank

Taipei Fubon Bank bid for Hanoi branch and Ho Chi Minh City sub-branch of Chinfon Bank on October 27, 2009, the original bid price was $2,526,800 (US$78,000 thousand), which was paid in cash on March 8, 2010. After deducting the related adjustments which were calculated according to the terms prescribing on the sales and purchase agreement in 70 days after the settlement date, the final bid price was $2,511,988 (US$77,545 thousand). The overpayment was refunded on June 15, 2010.

According to the agreement, Taipei Fubon Bank has to pay the capital assignment profit tax $507,618 (US$15,709 thousand) and other transaction costs $2,662 (US$83 thousand). The following information represents the purchase price allocation of the assumed assets and liabilities of Hanoi branch and Ho Chi Minh City sub-branch of Chinfon Bank and intangible assets in fair value on March 6, 2010:

Fixed asset (excluding computer software) $ 5,683 Cash 35,587 Due from Central Bank of Vietnam 70,190 Due from (to) other banks 189,019 Loans 3,451,903 Investment in securities 186,572 Other asset 101,972 Total asset (excluding intangible asset and goodwill) 4,040,926 Total liability (2,535,082 ) Net 1,505,844 Intangible asset Core deposits 558,092 Customer relationships 465 Software 12,874 Operating rights 572,037 Goodwill 372,956 1,516,424 $ 3,022,268

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The reviewed pro forma year consolidated results of operation assuming that the acquisition of Hanoi branch and Ho Chi Minh subbranch of ChinFon Bank was completed as of January 1, 2010 for the six-month period ended June 30, 2010 shown below:

2010

Revenues $ 241,399,673 Consolidated net income for continuing operations before 13,360,322 income atx Consolidated net income for continuing operations after 10,693,468 income tax Basic earnings per common share (in dollar) 1.32

(17) Other Assets

June 30, June 30, 2010 2009

Guarantee deposits $ 5,877,675 6,090,605 Foreclosed real estate 840,683 1,080,183 Deferred income tax assets – net 1,560,362 3,453,543 Settlement and clearing funds 521,285 479,377 Leased assets, net 517,419 516,458 Consolidated debit 2,136,715 2,136,715 Restricted time deposits 195,900 199,170 Prepaid outward reinsurance premiums 3,461,801 4,346,270 Prepaid commissions 709,253 540,773 Other 2,648,547 2,013,153 Total $ 18,469,640 20,856,247

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(18) Financial Liabilities Measured at Fair Value through Profit or Loss

June 30, June 30, 2010 2009

Financial liabilities for trading Stock warrant liabilities $ 150,858 86,649 Exchange fund bills and bonds 845,235 1,821,743 Zero coupon bonds 1,085,843 700,872 Stock borrowing payable 111,612 6,715 2,193,548 2,615,979 Derivative financial instruments Interest rate contracts 12,315,024 14,114,657 Foreign exchange contracts 15,590,376 12,770,271 Other 2,956,809 4,904,596 30,862,209 31,789,524 Financial liabilities designated at fair value through profit or loss: Structured products 70,723 7,634 Total $ 33,126,480 34,413,137

2) Stock warrant liabilities

As of June 30, 2010 and 2009, stock warrant liabilities of Fubon Securities, which were incuded in the accompanying consolidated balance sheets, were as follows:

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon D1 Micro-Star 20,000 17,619 1.46 29.40 6.71 0.12 International Corp. Fubon D2 CyberTAN 20,000 18,970 0.81 71.70 5.90 0.10 Technology Inc. Fubon D3 (Taiwan Index) 20,000 17,309 1.44 7,400.00 10.67 0.64 Fubon D4 Finance and 20,000 19,499 2.39 900.00 7.37 0.10 Insurance Sub- Index Fubon D5 Taiwan 20,000 19,901 0.79 93.60 15.80 0.03 Semiconductor Manufacturing Co., Ltd. Fubon D6 Unimicron 20,000 19,632 1.05 62.25 7.90 0.32 Technology Corp. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon D7 TXC Corp. 20,000 19,980 1.14 81.00 9.47 0.08 Fubon D8 E. Sun Financial 20,000 20,000 0.84 19.73 7.83 0.21 Holding Co., Ltd. Fubon D9 TSRC Corp. 20,000 19,733 1.77 58.43 11.00 1.71 Fubon E1 Inventec Corp. 20,000 19,766 1.99 28.05 9.40 0.05 Fubon E2 Goldsun 20,000 18,000 1.02 22.35 7.30 0.02 Development & Construction Co., Ltd. Fubon E3 Powertech 20,000 18,323 1.19 140.25 7.86 0.13 Technology Inc. Fubon E4 Gigabyte 20,000 19,584 0.85 45.15 7.08 0.30 Technology Co., Ltd. Fubon E5 Forhouse Corp. 20,000 15,390 1.39 63.23 6.06 0.01 Fubon E6 Macronix 20,000 19,415 1.00 24.83 8.28 1.23 international Co., Ltd. Fubon E7 Synnex Technology 20,000 19,899 1.54 103.35 8.95 0.20 International Corp. Fubon E8 AcBel Polytech 20,000 19,777 0.60 42.90 9.53 0.01 Inc. Fubon E9 Zinwell Corp. 20,000 19,579 1.57 90.45 7.68 0.10 Fubon F1 Cathay Real Estate 20,000 19,963 1.16 19.80 5.69 0.03 Development Co., Ltd. Fubon F2 First Steamship 20,000 19,337 1.21 69.90 7.70 0.54 Co., Ltd. Fubon F3 Ralink Technology 20,000 19,189 1.43 156.75 7.31 1.39 Corp. Fubon F4 Elitegroup 20,000 19,004 1.05 21.90 6.95 0.01 Computer Systems Co.,Ltd. Fubon F5 Chroma Ate Inc. 20,000 19,439 1.33 106.20 5.32 0.08 Fubon F6 Wpg Holdings Ltd. 20,000 19,514 0.80 78.30 6.53 0.52 Fubon F7 Formosa Plastics 20,000 17,936 1.11 97.95 11.77 0.25 Corp. Fubon F8 Siliconware 20,000 18,573 1.05 63.75 8.10 0.01 Precision Industries Co., Ltd. Fubon F9 Amtran 20,000 19,623 1.08 54.30 6.70 0.01 Technology Co., Ltd. Fubon G1 Infortrend 20,000 19,196 1.37 84.45 8.22 0.01 Technology, Inc. Fubon G2 Altek Corp. 20,000 19,803 1.54 90.45 7.83 0.02 Fubon G3 Alpha Networks 20,000 18,432 0.77 40.28 6.97 0.06 Inc. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon G4 AU Optronics 20,000 12,456 1.03 57.45 7.44 0.02 Corp. Fubon G5 Greatek Electronics 20,000 19,972 0.73 47.70 8.71 0.12 Inc. Fubon G6 Far Eastern 20,000 19,725 0.66 52.95 5.35 0.04 Department Stores Ltd. Fubon G7 Shin Zu Shing Co ., 20,000 19,735 2.08 228.00 7.31 0.10 Ltd. Fubon G8 Nan Ya Printed 20,000 19,355 1.55 184.50 7.94 0.81 Circuit Board Corp. Fubon G9 Taiwan 50 Index 20,000 19,847 2.66 83.40 10.45 0.05 Fubon H1 (Taiwan 50 Index) 20,000 19,243 1.65 27.80 16.85 1.29 Fubon H2 Compeq 20,000 18,760 1.16 15.68 9.01 0.02 Manufaturing Co.,Ltd Fubon H3 High Tech 20,000 18,510 2.37 527.25 14.83 0.10 Computer Corp. Fubon H4 MEGA Finnancial 20,000 19,803 0.92 27.68 10.03 0.05 Holding Co., Ltd. Fubon H5 MEGA Finnancial 20,000 19,213 1.40 18.90 9.00 0.01 Holding Co., Ltd. Fubon H6 Faraday 20,000 19,116 0.77 101.55 8.79 0.01 Technology Corp. Fubon H7 Global Unichip 20,000 19,627 2.05 253.50 8.24 0.04 Corp. Fubon H8 Nanya Plastics 20,000 19,767 0.83 86.40 13.88 0.02 Corp. Fubon H9 Silicon Integrated 20,000 19,249 0.66 36.30 7.33 0.03 Systems Corp. Fubon J1 Compal Electronics 20,000 18,863 0.79 66.00 11.14 0.04 Inc. Fubon J2 Acer Inc. Corp. 20,000 17,199 0.86 148.20 11.49 0.01 Fubon J3 Eternal Chemical 20,000 20,000 0.85 50.48 7.92 0.14 Co., Ltd. Fubon J4 I-chun Precision 20,000 19,598 1.68 81.30 6.45 0.06 Industry Co., Ltd. Fubon J5 Yeun Chyang 20,000 19,941 0.77 40.73 7.05 0.07 Industrial Co.,Ltd Fubon J6 Visual Photonics 20,000 18,964 1.13 124.50 7.35 0.07 Epitaxy Co.,Ltd Fubon J7 Phihong 20,000 19,967 0.82 45.38 7.38 0.24 Technology Co., Ltd. Fubon J8 Taishin Financial 20,000 19,490 0.98 19.43 6.61 0.05 Holding Fubon J9 Far Eastern 20,000 19,367 0.86 18.23 7.06 0.10 International

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon K1 Shin Kong 20,000 16,992 1.61 19.88 8.23 0.05 Financial Holding Co.,Ltd. Fubon K2 Chin-poon 20,000 20,000 0.77 43.50 7.53 0.05 Industral Co.,Ltd Fubon K3 Wistron NeWeb 20,000 19,672 1.48 81.15 7.31 0.63 Corporation Fubon K4 Merry Electronics 20,000 18,932 0.76 94.20 8.26 0.04 Co.,Ltd Fubon K5 Formosa Advanced 20,000 19,406 1.23 76.50 8.29 0.08 Technologies Co.,Ltd Fubon K6 Cathay Financial 20,000 18,947 1.36 90.60 8.88 0.02 Holding Fubon K7 (Cathay Financial 20,000 19,730 1.00 30.20 12.08 1.22 Holding) Fubon K8 TLG Asset 20,000 19,006 1.24 60.23 6.48 0.12 Management Co., Ltd. Fubon K9 Kinsus Interconnect 20,000 18,958 1.29 122.85 6.35 0.10 Technology Corp. Fubon L1 Dynamic 20,000 19,145 1.15 55.88 6.48 0.01 Electronics Co., Ltd. Fubon L2 Compal 20,000 19,048 0.64 63.53 6.62 0.01 Communications Inc. Fubon L3 Formosa Chemical 20,000 19,885 1.33 109.50 10.98 0.50 & Fibre Corp. Fubon L4 Richtek 20,000 19,450 2.57 477.00 12.37 0.04 Technology Corp. Fubon L5 China Steel Corp. 20,000 19,566 1.71 52.95 10.32 0.02 Fubon L6 ASIA OPTICAL 20,000 18,977 1.13 52.95 10.32 0.02 Co., Inc. Fubon L7 King Yuan 20,000 19,752 1.02 109.35 6.45 0.04 Electronics Co., Ltd. Fubon L8 Yang Ming Group 20,000 19,237 1.44 22.50 7.35 2.54 Fubon L9 (Yang Ming 20,000 18,120 1.13 6.58 11.64 0.10 Group) Fubon M1 (Electronics Sub- 10,000 9,998 1.57 330.00 10.94 2.18 Index) Fubon M2 Walsin Technology 20,000 19,978 0.86 18.83 7.30 0.06 Corp. Fubon M3 Chicony 20,000 16,590 1.38 130.95 6.33 0.09 Electronics Co., Ltd. Fubon M4 Catcher 20,000 19,557 1.07 125.55 7.82 0.07 Technology Co., Ltd. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon M5 U-Ming Marine 20,000 19,459 1.34 100.50 10.00 0.22 Transport Corp. Fubon M6 Tripod Technology 20,000 19,693 1.47 170.25 7.72 0.64 Corporation Fubon M7 Cyberlink Co., 20,000 19,081 1.57 232.50 9.87 0.04 Fubon M8 Lite-on It 20,000 16,439 0.85 48.68 7.64 0.15 Corporation Fubon M9 Delta Electronics, 20,000 19,397 1.18 141.75 8.01 1.03 Inc. Fubon N1 Chinatrust 20,000 18,224 1.15 27.68 8.02 0.64 Financial Holding Company Ltd. Fubon N2 Chang Hwa 20,000 18,569 1.56 21.98 9.39 0.57 Commercial Bank Ltd. Fubon N3 (Chang Hwa 20,000 16,617 1.14 7.33 12.85 0.26 Commercial Bank Ltd.) Fubon N4 Formosa Epitaxy 20,000 16,328 1.25 69.08 7.37 0.37 Incorporation Fubon N5 Sunplus 20,000 19,800 0.81 46.95 7.73 0.06 Technology Co., Ltd. Fubon N6 Lite-on Technology 20,000 19,175 1.11 64.50 7.75 0.10 Corp. Fubon N7 Transcend 20,000 19,764 1.46 161.25 7.36 0.06 Information, Inc. Fubon N8 Taiwan Fertilizer 20,000 18,542 1.31 162.00 8.24 0.17 Co., Ltd. Fubon N9 Tung Ho Stell 20,000 18,750 1.98 52.95 8.91 0.09 Enterprise Corp Fubon AA Yulon Motor Co., 20,000 17,525 2.11 49.13 7.76 0.98 Ltd. Fubon AB Evergreen 20,000 19,899 1.64 38.70 7.87 0.29 International Storage & Transport Fubon AC Asia Cement 20,000 19,722 0.78 46.35 7.92 0.26 Corporation Fubon AD Nien Hsing Textile 20,000 14,549 0.95 26.03 9.13 0.60 Co., Ltd. Fubon AE Yageo Corporation 20,000 18,776 1.49 17.10 7.65 2.14 Fubon AF Gemtek 20,000 17,929 1.28 83.25 8.67 0.17 Technology Co., Ltd. Fubon AG Quanta Computer 20,000 16,591 0.81 95.85 7.89 0.14 Inc. Fubon AH Media Tek Inc. 20,000 8,001 1.31 780.00 7.94 0.14

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon AJ Yieh Phui 20,000 19,394 0.76 17.63 7.73 0.43 Enterprise Co., Ltd. Fubon AK High Tech 20,000 19,579 2.27 477.00 14.01 8.55 Computer Corp. Fubon AL Foxconn 20,000 19,402 1.38 201.00 9.71 0.05 Technology Corp. Fubon AM (Foxconn 20,000 19,435 1.07 67.00 12.52 1.33 Technology Corp.) Fubon AN Taiwan Index 20,000 19,883 1.14 7,800.00 13.03 0.14 Fubon AP USI Co., Ltd. 20,000 18,939 1.01 28.43 9.38 0.49 Fubon AQ ALi Corporation 20,000 19,607 1.54 95.55 8.27 0.05 Fubon AR AU Optronics 20,000 7,950 0.81 52.95 8.72 0.08 Corp. Fubon AS (AU Optronics 20,000 19,744 0.65 17.65 10.86 0.95 Corp.) Fubon AT China Motor Corp. 20,000 19,888 0.64 28.35 5.91 0.14 Fubon AU Amtran 20,000 17,510 0.90 47.63 7.06 0.18 Technology Co., Ltd. Fubon AV First Financial 20,000 19,922 0.92 25.80 9.35 0.46 Holding Fubon AW Holy Stone 20,000 19,741 1.18 70.80 8.00 0.20 Enterprise Co.,Ltd. Fubon AX Ability Enterprise 20,000 19,537 1.41 77.85 7.36 0.33 Co., Ltd. Fubon AY United 20,000 19,747 1.79 24.00 8.94 0.16 Microelectronics Corp. Fubon AZ (United 20,000 16,694 1.48 8.00 10.81 1.42 Microelectronics Corp.) Fubon BA (High Tech 20,000 19,960 1.35 139.00 10.30 0.05 Computer Corp.) Fubon BB Forhouse Corp. 20,000 18,037 0.90 48.90 7.24 0.22 Fubon BC Radiant Opto- 20,000 19,826 1.03 58.20 7.53 0.71 electronics Corp. Fubon BD (Taiwan Index) 20,000 16,402 0.79 6,500.00 18.27 0.25 Fubon BE Elan 20,000 18,624 1.23 67.65 7.33 0.48 Microelectronics Corp. Fubon BF Novatek 20,000 16,909 1.09 136.80 8.37 0.30 Microelectronics Corp. Fubon BG Tong Yang 20,000 19,462 1.31 76.50 7.79 0.31 Industry Co.,Ltd Fubon BH Shin Zu Shing Co ., 20,000 19,466 1.37 180.75 8.80 0.06 Ltd. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon BJ Pan-International 20,000 16,857 0.60 73.58 8.18 0.22 Industrial Corp. Fubon BK Yuanta Financial 20,000 18,355 1.03 28.20 9.13 0.13 Holdings Fubon BL Far Eastern New 20,000 19,531 0.80 54.30 9.05 0.15 Century Corporation Fubon BM Wintek Corporation 20,000 17,449 0.74 34.35 6.19 0.48 Fubon BN Advanced 20,000 19,430 0.74 40.28 7.26 0.26 Semiconductor Engineering Inc. Fubon BP Hua Nan Financial 20,000 19,630 0.90 29.48 10.92 0.16 Holdings Fubon BQ Taishin Financial 20,000 19,967 0.76 17.03 7.47 0.62 Holding Fubon BR Far Eastern 20,000 19,880 0.76 36.83 8.08 0.46 Department Stores Ltd. Fubon BS UPC Technology 20,000 18,933 0.98 25.73 8.75 0.58 Corp. Fubon BT Feng Hsin 20,000 19,912 1.60 80.25 8.36 0.17 Iron&Steel Co.,Ltd Fubon BU Foxconn 20,000 19,087 1.33 174.75 8.76 0.29 Technology Co., Ltd. Fubon BV Reltek 20,000 19,225 1.16 130.35 7.49 0.09 Semiconductor Corp. Fubon BW Optotech Corp. 20,000 19,731 0.84 37.35 7.41 0.16 Fubon BX Taiwan 20,000 18,666 0.81 28.20 11.60 0.41 Cooperative Bank Fubon BY Wei Chuan Foods 20,000 18,964 0.88 55.28 8.38 0.64 Corp. Fubon BZ Chunghwa 20,000 19,769 0.99 60.70 12.26 0.87 Telecom Co., Ltd. Fubon CA EPISTAR corp. 20,000 19,603 1.19 142.20 7.97 0.21 Fubon CB (EPISTAR corp.) 20,000 19,282 1.05 47.40 9.03 1.19 Fubon CC Ruentex Industries 20,000 19,712 0.84 89.55 7.11 2.83 Limited Fubon CD Formosan Rubber 20,000 19,511 0.80 40.28 6.71 0.14 Group Inc. Fubon CE D-Link Corp. 20,000 19,216 0.93 52.05 7.46 0.10 Fubon CF Largan Precision 20,000 19,813 0.97 651.00 8.95 1.31 Co., Ltd. Fubon CG (Largan Precision 20,000 10,983 0.80 217.00 10.85 0.23 Co., Ltd.) Fubon CH Young Optics Inc. 20,000 19,699 0.78 366.75 6.27 0.27

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon CJ Young Fast 20,000 16,377 0.68 443.25 8.69 0.09 Optpelectronics. Co., Ltd. Fubon CK King Yuan 20,000 19,840 0.94 23.55 8.35 0.16 Electronics Co., Ltd. Fubon CL Lite-on It 20,000 18,680 0.79 49.58 8.37 0.56 Corproation Fubon CM Walsin Technology 20,000 18,067 0.67 17.40 8.66 0.36 Corp. Fubon CN Cheng Shin Tire 20,000 19,968 1.43 96.60 9.01 0.71 Fubon CP Wistron Corp. 20,000 19,096 0.78 85.65 7.32 0.08 Fubon CQ Altek Corp. 20,000 17,724 1.16 78.00 8.97 0.09 Fubon CR (Electronics Sub- 20,000 19,964 1.40 300.00 11.29 1.57 Index) Fubon CS (Finance and 20,000 19,667 1.62 800.00 10.17 1.10 Insurance Sub- Index) Fubon CT (Finance and 20,000 19,995 0.85 820.00 9.69 0.84 Insurance Sub- Index) Fubon CU Siliconware 20,000 19,875 0.86 57.90 8.98 0.26 Precision Ind. Co., Ltd. Fubon CV Cheng Uei 20,000 16,667 1.44 94.50 8.75 0.17 Precision Industry Co., Ltd. Fubon CW HUAKU 20,000 19,847 1.18 125.25 7.08 0.52 Development Co., Ltd. Fubon CX Eva Airways Corp. 20,000 19,949 1.26 30.00 7.94 0.99 Fubon CY Innolux Display 20,000 19,064 1.18 77.40 8.75 0.03 Corp. Fubon CZ (Taiwan Index) 20,000 19,586 1.55 7,800.00 10.13 1.99 Fubon DA Catcher 20,000 19,453 1.79 114.75 8.55 0.28 Technology Co., Ltd. Fubon DB Goldsun 20,000 19,787 0.82 19.65 7.99 0.57 Development & Construction Co., Ltd. Fubon DC HUAKU 20,000 19,591 0.82 41.60 10.15 0.83 Development Co., Ltd. Fubon DD Wpg Holdings Ltd. 20,000 17,931 0.66 78.30 7.91 0.82 Fubon DE Uni-president 20,000 19,731 0.84 51.98 10.31 0.38 Interprises Corp. Fubon DF Yuen Foong Yu 20,000 19,970 0.73 19.65 8.97 0.22 Paper MFG. Co., Ltd. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon DG Waterland 20,000 19,670 0.51 15.45 10.10 0.19 Financial Holdings Fubon DH Ruentex 20,000 18,244 1.38 62.55 7.55 1.57 Development Co., Ltd. Fubon DJ Formosa Plastics 20,000 19,840 1.12 106.95 12.73 0.46 Corporation Fubon DK Taiwan Styrene 20,000 16,900 1.01 26.70 8.81 0.06 Monomer Corporation Fubon DL Pan Jit 20,000 19,655 1.09 48.98 7.49 0.25 International Inc. Fubon DM China Life 20,000 19,401 0.73 37.05 6.77 0.57 Insurance Co., Ltd. Fubon DN Ability Enterprise 20,000 20,000 0.97 80.40 11.05 0.33 Co., Ltd. Fubon DP DARFON 20,000 19,482 0.61 74.48 8.14 0.09 Electronics Corp. Fubon DQ Yageo Corporation 20,000 17,629 0.72 18.60 8.61 0.35 Fubon DR Macronix 20,000 18,501 1.28 33.60 8.75 0.57 international Co., Ltd. Fubon DS Ruentex Industries 20,000 18,727 0.99 120.15 8.09 0.99 Limited Fubon DT Faraday 20,000 19,556 0.73 91.35 8.34 0.13 Technology Corp. Fubon DU Gigabyte 20,000 19,676 0.70 47.48 9.04 0.46 Technology Co., Ltd. Fubon DV Unity Opto 20,000 19,622 0.88 97.50 7.39 0.28 Technology Co., Ltd. Fubon DW HO TUNG 20,000 19,885 1.00 27.30 9.10 0.21 Chemical Corp. Fubon DX Compal Electronics 20,000 19,504 1.04 62.70 10.05 0.41 Inc. Fubon DY High Tech 20,000 19,445 0.89 585.75 8.78 0.86 Computer Corp. Fubon DZ Ju Teng 20,000 19,922 0.87 49.50 7.59 0.04 International Holdings Limited Fubon EA Tingyi (Cayman 20,000 19,924 1.01 62.25 8.22 0.39 Islands) Holding Corp. Fubon EB Oriental Union 20,000 19,901 1.52 41.03 9.00 0.39 Chemical Corp. Fubon EC Mitac International 20,000 19,987 0.86 21.98 8.52 0.18 Corp. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon ED Quanta Computer 20,000 19,930 1.17 88.95 10.14 0.57 Inc. Fubon EE Everlight 20,000 19,231 1.05 146.25 9.29 0.23 Electronics Co., Ltd. Fubon EF Media Tek Inc. 20,000 17,415 1.15 787.50 9.13 0.13 Fubon EG Infortrend 20,000 19,922 0.96 70.35 9.77 0.21 Technology, Inc. Fubon EH Acer Inc. Corp. 20,000 19,846 1.67 131.70 10.51 0.55 Fubon EJ Unimicron 20,000 18,930 1.06 71.33 8.97 0.94 Technology Corp. Fubon EK Yulon Motor Co., 20,000 19,766 0.99 54.75 9.22 0.47 Ltd. Fubon EL AU Optronics 20,000 8,724 0.84 55.58 8.22 1.80 Corp. Fubon EM Yuanta Financial 20,000 19,980 1.04 28.28 9.06 0.65 Holdings Fubon EN Tripod Technology 20,000 19,740 1.72 168.00 6.51 1.88 Corporation Fubon EP Richtek 20,000 19,411 0.84 504.00 8.00 0.40 Technology Corp. Fubon EQ China Steel Corp. 20,000 19,931 1.17 49.73 14.17 0.48 Fubon ER Yieh Phui 20,000 19,980 0.77 18.60 8.05 0.47 Enterprise Co., Ltd. Fubon ES Cathay Financial 20,000 19,889 1.15 75.30 10.91 0.55 Holding Fubon ET Powertech 20,000 18,295 1.12 170.25 10.13 0.25 Technology Inc. Fubon EU High Tech 10,000 8,997 4.28 642.75 10.01 2.99 Computer Corp. Fubon EV Taishin Financial 10,000 9,637 1.39 18.90 9.06 1.48 Holding Fubon EW Cathay Financial 10,000 9,488 2.53 76.50 10.08 2.24 Holding Fubon EX Gintech Energy 10,000 7,780 1.30 135.75 6.96 1.18 Corporation Fubon EY Quanta Computer 20,000 19,938 1.17 87.45 9.97 1.26 Inc. Fubon EZ Zinwell Corp. 20,000 5,307 1.27 79.80 8.38 0.94 Fubon FA MEGA Finnancial 20,000 19,865 0.95 15.60 10.95 0.76 Holding Co., Ltd. Fubon FB Taiwan Hon Chuan 20,000 19,048 1.39 89.40 10.72 1.23 Enterprise Co.,Ltd. Fubon FC Ralink Technology 10,000 9,127 1.95 223.50 7.64 1.10 Corp. Fubon FD Jentech Precision 20,000 18,411 0.76 351.75 6.17 0.74 Industrial Co., Ltd

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon FE DARFON 20,000 19,834 1.08 59.55 7.35 0.75 Electronics Corp. Fubon FF ALi Corporation 10,000 8,821 1.64 87.30 7.10 0.92 Fubon FG China 15,000 14,178 0.91 23.55 8.63 1.25 Petrochemical Development Corporation Fubon FH Pan-International 20,000 19,684 1.16 74.10 8.52 1.35 Industrial Corp. Fubon FJ Sincere Navigation 20,000 19,914 1.57 58.88 12.50 1.15 Corporation Fubon FK Cyberlink Co., 20,000 19,530 1.53 211.50 9.22 1.10 Fubon FL Shinkong Synthetic 10,000 7,953 1.26 17.40 9.21 1.32 Fiber Corporation Fubon FM Taiwan 10,000 9,457 1.14 89.25 13.05 0.99 Semiconductor Manufacturing Co., Ltd. Fubon FN Synnex Technology 10,000 9,833 1.30 106.35 10.91 1.12 International Corp. Fubon FP Ruentex 15,000 14,716 1.20 73.80 10.25 1.05 Development Co.,Ltd. Fubon FQ TSRC Corp. 20,000 19,265 1.88 67.05 11.89 1.63 Fubon FR Gigastorage 20,000 19,476 1.33 63.83 6.40 0.78 Corporation Fubon FS Asia Vital 20,000 19,970 0.94 58.20 8.26 1.05 Components Co., Ltd. Fubon FT Delta Electronics, 20,000 19,980 0.85 150.00 11.76 0.99 Inc. Fubon FU Green Energy 10,000 9,427 1.43 101.70 9.48 1.35 Technology Inc. Fubon FV Hiwin 15,000 13,637 1.16 70.70 6.09 0.98 Technologies Corp. Fubon FW Nankang Rubber 15,000 14,941 0.97 60.75 8.35 0.75 Tire Co., Ltd. Fubon FX Micro-Star 15,000 14,984 1.05 26.63 8.45 0.95 International Corp. Fubon FY Wistron Corp. 15,000 14,990 1.03 75.75 9.81 0.71 Fubon FZ Inventec Corp. 20,000 19,840 1.63 26.10 10.67 1.41 Fubon GA Foxconn 20,000 645 1.21 201.00 11.07 0.47 Technology Corp. Fubon GB (Foxconn 20,000 18,158 0.71 67.00 18.87 1.21 Technology Corp.)

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon GC Lite-on Technology 15,000 14,990 0.91 54.38 9.96 0.62 Corp. Fubon GD Media Tek Inc. 15,000 8,722 0.97 748.50 10.29 0.29 Fubon GE Ruentex Industries 10,000 9,933 1.87 110.40 7.87 3.15 Limited Fubon GF Chung Hung Steel 20,000 19,597 0.78 20.70 8.85 0.54 Corporation Fubon GG Clevo Co. 15,000 14,563 1.71 92.70 7.23 2.02 Fubon GH Gigabyte 15,000 15,000 1.59 49.80 10.44 1.26 Technology Co., Ltd. Fubon GJ Forhouse Corp. 15,000 14,978 0.83 52.50 8.43 0.50 Fubon GK Wistron NeWeb 15,000 14,988 1.42 85.80 8.06 0.96 Corporation Fubon GL First Steamship 10,000 9,948 1.27 71.70 7.53 1.59 Co., Ltd. Fubon GM First Financial 12,000 11,834 0.70 23.78 11.32 0.96 Holding Fubon GN TLG Asset 15,000 14,909 0.80 49.28 8.21 0.75 Management Co., Ltd. Fubon GP Kinsus Interconnect 15,000 14,091 0.83 104.55 8.40 0.30 Technology Corp. Fubon GQ (Taiwan Index) 20,000 19,864 1.29 7,000.00 10.99 1.03 Fubon GR Compal Electronics 15,000 14,990 1.55 55.88 12.02 1.25 Inc. Fubon GS Amtran 15,000 14,996 0.97 45.38 7.80 0.65 Technology Co., Ltd. Fubon GT Largan Precision 15,000 14,305 2.17 729.75 11.21 1.67 Co., Ltd. Fubon GU Feng Hsin 15,000 14,995 1.15 64.58 9.36 1.26 Iron&Steel Co.,Ltd Fubon GV AU Optronics 15,000 13,035 1.34 45.53 11.32 0.71 Corp. Fubon GW Pou Chen 15,000 14,980 1.08 36.00 11.11 1.00 Corporation Fubon GX Far Eastern 15,000 14,991 0.93 38.63 6.92 0.80 Department Stores Ltd. Fubon GY Formosa Epitaxy 12,000 10,809 1.49 61.80 6.91 1.16 Incorporation Fubon GZ Yageo Corporation 15,000 14,539 1.36 20.85 10.22 0.79 Fubon HA Kindom 15,000 14,404 0.79 31.73 6.69 0.74 Construction Corp. Fubon HB Chi Mei 15,000 14,086 1.00 52.95 8.83 0.84 Optoelectronics

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon HC Elite 15,000 14,136 0.91 87.90 6.44 0.62 Semiconductor Memory Technology Inc. Fubon HD United 15,000 14,714 1.38 22.20 10.72 1.33 Microelectronics Corp. Fubon HE Wpg Holdings Ltd. 15,000 14,882 1.38 93.30 9.01 1.27 Fubon HF ASIA OPTICAL 15,000 14,938 1.28 71.03 7.40 1.36 Co., Inc. Fubon HG Silicon Integrated 15,000 14,984 1.30 31.13 7.98 1.27 Systems Corp. Fubon HH The Ambassador 10,000 9,962 1.09 53.55 8.19 1.08 Hotel Ltd. Fubon HJ Young Optics Inc. 25,000 24,974 0.75 361.50 6.43 0.70 Fubon HK LOTES CO., LTD 10,000 9,989 2.73 265.50 6.48 2.21 Fubon HL Formosan Rubber 15,000 14,914 0.75 33.75 7.50 0.72 Group Inc. Fubon HM Taiwan 50 Index 15,000 14,897 1.70 75.30 14.76 1.56 Fubon HN (Taiwan 50 Index) 15,000 14,985 1.33 25.10 18.87 1.15 Fubon HP Foxconn 25,000 24,803 0.91 125.00 12.47 0.73 Technology Corp. Fubon HQ Catcher 15,000 14,975 1.59 100.65 8.44 1.19 Technology Co., Ltd. Fubon HR (Chi Mei 15,000 14,884 0.81 16.23 8.01 1.03 Optoelectronics) Fubon HS MEGA Finnancial 20,000 14,896 1.36 24.53 12.02 1.22 Holding Co., Ltd. Fubon HT Holtek 20,000 20,000 0.68 69.00 6.76 0.50 Semiconductor Inc. Fubon HU Chicony 12,000 19,863 0.88 105.75 8.01 0.72 Electronics Co., Ltd. Fubon HV ITE Tech. Inc 15,000 11,697 1.14 73.88 8.64 0.94 Fubon HW Cheng Uei 15,000 14,577 1.02 72.60 9.49 0.83 Precision Industry Co., Ltd. Fubon HX TXC Corp. 15,000 15,000 1.08 75.00 9.26 0.98 Fubon HY Greateall Enterprise 15,000 15,000 0.72 43.43 10.05 0.53 Fubon HZ Eva Airways Corp. 15,000 14,979 1.08 26.93 8.31 1.30 Fubon JA CyberTAN 15,000 14,996 1.08 50.93 7.86 0.83 Technology Inc. Fubon JB Tung Ho Stell 15,000 15,000 1.25 38.85 10.36 1.01 Enterprise Corp Fubon JC Optotech Corp. 15,000 15,000 0.72 34.20 7.92 0.59 Fubon JD EPISTAR corp. 15,000 14,698 1.09 123.00 7.52 0.74 Fubon JE Hua Nan Financial 15,000 14,997 1.41 27.38 12.94 1.41 Holdings (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon JF Radiant Opto- 15,000 15,000 0.91 64.88 9.51 0.96 electronics Corp. Fubon JG Yuanta Financial 15,000 15,000 0.91 25.95 9.51 0.87 Holdings Fubon JH Nanya Plastics 15,000 14,998 1.01 81.00 10.69 0.93 Corp. Fubon JJ Tong Yang 15,000 15,000 1.09 68.40 8.37 0.98 Industry Co.,Ltd Fubon JK Taiwan Fertilizer 15,000 14,999 1.04 141.75 9.09 0.61 Co., Ltd. Fubon JL Novatek 15,000 14,844 0.95 135.15 9.48 0.69 Microelectronics Corp. Fubon JM E. Sun Financial 20,000 19,886 0.68 20.10 9.85 0.57 Holding Co., Ltd. Fubon JN (AU Optronics 15,000 15,000 0.65 15.68 12.06 0.63 Corp.) Fubon U6 Dynapack 20,000 19,480 0.97 150.00 10.31 0.05 International Technology Corp. Fubon U7 PixArt Imaging Inc. 20,000 19,547 0.42 365.25 5.80 0.10 Fubon V7 Solar Applied 20,000 19,903 1.07 118.35 7.37 0.04 Materials Technology Corp. Fubon V8 E-Ton Solar Tech. 10,000 6,969 1.19 122.55 6.87 0.01 Co., Ltd. Fubon W1 Chipbond 20,000 19,899 0.99 44.40 5.98 3.07 Technology Corp. Fubon W2 Chuntex Electronic 20,000 19,573 1.27 67.95 7.13 0.40 Co., Ltd. Fubon W3 Kenmec 20,000 19,340 0.87 43.95 6.74 0.06 Mechanical Engineering Co., Ltd. Fubon W4 Gamania Digital 20,000 19,822 1.40 91.05 8.67 0.17 Entertainment Co., Ltd. Fubon W5 Vanguard 20,000 18,725 1.37 25.13 12.23 0.03 International Semiconductor Co. Fubon W6 Phison Electronics 20,000 19,265 3.07 381.75 8.29 0.03 Corp. Fubon W7 Foxlink Image 20,000 18,841 0.93 41.70 5.98 0.07 Technology Fubon W8 Etron Technology, 20,000 15,207 1.03 42.00 5.44 0.38 Inc. Fubon W9 Princeton 20,000 20,000 0.93 41.25 5.91 0.15 Technology Corp. Fubon PA Systex Corp. 20,000 17,417 0.58 63.60 7.31 0.26 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon PB Motech Industries 20,000 18,274 1.35 171.00 8.44 0.01 Inc. Fubon PC Wei Mon Industry 20,000 16,458 0.61 32.70 7.15 0.46 Co., Ltd. Fubon PD TTY Biopharm 20,000 18,936 1.18 120.45 6.81 1.19 Co., Ltd. Fubon PE Chuntex Electronic 20,000 18,742 1.27 70.58 7.41 0.86 Co., Ltd. Fubon PF Wafer Works Corp. 20,000 19,410 0.70 73.80 7.03 0.11 Fubon PG Solar Applied 20,000 18,368 1.02 106.35 6.95 0.45 Materials Technology Corp. Fubon PH PixArt Imaging Inc. 20,000 13,798 0.31 284.25 6.11 0.16 Fubon PJ E-Ton Solar Tech. 10,000 2,857 0.82 96.00 7.80 0.08 Co., Ltd. Fubon PK Sino-American 20,000 19,411 0.96 108.15 7.51 0.24 Silicon Products Inc. Fubon PL Kenmec 10,000 8,253 0.76 38.78 6.80 0.17 Mechanical Engineering Co., Ltd. Fubon PM Quanta Storage Inc. 20,000 19,760 0.70 80.85 7.70 0.11 Fubon PN Solar Applied 20,000 20,000 0.88 115.20 8.73 0.69 Materials Technology Corp. Fubon PP Vanguard 20,000 19,839 0.88 23.63 8.95 0.38 International Semiconductor Co. Fubon PQ Soft-world 10,000 9,318 2.06 257.25 8.33 0.86 International Corporation Fubon PR Chipbond 10,000 9,228 1.19 69.68 7.81 0.78 Technology Corp. Fubon PS Dynapack 20,000 19,953 1.13 161.25 9.51 0.42 International Technology Corporation Fubon PT Simplo Tchnology 20,000 19,828 1.75 270.75 10.31 0.85 Co.,Ltd. Fubon PU Quanta Storage Inc. 20,000 19,864 1.35 79.65 7.87 0.56 Fubon PV Chinese Gamer 15,000 8,853 1.06 522.00 6.57 0.32 International Corporation Fubon PW Userjoy 10,000 8,814 1.31 660.00 6.72 0.52 Technology Co.,Ltd. Fubon PX Chipbond 15,000 14,996 1.35 43.30 6.41 1.82 Technology Corp. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon PY Alltop Technology 8,000 7,820 1.66 163.50 6.57 1.21 Co., Ltd. Fubon PZ Channel Wwll 15,000 14,913 1.33 64.13 6.43 1.36 Technology Co., Ltd. Fubon QA ADATA 15,000 14,848 1.00 96.30 6.42 0.90 Technology Co., Ltd. Fubon QB Wafer Works Corp. 10,000 9,321 1.18 65.48 7.40 1.00 Fubon QC Motech Industries 15,000 14,129 1.22 141.45 7.73 1.76 Inc. Fubon QD Sino-American 10,000 9,764 0.89 105.00 7.87 1.07 Silicon Products Inc. Fubon QE Taiwan Surface 10,000 9,891 0.84 100.95 8.01 1.03 Mounting Technology Corp. Fubon QF MAG.LAYERS 15,000 14,987 1.20 135.15 7.51 0.94 Scientific- Technics Co.,Ltd. Fubon QG RoyalTek 15,000 14,945 0.64 63.90 6.66 0.41 Company Ltd. Fubon QH Phison Electronics 6,000 6,000 2.91 307.50 7.04 1.98 Corp. Fubon QJ TTY Biopharm 15,000 14,439 1.25 147.30 7.86 0.87 Co., Ltd. Fubon QK Etron Technology, 15,000 13,297 0.81 38.25 6.30 0.45 Inc.

June 30, 2009 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon GE Media Tek Inc. 20,000 19,840 0.45 433.50 6.45 1.10 Fubon GU High Tech 20,000 18,810 0.55 411.75 5.02 0.97 Computer Corp. Fubon GW China Steel Corp. 20,000 15,230 0.49 33.08 9.06 0.38 Fubon GX ASUS Tek 20,000 19,899 0.7 55.35 10.59 0.22 Computer Inc. Corp. Fubon GY Cathay Financial 19,698 18,950 0.47 47.70 6.79 0.80 Holding Fubon HA Formosa Chemical 20,000 17,298 0.45 69.90 10.40 0.09 & Fibre Corp. Fubon HB Evergreen 20,000 19,937 0.74 27.83 5.04 2.18 International Storage & Trans (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon HC AU Optronics 20,000 19,895 0.64 30.75 6.44 1.51 Corp. Fubon HD Yang Ming Group 20,000 19,171 0.73 17.55 8.05 0.12 Fubon HE Siliconware 20,000 19,898 0.76 37.13 6.54 0.71 Precision Ind. Co., Ltd. Fubon HF Hua Nan Financial 20,000 18,989 1.37 26.25 6.37 0.44 Holding Fubon HH Wistron Corp. 20,000 19,995 0.85 36.23 5.71 4.00 Fubon HJ Advanced 20,000 19,831 0.41 18.45 6.03 1.11 Semiconductor Engineering Inc. Fubon HK Mega Financial 20,000 18,766 0.92 17.25 6.28 1.56 Holding Co., Ltd. Fubon HL Chi Mei 20,000 19,873 0.86 15.38 5.99 2.82 Optoelectronics Corp. Fubon HM Formosa Plastics 20,000 19,742 0.62 67.95 14.68 1.39 Corp. Fubon HN Faraday 19,980 19,782 1.17 41.10 4.70 3.79 Technology Corp. Fubon HP Uni-President 20,000 19,661 0.72 41.25 7.64 0.70 Enterprise Corp. Fubon HQ Compat Electronic 20,000 19,848 0.8 52.35 4.36 2.19 Inc. Fubon HR Pou Chen 20,000 18,853 0.96 22.20 7.71 2.24 Corporation Fubon HS Compal Electronics 20,000 20,000 0.97 25.73 8.84 3.86 Inc. Fubon HT Acer Inc. Corp. 20,000 19,719 0.82 60.60 9.85 1.89 Fubon HU Foxconn 19,970 19,708 1.06 90.75 5.71 5.40 Technology Corp. Fubon HV Quanta Computer 20,000 19,954 0.69 45.08 8.71 2.97 Inc. Fubon HW Chicony 20,000 19,977 1.05 45.38 5.76 5.45 Electronics Co., Ltd. Fubon HX Richtek 20,000 19,818 1.92 186.75 6.48 4.47 Technology Corp. Fubon HY Taiwan 50 ETF 20,000 20,000 1.68 47.21 9.37 3.08 Fubon HZ Far Eastern Corp. 20,000 20,000 1.58 31.95 6.74 6.80 Fubon JA Delta Electronics, 20,000 20,000 0.99 77.70 10.46 1.72 Inc. Fubon JB U-Ming Marine 20,000 19,975 1.43 62.93 5.87 2.82 Transport Corp. Fubon JC United 20,000 19,619 1.34 12.30 6.12 3.05 Microelectronic Corp.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon JD Cheng Uei 20,000 19,945 1.17 56.63 6.45 1.94 Precision Industry Co., Ltd. Fubon JE WPG Holdinds 20,000 19,996 1.50 27.90 6.20 5.85 Limited Fubon JF (Taiwan 50 ETF) 20,000 19,685 1.67 16.08 9.63 0.07 Fubon JG (China Steel Corp.) 20,000 18,444 0.58 11.05 7.64 0.01 Fubon JH Epistar Corp. 20,000 19,958 1.62 64.65 5.32 7.55 Fubon JJ Media Tek Inc. 20,000 19,985 0.57 438.00 5.12 0.93 Fubon JK Novatek 20,000 19,977 1.24 62.40 6.71 5.75 Microelectornics Corp. Fubon JL Global Unichip 20,000 19,633 2.19 220.50 6.71 0.79 Corp. Fubon JM China Steel Corp. 20,000 19,015 0.66 32.55 6.58 1.08 Fubon JN Foxconn 20,000 19,956 1.3 119.85 6.15 1.22 Technology Co., Ltd. Fubon JP Cathay Financial 20,000 19,875 1.9 37.58 6.59 11.50 Holding Fubon JQ Yuanta Holding 20,000 20,000 1.08 18.00 5.56 4.76 Corp. Fubon JR Largan Precision 20,000 19,504 0.44 370.50 5.61 0.81 Co., Ltd. Fubon JS Innolux Display 20,000 19,942 2.35 43.88 6.22 3.51 Corp. Fubon JT Advanced 20,000 19,802 1.25 22.20 5.92 1.71 Semiconductor Engineering Inc. Fubon JU Everlight 20,000 19,997 1.91 86.55 6.04 4.23 Electronics Corp. Fubon JV AU Optronics 20,000 19,875 0.82 38.33 6.23 1.06 Corp. Fubon JW Transcend 20,000 19,903 2.3 105.00 6.09 2.56 Information, Inc. Fubon JX High Tech 20,000 19,711 5 562.50 7.50 4.35 Computer Corp. Fubon JY Powertech 20,000 19,985 1.8 81.75 6.06 2.52 Technology Inc. Fubon JZ Nanya Plastics 20,000 19,923 1.92 55.65 9.66 1.67 Corp. Fubon KA Synnex Technology 20,000 19,952 1.46 66.00 6.03 1.81 International Corp. Fubon KB First Financial 20,000 19,673 2.02 20.78 6.86 3.85 Holding Fubon KC Wistron Corp. 20,000 19,961 1.05 47.40 6.02 3.46 Fubon KD (Foxconn 20,000 19,907 1.29 34.25 10.62 0.10 Technology Corp.) (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon KE (Media Tek Inc.) 20,000 17,761 0.45 151.50 6.73 0.10 Fubon KF Catcher 20,000 18,953 2.28 103.20 6.04 1.81 Technology Co., Ltd. Fubon KG Chi Mei 20,000 19,889 1.17 19.80 5.64 2.40 Optoelectronics Corp. Fubon KH Formosa Petro 20,000 19,553 2.34 95.25 13.57 3.60 Chemical Corp. Fubon KJ Formosa Chemical 20,000 19,513 2.2 60.68 9.19 2.81 & Fibre Corp. Fubon KK Pan-International 20,000 19,933 1.18 46.80 5.29 1.34 Industrial Corp. Fubon KL Inventec Corp. 20,000 19,985 1.7 19.35 7.59 5.65 Fubon KM Chang Hwa 20,000 19,308 1.29 16.88 8.72 2.46 Commercial Bank Ltd. Fubon KN Tripod Technology 20,000 19,880 1.62 67.80 5.58 2.30 Corporation Fubon KP Taiwan 20,000 19,982 1.74 22.73 8.71 3.03 Cooperative Bank Fubon KQ Taiwan Fertilizer 20,000 19,999 1.87 93.75 6.68 4.87 Co., Ltd. Fubon KR (Siliconware 20,000 19,910 1.78 16.65 9.35 0.95 Precision Ind. Co., Ltd.) Fubon KS (First Financial 20,000 20,000 1.4 7.25 10.36 0.29 Holding) Fubon KT Chunghwa 20,000 19,876 1.13 98.25 11.59 0.66 Telecom Co., Ltd Fubon KU United 20,000 13,422 1.51 15.83 6.99 1.12 Microelectronic Corp. Fubon KV (United 20,000 19,910 1.29 5.28 8.18 0.82 Microelectronic Corp.) Fubon KW Yuanta Holding 20,000 19,958 1.5 25.20 5.60 3.68 Corp. Fubon KX (Yuanta Holding 20,000 19,987 1.28 8.40 6.56 0.24 Corp.) Fubon KY Compal Electronics 20,000 19,858 1.43 36.30 8.46 1.31 Inc. Fubon KZ Micro-Star 20,000 19,938 1.45 24.23 5.57 1.86 International Corp. Fubon LA USI Co., Ltd. 20,000 19,953 0.85 15.00 5.88 0.90 Fubon LB Faraday 20,000 19,844 1.45 66.75 6.14 1.19 Technology Corp. Fubon LC Radiant Opto- 20,000 19,873 1.16 51.45 5.91 1.29 Electronics Corp. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon LD Nan Ya Printed 20,000 19,815 1.37 132.75 6.46 0.95 Circuit Board Corporation Fubon LE Élan 20,000 18,944 1.1 49.80 6.04 2.88 Microelectronics Corp. Fubon LF D-Link 20,000 19,360 0.92 39.08 5.66 0.71 Corporation Fubon LG Yang Ming Group 20,000 19,153 1.64 18.75 7.62 0.97 Fubon LH (Chi Mei 20,000 18,215 1.15 7.85 6.83 1.19 Optoelectronics Corp.) Fubon LJ Delta Electronic. 20,000 19,969 1.37 77.40 7.53 1.30 Inc. Fubon LK (Delta Electronic. 20,000 20,000 1.38 25.80 7.48 0.87 Inc.) Fubon LL Cathay Financial 20,000 19,727 2.75 56.70 6.87 6.45 Holding Fubon LM (Cathay Financial 20,000 18,767 0.87 18.90 8.69 0.13 Holding) Fubon LN ASUS Tek 20,000 19,676 2.73 63.60 7.77 2.15 Computer Inc. Corp. Fubon LP AU Optronics 20,000 19,822 1.13 52.88 6.24 0.64 Corp. Fubon LQ (AU Optronics 20,000 19,944 1.02 17.63 6.91 0.59 Corp.) Fubon LR Cyberlink Co., 20,000 19,461 2.55 193.50 10.12 1.18 Fubon LS Tung Ho Stell 20,000 19,723 1.96 42.75 7.27 2.01 Enterprise Corp Fubon LT Foxconn 20,000 18,924 1.31 143.40 7.30 1.43 Technology Corp. Fubon LU Mega Financial 20,000 19,940 1.43 20.10 9.37 1.38 Holdinng Co., Ltd. Fubon LV Far EasTone 20,000 19,952 1.24 56.48 15.18 0.79 Telecommunicatio ns Co., Ltd. Fubon LW China Steel Corp. 20,000 17,540 0.65 39.75 8.15 0.53 Fubon LX (ASUS Tek 20,000 19,993 1.53 23.20 15.16 1.50 Computer Inc. Corp.) Fubon LY Realtek 20,000 19,850 1.74 96.60 7.40 0.94 Semiconductor Corp Fubon LZ Hua Nan Financial 20,000 18,598 1.1 28.73 8.70 0.74 Holding

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon MA Feng Hsin 20,000 19,970 1.3 75.00 7.69 1.24 Iron&Steel Co.,Ltd Fubon MB (Media Tek Inc.) 20,000 20,000 0.52 190.50 7.33 0.92 Fubon MC Yulon Group 20,000 18,654 1.97 45.83 7.75 1.79 Fubon MD Gemtek 20,000 19,970 1.35 84.00 8.30 0.86 Technology Co.,Ltd Fubon ME Far Eastern Corp. 10,000 9,961 2.17 56.63 8.70 2.18 Fubon MF Evergreen Line 10,000 9,679 1.49 26.40 11.81 0.60 Fubon MG Wistron Corp. 10,000 9,919 1.58 71.85 6.06 2.05 Fubon MH (Yang Ming 10,000 9,870 0.99 6.30 12.73 1.45 Group) Fubon MJ (Chang Hwa 10,000 9,949 1.14 7.50 13.16 1.45 Commercial Bank Ltd.) Fubon MK SinoPac Holding 10,000 9,442 1.55 15.53 6.68 1.60 Fubon ML Yuanta Holding 10,000 9,883 1.95 35.10 6.00 1.00 Corp. Fubon MM (China Steel Corp.) 10,000 9,985 0.52 13.33 10.25 0.64 Fubon MN Taiwan Index 10,000 9,849 1.35 7200.14 9.98 0.79 Fubon MP (Taiwan Index) 10,000 7,881 1.2 6000.23 11.23 1.22 Fubon MQ Advanced 10,000 10,000 1.55 30.15 6.48 0.93 Semiconductor Engineering Inc. Fubon MR Media Tek Inc. 10,000 9,790 0.66 600.00 6.06 0.57 Fubon MS Epistar Corp. 10,000 9,892 2.44 144.75 7.91 1.82 Fubon MT (Epistar Corp.) 10,000 8,616 1.6 48.25 12.06 1.57 Fubon MU CSBC Corporation, 10,000 7,182 0.98 54.53 7.42 0.88 Taiwan Fubon MV Delta Electronic. 10,000 9,972 0.93 105.45 7.56 1.09 Inc. Fubon MW Chi Mei 10,000 10,000 1.55 28.80 6.19 1.10 Optoelectronics Corp. Fubon MX Pou Chen 10,000 9,988 1.2 28.58 7.94 1.58 Corporation Fubon MY Taiwan Index 10,000 9,992 1.52 7000.00 8.64 1.12 Fubon MZ (Taiwan Index) 10,000 9,970 1.64 6200.00 8.01 1.56 Fubon NA Acer Inc. Corp. 10,000 9,997 1.08 87.00 10.74 0.92 Fubon NB Richtek 10,000 9,990 2.62 279.75 7.12 2.84 Technology Corp. Fubon NC Taiwan 50 ETF 10,000 10,000 1.7 64.13 12.57 1.77 Fubon ND (Taiwan 50 ETF) 10,000 10,000 1.1 21.38 19.43 1.05 Fubon S3 Pix Art Imaging 20,000 19,902 2.42 207.75 5.72 5.70 Inc. Fubon S4 Coretronic 20,000 19,875 0.61 27.60 6.03 2.44 Corporation

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Stock call (put) Issue Exercise Market warrant Underlying Issued units price (per price (per Leverage price (per issued securities Issued units repurchased unit) unit) multiple unit)

Fubon S5 Prime View 19,980 19,795 1.64 25.65 5.21 7.40 International Co., Ltd. Fubon S6 A-DATA 20,000 14,959 1.17 45.75 5.21 2.75 Technology Co., Ltd. Fubon S7 E-TON SOLAR 20,000 18,274 2.72 151.50 7.43 1.08 TECH. CO., LTD Fubon S8 Simplo Technology 20,000 19,922 2.62 145.50 7.40 5.20 Co.,Ltd. Fubon S9 Motech 20,000 19,657 2.62 145.50 7.40 5.35 Industries Inc.

As of June 30, 2010 and 2009, the Company’s net liabilities for stock call (put) warrants issued were as follows:

June 30, June 30, 2010 2009

Liabilities for stock warrants issued $ 3,598,530 5,350,373 Less: issued stock warrants repurchased 3,447,672 5,263,724 $ 150,858 86,649

The stock call (put) warrants issued by the Consolidated Company are American-style warrant and European-style warrant, and the maturity period of these stock warrants is one year starting from the first trading date. These warrants can be settled in stock or cash.

(19) Commercial Paper Payable

June 30, June 30, 2010 2009

Commercial paper payable $ 7,910,000 1,085,000 Less: discount on commercial paper payable 1,261 933 $ 7,908,739 1,084,067 Interest rates for the years 0.20~0.42% 0.27~0.70%

As of June 30, 2010 and 2009, the commercial paper payables were guaranteed by China Bills Finance, International Bills Finance, MEGA Bills Finance, Grand Bills Finance, and Taiwan Finance.

For details of asset pledged for commercial paper payable, please refer to note 35.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(20) Deposits

June 30, June 30, 2010 2009

Checking accounts $ 64,156,840 75,315,158 Demand deposits 175,346,372 144,071,909 Time deposits 456,172,034 437,414,052 Negotiable certificates of deposit 18,080,289 6,149,325 Savings accounts 546,874,829 531,152,537 Remittances 9,138,558 373,366 Total $ 1,269,768,922 1,194,476,347

(21) Bonds Payable

1) The bonds payable of the Company were as follows:

June 30, June 30, 2010 2009

Unsecured corporate bonds $ 20,000,000 22,111,847 Financial bonds 60,878,169 49,353,025 Total $ 80,878,169 71,464,872

2) As resolved by the board of directors on May 17, 2005, the Company issued the first unsecured domestic corporate bonds, in order to repay the second unsecured Euro convertible bonds issued by the Company. Indicative terms and conditions for an issue were as follows:

1. Form / Denomination: Unsecured corporate bonds

2. Issue date: June 27~July 5, 2005; issued $2,000,000 twice on June 27, 2005, and July 4, 2005, respectively.

3. Maturity date/duration: June 27~July 5, 2010; 5 years

4. Issue amount

The issued amount was $4,000,000 divided equally into Bonds A01 to A04 and Bonds B01 to B04 according to the issue conditions and dates, and issued at 100% of par value.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

5. Coupon rate

(a) Bonds A01 to A04:

1.93% per annum.

(b) Bonds B01 to B04:

1.9208% per annum.

6. Interest payment

(a) Bond A01 to A04:

Interests is payable annually at coupon rate calculated with nominal simple interest rate.

(b) Bond B:

Interests is payable semi-annually at coupon rate calculated with compound interest.

7. Principal payment: Five years after issue date

The Company has paid off the Bonds A01, A02, B01, and B02, amounting to $2,000,000, on June 27, 2010, and will pay off the Bonds A03, A04, B03, and B04, amounting to $2,000,000, on July 5, 2010.

3) As resolved by the board of directors on April 25, 2007, the Company issued the first 2007 unsecured domestic corporate bonds, in order to repay the first 2004 unsecured Euro convertible bonds issued by the Company. Indicative terms and conditions for an issue were as follows:

1. Form / Denomination: Unsecured corporate bonds

2. Issue date: July 5, 2007

3. Maturity date/duration: July 5, 2012; 5years

4. Issue amount

The total issue amount was $7,000,000, with par value of $10,000 each unit, and issued at 100% of par value.

5. Coupon rate

2.10% per annum.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6. Interest payment

Interests is payable annually from the issue date at fixed coupon rate calculated with nominal simple interest rate.

7. Principal payment: Five years after issue date

4) In order to acquire ING Life Insurance, the Company issued subordinate overseas corporate bonds to ING Group amounting to US$338,590 thousand on February 11, 2009. Indicative terms and conditions for the issuance were as follows:

1. Form / Denomination: subordinate corporate bonds

2. Issue date: February 11, 2009

3. Maturity date / duration: December 29, 2016, but the bonds has redeemed on February 9, 2010.

4. Issue amount: US$338,590 thousand.

5. Coupon rate: 6.326% per annum.

6. Interest payment:

The interests are payable and calculated semi-annually with nominal simple interest rate.

7. Principal payment: pay in full when mature.

8. Issue mode: Issue the private overseas corporate bonds overseas.

5) As resolved by the board of directors on October 30, 2009, the Company issued the first 2009 unsecured domestic corporate bonds, in order to repay the subordinate overseas corporate bonds issued on February 11, 2009. Indicative terms and conditions for an issue were as follows:

1. Form / Denomination: Unsecured corporate bonds

2. Issue date: January 27, 2010.

3. Maturity date / duration: January 27, 2017; 7 years

4. Issue amount

The total issue amount was $6,000,000, with par value of $1,000 each unit, and issued at 100% of par value.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

5. Coupon rate

2.60% per annum

6. Interest payment

Interests is payable annually from the issue date at fixed coupon rate calculated with nominal simple interest rate.

7. Principal payment: pay in full when mature.

6) As resolved by the board of directors on October 30, 2009, the Company issued the second 2009 unsecured domestic corporate bonds, in order to repay the subordinate overseas corporate bonds issued on February 11, 2009. Indicative terms and conditions for an issue were as follows:

1. Form / Denomination: Unsecured corporate bonds.

2. Issue date: January 28, 2010

3. Maturity date / duration: January 28, 2015 and 2017, 5 and 7 years.

4. Issue amount

The issued amount was $5,000,000 divided into Bond A of $3,200,000, Bond B of $1,000,000, and Bond C of $800,000, respectively, with $1,000 each unit, and issued at 100% of par value.

5. Coupon rate

The annual fixed rates for bond A, B and C are 1.70%, 1.90%, and 2.60%, respectively.

6. Interest payment

Interests is payable annually from the issue date at fixed coupon rate caculated with nominal simple interest rate.

7. Principal payment: pay in full when mature.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

7) Financial debentures payable

June 30, 2010 Maturity years Interest rate Amount

Taipei Fubon From July 2010 to March 2020 Inverse floating rate, $ 52,280,683 Bank floating rate or fixed rate Fubon Bank From July 2010 to August 2019 Floating rate or fixed 8,597,486 (Hong Kong) rate $ 60,878,169

June 30, 2009 Maturity years Interest rate Amount

Taipei Fubon From May 2010 to June 2015 Inverse floating rate, $ 39,578,186 Bank floating rate or fixed rate Fubon Bank From August 2009 to April 2011 Floating rate or fixed 9,774,839 (Hong kong) rate $ 49,353,025

(22) Other Borrowings

June 30, June 30, 2010 2009

Credit and guarantee loan $ 5,600,000 3,800,000

For the six-month periods ended June 30, 2010 and 2009, the annual interest rates ranged from 0.500% to 2.750% and 0.500% to 3.290%, respectively.

For details of assets pledged for other borrowings, please refer to note 35.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(23) Reserves for Operations and Other Liabilities

June 30, June 30, 2010 2009

Reserve for securities default $ 244,751 236,002 Reserve for trading loss 136,073 12,806 Reserve for bad debt 32,142 32,142 Unearned premium reserve 18,356,585 17,932,356 Special claim reserve 18,617,260 17,080,104 Claim reserve 12,621,333 11,156,229 Reserves for value added taxes on land 9,263 9,263 Assurance reserve 1,176,153,427 915,343,172 Guarantee reserve 127,058 79,201 Reserve for premium deficiency 1,410,068 2,066,486 Claim reserve without approval 183,935 410,393 Others 32,527,343 33,333,584 Total $ 1,260,419,238 997,691,738

(24) Pension

Pension expense recognized by the Consolidated Company for the six-month periods ended June 30, 2010 and 2009, amounting to $821,066 and $1,054,590, respectively. As of June 30, 2010 and 2009, the balance of the “Accrued pension liability” was $3,021,374 and $3,405,880, respectively.

(25) Other Financial Liabilities

June 30, June 30, 2010 2009

Investment-type insurance policy liabilities $ 152,073,199 132,611,350 Exchange fund bills and bonds 11,569,916 17,558,432 Hedging derivative financial liabilities 908,846 144,576 Appropriated loan funds 926,000 1,091,771 Total $ 165,477,961 151,406,129

1) Investment-type insurance policy liabilities

June 30, June 30, 2010 2009

Reserve $ 152,073,199 132,611,350

For related revenue and expenses of investment-type insurance policy, please refer to note 13. (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2) Exchange fund bills and notes

Fubon Bank (Hong Kong) was appointed by the Hong Kong Monetary Authority as the eligible market-makers of exchange fund bills and notes, and other debt instruments in 2002.

3) Hedging financial liabilities, net

June 30, June 30, 2010 2009

Hedging derivative financial assets $ 978,635 1,486,011 Hedging derivative financial liabilities 908,846 144,576 $ 69,789 1,341,435

1. Fubon Life Insurance

(a) Cash flow hedge

The future cash flow of the floating-rate assets or liabilities may fluctuate due to the changes of market interest rates. Therefore, Fubon Life Insurance entered into interest rate swap contracts to hedge such interest rate risk.

Designated hedging Expected instrument’s period of Designated fair value on Expected recognition Hedged hedging Nominal June 30, period of in profit or item instrument amount 2010 cash flow loss

Floating Interest rate $ 11,100,000 522,114 June 30, June 30, financial swap 2010 ~ 2010 ~ debenture contract December December strip bonds 25, 2017 25, 2017 and floating collateral loans

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Designated hedging Expected instrument’s period of Designated fair value on Expected recognition Hedged hedging Nominal June 30, period of in profit or item instrument amount 2009 cash flow loss

Floating Interest rate $ 15,100,000 720,045 June 15, June 15, corporate swap 2009 ~ 2009 ~ bonds and contract December December financial 27, 2017 27, 2017 bonds, financial debenture strip bonds, and floating collateral loans

(b) As of June 30, 2010 and 2009, Fubon Life Insurance had adjusted the shareholders’ equity for the unrealized gain or loss resulting from the cash flow hedge. Details of which were as follows:

Item 2010 2009

Shareholders’ equity adjusted amount $ 522,114 720,045 Non-financial liabilities (deferred income tax $ (88,759 ) (144,009 ) liabilities) transferred from shareholders’ equity

2. Fubon Securities

(a) Cash flow hedge

The future cash flow of the floating-rate assets or liabilities may fluctuate due to the changes of market interest rates. Therefore, Fubon Securities entered into interest rate swap contracts to hedge such interest rate risk.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(b) As of June 30, 2010 and 2009, Fubon Securities had adjusted the shareholders’ equity for the unrealized gain or loss resulting from the cash flow hedge. Details of which were as follows:

Item 2010 2009

Current income or loss transferred from $ - 1,515 shareholders’ equity

As of June 30, 2010 and 2009, there was no cash flow hedge transactions.

3. Taipei Fubon Bank

(a) Cash flow hedge

The future cash flow of the floating-rate liabilities may fluctuate due to the changes of market interest rates. Therefore, Taipei Fubon Bank entered into interest rate swap contracts to hedge such interest rate risk.

Designated hedging Expected instrument’s period of Designated fair value on Expected recognition hedging Nominal June 30, period of in profit or Hedged item instrument amount 2010 cash flow loss

Financial Interest rate $ 5,000,000 11,276 2006~2013 2006~2013 bonds swap payable contract

Designated hedging Expected instrument’s period of Designated fair value on Expected recognition hedging Nominal June 30, period of in profit or Hedged item instrument amount 2009 cash flow loss

Financial Interest rate $ 13,200,000 131,663 2006~2013 2006~2013 bonds swap payable contract

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(b) As of June 30, 2010 and 2009, Taipei Fubon Bank had adjusted the shareholders’ equity for the unrealized gain or loss resulting from the cash flow hedge. Details of which were as follows:

Item 2010 2009

Shareholders’ equity adjusted amount $ (58,318 ) (89,372 ) Current income or loss transferred from $ 28,439 66,705 shareholders’ equity

Corporate bonds and financial bonds held and financial bonds granted may be exposed to the risk of fluctuations in fair value because of changes in interest rates. Therefore, Taipei Fubon Bank entered into interest rate swap contracts to hedge such interest rate risk.

June 30, 2010 Designated hedging Nominal Hedged item instrument amount Fair value

Financial bonds Interest rate swap $ 14,500,000 436,425 payable contract Available-for-sale Interest rate swap 1,079,932 (105,308) financial assets – contract corporate bond Availed-for-sale Interest rate swap 2,569,035 (162,562) financial assets – contract financial bond

June 30, 2009 Designated hedging Nominal Hedged item instrument amount Fair value

Financial bonds Interest rate swap $ 11,800,000 392,363 payable contract Available-for-sale Interest rate swap 1,425,624 (117,000) financial assets – contract corporate bond Available-for-sale Interest rate swap 1,148,648 (10,154) financial assets – constract corporate bond

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

4. Fubon Bank (H.K.) – fair value hedge

Fixed-rate bond payables may be exposed to the risk of fluctuation in fair value because of changes in interest rates. Therefore, Fubon Bank (H.K.) entered into interest rate swap contracts to hedge such interest rate risk.

June 30, 2010 Designated hedging Nominal Hedged item instrument amount Fair value

Bond payable Interest rate swap contract $ 6,455,862 311,573 Available-for-sale Interest rate swap contract 10,274,505 (943,729) financial assets

June 30, 2009 Designated hedging Nominal Hedged item instrument amount Fair value

Bond payable Interest rate swap contract $ 6,550,035 464,611 Available-for-sale Interest rate swap contract 9,129,945 (240,093) financial assets

(26) Other Liabilities

June 30, June 30, 2010 2009

Advance receipts $ 2,375,071 1,619,612 Temporary receipts 1,730,527 3,328,665 Deferred revenues 67,337 70,161 Guarantee deposits received 1,075,704 899,214 Contingency reserve for reinsurance 23,146 23,146 Accrued pension liability 3,021,374 3,405,880 Withholdings 500,130 483,833 Temporary premiums 1,686,486 1,713,845 Others 674,426 821,239 $ 11,154,201 12,365,595

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(27) Income Tax

The components of income tax expense for the six-month periods ended June 30, 2010 and 2009 were as follows:

2010 2009

Current income tax expense $ 1,698,366 1,990,352 Deferred income tax income (81,968) (823,502) 10% surtax on unappropriated earnings 844,047 76 Income tax expense $ 2,460,445 1,166,926

According to the amendment of the “Income Tax Act” issued on May 27, 2009, the income tax rate of profit-seeking enterprises will be reduced from 25% to 20% beginning from 2010. However, the Company will be subject to a maximum income tax rate of 17% effective retroactively from year 2010 onward according to the amendment of the “Income Tax Act” issued on June 15, 2010. For the years of 2010 and 2009, the income tax rate of the Company and its domestic subsidiaries are 17% and 25%, respectively, and the Company and its domestic subsidiaries shall compute basic tax according to the “Income Basic Tax Act”. Fubon Bank (Hong Kong) is subject to income tax rate of 16.5%. The income tax calculated based on accounting income at the statutory rate was reconciled with the income tax expense as reported in the accompanying financial statements for the six-month periods ended June 30, 2010 and 2009 were as follows:

2010 2009

Income tax calculated based on accounting income $ 2,309,049 1,882,977 Tax effect of adjustments: Gain on domestic investment under equity method (13,010) (15,998) Tax-exempt investment income (780,138) (901,985) Tax-exempt dividend income (50,765) (41,884) Prior year’s tax adjustments (38,672) 326,649 Non-deductible expense 10,648 7,362 Provision for allowance of deferred income tax assets 7,620 91,650 10% surtax on unappropriated earnings 844,047 76 Effect of separately taxable interest income from 6,237 (37,426) commercial paper Investment tax credit (80,696) (200,991) Effect of changes in income tax rate 323,824 (6,090) Others (77,699 ) 62,586 Income tax expenses $ 2,460,445 1,166,926

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Deferred income tax benefit for the six-month periods ended June 30, 2010 and 2009, consisted of following:

2010 2009

Reversal for (provision in) doubtful accounts $ 6,093 (22,230) Gain on foreign investment under equity method 44,879 24,910 Unrealized loss from foreign exchange (586,402) (2,091,535) Unrealized gain (loss) on evaluation of financial instruments (60,365) 793,488 Decrease (increase) in loss carry-forward 99,292 (236,829) Provision in (reversal for) allowance of deferred income tax 4,086 (88,436) assets Unrealized expense – commission expense 53,667 59,106 Change in tax rate of deferred income tax benefit from tax 324,195 676,194 expenses Others 32,587 61,830 Deferred income tax benefit $ (81,968 ) (823,502 )

The components of deferred income tax assets (liabilities), loss carry-forwards, and tax credit were as follows:

June 30, 2010 June 30, 2009 Amount Tax effect Amount Tax effect

Deferred income tax assets: Unrealized foreign exchange $ 4,934,561 840,723 5,956,781 1,191,356 loss Investment credit 106,253 18,063 174,170 37,172 Allowance for bad debts in 910,556 151,307 760,964 133,071 excess of tax allowable limit Unrealized loss on available- 359,147 61,055 3,795,241 772,293 for-sale financial assets Reserve for default loss 244,751 41,608 236,002 47,200 Unrealized loss on evaluation of 4,837,676 822,405 1,567,174 291,406 financial instruments Provision for impairment loss 6,351,918 1,079,826 5,397,704 1,082,978 Unappropriated pension reserve 4,406,226 749,057 4,061,235 821,794 Deferral of salary expense 96,733 16,445 88,078 17,616 Loss carry-forward 1,323,319 242,838 2,286,445 488,827 Deferral of overseas branch 170,988 29,068 118,216 29,554 expense Unrealized donation expense 110,188 18,732 116,152 29,038 Unrealized commission expense 72,581 12,340 140,157 28,031 Unrealized share-based payment - - 116,833 23,367 Other 247,808 42,153 135,502 27,780 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 June 30, 2009 Amount Tax effect Amount Tax effect

Allowance for deferred income $ - (655,576) - (213,482) tax assets $ 3,470,044 4,808,001 Deferred income tax liabilities: Deferral of depreciation 236,871 39,084 306,514 50,575 expense Unrealized gain on evaluation 2,554,226 433,861 2,608,169 573,499 of financial instruments Prepaid pension 51,160 8,697 64,501 12,900 Unrealized foreign exchange 200,182 34,031 746,066 156,108 gain Unrealized gain on cash flow 533,390 90,676 825,377 170,342 hedge derivatives Unrealized gain on available- 5,665,833 963,192 - - for-sale financial instruments Gain on foreign investment 1,565,629 266,160 1,710,143 342,028 under equity method Gain on valuation of building 153,715 25,364 159,704 26,351 Others 287,995 48,617 59,540 22,655 $ 1,909,682 1,354,458

1) In accordance with the Financial Holding Company Act, Article 49, the domestic companies, which are held directly by the Company for over 90% of their equity shares, appointed Fubon Financial Holding as the taxpayer to file a combined corporate income tax return commencing from 2002. For the years 2003, 2005, 2006, 2007 and 2008, the amounts of income tax receivable were $115,682, $361,237, $900,003, $28,830 and $72,435, respectively.

2) Under a combined corporate income tax filing, the income tax paid to the tax authorities amounted to $591,448 (actual) and $851,565 (actual) for 2009 and 2008, respectively.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

3) The status of the local tax office’s assessment of the income tax return of the Company and its subsidiaries was as follows:

Disapproved issues Solution

The Company Certain operating expense and Discussing with the authorities interest expense were not allowed as deductible Fubon Insurance The withholding taxes on Recorded the increasing accrued bond interest and assessment amortization of bond premium and discount Fubon Life Assurance The withholding taxes on Recorded the increasing accrued bond interest and assessment amortization of bond premium and discount Fubon Securities The tax issue on stock warrant Recorded the increasing and the withholdings taxes of assessment accrued bond interest, etc. Fubon Asset Management - - Taipei Fubon Bank The withholdings taxes on Recorded the increasing accrued bond interest assessment

The Company is the taxpayer of the combined corporate income tax return, which have been assessed by the tax authority through 2003 and 2004.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

4) Since 2002, the Company has filed a combined income tax return in accordance with the Financial Holding Company Act, Article 49. As of June 30, 2010 and 2009, the details of receivable and payable of subsidiaries resulting from consolidated income tax return filing were as follows:

June 30, 2010 Taxes in Estimate in previous 2010 years Total

Linked tax receivables from subsidiaries: Fubon Insurance $ 186,105 424,036 610,141 Fubon Life Insurance 725,494 - 725,494 Fubon Securities 119,966 1,523,732 1,643,698 Taipei Fubon Bank 353,183 11,490 364,673 Fubon Asset Management 6,044 - 6,044 Fubon Direct Marketing 10,119 - 10,119 Consulting Fubon Asset Management Service 24,261 - 24,261 Fubon Investment Management 445 - 445 Total $ 1,425,617 1,959,258 3,384,875

Taxes in Estimate in previous 2010 years Total

Linked tax payables to subsidiaries: Fubon Insurance $ - 96,074 96,074 Fubon Life Insurance - 483,318 483,318 Fubon Bank - 131,864 131,864 Fubon Securities - 183,859 183,859 Taipei Fubon Bank - 944,087 944,087 Fubon Asset Management - 134,100 134,100 Fubon Financial Holding 2 - 2 Venture Capital Total $ 2 1,973,302 1,973,304

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Taxes in Estimate previous in 2009 years Total

Linked taxes receivable from subsidiary: Fubon Insurance $ 321,377 - 321,377 Fubon Securities 133,165 1,490,340 1,623,505 Taipei Fubon Bank 240,780 - 240,780 Fubon Direct Marketing 8,123 - 8,123 Consulting Fubon Asset Management Service 28,567 - 28,567 Fubon Investment Management 479 - 479 Total $ 732,491 1,490,340 2,222,831

Taxes in Estimate in previous 2009 years Total

Linked taxes payable to subsidiaries: Fubon Insurance $ - 96,074 96,074 Fubon Life Assurance 72,435 410,883 483,318 Fubon Bank - 131,864 131,864 Fubon Securities - 183,859 183,859 Taipei Fubon Bank - 866,378 866,378 Fubon Asset Management 2,875 165,090 167,965 Fubon Financial Holding Venture 1 - 1 Capital Total $ 75,311 1,854,148 1,929,459

As of June 30, 2010 and 2009, the balances of the imputation credit account (ICA) was as follows:

June 30, June 30, 2010 2009

Imputation credit account balance $ 1,513,781 1,085,134

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The imputed tax credit for appropriating the net income was 7.74% (estimated) for 2009 and 8.96% (actual) for 2008.

June 30, June 30, 2010 2009

Unappropriated retained earnings: Earnings prior to January 1, 1997 $ 46,459 - Earnings commencing from January 1, 1998 24,870,113 6,213,732 Total $ 24,916,572 6,213,732

(28) Shareholders’ Equity

1) Common stock

The authorized and paid-in capital as of June 30, 2010, amounted to $120,000,000 and $81,385,520, respectively. On February 11, 2009, the Company acquired ING Life Insurance by shares swap. The Company issued for NT$21.88 per share the 406,268 thousand shares with par value of NT$10 per share.

The Company transferred unappropriated retained earnings of $4,069,298 to share capital by issuing 406,930 thousand shares of common stock under the resolution of the stockholder’s meeting held on June 25, 2010. As of June 30, 2010, this share issuance was not authorized by and registered with the authorities yet.

In 2010, the Company issued 12,366 thousand shares for employee warrants exercise.

2) Treasury stock

1. As of June 30, 2010, the subsidiaries did not sell any stock of the Company, and the subsidiaries held 9,080 thousand shares amounting to $195,220, with average cost per share of NT$21.50. All of these stocks were recorded as treasury stock. The market value per share was NT$36.10 on June 30, 2010. In accordance with article 31 of “Financial Holding Company Act”, the Company will sell or cancel the remaining treasury stock within three years since the acquiring day.

2. According to the regulation, the shares of the Company held by its subsidiaries are treated as treasury stock. When the market value of the stock held by the subsidiaries is less than the book value by the end of year, the difference is recognized as valuation loss on financial assets by share holding percentage and the same amount of special reserve is provided thereon. Afterward, if a recovery of valuation occurs, the Company would reverse the same amount of special reserve. The special reserve mentioned above should be computed as the stockholders’ equity contra account other than treasury stock.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

3) Limits on distribution of capital surplus and retained earnings

1. Capital surplus

Pursuant to the ROC Company Act, capital surplus can only be used to offset a deficit or to increase share capital. Capital surplus cannot be distributed as cash dividends. Issuance of new stock from capital surplus can be made only once a year. In addition, the amount to be capitalized cannot exceed ten percent of the paid-in capital.

The components of capital surplus as of June 30, 2010 and 2009 were as follows:

June 30, June 30, 2010 2009

Additional paid-in capital for cash $ 15,258,148 15,258,148 Additional paid-in capital from share exchange 38,651,532 38,651,532 Additional paid-in capital from equity investment by 8,911 6,279 equity method Asset revaluation surplus 1,104 1,104 Sale of treasury stock 31,130 - Additional paid-in capital for employee warrants 235,113 - exercise $ 54,185,938 53,917,063

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2. The details of additional paid-in capital from share exchange were as follows:

June 30, June 30, Date Description 2010 2009

December 19, 2001 Fubon Securities, Fubon $ 42,040,134 42,040,134 Bank, and Fubon Life Assurance August 28, 2002 Fubon Asset Management (124,882) (124,882) December 23, 2002 TaipeiBank 3,384,059 3,384,059 February 2009 ING Life Insurance 4,825,587 4,825,587 Sub-total 50,124,898 50,124,898 Cash dividend (3,912,569) (3,912,569) Employee bonus and (46,600) (46,600) remuneration to directors and supervisors December 19, 2004 Write-off of common stock (2,982,647) (2,982,647) held by Fubon Securities and Fubon Insurance April 29, 2005 Retirement of treasury (313,789) (313,789) stock December 23, 2005 Retirement of treasury (2,287,988) (2,287,988) stock June 2006 Cash dividend (1,929,773 ) (1,929,773 ) (11,473,366 ) (11,473,366 ) $ 38,651,532 38,651,532

The additional paid-in capital through exchange of shares was generated from the transfer of the shares of subsidiaries to the Company. In compliance with item 4 of Article 47 of the Financial Holding Company Law, the portion of additional paid-in capital from the share exchange which resulted from the original financial institution’s unappropriated retained earnings can be distributed as cash dividend. As of June 30, 2010, the balance of such capital surplus was $4,343.

3. Legal reserve

The ROC Company Act stipulates that the Company must retain 10% of its annual earnings, as defined in the Act, until the accumulated amount of such retention equals the amount of paid-in capital. This legal reserve shall be used exclusively to cover losses and shall not be distributed as cash dividends, but may be converted to share capital when it reaches an amount equal to at least 50% of paid-in capital. Such conversion to capital may not exceed 50% of legal reserve.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

4. Special reserve

According to the regulation stipulated by the Securities and Futures Bureau, in addition to legal reserve, the Company is also required provide a special reserve equal to the net amount of the current year stockholders’ equity contra accounts, from the current year’s earnings after tax or prior years’ unappropriated earnings. If a reversal of stockholders’ equity contra account occurs, the reversed portion of the special reserve could be distributed as dividends.

5. Distribution of earnings

According to the Company’s articles of incorporation, 10% of its annual net income after offsetting prior years’ losses and tax payment is to be appropriated as legal reserve.

The distribution for employees’ bonus shall be 0.01% to 0.05% of the remaining unappropriated earnings. Remaining balance and prior year’s unappropriated earnings is to be distributed as bonuses to shareholders upon the approval of shareholders’ meeting.

In 2010, the estimated amount of employees’ bonuses and directors’ and supervisors’ remuneration of the Company was insignificant and was not recorded in the account balance. Difference between the amount approved in the shareholders’ meeting and recognized in the financial statements, if any, will be accounted for as changes in accounting estimate and recognized in profit or loss in 2011.

If the employee’s bonuses are provided with shares, calculated by the closing price on June 30, 2010, employee’s bonuses are estimated to appropriate 0 thousand shares.

The differences in retained earnings between the actual distribution results and the amounts recorded in the financial statements for 2009 and 2008 were as follows:

2009 Actual results Amount Difference

Employees’ bonuses – cash $ 4,000 4,000 - Directors’ and supervisors’ 26,000 26,000 - remuneration – cash Total $ 30,000 30,000 -

2008 Actual results Amount Difference

Employees’ bonuses – cash $ - - - Directors’ and supervisors’ - - - remuneration – cash Total $ - - - (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The differences between actual results and the amounts recorded in the financial statements are accounted for as changes in accounting estimates and recognized as operating expense in 2010 and 2009, respectively.

The Company paid a cash dividend of $2 and $0 per share from its 2009 and 2008 retained earnings in 2010 and 2009, respectively. The distribution of earnings approved in the shareholder’s meeting is the same as the resolution of the board meeting in 2010 and 2009. The relevant information could be accessed on the website of the Market Observation Post System.

6. Dividend policy

The Company adopted a stable and balanced dividend policy to provide balance to the shareholders’ profitability, the Company’s capital accumulation as well as impact on operation.

According to the Company’s operating plan, the stock dividends are intend to retain operating capital. The remainder of retained earnings after appropriation for legal reserve and special reserve and distribution for stock dividends can be distributed further in cash, but cash dividends shall be at least 50% of the total dividends declared. Nevertheless, the aforementioned dividend policy may be adjusted with the resolution of shareholders’ meeting. The Company may reconsider a better dividend policy in the light of its operations and capital budget plan for the next year.

(29) Employee Warrant Plan

An employee warrant plan was approved in June 2007 by the Financial Supervisory Commission. The Company granted a total of 150,000 units of call warrants. Each unit bears the right to purchase one thousand shares of the Company’s common stock. This warrant is granted to the employees working for the parent company or for more than 50%-owned subsidiaries (direct or indirect). The duration of the warrants is five year, and the exercise price of the warrant is the closing price at issue date.

Warrant holders are only able to execute the rights two years after vesting. The annual vesting percentages are as below:

Accumulated Percentage of percentage of Vesting period of employee warrants warrants vested warrants vested

Over 2 years but less than 3 years 50% 50% Over 3 years but less than 4 years 25% 75% 4~5 years 25% 100%

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The related information on employee warrants for the six-month period ended June 30, 2010, was as follows:

June 30, 2010 Weighted- average exercise price Employee warrant plan in 2007 Units (NTD) Duration

Outstanding balances on January 1, 2010 Release for the first time 52,247 $ 29.00 2010.06.30~ 2012.07.30 Release for the second time 82,173 26.70 2010.06.30~ 2012.12.06 Granted - - Cancelled: Release for the first time (850) - Release for the second time (2,027) - Exercised (12,366 ) - Outstanding balance on June 30, 2010 119,177 Vested balance on June 30, 2010 51,751

The employees of the Consolidated Company exercised 1,243 units warrant for the six-month period ended June 30, 2010. It is expected to be authorized by and registered with the authorities in August, 2010.

For employee warrant plan in 2007 which exercised during the year of 2010, the weighted average share price at the date of exercise was NT$27.27.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(30) Earnings per Share

The details of earnings per share for the six-month periods ended June 30, 2010 and 2009 were as follows:

June 30, 2010 Amount Weighted EPS average outstanding Before After Before After Shares income tax income tax income tax income tax (000’s) (NTD) (NTD)

Basic EPS: Net income for $ 13,153,492 10,694,098 8,137,451 common stocks Treasury stocks - - (9,080 ) $ 13,153,492 10,694,098 8,128,371 1.62 1.32 Diluted EPS: Net income for $ 13,153,492 10,694,098 8,137,451 common stocks Treasury stocks - - (9,080) Employee warrants - 13,895 $ 13,153,492 10,694,098 8,142,266 1.62 1.31

The Company did not have exercising employee warrants in 2009, therefore there were no diluted earnings per share.

June 30, 2009 Amount Weighted EPS average outstanding Before After Before After Shares income tax income tax income tax income tax (000’s) (NTD) (NTD)

Basic EPS: Net income for $ 7,380,658 6,213,732 8,033,334 common stocks Treasury stocks - - (8,570 ) $ 7,380,658 6,213,732 8,024,764 0.92 0.77

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(31) Insurance Income, Net

2010 2009

Gross written premiums $ 201,928,045 124,948,350 Reinsurance claims recovery 1,759,359 2,402,899 Policyholders’ reserve release 66,680,951 38,105,453 Special claim reserve release 892,974 157,940 Claim reserve without approval release 3,272,473 1,911,251 Deficiency reserve release 396,511 78,573 Investment-type insurance policy revenue 18,903,321 30,698,510 Total revenue 293,833,634 198,302,976 Insurance expenses 4,068,108 5,277,562 Direct business expense 12,978 17,402 Benefits and claims 64,332,550 39,010,579 Investment-type insurance policy expense 18,903,321 30,698,510 Total expenses 87,316,957 75,004,053 Net income $ 206,516,677 123,298,923

(32) Provision for Insurance reserves

2010 2009

Provision for policyholders’ reserve $ 204,834,944 121,784,829 Provision for special claim reserve 1,612,155 1,147,363 Stability fund 214,001 136,760 Provision for deficiency reserve 7,576 570,287 Provision for claim reserve without approval 3,670,663 2,069,353 Total $ 210,339,339 125,708,592

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(33) Financial Instruments

1) Fair value of financial instruments

June 30, 2010 June 30, 2009 Non-derivative financial instruments Book value Fair value Book value Fair value

Financial assets: Cash and cash $ 133,007,569 133,007,569 69,115,858 69,115,858 equivalents Due from Central 96,898,404 96,898,404 286,970,343 286,970,343 Bank and call loans to banks Financial assets 22,421,370 22,421,370 23,895,006 23,895,006 measured at fair value through profit or loss Bonds and bills 35,995,363 35,995,363 7,844,913 7,844,913 purchased under resell agreements Receivables 137,960,837 137,960,837 101,549,217 101,549,217 Loans 1,052,210,779 1,052,210,779 1,016,795,323 1,016,795,323 Available-for-sale 681,417,198 681,417,198 609,958,447 609,958,447 financial assets Held-to-maturity 426,652,907 417,135,784 161,790,861 159,800,335 investments Other financial 208,641,261 206,173,449 154,507,964 151,644,850 assets Debt investments in 291,770,014 286,373,677 259,625,534 248,034,002 non-active market Financial liabilities: Due to Central Bank 80,009,237 80,009,237 106,321,361 106,321,361 and other banks Bonds and bills sold 15,120,171 15,120,171 12,497,526 12,497,526 under repurchase agreements Commercial paper 7,908,739 7,908,739 1,084,067 1,084,067 payable Financial liabilities 2,264,271 2,264,271 2,623,613 2,623,613 measured at fair value through profit or loss

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 June 30, 2009 Non-derivative financial instruments Book value Fair value Book value Fair value

Payables $ 100,786,768 100,786,768 51,922,686 51,922,686 Deposits 1,269,768,922 1,269,768,922 1,194,476,347 1,194,476,347 Bonds payable 80,878,169 80,772,555 71,464,872 71,222,269 Other borrowings 5,600,000 5,600,000 3,800,000 3,800,000 Other financial 164,569,115 164,569,115 151,261,553 151,261,553 liabilities

June 30, 2010 June 30, 2009 Derivative financial Book value Fair value Book value Fair value instruments

Financial assets: Financial assts $ 25,246,622 25,246,622 23,001,639 23,001,639 measured at fair value through profit or loss Other financial 978,635 978,635 1,486,011 1,486,011 assets Financial liabilities: Financial liabilities 30,862,209 30,862,209 31,789,524 31,789,524 measured at fair value through profit or loss Other financial 908,846 908,846 144,576 144,576 liabilities

2) Methods and assumptions used by the Company and its subsidiaries for fair value evaluation of financial instruments were as follows:

1. Fair value of short-term financial instruments is estimated by their book value on the balance sheet date. As these instruments have short-term maturities, the book value is adopted as a reasonable basis in estimating the fair value. This method is applied to cash and cash equivalents, due from Central Bank and call loans to banks, bonds and bills purchased under resell agreements, receivables, other financial assets (excluding financial assets carried at cost and debt investments in non-active market), due to Central Bank and other banks, commercial paper payable, bonds and bills sold under repurchase agreements, payables, borrowing from Central Bank and other banks, bonds payable (excluding financial liabilities measured at fair value through profit and loss), other borrowings, and other financial liabilities.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2. The fair value of financial instruments at fair value through profit or loss and available-for- sale, held-to-maturity, and hedging derivative financial assets is based on quoted market prices in an active market. If a quoted market price is unavailable, then the fair value is determined based on certain valuation techniques. The estimates and assumptions of the valuation techniques adopted by the Company and its subsidiaries are identical to those adopted by other market participants.

3. The fair value of debt investments in non-active market is estimated by using the quoted prices from financial institution or counterparty. If the fair value is unavailable, then the fair value is determined based on unamortized cost.

4. According to the regulations of “Criteria Governing the Preparation of Financial Reports by Public Banks”, financial assets carried at cost of other financial assets are investment in unlisted stocks.

5. Loans and deposits are both classified as interest-bearing financial asset/liabilities; therefore, their book value approximates their fair value.

6. The fair value of each forward contract is determined on the forward rate from Bloomberg Information System. The fair value of interest rate swap and cross currency swap is calculated either by the quotations from the counterparty or by the price from Bloomberg Information System.

3) As of June 30, 2010 and 2009, the fair values of the financial instruments of the Company and its subsidiaries which were based on quoted market price or determined by using certain valuation techniques were as follows:

June 30, 2010 June 30, 2009 Estimate using Estimate using Quoted valuation Quoted valuation market price technique market price technique

Financial assets: Cash and cash $ - 133,007,569 - 69,115,858 equivalents Due from Central - 96,898,404 - 286,970,343 Bank and call loans to banks Financial assets at 8,791,237 38,876,755 12,884,432 34,012,213 fair value through profit or loss Bonds and bills - 35,995,363 - 7,844,913 purchased under resell agreements Receivables - 137,960,837 - 101,549,217

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2010 June 30, 2009 Estimate using Estimate using Quoted valuation Quoted valuation market price technique market price technique

Loans $ - 1,052,210,779 - 1,016,795,323 Available-for-sale 599,698,873 81,718,325 527,974,465 81,983,982 financial assets Held-to-maturity 2,527,875 414,607,909 2,640,908 157,159,427 investments Other financial - 207,152,084 - 153,130,861 assets Debt investments in - 286,373,677 - 248,034,002 non-active market Financial liabilities: Due to Central Bank - 80,009,237 - 106,321,361 and other banks Financial liabilities 269,023 32,857,457 943,074 33,470,063 at fair value through profit or loss Bonds and bills sold - 15,120,171 - 12,497,526 under repurchase agreements Payables - 100,786,768 - 51,922,686 Deposits - 1,269,768,922 - 1,194,476,347 Bonds payable 46,776,386 33,996,169 31,207,397 40,014,872 Commercial paper - 7,908,739 - 1,084,067 payable Other borrowings - 5,600,000 - 3,800,000 Other financial - 165,477,961 - 151,406,129 liabilities

4) For the six-month periods ended June 30, 2010 and 2009, the Company and its domestic subsidiaries recognized net gain (loss) of $1,719,415 and $(1,381,988), respectively, on changes in valuation of financial instruments.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

5) Financial risk information

To effectively control the overall risk of the Company, the Company established a risk management committee which is responsible for risk management-related task. The Risk Management Committee, established by the Board, operates independently from other business units to execute the risk control system solidly. The risk management organization structure includes the Boards of Directors of the consolidated companies, top management, risk management units as well as each business unit. The Risk Management Committee is responsible for risk management policy making by applying adequate segregation of duties and delegation with professional skills. The purpose to establish overall risk management culture is to ensure the effectiveness and soundness of risk management system.

The risk management policy constitute five main segments including the scope, workflow, control points, scheme as well as reports and feedback of market risk management. This policy, managed and controlled by the Risk Management Committee, is to minimize the potential adverse impacts on the operational efficiency by using both qualitative and quantitative methodologies.

Risks that the Company might encounter are listed below:

1. Market risk

Market risk refers to the fluctuation in market price such as a change in interest rate, exchange rate, securities’ prices, and commodity price, which might possibly cause a potential loss. The Company manages market risk through a market risk management control system, which is able to evaluate and control every aspect of market risk.

The fair value of the Fixed-rate Bonds that the Company and its subsidiaries invested will fluctuate according to market interest rate. Until the change of market risk factor increase to 1%, the Company will use sensitive analysis to evaluate the change of fair value of investment position. Therefore, the Company could use the information above to confine the losses within an expected range.

2. Credit risk

The Company sets up credit risk management policies to evaluate and control risk that might arise during the course of business. Possible loss may occur in the event of non- performance by counterparties to financial instrument contracts issued or held by the Company and its subsidiaries. The amount of credit risk of the Company and its subsidiaries refers to financial assets with positive fair value on the balance sheet date.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The credit rating of the counterparties will be determined by the Company and its subsidiaries before entering into the transactions such as loans, accounts receivables, and certain guarantees. The collaterals usually are cash, real estate, securities with liquidity, or other assets. On the other hand, the Company and its subsidiaries make the same credit policy of loans and crediting and sign the net settlement of collateral received agreement with the counterparties to decrease credit risk.

Significant concentration of credit risk exist when there are significant exposure to an individual counterparty to a transaction or a number of related counterparties engage in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

The contract amounts of the financial instruments with off-balance-sheet credit risk for Taipei Fubon Bank and Fubon Bank (HK) were as follows:

June 30, June 30, 2010 2009

Credit line of credit cards and cash cards $ 226,095,238 229,942,275 Guarantees on loans and letters of credit 87,007,653 68,565,608 Irrevocable loan acceptance 83,644,290 86,939,397

Taipei Fubon Bank does not have any significant concentration of credit risk in terms of a single client, a party or a transaction, except for clients being in the industry with similar industrial characteristics. Contracts with significant concentration of credit risk of Taipei Fubon Bank were as follows:

June 30, June 30, 2010 2009

Manufacturing $ 138,718,501 135,208,827 Conveyance, storagehouse and communication 27,664,188 25,505,715 Real estate 30,313,587 29,526,637 $ 196,696,276 190,241,179

3. Liquidity risk

Liquidity risk includes market liquidity risk and capital liquidity risk (financial risk). Market liquidity risk refers to the inactiveness of the market, whereas capital liquidity risk refers to the inability to convert assets into cash and obtain adequate capital. The Consolidated Companies not only set standards for the capital needs of different business departments, but also control the general position of daily capital inflow and outflow.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company and its subsidiaries control the trading risk of commodities by means of the aforementioned position limits, stop loss points setting, and operation guidelines at the management level. In addition, the Company and its subsidiaries utilize financial tools of the money market and foreign exchange market and the appropriate liquid assets to plan the cash demand in the future.

The capital and operating funds of the Consolidated Company are sufficient to fulfil all current contract obligations. Therefore, management is not expecting any liquidity risk.

The maturity analysis of material assets and liabilities of Taipei Fubon Bank as of June 30, 2010 and 2009 was as follows:

June 30, 2010 Within one month 1~3 months 3~6 months 6~12 months 1~7 years Over 7 years Total

Assets Cash and cash equivalents $ 30,612,536 - - - - - 30,612,536 Due from Central Bank and 60,447,657 11,372,857 4,792,475 4,604,983 10,891,397 - 92,109,369 call loans to banks Financial assets measured at 25,825,786 1,298,162 1,196,510 3,276,810 2,958,377 597,656 35,153,301 fair value through profit or loss Receivables 74,600,629 354,364 134,525 126,225 4,472,504 - 79,688,247 Loans 46,349,899 75,618,704 81,992,438 98,560,838 196,103,706 363,837,917 862,463,502 Available-for-sale financial 5,346,749 1,445,280 286,613 2,818,310 27,535,908 3,571,737 41,004,597 assets Held-to-maturity 160,900,000 48,922,752 6,115,499 32,535,853 5,802,574 - 254,276,678 investments Debt investments in non- - - 41,128 - 4,930,960 6,778,527 11,750,615 active market Other financial instrument - 6,061 - 19,862 430,598 - 456,521 assets Total $ 404,083,256 139,018,180 94,559,188 141,942,881 253,126,024 374,785,837 1,407,515,366

Liabilities Due to Central Bank and $ 45,531,228 11,476,019 3,823,353 6,761,209 - - 67,591,809 other banks Financial liabilities 23,002,287 - - - - - 23,002,287 measured at fair value through profit or loss Bonds and bills sold under 15,139,333 2,496,145 10,633 - - - 17,646,111 repurchased agreements Payables 30,475,829 754,937 387,683 1,492,981 91,251 - 33,202,681 Deposits and remittances 629,680,174 166,388,326 130,736,388 170,609,678 33,023,145 6,862,975 1,137,300,686 Financial bonds 2,000,000 4,500,000 - 3,200,000 38,180,683 4,400,000 52,280,683 Other financial instrument - 1,900 - 12,323 262,467 - 276,690 liabilities Total $ 745,828,851 185,617,327 134,958,057 182,076,191 71,557,546 11,262,975 1,331,300,947

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Within one month 1~3 months 3~6 months 6~12 months 1~7 years Over 7 years Total

Assets Cash and cash equivalents $ 20,351,035 - - - - - 20,351,035 Due from Central Bank and 195,220,685 51,059,892 12,212,075 6,848,311 10,427,840 - 275,768,803 call loans to banks Financial assets measured at 19,961,430 3,309,170 709,238 1,065,226 4,145,720 - 29,190,784 fair value through profit or loss Bonds and bills purchased 6,621,045 - - - - - 6,621,045 under resell agreements Receivables 46,796,210 392,548 323,367 144,433 4,033,406 - 51,689,964 Loans 44,906,609 59,257,653 56,423,491 107,664,998 204,720,913 337,773,110 810,746,774 Available-for-sale financial 4,472,812 384,503 2,385,363 5,769,016 35,533,483 2,316,127 50,861,304 assets Held-to-maturity 87,200 130,000 228,455 1,133,708 4,854,288 - 6,433,651 investments Debt investments in non- - 50,000 - 100,000 7,152,314 6,891,885 14,194,199 active market Other financial instrument - - - 80,315 458,861 2,272 541,448 assets Total $ 338,417,026 114,583,766 72,281,989 122,806,007 271,326,825 346,983,394 1,266,399,007

Liabilities Due to Central Bank and $ 69,998,760 16,068,279 3,694,589 9,100,135 - - 98,861,763 other banks Financial liabilities 19,460,879 - - - - - 19,460,879 measured at fair value through profit or loss Bonds and bills sold under 5,976,407 14,595 - - - - 5,991,002 repurchased agreements Payables 17,778,867 996,414 931,398 1,603,013 838,428 - 22,148,120 Deposits and remittances 526,914,226 132,611,212 144,388,408 168,593,829 29,768,156 6,950,000 1,009,225,830 Financial bonds - - - 8,200,000 31,378,186 - 39,578,186 Other financial instrument - - - 17,899 126,677 - 144,576 liabilities Total $ 640,129,138 149,690,500 149,014,395 187,514,876 62,111,447 6,950,000 1,195,410,356

4. Cash flow risk of interest rate change

The short-term and long-term borrowings of the Company and its subsidiaries are not subject to cash flow risk since the interest rates are fixed and the fluctuation of market interest rate will have not impact on its effective interest rate.

The bond investments of the Consolidated Company carried at floating rates are subject to cash flow risk since the future cash flow of those bond investments changes along with the market rate fluctuation.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6) Reclassification of financial assets

1. Fubon Securities

(a) The reasons and amount for reclassifying the financial assets of Fubon Securities and the related amount thereof were as follows:

A financial assets can be reclassified out of the financial assets measured at fair value through profit or loss category if Fubon Securities has the intention and ability to hold the financial assets for the foreseeable future. Reclassification can be made according to the purpose of holding the financial assets. Considering the change in the current global and domestic financial environment in the third quarter of 2008, Fubon Securities reclassified the stock investment held for trading into available-for-sale financial assets, amounting to $5,550,224. In accordance with the second revision of ROC Statement of Financial Accounting Standards No. 34 “Financial Instruments: Recognition and Measurement”.

(b) The book value and fair value of reclassified financial assets were as follows:

June 30, 2010 June 30, 2009 Cost Fair value Cost Fair value

Available-for- $ 5,393,882 6,163,096 5,393,882 5,253,172 sale financial assets

Originally classified as financial assets measured at fair value through profit or loss Assumed profit Recognition in (loss) without profit (loss) such after reclassification reclassification

For the six-month period ended June 30, 2010 $ 309,562 - For the six-month period ended June 30, 2009 $ 684,788 -

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2. Fubon Bank (HK)

(a) The reasons and amount for Fubon Bank (HK) to reclassify financial assets were as follows:

A financial assets may be reclassified out of the financial assets measured at fair value through profit or loss category if Fubon Bank (HK) has the intention and ability to hold the financial assets for the foreseeable futures. Reclassification can be made according to the holding purpose for the financial assets. Because of the change of the current global and domestic financial environment, Fubon Bank (HK) reclassified certain available-for-sale investment securities into debt investment in non-active market, amounting to HK$3,723,900 thousand. In accordance with the second revision of ROC Statement of Financial Accounting Standards No. 34 “Financial Instruments: Recognition and Measurement”.

(b) The book value and fair value of financial assets reclassified:

June 30, 2010 Book value Fair value

Debt investment in non-active market HK$ 3,101,051 2,782,072

June 30, 2009 Book value Fair value

Debt investment in non-active market HK$ 3,430,094 3,003,894

Originally classified as available- for-sale financial assets Assumed profit Recognition in (loss) without profit (loss) such after reclassification reclassification

For the six-month period ended June 30, 2010 HK$ (101,842 ) 36,530 For the six-month period ended June 30, 2009 HK$ (81,992 ) 70,149

(d) The effective interest rate of reclassified financial assets on the reclassification day was between 2.9% and 9.2%, and the estimated recoverable cash flow was HKD3,885,800 thousand.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(34) Related-Party Transactions

1) Names and relationship of related parties

Name of related party Relationship with the Company

Fu-sheng Life Assurance Agent Co., Ltd. A second-tier subsidiary of the Company

Fu-sheng General Insurance Agent Co., Ltd. A second-tier subsidiary of the Company

Fu-li Life Assurance Agent Co., Ltd. A second-tier subsidiary of the Company

Fubon Property Management Co., Ltd. A second-tier subsidiary of the Company

Fubon Securities Finance Co., Ltd. Related parties in substance

Fubon Land Development Co., Ltd. Related parties in substance

Taipei Bank Charitable Foundation Related parties in substance

Fubon Charity Foundation Related parties in substance

Fubon Art Fundation Related parties in substance

Fubon Cultural & Education Foundation Related parties in substance

Funds Managed by Fubon Asset Management Related parties in substance

Taiwan Fixed Network Co., Ltd. An affiliate

TFN Media Co., Ltd. An affiliate

Taiwan High Speed Rail Co., Ltd. Related parties in substance

Taiwan Mobile Co., Ltd. An affiliate

Taiwan Cement Corporation Related parties in substance

China Synthetic Rubber Corporation Related parties in substance

Chia Hsin Cement Corporation Related parties in substance

GTECH Global Service Corp. Related parties in substance

HKJCBV Related parties in substance

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of related party Relationship with the Company

MasterLink Securities Corporation Related parties in substance

Inotera Memories, Inc. Related parties in substance

Taiwan Prosperity Chemical Corporation Related parties in substance

City Bank (Taiwan) Related parties in substance

Taiwan Futures Exchange Related parties in substance

Chung Hsing Land Development Co., Ltd. A major stockholder of the Company

Ming-dong Corporation A major stockholder of the Company

Taipei City Government A major stockholder of the Company

Wan-Tsai Tsai Related party in substance

Yang-Hsiang-Hsun Tsai Related party in substance

Cheng-Tao Tsai Related party in substance

Cheng-Ju Tsai Related party in substance

Ming-Wen Tsai & Ming-Chun Tasi Related parties in substance

Tzung-Jie Yang Related parties in substance

Others Directors, supervisors, managers and their relatives up to the second degree; affiliates and the related parties in substance

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

2) Significant transactions with the above related parties of the Consolidated Company as of and for the six-month periods ended June 30, 2010 and 2009 were as follows:

1. Insurance revenue

Insurance revenue Insurance receivable June 30, June 30, 2010 2009 2010 2009

Taiwan Mobile Co., Ltd. $ 10,133 10,680 18 28 Tzung-Jie Yang 17,300 - - - Others 51,364 30,040 3,453 2,580 $ 78,797 40,720 3,471 2,608

The terms of the transactions were similar to those with non-related parties.

2. Rental expense and refundable deposits

2010 2009

Rental expense: Chung Hsing Land Development Co., Ltd. $ 115,103 79,084 Ming-dong Corporation 10,110 10,110 Taiwan Mobile Co., Ltd. 17,279 13,133 Ming-Wen Tasi & Ming-Chun Tasi 12,126 12,127 Taipei City Government 14,898 11,853 $ 169,516 126,307

June 30, June 30, 2010 2009

Refundable deposits: Chung Hsing Land Development Co., Ltd. $ 28,215 28,215 Ming-dong Corporation 2,742 2,742 Ming-Wen Tasi & Ming-Chun Tasi 4,042 4,042 Taipei City Government 2,125 2,125 Others 13,010 7,035 $ 50,134 44,159

All the above leases were operating leases. The terms of the transactions were similar to those with non-related parties.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

3. Deposits accepted by Taipei Fubon Bank

June 30, 2010 June 30, 2009 Interest Interest Amount rate range Amount rate range

Others $ 21,532,345 0~6.085% 7,081,994 0~7.185%

4. Loans

Loans to related parties from Taipei Fubon Bank

June 30, 2010 June 30, 2009 Interest Interest Amount rate range Amount rate range

Others $ 37,530,794 0~19.98% 40,293,960 0~19.98%

June 30, 2010 Differences in transaction terms between related Amount or Name of Highest Ending and nonrelated Category Related Party Balance Balance Normal Overdue Type of Collateral parties

Employee 75 $ 30,010 26,527 ˇ - Credit None consumer loans House mortgages 316 2,169,579 2,038,337 ˇ - Land and buildings None Others Taiwan High Speed Rail 20,676,228 - ˇ - Approval by None Co., Ltd. contract China Synthetic Rubber 360,000 241,500 ˇ - Credit None Corporation Taipei City Government 32,364,823 14,764,823 ˇ - Public treasury None guarantees Department of Urban 2,295,432 2,092,590 ˇ - Public treasury None Development, Taipei guarantees City Government Department of Rapid 4,586,507 4,586,507 ˇ - Public treasury None Transit Systems, TCG guarantees Taipei Municipal Secured 9,040 8,410 ˇ - Public treasury None Small Loans Service guarantees Taipei City Public 3,592,100 3,592,100 ˇ - Public treasury None Transportation office guarantees Department of Property, 9,000,000 9,000,000 ˇ - Credit None Taipei City Government Fubon Land Development 1,180,000 1,180,000 ˇ - Construction land None Co., Ltd. Total $ 76,263,719 37,530,794 -

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Differences in transaction terms between related Amount or Name of Highest Ending and nonrelated Category Related Party Balance Balance Normal Overdue Type of Collateral parties

Employee 67 $ 29,767 26,332 ˇ - Credit None consumer loans House mortgages 250 1,480,237 1,413,284 ˇ - Land and buildings None Others Taiwan High Speed Rail 20,774,723 20,774,723 ˇ - Approval by None Co., Ltd. contract Taiwan Cement 600,000 300,000 ˇ - Credit None Corporation China Synthetic Rubber 560,000 360,000 ˇ - Credit None Corporation Taipei City Government 14,134,710 13,364,823 ˇ - Public treasury None guarantees Department of Urban 2,833,584 2,559,598 ˇ - Public treasury None Development, Taipei guarantees City Government Department of Rapid 86,507 86,507 ˇ - Public treasury None Transit Systems, TCG guarantees Taipei Municipal Secured 10,348 9,708 ˇ - Public treasury None Small Loans Service guarantees Taipei city Public 1,398,985 1,398,985 ˇ - Public treasury Transportation office Hydraulic Engineering 5,830,113 - ˇ - Public treasury None Office, Public Works guarantees Department, Taipei City Government Chia Hsin Cement 200,000 - ˇ - Credit None Corporation Total $ 47,938,974 40,293,960 -

5. Guarantees

June 30, 2010 June 30, 2009 Interest Interest Amount rate range Amount rate range

Guarantees $ 100,000 0.45~0.85% 1,137,537 0.45~0.85%

June 30, 2010 Highest balance in current Ending Provision Type of Related party period balance (note) Rates (%) collateral

Taiwan High Speed Rail $ 944,519 - - 0.78~0.85 None (Approval Co., Ltd. by contract) Taiwan Cement $ 200,000 100,000 - 0.45 None Corporation

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2009 Highest balance in current Ending Provision Type of Related party period balance (note) Rates (%) collateral

Taiwan High Speed Rail $ 979,156 837,757 - 0.78 None (Approval Co., Ltd. by contract) Taiwan Cement $ 400,000 300,000 - 0.45 None Corporation

6. Securities refinancing transactions

2010 June 30, 2010 Securities Securities refinance refinance Refinancing Interest ending margin deposits Name of related party amount revenue balance ending balance

Fubon Securities $ 12,116 - - - Finance Co., Ltd.

2009 June 30, 2009 Securities Securities refinance refinance Refinancing Interest ending margin deposits Name of related party amount revenue balance ending balance

Fubon Securities $ 26,409 - - - Finance Co., Ltd.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

7. Derivative financial instruments (notional amount)

June 30, June 30, Name of related party Instrument 2010 2009

Taiwan Cement Corporation Fixed rate $ - 1,800,000 commercial paper MasterLink Securities Interest rate swap 2,900,000 3,200,000 Corporation contract Inotera Memories, Inc. Interest rate swap 5,000,000 - contract Department of Cultural Affairs Forward contract 100,661 - Taipei City Government China Synthetic Rubber Commodities 47,450 - Corporation swap contract Taiwan Prosperity Chemical Commodities 172,110 - Corporation swap contract $ 8,220,221 5,000,000

8. Commission revenue

(a) Commission revenue

Name of related party 2010 2009

Fu-sheng Life Assurance Agent Co., Ltd. $ 269,006 195,052 Fu-sheng General Insurance Agent Co., Ltd. 32,244 30,038 $ 301,250 225,090

(b) Commission receivable

June 30, June 30, Name of related party 2010 2009

Fu-sheng Life Assurance Agent Co., Ltd. $ 85,267 60,845 Fu-sheng General Insurance Agent Co., Ltd. 11,473 9,668 $ 96,740 70,513

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

9. Other revenues

(a) Management fees charged by Fubon Asset Mangement

Management revenues Name of related party 2010 2009

Funds managed by Fubon Asset Management $ 141,040 104,872 Others 40,828 43,360 $ 181,868 148,232

(b) Service fees charged by Fubon Securities

Name of related party 2010 2009

Others $ 18,658 19,272

10. Other expenses payable to related parties

Name of related party Items 2010 2009

Fu-sheng General Insurance Service fee and $ 39,506 33,808 Agent Co., Ltd. commission expenses Taiwan Fixed Network Co., Ltd. Phone expense 100,543 101,952 and service fee Fubon Property Management Management fees 39,233 5,884 Co., Ltd. and other expense TFN Media Co., Ltd. Channel rents 26,114 42,340 Taiwan High Speed Rail Co., Other expense 6,550 14,300 Ltd. GTECH Global Service Corp. Professional 30,611 28,703 consulting service fees HKJCBV Professional 49,998 49,002 consulting service fees Others Insurance expense, 92,663 53,905 service fee, advertising expense, other expense, etc. $ 385,218 329,894

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

11. Commission expenses

Name of related party 2010 2009

Fu-li Life Assurance Agent Co., Ltd. $ 15,346 16,871 Fu-Sheng Life Assurance Agent Co., Ltd. 246,609 214,130 $ 261,955 231,001

12. Bond transactions

(a) Bonds sold under repurchase agreement

2010 Bonds sold under agreements to Interest repurchase, Name of related party revenue June 30

Wan-Tsai Tsai $ 10 14,001 Ming-Chun Tsai 49 74,245 Yang-Hsiang-Hsun Tsai 50 121,526 Cheng-Tao Tsai 15 22,273 Cheng-Ju Tsai 10 15,248 Taiwan High Speed Rail Co., Ltd. - 478,000 Taiwan Mobile Co., Ltd. - 695,076 MasterLink Securities Corporation 2,965 2,456,888 $ 3,099 3,877,257

2009 Bonds sold under agreements to Interest repurchase, Name of related party revenue June 30

MasterLink Securities Corporation $ - 2,900,000 Others 6,037 82,652 $ 6,037 2,982,652

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(b) Bond buy-out and sell-out transactions

a) Buy-out transactions

Name of related party 2010 2009

MasterLink Securities Corporation $ - 4,207,403 Taipei City Government - 798,000 Others 399,139 - $ 399,139 5,005,403

b) Sell-out transactions

Name of related party 2010 2009

Fubon Securities Finance Co., Ltd. $ - 99,957 MasterLink Securities Corporation - 196,446 Citi Bank (Taiwan) 299,883 - Taiwan Futures Exchange 150,000 - $ 449,883 296,403

a) Buy-out transactions

Name of related party 2010 2009

Taiwan Cement Corporation $ 593,716 1,790,728

b) Sell-out transactions

Name of related party 2010 2009

Citi Bank (Taiwan) $ 299,883 -

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

13. The Consolidated Company’s donations to related parties were as follows:

Name of related party 2010 2009

Fubon Cultural & Educational Foundation $ 29,349 30,573 Fubon Art Foundation 18,143 12,240 Fubon Charity Foundation 28,765 8,344 Taipei Bank Charity Foundation 10,000 20,000 Others 13,902 6,140 $ 100,159 77,297

14. Receivable of related party

June 30, June 30, Name of related party 2010 2009

Others $ 29,292 26,924

15. Payable of related party

Name of related party 2010 2009

CTECH Global $ 35,930 4,921 HKJCBV 56,403 - $ 92,333 4,921

16. Payable to customers of related party

June 30, June 30, Name of related party 2010 2009

Funds managed by Fubon Asset Management $ 106,570 4,595

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

17. Funds purchased by the Consolidated Company’s related party and managed by Fubon Asset Management Co., Ltd. were as follows:

June 30, June 30, Name of related party 2010 2009

Fubon Precision Fund $ 107,227 147,713 Fubon Fubon Fund 692,682 753,628 Fubon Aggressive Growth Fund 28,229 40,496 Fubon Chi-hsiang Fund 3,601,914 2,649,292 Fubon Supreme Fund 34,305 51,290 Fubon Taiwan Technology ETF Fund 123,840 115,213 Fubon Fu-Bao Fund 38,378 48,089 Fubon I REIT Securitization Fund 2,025,119 1,829,355 Fubon II REIT Securitization Fund 1,202,157 1,299,819 Fubon MSCI Taiwan ETF Fund 107,558 96,312 Fubon Taiwan Eight Industries ETF Fund 125,593 114,582 Fubon Taiwan Finance ETF Fund 118,631 117,959 Fubon Taiwan Technology ETF Fund 12,270 - Fubon Taiwan CSR Fund 5,445 31,759 $ 8,223,348 7,295,507

18. Transaction of property

Taiwan Sport Lottery leased the internet systematic equipment with Taiwan Fixed Network amounted to $76,319 based on market value, which had signed first and second advisor addendum on August 31, 2009 and May 1, 2010, respectively. As of June 30, 2010 and 2009, the obligation under capital lease was $36,185 and $61,647, and other payable was $3,427 and $3,079, respectively. The interest expense thereon were $1,157 and $1,907 for the six-month periods ended June 30, 2010 and 2009, respectively.

Taiwan Sport Lottery also leased the facilities equipment from Taiwan Mobile of $13,370 based on market value. As of June 30, 2010 and 2009, the obligation under capital lease were both $0. The lease of the target was terminated on May 9, 2009, and the lease of furniture, fixtures, and equipment was terminated on May 31, 2009. The interest expense were $0 and $230 for the six-month periods ended June 30, 2010 and 2009, respectively. Due to the lease of the target was terminated, the loss was $7,990 for the six-month period ended June 30, 2009.

Taipei Fubon Bank purchased the land and building with Fubon Land Development amounting to $93,539 and $31,180, respectively in 2008. The amount was paid to Fubon Land Development by installments, and the total transaction amount was paid on June 30, 2009.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

3) Information on related-party transactions amounting to more than $100,000

If a transaction happens between two subsidiaries, only one of the subsidiaries needs to disclose it related-party information, and this transaction would be eliminated when the Company compiles the consolidated financial report.

As the subsidiary, Fubon Investment Management Co., Ltd. and Fubon Asset Management Service did not have related-party transactions of more than $100,000, no disclosure was made thereon.

1. Fubon Insurance

(a) Name and relationship of related party

Name of related party Relationship with the Company

Taipei Fubon Bank Co., Ltd. A subsidiary of Company

Funds managed by Fubon Asset Management Related parties in substance

MasterLink Securities Corporation Related parties in substance

(b) Significant transactions with related parties as of and for the six-month periods ended June 30, 2010 and 2009 were as follows:

a) Funds purchased by Fubon Insurance and managed by Fubon Asset Management Co., Ltd. were as follows:

June 30, June 30, Name of related party 2010 2009

Fubon Fubon Fund $ 172,522 156,293 Fubon I REIT Securitization Fund 625,031 606,848 Fubon II REIT Securitization Fund 577,500 558,250 Total $ 1,375,053 1,321,391

b) Bank deposit with related party

June 30, June 30, Name of related party 2010 2009

Taipei Fubon Bank Co., Ltd. $ 1,099,840 574,580

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Notes to Consolidated Financial Statements

c) Bond transactions with related party

2009 Bonds purchased under resell Interest agreement, Name of related party revenue June 30

Taipei Fubon Bank Co., Ltd. $ - 585,030 MasterLink Securities Corporation 2,965 1,956,669 $ 2,965 2,541,699

d) Payable with related party

June 30, June 30, Name of related party 2010 2009

Fubon Financial Holding Co., Ltd. $ 270,236 875,524

e) Marketing Consulting fee with related party

June 30, June 30, Name of related party 2010 2009

Fubon Direct Marketing Consulting $ 121,760 101,869

2. Fubon Life Insurance

(a) Name and relationship of related party

Name of related party Relationship with the Company

Fubon Asset Management Co., Ltd. A subsidiary of the Company

Taipei Fubon Bank Co., Ltd. A subsidiary of the Company

Fubon Securities Co., Ltd. A subsidiary of the Company

Funds managed by Fubon Asset Management Related parties in substance

Taipei Fubon Bank Life Assurance Agent Co., An affiliate Ltd.

Fu-Sheng Life Assurance Agent Co., Ltd. An affiliate (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(b) Significant transactions with related parties

a) Commission expenses

Name of related party 2010 2009

Taipei Fubon Bank Life Assurance Agent $ 457,948 524,039 Co., Ltd. Fu-Sheng Life Assurance Agent Co., Ltd. 246,609 214,130 Taipei Fubon Bank Co., Ltd. 348,024 - $ 1,052,581 738,169

b) Deposits accepted by Taipei Fubon Bank

June 30, June 30, Name of related party 2010 2009

Demand deposits $ 9,711,332 11,524,754 Time deposits 11,547,377 263,424 Structured deposits 3,198,672 3,252,533 $ 24,457,381 15,040,711

c) Funds purchased by Fubon Life Insurance and managed by Fubon Asset Management Co., Ltd. were as follows:

June 30, June 30, Name of related party 2010 2009

Fubon Fubon Fund $ 171,002 154,916 Fubon Chi-hsiang Fund 2,021,684 191,294 Fubon Taiwan Technology ETF Fund 123,840 115,213 Fubon MSCI Taiwan ETF Fund 107,558 96,312 Fubon Taiwan Eight Industries ETF Fund 125,593 114,582 Fubon Taiwan Financial ETF Fund 118,631 117,959 Total $ 2,668,308 790,276

As of June 30, 2010 and 2009, Fubon Life Insurance has acquired Fubon REIT II Fund in the amounts of $624,657 and $741,569, respectively.

As of June 30, 2010 and 2009, Fubon Life Insurance has acquired Fubon REIT I Fund in the amounts of $765,608 and $606,485, respectively.

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

d) Account balance under the Discretionary Investment Services was as follows:

June 30, June 30, Name of related party 2010 2009

Fubon Asset Management Co., Ltd. $ 39,898,651 3,204,872

e) Derivative transactions with related party – cross – currency swap contracts

Name of related party 2010 2009

Taipei Fubon Bank Co., Ltd. $ (63,941 ) (132,429 )

f) Bond and Securities transactions with related party were as follows:

a. Purchase of bonds and securities

Name of related party 2010 2009

Taipei Fubon Bank Co., Ltd. $ 9,309,760 3,235,981 Fubon Securities Co., Ltd. 3,644,146 509,501 Other 399,139 - $ 13,353,045 3,745,482

b. Bond purchased under resell agreements

2010 Bonds sold under Interest agreements to Name of related party revenue resell, June 30

Taipei Fubon Bank Co., Ltd. $ 777 1,451,072 Fubon Securities Co., Ltd. 2 200,000 $ 779 1,651,072

g) Fubon Asset Management promised to compensate Fubon Life Insurance for the financial bonds and corporate bonds bought from Fubon Asset Management for $16,116,457 with yield of 90 days CP+20bp, which is paid quarterly. The interest of compensation amounted to $4,158 and $24,411 for the six-month periods ended June 30, 2010 and 2009, respectively.

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Notes to Consolidated Financial Statements

h) Other receivable (payable) with related party

Name of related party 2010 2009

Fubon Financial Holding Co., Ltd. $ (49,125) 166,795 Taipei Fubon Bank Co., Ltd. (163,986 ) 60,635 $ (213,111 ) 227,430

3. Fubon Securities

(a) Name and relationship of related party

Name of related party Relationship with the Company

Taipei Fubon Bank Co., Ltd. A subsidiary of the Company

Taiwan Future Exchange Related parties in substance

Funds managed by Fubon Asset Management Related parties in substance

Yang Hsiang-Hsun Tasi Related parties in substance

(b) Significant transactions with related parties

a) Bank deposits, short-term borrowings, and other current assets

On June 30, 2010 and 2009, cash deposited in Taipei Fubon Bank was as follows:

June 30, June 30, Name of related party 2010 2009

Demand deposits (including securities $ 3,481,647 808,378 brokerage account) Checking accounts $ 110,939 34,748 Time deposits $ 825,000 425,900 Restricted time deposits $ 511,000 361,000

As of June 30, 2010 and 2009, the Company had provided time deposits in Taipei Fubon Bank as operating deposits amounting to $1,114,000 and $1,099,600, respectively. Interest revenue earned on the operating deposits in Taipei Fubon Bank was $6,334 and $31,289 for the six-month periods ended June 30, 2010 and 2009, respectively.

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Notes to Consolidated Financial Statements

Balances of short-term borrowing from Taipei Fubon Bank as of June 30, 2010 and 2009 were both $0. As of June 30, 2010 and 2009, unused credit facilities from Taipei Fubon Bank both amounted to $6,000,000. Time deposits pledged to Taipei Fubon Bank for short-term borrowings were $500,000 and $0 as of June 30, 2010 and 2009, respectively. The book value of land and buildings pledged to Taipei Fubon Bank for short-term borrowings were $904,788 and $901,030 as of June 30, 2010 and 2009, respectively. The Company also provided stock investments amounting to $2,093,000 and $1,960,000 to Taipei Fubon Bank as collateral for short-term borrowings as of June 30, 2010 and 2009, respectively, recorded as available-for-sale financial assets – current.

b) Bond transactions with related party were as follows:

a. Bonds sold under repurchase agreement

2010 Bonds sold under agreements to Interest repurchase, Name of related party expense June 30

Yang-Hsiang-Hsun Tsai $ 50 121,526

2009 Bonds sold under agreements to Interest repurchase, Name of related party expense June 30

Taipei Fubon Bank Co., Ltd. $ 393 2,198,500

b. Bonds purchased under resell agreement

2010 Bonds purchased under agreements to Interest repurchase, Name of related party expense June 30

Taipei Fubon Bank Co., Ltd. $ 3,550 3,661,607

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FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

c. Bond buy and sell transactions

Trade not through GTSM

Purchase of bonds

Name of related party 2010 2009

Taipei Fubon Bank Co., Ltd. $ 100,253 -

Sell of bonds

Name of related party 2010 2009

Taiwan Futures Exchange $ 150,000 -

c) Derivative transactions with related party

June 30, June 30, Name of related party Items 2010 2009

Taipei Fubon Bank Interest swap $ 155,487 210,003 contract Taipei Fubon Bank Interest swap $ (121,340 ) (185,258 ) contract

d) Rental revenue

Rental revenue Rental receivable Name of related June 30, June 30, party 2010 2009 2010 2009

Taipei Fubon $ 127,136 89,025 41,974 34,476 Bank Co., Ltd.

e) Funds purchased by Fubon Securities and managed by Fubon Asset Management Co., Ltd. were as follows:

Name of related party 2010 2009

Fubon Chi-hsiang Fund $ - 280,021

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Notes to Consolidated Financial Statements

4. Fubon Asset Management

(a) Name of related party and relationship

Name of related party Relationship with the Company

Fubon Life Insurance Co., Ltd. A subsidiary of the Company

(b) Significant transactions with related parties

Fubon Asset Management sold its bond funds of $16,116,457 to Fubon Life Insurance, and planned to subsidize the yield spread with its own capital. Fubon Asset Management committed to pay Fubon Life Insurance a yield of 90-day CP+20bp at the end of each quarter from the settlement date to the maturity date. For the six-month periods ended June 30, 2010 and 2009, the compensation expense was amounted to $3,088 and $24,411, respectively, recognized in non-operating expense.

5. Taipei Fubon Bank and its subsidiary

(a) Name and relationship of related party

Name of related party Relationship with the Company

Fubon Insurance Co., Ltd. A subsidiary of the Company

Fubon Life Insurance Co., Ltd. A subsidiary of the Company

Fubon Securities Co., Ltd. A subsidiary of the Company

Fubon Asset Management Co., Ltd. A subsidiary of the Company

Taiwan Sport Lottery Co., Ltd. A subsidiary of the Company

Fubon Bank (HK) A subsidiary of the Company

Taipei City Government A major shareholder of the Company

Funds managed by Fubon Asset Management Related parties in substance

Taiwan High Speed Rail Co., Ltd. Related parties in substance

Taiwan Cement Corporation Related parties in substance

Chia Hsin Cement Corporation Related parties in substance

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Notes to Consolidated Financial Statements

Name of related party Relationship with the Company

China Synthetic Rubber Corporation Related parties in substance

Fubon Land Development Co., Ltd. An affiliate

MasterLink Securities Corporation Related parties in substance

Inotera Memories, Inc. Related parties in substance

Citibank (Taiwan) Co., Ltd. Related parties in substance

Taiwan Mobile Co., Ltd. Related parties in substance

Others Directors, supervisors, managers and their relatives up to the second degree; affiliated and the related parties in substance

(b) Significant transactions with related parties

a) Deposits and loans

2010 Interest rate / Interest service fee rate revenue Name of related party Amount (%) (expense)

Deposits $ 66,670,828 0~6.085 (130,024 ) Call loans to bank $ 968,361 0.01~1.00 9,970 Loans $ 37,530,794 0~19.98 289,684

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Notes to Consolidated Financial Statements

June 30, 2010 Differences in transaction terms between Amount or related and Name of Highest Ending Type of nonrelated Category Related Party Balance Balance Normal Overdue Collateral parties

Employee 75 $ 30,010 26,527 ˇ - Credit None consumer loans 316 2,169,579 2,038,337 ˇ - Land and None House mortgages buildings Others Taiwan High 20,676,228 - ˇ - Approval by None Speed Rail Co., contract Ltd. China Synthetic 360,000 241,500 ˇ - Credit None Rubber Corporation Taipei City 32,364,823 14,764,823 ˇ - Public treasury None Government guarantees Department of 2,295,432 2,092,590 ˇ - Public treasury None Urban guarantees Development, Taipei City Government Department of 4,586,507 4,586,507 ˇ - Public treasury None Rapid Transit guarantees Systems, TCG Taipei Municipal 9,040 8,410 ˇ - Public treasury None Secured Small guarantees Loans Service Taipei City 3,592,100 3,592,100 ˇ - Public treasury None Public guarantees Transportation office Department of 9,000,000 9,000,000 ˇ - Credit None Property, Taipei City Government Fubon Land 1,180,000 1,180,000 ˇ - Construction None Development land Co., Ltd. Total $ 76,263,719 37,530,794 -

2010 Interest rate / service fee rate Interest Name of related party Amount (%) revenue

Guarantees and $ 100,000 0.45~0.85 5,714 acceptances

June 30, 2010 Highest balance in current Ending Type of Related party period balance Provision Rate (%) collateral

$ 944,519 - - 0.78~0.85 None Taiwan High Speed (Approval by Rail Co., Ltd. contract) Taiwan Cement $ 200,000 100,000 - 0.45 None Corporation

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Notes to Consolidated Financial Statements

2009 Interest rate / Interest service fee rate revenue Name of related party Amount (%) (expense)

Deposits $ 25,861,840 0~7.185 (94,710 ) Call loans to bank $ 2,297,295 0.78~2.40 12,481 Call loans from bank $ 1,408,005 0.09~0.31 (209 ) Loans $ 40,293,960 0~19.98 381,106

June 30, 2009 Differences in transaction terms between Amount or related and Name or Highest Ending Type of nonrelated Category Related Party Balance Balance Normal Overdue Collateral parties

Employee 67 $ 29,767 26,332 ˇ - Credit None consumer loans 250 1,480,237 1,413,284 ˇ - Land and None House mortgages buildings Others Taiwan High 20,774,723 20,774,723 ˇ - Approval by None Speed Rail Co., contract Ltd. Taiwan Cement 600,000 300,000 ˇ - Credit None Corporation China Synthetic 560,000 360,000 ˇ - Credit None Rubber Corporation Taipei City 14,134,710 13,364,823 ˇ - Public treasury None Government guarantees Department of 2,833,584 2,559,598 ˇ - Public treasury None Urban guarantees Development, Taipei City Government Department of 86,507 86,507 ˇ - Public treasury None Rapid Transit guarantees Systems, TCG Taipei Municipal 10,348 9,708 ˇ - Public treasury None Secured Small guarantees Loans Service Taipei city 1,398,985 1,398,985 ˇ - Public treasury Public Transportation office Hydraulic 5,830,113 - ˇ - Public treasury None Engineering guarantees Office, Public Works Department, Taipei City Government Chia Hsin 200,000 - ˇ - Credit None Cement Corporation Total $ 47,938,974 40,293,960 -

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Notes to Consolidated Financial Statements

2009 Interest rate / service fee rate Interest Name of related party Amount (%) revenue

Guarantees and $ 1,137,537 0.45~0.85 4,618 acceptances

June 30, 2009 Highest balance in current Ending Type of Related party period balance Provision Rate (%) collateral

$ 979,156 837,757 - 0.78 None Taiwan High Speed (Approval by Rail Co., Ltd. contract) Taiwan Cement $ 400,000 300,000 - 0.45 None Corporation

b) Bond transactions between Taipei Fubon Bank and its related parties were as follows:

Name of related Transaction June 30, June 30, party types 2010 2009

Fubon Life Insurance Bonds purchased $ 1,424,165 - Co., Ltd. Fubon Insurance Co., Bonds sold 155,235 - Ltd. Fubon Securities Co., Bonds purchased 2,021,676 1,496,934 Ltd. MasterLink Securities Bonds purchased - 4,207,403 Corporation MasterLink Securities Bonds sold under 500,219 2,900,000 Corporation repurchase agreements Taiwan Cement Securities purchased 593,716 1,790,728 Corporation Taipei City Bonds purchased - 798,000 Government MasterLink Securities Bonds sold - 196,446 Corporation CitiBank Taiwan Securities sold 299,883 -

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Notes to Consolidated Financial Statements

Name of related Transaction June 30, June 30, party types 2010 2009

Fubon Asset Bonds sold under $ 280,221 - Management Co., repurchase Ltd. (note) agreements Taiwan High Speed Bonds sold under 478,000 - Rail Co., Ltd. repurchase agreements Taiwan Mobile Bonds sold under 695,076 - repurchase agreement Fubon Securities Co., Bonds purchase - 2,198,500 Ltd. under resell agreement Fuobn Insurance Co., Bonds purchase - 585,030 Ltd. under resell agreement

Note: transactions of fund account.

c) Fund and stock transactions

June 30, June 30, Name of related party 2010 2009

Fubon I REIT Securitization Fund $ 634,480 616,022 Fubon Fund 248,352 317,219 $ 882,832 933,241

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Notes to Consolidated Financial Statements

d) Insurance

Insurance contracts with Fubon Insurance were as follows:

2010 Insured Insurance Insured items Insured years amount expense

Cash 2010.4.20~2011.4.20 $ 200,000 415 Safety deposit box 2010.4.20~2011.4.20 150,000 670 liability insurance Electrical equipment 2009.11.1~2010.11.1 2,195,973 3,953 insurance Fire insurance 2010.4.20~2011.4.20 5,284,367 1,997 Liability insurance 2010.4.20~2011.4.20 468,000 758 Banking insurance 2010.4.20~2011.4.20 122,500 9,390

2009 Insured Insurance Insured items Insured years amount expense

Cash 2009.4.20~2010.4.20 $ 200,000 820 Safety deposit box 2009.4.20~2010.4.20 100,000 696 liability insurance Electrical equipment 2008.11.1~2009.11.1 3,025,556 5,446 insurance Fire insurance 2009.4.20~2010.4.20 5,085,056 2,037 Liability insurance 2009.4.20~2010.4.20 168,000 728 Banking insurance 2009.4.20~2010.4.20 272,500 9,925

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Notes to Consolidated Financial Statements

e) Derivative financial instruments

Name of related June 30, June 30, party Instruments 2010 2009

Fubon Bank (HK) Interest rate swap $ 163,882 (24,745) contract Inotera Memories, Interest rate swap 107,259 - Inc. contract Fubon Bank (HK) Foreign exchange 115,773 2,073 swap contract Fubon Life Insurance Interest rate swap (582,422) (580,224) Co., Ltd. contract Fubon Life Insurance Foreign exchange 65,079 123,205 Co., Ltd. swap contract $ (130,429 ) (479,691 )

f) Others

Name of related party 2010 2009

Receivable – other $ 679,684 132,215 Payable – other 104,421 41,270 Service fee – Fubon Life Insurance Co., Ltd. 713,064 560,077 Service fee – other 133,590 163,321 Other income – Taiwan Sport Lottery Co., 29,841 102,178 Ltd. Service fee – Taiwan Sport Lottery Co., Ltd. 198,629 237,982 $ 1,859,229 1,237,043

g) Taipei Fubon Bank and Fubon Securities had signed the settlement contract and cooperation expenses contract, and the customers of Fubon Securities have to share the expenses for their deposit of Taipei Fubon Bank. Taipei Fubon Bank had to pay the rent expenses for Fubon Securities. The expenses was amounted to $126,343 and $78,547, respectively, for the six-month periods ended June 30, 2010 and 2009.

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Notes to Consolidated Financial Statements

6. Fubon Bank (Hong Kong)

(a) Name and relationship of related party

Name of related party Relationship with the Company

Taipei Fubon Bank Co., Ltd. A subsidiary of the Company

(b) Significant transactions with related parties as of and for the six-month periods ended June 30, 2010 and 2009 were as follows:

a) Deposits

June 30, June 30, 2010 2009

Taipei Fubon Bank Co., Ltd. HKD 255,190 HKD 561,653

b) Loans

June 30, June 30, 2010 2009

Taipei Fubon Bank Co., Ltd. HKD 2,925 HKD 332,503

7. Fubon Financial Holding Venture Capital and its subsidiary

(a) Name and relationship of related party

Name of related party Relationship with the Company

Taipei Fubon Bank Co., Ltd. A subsidiary of the Comapny

Funds managed by Fubon Asset Management Related parties in substance

(b) Significant transactions with related parties

a) Deposits

June 30, June 30, Taipei Fubon Bank Co., Ltd. 2010 2009

Saving deposit $ 27,919 263,927 Time deposit $ 352,700 85,000

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Notes to Consolidated Financial Statements

For the six-month periods ended June 30, 2010 and 2009, the interest revenue was $449 and $1,174, respectively.

b) Funds purchased by Fubon Financial Holding Venture Capital and managed by Fubon Asset Management Co., Ltd. were as follows:

June 30, June 30, Name of related party 2010 2009

Fubon Chi-hsiang Fund $ 1,432,621 2,025,733

8. Fubon Direct Marketing Consulting

(a) Name and relationship of related party

Name of related party Relationship with the Company

Fuobn Insurance Co., Ltd. A subsidiary of the Company

Fu-sheng Life Assurance Agent Co., Ltd. A second-tier subsidiary of the Company

(b) Significant transactions with related parties

a) Operating revenue

Name of related party 2010 2009

Fubon Insurance Co., Ltd. $ 121,760 101,869 Fu-sheng Life Assurance Agent Co., Ltd. 269,006 195,052 $ 390,766 296,921

The details of account receivables generated from transactions above were as follows:

June 30, June 30, Name of related party 2010 2009

Fubon Insurance Co., Ltd. $ 45,073 21,935 Fu-sheng Life Assurance Agent Co., Ltd. 85,267 60,845 $ 130,340 82,780

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Notes to Consolidated Financial Statements

9. Taiwan Sport Lottery

(a) Name and relationship of related party

Name of related party Relationship with the Company

Taipei Fubon Bank Co., Ltd. A subsidiary of the Company

(b) Significant transactions with related parties – Other payable

June 30, June 30, Name of related party 2010 2009

Taipei Fubon Bank Co., Ltd. $ 441,000 -

(35) Pledged Assets

As of June 30, 2010 and 2009, the book values of pledged assets were as follows:

June 30, June 30, Pledged assets Purpose of Pledge 2010 2009

Time deposits Guarantee deposits for Insurance $ 48,448 70,530 (accounted for as Business refundable deposits) Time deposits Bank loans 119,700 173,170 Certificates of deposits Collateral for day-term overdraft 1,000,000 10,000,000 (accounted for due from Central Bank and call loans to Banks) Certificates of deposits 76,200 26,000 (accounted for pledged assets) Time deposits Placement with courts of justice for 1,118,158 623,817 (accounted for as various over-due loan collection available-for-sale cases and National Credit Card financial assets) Center to secure potential obligation arising from credit card activities Time deposits 970 - (guarantee deposits paid)

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Notes to Consolidated Financial Statements

June 30, June 30, Pledged assets Purpose of Pledge 2010 2009

Held-to-maturity Placement with courts of justice for $ 10,110,613 170,656 financial assets various over-due loan collection cases and National Credit Card Center to secure potential obligation arising from credit card activities Trading securities Bank loan - 1,960,000 (accounted for as financial assets to measured at fair value through profit or loss) Government bonds Guarantee deposits for Insurance 4,342,551 4,416,657 Business Fixed assets – land and Bank loans 1,059,515 1,148,863 buildings Leased assets – land and Bank loans 385,262 392,291 buildings Idle assets – land and Bank loans 146,188 41,490 buildings $ 18,407,605 19,023,474

As of June 30, 2010 and 2009, operating deposits and refundable deposits in Taipei Fubon Bank Co., Ltd. amounted to $2,054,370 and $1,816,180, respectively, were eliminated when the Company compiled its consolidated financial report.

(36) Contingent Liabilities and Commitments

1) Legal matters of Fubon Insurance

1. As of June 30, 2010, Fubon Insurance had several insurance disputes and was requested to pay indemnities amounting to approximately $517,170, of which approximately $243,801 was reinsured. The difference not covered by reinsurance related to these claims had been accrued. These cases were still pending with the district court and had not been resolved as of June 30, 2010.

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Notes to Consolidated Financial Statements

2. Tainan County Government claimed that a separating employee of Fubon Insurance used a insurance policy without “sample” icon seal, resulting to a loss of $223,500. Consequently, Tainan Country Government requested the related person and Fubon Insurance to pay indemnities for the loss but this case was refuted by Tainan District Court. However, Taiwan County Government filed an appeal for retrial. Nevertheless, Fubon Insurance lost the suit at the second trial in March 2009. Fubon Insurance appealed to a higher court and recognized the related liabilities at the same time. On September 17, 2009, the supreme court ruled that the remand order for this case to Taiwan District Court.

2) Legal matters of Fubon Life Insurance

As of June 30, 2010, Fubon Life Insurance had 57 important insurance lawsuits for which it was requested to pay total indemnities for losses of approximately $160,381. Those losses had been accrued. There were 14 non-settlement cases, which was requested to pay total indemnities for losses of approximately $55,560. Those losses had been accrued according to the circumstances of these cases.

3) Contingent liabilities and commitments of Fubon Securities

1. As of June 30, 2010, Fubon Securities had several proxy delivery agreements with certain securities companies. In accordance with these agreements, the companies have agreed to be Fubon Securities’ first and second proxy. If Fubon Securities is unable to fulfil its obligations to the TSE, the proxies must then act pursuant to said obligations and responsibilities.

Fubon Securities has reciprocated by agreeing to act as the first or second proxy for these companies.

Fubon Futures had several proxy delivery agreements with certain futures companies. In accordance with these agreements, the companies have agreed to be Fubon Futures’ first and second proxy. If Fubon Futures is unable to fulfill it obligations to the TAIFEX, the proxies must then act pursuant to said obligations and responsibilities.

2. There were several disputes that former brokers had with clients due to securities brokerage transactions. Also, there were several disputes in which brokers of the Futures IB group of Fubon Securities had with clients due to future transactions. The clients filed lawsuits against Fubon Securities and Future IB group of Fubon Securities for damages. According to the adjudication, as of June 30, 2010, Fubon Securities recognized the indemnification loss of $22,142, and remaining claims for indemnification loss of $93,000 were still under judicial examination. In the opinion of Fubon Securities lawyer, this charge was committed by the former brokers without involvement of Fubon Securities. But the actual result will be still based on the judicial judgements.

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Notes to Consolidated Financial Statements

3. The procurator of the Taipei District Court indicted Fubon Futures and asked for a penalty below $2,000 due to a broker of Fubon Futures promised to engage in profit-taking futures transactions. In December 2008, the procurator of the Taipei District Coart adjudicated Fubon Futures to pay the penalty of $1,000, but Fubon Futures appealed to a higher court. Based on the principle of conservatism, Fubon Futures recognized the unrealized lawsuit loss of $1,000.

Customers of Fubon Futures, Mrs. Li, and Mrs. Lin, requested Fubon Futures to absorb all the losses in Mrs. Li’s and Mrs. Lin’s accounts of $16,435 and $126,490, respectively, totaling $142,925. This case was submitted for arbitration. Based on the opinion of Fubon Futures’s lawyer, there is no precedent that an arbitration case could follow, but considering the principle of conservatism, Fubon Futures made a provision for loss of $56,500 in 2008. According to the arbitral award, In 2009, Fubon Futures has paid $35,646 to Mrs. Li and Mrs. Lin. In addition, in December 2008, a customer of Fubon Futures, Feng-Yueh Investment, requested Fubon Futures to absorb all the losses in Feng-Yueh Investment’s account of $11,600. According to the arbitral award, In 2009, Fubon Futures has paid $3,571 to Feng-Yueh Investment.

Customers of Fubon Futures, Mrs. Liu and nine other persons, requested Fubon Futures to absorb all losses in their futures accounts amounting to $237,644. In 2010, the requested amount was changed to $238,629 because of the client Miss Chen and Miss Lin. Fubon Futures reached a settlement with Mr. Wang and paid $390 to Mr. Wang in 2009. Pursuant to the first trial judgment made by Taiwan Taipei District Court in 2010, Fubon Futures had to pay Miss Lin and Mr. Lee $9,400, but Fubon Futures appealed to a higher court. Based on the opinion of Fubon Futures’s lawyer, Fubon Futures’s absorbing of losses requested by the remaining customers would be $51,400, but the final result will be still based on the judicial judgments.

4) Contingent liabilities and commitments of Taipei Fubon Bank

1. As of June 30, 2010, Taipei Fubon Bank had sold bills and bonds under repurchase agreements of $17,650,665 which should be repurchased before November 30, 2010.

As of June 30, 2010, the Bank’s investments in financial assets at fair value through profit or loss and available-for-sale financial assets, net, amounting to $399,300 and $18,653,650, respectively, had been sold under repurchase agreements.

2. As of June 30, 2010, Taipei Fubon Bank engaged in important construction and purchase contracts amounted to $223,539, of which $160,698 was unpaid.

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Notes to Consolidated Financial Statements

3. Taipei Fubon Bank sold a building in the Neihu District to Land Bank under a sell-and- leaseback on March 24, 2006. The gain on disposal of the building amounting to $295,819. Taipei Fubon Bank will rent the building for another ten years, so Taipei Fubon Bank will re-estimate the unrealized leaseback gain by the new tenancy from January 1, 2009, and recognized during the 124-month leaseback period.

4. Under the announcement released by the Ministry of Finance (MOF) on September 3, 2007, Taipei Fubon Bank was awarded the license to issue sports lottery tickets from April 16, 2007 to December 31, 2013. Based on an announcement of MOF earlier, the target annual turnover should be no less than NT$4 billion. Thus, under the guidelines of the national sports regulatory agency, unless there are reasons other than force majeure, Taipei Fubon Bank should have turned in 80% of the target annual lottery earnings, which was at least NT$1.145 billion annually, to the government in 2008. If the earning goal was not met, the Bank had to pay for the short fall.

There was some delay, however in the approval of Taipei Fubon Bank’s proposed network of ticket vendors, and the date to begin issuing lottery tickets was postponed from April 15 to May 2 and November 11 in 2008. As a result, the vendors could sell lottery tickets much later than planned and even the plan to make ticket sales ride on the popularity of the 2008 Beijing Olympics could not be realized. These developments were considered force majeure, which prevented Taipei Fubon Bank from meeting the requirement for the 2008 turnover. Thus, on October 21, 2008, Taipei Fubon Bank submitted a request to the regulatory agencies for the revision of the turnover and lottery earnings requirement for 2008.

As of August 2, 2010, the date of the accompanying auditors’ report, one of the regulatory agencies, the Sports Affairs Council, agreed Taipei Fubon Bank to revise the target annual lottery earnings basicly, but Taipei Fubon Bank still needed to prepare the supplementary material which was asked for by the Sport Affairs Council.

5. Taipei Fubon Bank sold the linked securities issued by Lehman Brother Company (LEH) to customers, but LEH had filed for bankruptcy in September 2008. The customers then claim the settlement with Taipei Fubon Bank. In 2009 and 2008, Taipei Fubon Bank estimated a loss of $420,000 thereon and accrued it accordingly. As of June 30, 2010, Taipei Fubon Bank had compensated $252,020.

6. As of June 30, 2010 and 2009, trust assets with Taipei Fubon Bank amounted to $307,605,697 and $373,834,028, respectively.

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Notes to Consolidated Financial Statements

Balance Sheet of Trust Accounts June 30, 2010 (In thousands of New Taiwan Dollars)

Real estate Other trust trust assets assets Total Trust assets

Bank deposits $ 16,117 1,374,147 1,390,264 Short-term investment Bonds - 28,210,690 28,210,690 Stocks - 11,157,763 11,157,763 Mutual funds - 168,410,850 168,410,850 Stock borrowing – common stock - - - investment Investment - 2,257,035 2,257,035 Receivables - - - Real estate Construction in process - 1,493,768 1,493,768 Land 442,096 1,915,496 2,357,592 Building 176,307 198,327 374,634 Collective investment trust funds - 87,619 87,619 Entrusted exchange traded funds - 91,865,482 91,865,482 Total trust assets $ 634,520 306,971,177 307,605,697 Trust liabilities Payables $ 5,128 109 5,237 Other liabilities 13,044 131 13,175 Trust capital 515,000 218,435,639 218,950,639 Reserve and accumulated earnings Accumulated earnings (loss) 2,662 (6,140,951) (6,138,289) Asset revaluation surplus 98,510 - 98,510 Net income 176 2,723,148 2,723,324 Collective investment trust funds - 87,619 87,619 Entrusted exchange traded funds - 91,865,482 91,865,482 Total trust liabilities $ 634,520 306,971,177 307,605,697

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Notes to Consolidated Financial Statements

Balance Sheet of Trust Accounts June 30, 2009 (In thousands of New Taiwan Dollars)

Real estate Other trust trust assets assets Total Trust assets

Bank deposits $ 16,107 762,832 778,939 Short-term investment Bonds - 48,685,594 48,685,594 Stocks - 10,325,347 10,325,347 Mutual funds - 135,342,256 135,342,256 Receivables - 12,444 12,444 Real estate Construction in process - 3,194,116 3,194,116 Land 442,096 3,345,767 3,787,863 Building 176,307 145,349 321,656 Collective investment trust funds - 2,554,135 2,554,135 Entrusted exchange traded funds - 168,831,678 168,831,678 Total trust assets $ 634,510 373,199,518 373,834,028 Trust liabilities Payables $ 5,129 - 5,129 Other liabilities 13,044 - 13,044 Trust capital 515,000 204,726,305 205,241,305 Reserve and accumulated earnings Accumulated earnings (loss) 2,735 (112,592) (109,857) Asset revaluation surplus 98,510 - 98,510 Net income 92 (2,800,008) (2,799,916) Collective investment trust funds - 2,554,135 2,554,135 Entrusted exchange traded funds - 168,831,678 168,831,678 Total trust liabilities $ 634,510 373,199,518 373,834,028

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Notes to Consolidated Financial Statements

5) Contingent liabilities and commitments of Taiwan Sport Lottery

Taiwan Sport Lottery is established to operate a sport lottery business entrusted by Taipei Fubon Bank. Taiwan Sport Lottery engaged a contract with Taipei Fubon Bank on May 27, 2009. The term of contract is from May 27, 2009 to July 31, 2014. According to the contract, Taiwan Sport Lottery should achieve a sales revenue which is determined based on a guaranteed annual turnover that is equal to 80% of the annual turnover target set by the regulatory authorities considering the economic environment and other factors. After the right of distribution expires, if the amount of total lottery prizes exceed 75% of total lottery issuing amount, Taiwan Sport Lottery should afford the excess amount. If this sales revenue is not achieved , Taipei Fubon Bank has to pay the government for the shortfall between the actual sales revenue and the guaranteed sales revenue. However , the Taiwan Sport Lottery has to compensate Taipei Fubon Bank with lower amount of the following two alternatives: (a) the difference mentioned above and (b) the amount which Taipei Fubon Bank has actually paid to the government. In addition, according to the contract, Taipei Fubon Bank should transfer the technical service contract and software license agreement that it signed with HKJC and HKJCBV to Taiwan Sport Lottery.

On February 8, 2010, Taipei Fubon Bank, the principal, and Taiwan Sport lottery requested the Sports Affairs Council to amend and decrease the guaranteed annual turnover, or Taipei Fubon Bank and Taiwan Sport Lottery shall request to stop issuing sport lottery because of operating deficit. The Sports Affairs Council has replied the proposal on June 30, 2010, and Taiwan Sport Lottery has provided the additional information for the request of the Sports Affairs Council. The final result still needed to coordinate with the two parties.

Owing to the Taiwan Sport Lottery Issue Acts, started in January 1, 2010, the Sports Affairs Council reguest Taiwan Sport Lottery has to explain the effective din earnings, that is the earnings of guarantee for 2008, 2009 and in the future. As of June 30, 2010, the Sports Affairs Council had not approbated the goal of earnings and the losses that Taiwan Sport Lottery could not achieve a guaranteed earnings in 2008 and 2009, so that Taiwan Sport Lottery could not estimate the losses for the six-month period ended June 30, 2010.

6) Operating leases

The lease contracts for office space have expiry dates through 2014. The future lease payments for these contracts are approximately as follows:

Amount

From July 1, 2010, to December 31, 2010 $ 2,306,443 From January 1, 2011, to December 31, 2011 2,047,859 From January 1, 2012, to December 31, 2012 993,471 From January 1, 2013, to December 31, 2013 546,906 From January 1, 2014, to December 31, 2014 345,980 From January 1, 2015, to December 31, 2015 22,098 $ 6,262,757

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Notes to Consolidated Financial Statements

(37) Significant Subsequent Events: None.

(38) Other

1) Summary of personnel costs and depreciation, depletion and amortization expenses

A summary of personnel costs and depreciation, depletion and amortization expenses for the six- month periods ended June 30, 2010 and 2009, were as follows:

2010 2009 Function Cost of Operating Cost of Operating Nature goods sold expenses Total goods sold expenses Total

Personnel costs: Salaries 365,376 6,890,502 7,255,878 311,592 6,304,228 6,615,820 Labor and health insurance 27,560 533,272 560,832 21,951 454,158 476,109 Pension 231,668 589,397 821,065 120,783 697,609 818,392 Other employment costs 18,808 1,632,141 1,650,949 15,601 1,278,199 1,293,800 Depreciation expenses 192,311 740,648 932,959 154,016 788,204 942,220 Depletion expenses ------Amortization expenses 52,245 315,100 367,345 50,032 280,878 330,910

2) Reclassification

To conform to the presentation adopted for the consolidated financial statements as of and for the six-month period ended June 30, 2010, certain items of the financial statements as of June 30, 2009, have been reclassified.

3) Business or trading behaviours within Subsidiaries:

1. Business or trading behaviours:

Please see Note 34 for your reference.

2. Integrate business activities:

Commencing from 2005, the Company changed the operating mode in information cross application and marketing cooperation aspect by established six business groups consisting of corporate finance, financial market, consumer finance, wealth management, investment and insurance. By promoting sales cooperation aggressively, the Company is excepting to make it more effective and efficient. In June 2009, Fubon Life Assurance and ING Life Insurance was officially merged. Thereafter, it has strengthened cooperation with the Company’s subsidiaries so as to promote sales.

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Notes to Consolidated Financial Statements

3. Cross utilization of information:

In support of government’s policy for financial holding company and its subsidiaries, the company and its subsidiaries concluded and signed “Agreement of Privacy Exchange” on January 1, 2002, to cope with the change of duties in the company and to enhance the protection of privacy. The related information is disclosed on the web sites of any subsidiaries.

In accordance with government’s policy and the Company’s self-discipline standard, customers could notify the Company and its subsidiaries to stop using their personal information among subsidiaries for cross-marketing. This standard s accessible in the web site of each subsidiary.

4. Locations and business utilities:

The company applied to government for “Location set up for operating other business” and had been approved in August 2002 and April 2003, separately. Taipei Bank and Fubon Bank were officially merged and applied for new operating location in 2005. By 2010, Taipei Fubon Bank has 119 branches, which also operate securities and insurance business; 6 other branches set up insurance counters. Fubon Securities has 60 branches, which also operate banking and insurance business. They provide securities, insurance, and banking services in banks’ and securities’ branches.

5. Allocation on revenues, costs, expenses, profits and losses:

Allocation of Revenue, Cost and Expense is calculated based on the proportion of actual sales among subsidiaries. The estimated amount for the six-month period ended June 30, 2010, was as follows:

Name Amount

Fubon Insurance $ 148,615 Taipei Fubon Bank 15,292 Fubon Life Insurance 18,862 Fubon Securities 11,134

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Notes to Consolidated Financial Statements

4) Capital adequacy ratios

As of June 30, 2010 (Expressed in millions of New Taiwan dollars)

Ownership Item interest Eligible capital Legal capital The Company 100.00% 203,153 219,042 Taipei Fubon Bank 100.00% 97,747 65,442 Fubon Bank (HK) 75.00% 18,563 8,183 Fubon Securities 100.00% 24,097 7,534 Fubon Insurance and Fubon Life 100.00% 81,682 52,518 Insurance Fubon Asset Management 100.00% 972 446 Fubon Financial Holding Venture 91.67% 3,066 1,534 Capital Taiwan Sports Lottery Corporation 51.00% (339) 130 Others 100.00% 2,958 2,172 Less: deductible item (234,589) (218,501) Subtotal 197,310 138,500 Consolidated capital adequacy ratios 142.46%

As of June 30, 2009 (Expressed in millions of New Taiwan dollars)

Ownership Item interest Eligible capital Legal capital The Company 100.00% 182,129 192,998 Taipei Fubon Bank 100.00% 84,795 61,951 Fubon Bank (HK) 75.00% 18,728 9,258 Fubon Securities 100.00% 24,056 7,356 Fubon Insurance and Fubon Life 100.00% 75,422 44,258 Insurance Fubon Asset Management 100.00% 853 449 Fubon Financial Holding Venture 91.67% 2,289 1,145 Capital Taiwan Sports Lottery Corporation 51.00% 52 177 Others 100.00% 2,854 3,174 Less: deductible item (204,039) (192,417) Subtotal 187,139 128,349 Consolidated capital adequacy ratios 145.81%

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Notes to Consolidated Financial Statements

5) Eligible capital

(Expressed in thousands of NTD) Amount Item June 30, 2009 June 30, 2008 Common stock 81,385,520 81,253,616 Capital surplus 54,185,938 53,917,063 Legal reserve 23,962,851 21,969,087 Special reserve 1,285,676 13,842,513 Accumulated profit 24,916,572 6,213,732 Equity adjustments 10,827,184 (5,927,155) Other subordinated bonds 6,800,000 11,111,847 Less: Deferred assets 15,240 13,584 Less: Treasury stock 195,220 238,220 Consolidated eligible capital 203,153,281 182,128,899

6) The aggregate amount of credit extended, guarantees given, or any other transactions conducted by all subsidiaries of the financial holding company to, for, or with the same person, same related person, or same affiliate:

(In millions of New Taiwan Dollars; %) June 30, 2010 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth The same person Central Bank $ 604,668 307.02 TAIWAN POWER CORPORATION 78,855 40.04 FREDDIE MAC 35,960 18.26 FANNIE MAE 31,514 16.00 HK GOVERNMENT EXCHANGE FUND 30,133 15.30 TAIPEI COUNTRY GOVERNMENT 30,000 15.23 GOVERNMENT NATIONAL MORTGAGE 22,926 11.64 ASSOCIATION CPC CORPORATION, TAIWAN 19,659 9.98 CHUNGHWA TELECOM 18,783 9.54 TAIPEI CITY GOVERNMENT 18,293 9.29 CHIMEI INNOLUX CORPORATION 18,106 9.19 Industrial Park Management Fund 455 account 17,800 9.04 KREDITANSTALT FUER WIEDERAUFBAU 17,769 9.02 US TREASURY 19,568 8.92 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

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Notes to Consolidated Financial Statements

June 30, 2010 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth FRENCH GOVERNMENT 15,425 7.83 Taiwan Railway Administration 15,000 7.62 TAIWAN MOBILE CORPORATION 13,897 7.06 CHINA TRUST COMMERCIAL BANK 13,476 6.84 DEUTSCHE BANK 12,229 6.21 Taiwan Semiconductor Manufacturing Company 12,118 6.15 SPAIN GOVERNMENT 11,290 5.73 FORMOSA PETROCHMICAL CORPORATION 10,961 5.57 RABOBANK NEDERLAND 10,959 5.56 BARCLAYS BANK PLC 10,687 5.43 BNP RARIBAS 10,676 5.42 TAINAN CITY GOVERNMENT 10,563 5.36 AU Optronics Corp. 10,508 5.34 FIRST BANK 10,507 5.33 HSBC BANK PLC 10,387 5.27 NATIONAL SCIENCE COUNCIL, EY 10,000 5.08 KAOHSIUNG CITY SERVICE ADMINISTRATION 10,000 5.08 COMMONWEALTH BANK OF AUSTRALIA 9,927 5.04 GERNMANY GOVERNMENT 9,813 4.98 MIAOLI COUNTRY GOVERNMENT 9,792 4.97 ESEA ENGINEERING CORPORATION 9,776 4.96 FORMOSA CHEMICALS & FIBER 9,607 4.88 CORPORATION NORTH RHINE – WE STPHALIA BANK 9,317 4.73 STANDARD CHARTERED BANK 9,237 4.69 ING BANK NV 9,167 4.65 DEPARTMENT OF FINANCE, TAIPEI CITY 9,000 4.57 GOVERNMENT ACER CORPORATION 8,738 4.44 TAIWAN COOPERATIVE BANK 8,092 4.11 Taipei Financial Central Corp. 8,067 4.10 CHINA STEEL 8,032 4.08 CHINATRUST GROUP CORPORATION 7,976 4.05 Science Part Administration 7,804 3.96 BANK SINOPAC 7,773 3.95 CHINA DEVELOPMENT INDUSTRIAL BANK 7,391 3.75 CATHAY UNITED BANK 7,181 3.65 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

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Notes to Consolidated Financial Statements

June 30, 2010 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth BANK OF AMERCIA COPR. 7,126 3.62 FORMOSA PLASTIC CORPORATION 6,681 3.39 RO YAL B.K. CANADA LONDON 6,478 3.29 EUROPEAN INVESTMENT BANK 6,382 3.24 AUST & NZ BANKING CORP. 6,377 3.24 DRAGON STEEL CORPORATION 6,067 3.08 NAN YA PLASTICS CORPORATION 6,062 3.08 WESTPAC BANKING CORP. 6,033 3.06 CALYON FINANCE GUERNSEY LTD. 5,989 3.04 JP Morgan 5,947 3.02 CITIGROUP INC 5,435 2.76 International Bank for Reconstruction & Development 5,429 2.76 NANYA TECHNOLOGY CORPORATION 5,402 2.74 NATIONALAUSTRALIA BK 5,332 2.71 ERSPORT FINANCS A/S 5,281 2.68 CHANG HWA BANK 5,139 2.61 Securities Investment Trust 5,138 2.61 HUANAN BANK 5,059 2.57 Southern Taiwan Science Park 5,000 2.54 CITIGROUP FONDING INC. 4,965 2.52 A/B Svensk Exportkredit 4,793 2.43 EVA AIRWAYS CORPORATION 4,722 2.40 CHINA AIRLINES 4,708 2.39 DEPARTMENT OF RAPID TRANSIT SYSTEMS 4,587 2.33 GOLDMAN SACHS 4,574 2.32 DBS BANK 4,395 2.23 MEDIATEK CORPORATION 4,383 2.23 KOMMUNALBANKEN AS 4,343 2.2 CAPITAL SECURITIES CO., LTD. 4,220 2.14 CATHAY FINANCIAL HOLDINGS 4,122 2.09 UBS AG 4,076 2.07 NORDIC INVESTMENT BANK 3,898 1.98 HSIN CHU COUNTY GOVERNMENT 3,820 1.94 SHOUGANG CONCORD INT'L ENT CL 3,791 1.93 POWERCHIP CORPORATION 3,743 1.9

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Notes to Consolidated Financial Statements

June 30, 2010 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth PUBLIC TRANSPORTATION OFFICE MANAGES 3,592 1.82 PUBLIC BUS ADMINISTRATION FUND SPECIAL BANK ACCOUNT MEGA INTERNATIONAL COMMERCIAL BANK 3,552 1.80 KAOHSIUNG CITY GOVERNMENT 3,449 1.75 MORGAN STANLEY 3,447 1.75 DLK HOLDING COMPANY LLC 3,309 1.68 DZ BANK AG 3,187 1.62 MUNICIPALITY FINANCE 3,108 1.58 HK MORTGAGE CORP 3,106 1.58 CHUNGHWA PICTURE TUBES, LTD. 3,033 1.54 In charge for the company of the same person and a helpmate Ju OO and related party 16,885 8.57 Huang OO and related party 4,607 2.34 The same affiliate TAIWAN POWER COMPANY GROUP 78,855 40.04 FUXCONN TECHNOLOGY GROUP 22,571 11.46 CHUNGHWA TELECOM GROUP 21,533 10.93 CITIC GROUP 21,526 10.93 CPC CORPORATION, TAIWAN 19,971 10.14 CHIMEI INNOLUX CORPORATION GROUP 19,219 9.76 CSC GROUP 17,171 8.72 FIRST FINANCIAL HOLDING GROUP 15,732 7.99 NAN YA PLASTICS CORPORATION GROUP 14,110 7.16 TAIWAN MOBILE GROUP 13,948 7.08 FORMOSA PETROCHEMICAL CORPORATION 13,486 6.85 GROUP TAIWAN SEMICONDUCTOR MANUFACTURING 12,940 6.57 COMPANY LIMITED GROUP AUO COMPANY GROUP 12,100 6.14 CATHAY FINANCIAL HOLDINGS GROUP 11,357 5.77 FORMOSA CHEMICALS& FIBER CORPORATION 11,282 5.73 GROUP CITY BANK GROUP 10,512 5.34 TAISHIN FINANCIAL HOLDING CO., LTD 10,312 5.24

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Notes to Consolidated Financial Statements

June 30, 2010 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth CHINA DEVELOPMENT FINANCIAL HOLDINGS 9,968 5.06 GROUP RSEA ENGINEERING COPORATION GROUP 9,777 4.96 STANDARD CHARTERED GROUP 9,053 4.60 MEGA HOLDINGS GROUP 8,765 4.45 ACER GROUP 8,738 4.44 HUA NAN FINANCIAL HOLDING GROUP 8,243 4.19 TAIWAN COOPERATIVE BANK GROUP 8,076 4.10 FORMOSA PLASTICS CORPORATION 7,856 3.99 SINOPAC HOLDINGS GROUP 7,439 3.78 CHINA AIRLINES GROUP 7,375 3.74 RDSA LN 6,851 3.48 EVERGREEN GROUP 6,445 3.27 WALSIN LIHWA COMPANY GROUP 6,377 3.24 UNI-PRESIDENT GROUP 6,376 3.24 TATUNG CORPORATION GROUP 5,306 2.69 ANZ BANK GROUP 5,170 2.63 KBRO CO., LTD. 4,570 2.32 ASUSTek COMPUTER GROUP 4,556 2.31 CHEUNG KONG/ HUTCHISON GROUP 4,431 2.25 MEDIATEK CORPORATION GROUP 4,383 2.23 THE CAPITAL GROUP 4,338 2.20 UNITED MICROELECTRONICS CORPORATION 4,228 2.15 GROUP FAR EASTERN NEW CENTURY COROPRATIOPN 4,178 2.12 GROUP SHOUGANG CONCORD GROUP 4,037 2.05 QUANTA COMPUTER GROUP 4,034 2.05 HK MORTGAGE CORP. GROUP 3,812 1.94 POWERCHIP TECHNOLOGY CORPORATION 3,743 1.90 GROUP E. SUN FINANCIAL HOLDING GROUP 3,688 1.87 YUANTA FINANCIAL HOLDING 3,295 1.67 KINPO ELECTRONICS, INSC. GROUP 3,219 1.63 LITEON TECHNOLOGY CORPORATION GROUP 3,183 1.62 WESCO CHINA LTD GROUP 3,005 1.53 2,061,320 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

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Notes to Consolidated Financial Statements

June 30, 2009 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth The same person Central Bank 430,114 240.96 DEUTSCHE BANK A.G. 163,138 91.39 BNP PARIBAS 151,796 85.04 ING Bank N.V 126,072 70.63 UBS AG 92,213 51.66 BARCLAYS BANK PLC 88,527 49.60 JPMorgan 80,984 45.37 CALYON 64,444 36.10 DBS Bank 46,576 26.09 Federal Home Loan Mortgage Corporation 36,568 20.49 Federal National Mortgage Association 36,182 20.27 KBC Bank NV 33,819 18.95 Chunghwa Post Co., Ltd. 22,423 12.56 Morgan Stanley & Co. International Limited 21,042 11.79 Taipei Country Government 20,000 11.20 Taipei City Government 19,400 10.87 GOVERNMENT NATIONAL MORTGAGE 18,532 10.38 ASSOCIATION Credit Suisse Bank 18,418 10.32 SOCIETE GENERALE 17,201 9.64 KREDITANSTALT FOER WIEDERAUFBAU 16,677 9.34 FRENCH GOVERNMENT 16,088 9.01 GOLDMAN SACHS 15,202 8.52 Industrial Development Bureau, Ministry of Economic 15,200 8.52 Affairs BANK OF TAIWAN 12,766 7.16 Nomura Securities Co., Ltd. 11,757 6.59 SPAIN GOVERNMANT 11,594 6.50 Taiwan Railway Administration 11,000 6.16 RABOBANK NEDERLAND NV 10,546 5.91 National Treasury Agency 10,399 5.83 GERMANY GOVERNMENT 10,276 5.76 Bureau of National Health Insurance 10,000 5.60 Mizuho Corporate Bank 9,862 5.52

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Notes to Consolidated Financial Statements

June 30, 2009 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth Construction and Planning Agency, Ministry of the 9,725 5.45 Interior Zhong-Xi Co., Ltd. 9,505 5.32 NAN SHAN Insurance Co., Ltd. 8,700 4.87 Taipei Financial Central Corp. 8,449 4.73 EUROPEAN INVESTMENT BANK 8,302 4.65 Finance Bureau Kaohsiung City Government 7,600 4.62 Fortis Bank 7,424 4.16 National Stabilization fund Committee 6,898 3.86 Bureau of Labor Insurance 6,839 3.83 Standard Bank of South Africa Ltd. 6,770 3.79 Miaoli Country Government 5,356 3.00 CHANG HWA BANK 5,145 2.88 CHINA BILLS FINANCE CORPORATION 5,140 2.88 Bank of Tokyo-Mitsubishi UFJ, Ltd. 5,005 2.80 KAOHSIUNG City Bus Service Administration 5,000 2.80 Commonwealth bank of australia 4,464 2.50 Oversea-Chinese Banking Corp. Ltd. 4,389 2.46 Natixis 4,360 2.44 Tainan City Government 4,173 2.34 En Tie Commercial Bank 4,137 2.32 Xiong-He Co., Ltd. 4,045 2.27 International Bank for Reconstruction & Dev 4,037 2.26 Bank of New York 3,795 2.13 DLK Holding Com 3,729 2.09 Fubon No.1 REIT 3,561 1.99 Taoyuan Country Government 3,225 1.81 JAPAN GOVERNMENT 3,167 1.77 Sumitomo Mitsui Banking Corp. 3,136 1.76 National Australia Bank 3,118 1.75 Labor Pension Fund(New System) 3,000 1.68 The same affiliate Fubon Financial Holding Group 172,762 96.79 China Trust Financial Holding Group 158,716 88.92 Citi Group 135,126 75.70 Royal Bank of Scotland Group 79,570 44.58 Cathy Financial Holding Group 77,315 43.31 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

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Notes to Consolidated Financial Statements

June 30, 2009 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth Standard Chartered Group 75,049 42.04 Sinopac Financial Holding Group 73,097 40.95 HSBC 67,399 37.76 Taiwan Power Group 64,710 36.25 Bank of America 56,763 31.80 First Financial Holding Group 46,330 25.96 China Development Financial Holding Group 44,623 25.00 Dni-president Enterprises Corp. 37,535 21.03 Taishin Financial Holding Group 31,474 17.63 MEGA Financial Holding Group 28,845 16.16 Continental Engineering Group (note 1) 26,587 14.89 Yuanta Group 24,899 13.95 Nan ya Group 24,656 13.81 China Steel Group 24,245 13.58 HK Government Exchange Fund 24,110 13.51 China Airline Group 22,959 12.86 Chi Mei Group 21,799 12.21 Formosa Chemicals & Fibre Group 19,411 10.87 AU optronics Group 19,168 10.74 Water land Financial Holding Group 17,115 9.59 Formosa Petrochemical Group 16,600 9.30 Chungwa Telecom Group 16,414 9.20 Kbro group 15,048 8.43 Taiwan Communication Group 14,803 8.29 ANZ BANK GROUP 14,782 8.28 E.SUN Financial Holding Group 14,382 8.06 Taiwan Semiconductor Manufacturing Group 14,319 8.02 Acer Inc. Group 14,317 8.02 Capital Securities Group 14,098 7.90 Foxconn Technology Group 13,254 7.43 Walsin Lihwa Group 12,985 7.27 Taiwan Cooperative Bank Group 12,822 7.18 Jih Sun Holding Group 11,247 6.30 SAVONA LIMITED 10,147 5.68 RSEA Engineering Group 10,137 5.68 Evergreen Group 10,067 5.64 Polaris Group 9,825 5.50 (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

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Notes to Consolidated Financial Statements

June 30, 2009 Aggregate amount of Aggregate ratio credits, of the financial guarantees or holding any other company’s net Name transactions worth Shin Kong Financial Holding Group 9,579 5.37 Far Eastern Group 8,888 4.98 ASE INC. 8,411 4.71 Tatung Group 7,875 4.41 Powerchip Group 7,786 4.36 Hua Nan Financial Holding Group 7,388 4.14 UMC Group 7,319 4.10 MERCURIES & ASSOCIATES GROUP 6,728 3.77 Formosa Plastics Group 6,657 3.73 Kinpo Group 5,894 3.30 VIA Tech Group 5,474 3.07 VIA Tech Group 5,394 3.02 Master Link Securities Corporation 5,374 3.01 Taiwan Cogeneration Corporation Group 5,371 3.01 Taiwan Cement Corporation Group 5,145 2.88 Chang-Xuan Construction Group 5,055 2.83 China Network System Group 4,615 2.59 Wistron Group 4,020 2.25 Taiwan Business Bank Group 3,930 2.20 Synnex Technology International Group 3,788 2.12 CPC Corporation Group 3,747 2.10 SHUI ON GROUP 3,706 2.08 INVENTEC GROUP 3,637 2.04 HK MORTGAGE CORP 3,456 1.94 YFY Group 3,022 1.69 ASUS TeK Computer Group 3,009 1.69 Primax Electronics Ltd. 3,004 1.68 Total 3,558,792

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Notes to Consolidated Financial Statements

7) Financial information classified by business type:

For the six-month period ended June 30, 2010

Item Banking Insurance Securities Others Consolidation

Interest income 7,786,668 17,548,963 680,479 (509,699) 25,506,411 Non-interest income 5,820,047 206,149,065 2,156,386 1,801,041 215,926,539 Net revenue 13,606,715 223,698,028 2,836,865 1,291,342 241,432,950 Bad debt expense 393,316 - - - 393,316 Provision for insurance reserve - 210,339,339 - - 210,339,339 Operating expense 7,143,989 6,574,086 2,247,584 1,329,911 17,295,570 Net income before cumulative 6,069,410 6,784,603 589,281 (38,569) 13,404,725 effect of changes in accounting principle, and income tax Income tax expense 551,431 1,063,391 132,474 713,149 2,460,445 Cumulative effect of changes in - - - - - accounting principle Net income 5,517,979 5,721,212 456,807 (751,718) 10,944,280

For the six-month period ended June 30, 2009

Item Banking Insurance Securities Others Consolidation

Interest income 8,380,087 12,248,823 486,613 (280,936) 20,834,587 Non-interest income 5,151,465 122,072,139 2,379,610 1,176,503 130,779,717 Net revenue 13,531,552 134,320,962 2,866,223 895,567 151,614,304 Bad debt expense 2,456,854 - - - 2,456,854 Provision for insurance reserve - 125,708,592 - - 125,708,592 Operating expense 7,316,673 5,825,036 1,970,633 833,139 15,945,481 Net income before cumulative 3,758,025 2,787,334 895,590 62,428 7,503,377 effect of changes in accounting principle, and income tax Income tax expense 569,074 670,285 168,244 (240,677) 1,166,926 Cumulative effect of changes in - - - - - accounting principle Acquisition income 3,188,951 2,117,049 727,346 303,105 6,336,451

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8) Financial statements of Fubon Financial Holding Co., Ltd.

FUBON FINANCIAL HOLDING CO., LTD.

Balance Sheets

June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars)

Change of Change of Assets 2010 2009 percentage Liabilities and Stockholders’ Equity 2010 2009 percentage

Cash and cash equivalents $ 13,210,868 1,270,600 940 Payables $ 22,580,886 4,080,860 453 Financial assets measured at fair value through Financial liabilities measured at fair value through profit or loss 196,152 32,068 512 profit or loss - 26,887 - Bonds and bills purchased under resell agreements 2,398,518 - - Bonds payable 20,000,000 22,111,847 (10) Receivables, net 5,358,092 4,195,890 28 Other liabilities 776,525 792,095 (2) Long-term investment under equity method 214,758,566 188,635,099 14 Total liabilities 43,357,411 27,011,689 61 Other financial assets, net 3,724,293 3,798,218 (2) Total stockholders’ equity: Fixed assets, net 14,903 39,295 (62) Common stock 81,385,520 81,253,615 - Intangible assets, net 2,510 2,240 12 Stock dividends to be distributed 4,069,298 - - Other assets 62,030 68,915 (10) 85,454,818 81,253,615 5 Capital surplus 54,185,938 53,917,063 - Retained earnings: Legal reserve 23,962,851 21,969,088 9 Special reserve 1,285,676 13,842,513 (91) Unappropriated retained earnings 20,847,274 6,213,732 236 46,095,801 42,025,333 10 Equity adjustments Cumulative foreign currency translation adjustments (409,049) (74,497) 449 Unrealized gain (losses) on financial instruments 10,523,406 (5,592,534) (288) Net loss from unrecognized pension cost 712,827 (260,124 ) (374) 10,827,184 (5,927,155 ) (283) Treasury stock (195,220 ) (238,220 ) (18) Total stockholders’ equity 196,368,521 171,030,636 - Total Assets $ 239,725,932 198,042,325 21 Total Liabilities and Stockholders’ $ 239,725,932 198,042,325 21 Eequity

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Income Statements

For the six-month periods ended June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars, except earnings per share)

Change of 2010 2009 percentage

Revenue: Income from equity investments under equity method $ 12,053,549 5,933,163 103 Other revenue 201,778 579,041 (65) 12,255,327 6,512,204 88 Expense: Operating expense 209,755 216,326 (3) Other expense and loss 792,302 466,483 70 1,002,057 682,809 47 Net income before income tax 11,253,270 5,829,395 93 Income tax expense (benefit) 559,172 (384,337 ) 245 Net income $ 10,694,098 6,213,732 72

Before tax After tax Before tax After tax

Earnings per share – basic $ 1.38 1.32 0.73 0.77 Earnings per share – diluted $ 1.38 1.31 - -

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FUBON FINANCIAL HOLDING CO., Ltd.

Statements of Changes in Stockholders’ Equity

For the six-month periods ended June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars, except earnings per share)

Retained Earnings Stock Cumulative Unrealized Stock Foreign Gains or Dividend Unappropriated Currency Losses Common to be Capital Legal Special Retained Translation Unrecognized on Financial Treasury Stock Distributed Surplus Reserve Reserve Earnings Adjustments Pension Cost Instruments Stock Total

Balance on January 1, 2009 $ 77,190,935 - 49,091,476 20,881,553 2,341,478 12,588,570 196,777 (260,124) (18,315,548) - 143,715,117 Capital increase by cash 4,062,680 - 4,825,587 ------8,888,267 Appropriations of retained earnings: - Legal reserve - - - 1,087,535 - (1,087,535) - - - - - Special reserve - - - - 11,501,035 (11,501,035) - - - - - Cumulative foreign currency translation adjustments ------(271,274) - - - (271,274) Unrealized gains or (losses) from remeasurement of financial instruments ------12,723,014 - 12,723,014 Treasury stock ------(238,220) (238,220) Net income - - - - - 6,213,732 - - - - 6,213,732 Balance on June 30, 2009 $ 81,253,615 - 53,917,063 21,969,088 13,842,513 6,213,732 (74,497 ) (260,124 ) (5,592,534 ) (238,220 ) 171,030,636 Balance on January 1, 2010 81,261,865 - 53,964,908 21,969,088 13,842,513 19,936,591 (424,573) 712,827 17,400,052 (195,220) 208,468,051 Issuing new shares for employee warrants exercise 123,655 - 219,437 ------343,092 Appropriations of retained earnings (note): Legal reserve - - - 1,993,763 - (1,993,763) - - - - - Special reserve - - - - (12,556,837) 12,556,837 - - - - - Cash dividend - - - - - (16,277,191) - - - - (16,277,191) Stock dividend - 4,069,298 - - - (4,069,298) - - - - - Additional paid-in capital from long-term equity investment by equity method - - 1,593 ------1,593 Cumulative foreign currency translation adjustment ------15,524 - - - 15,524 Unrealized gains or (losses) from remeasurement of financial instruments ------(6,876,646) - (6,876,646) Net income - - - - - 10,694,098 - - - - 10,694,098 Balance on June 30, 2010 $ 81,385,520 4,069,298 54,185,938 23,962,851 1,285,676 20,847,274 (409,049 ) 712,827 10,523,406 (195,220 ) 196,368,521

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Statements of Cash Flows

For the six-month periods ended June 30, 2010 and 2009 (Expressed in thousands of New Taiwan Dollars, except earnings per share)

2010 2009

Cash flows from operating activities: Net income $ 10,694,098 6,213,732 Adjustments to reconcile net income to net cash: Depreciation 10,993 16,451 Amortization 3,510 5,085 Investment income accounted for under equity method (12,053,549) (5,933,163) Cash dividend received on investments under equity method 16,673,134 4,497,359 Loss (gain) on valuation of financial assets at fair value through profit or loss (22,871) 3,597 Change in operating assts and liabilities, net Change in operating asset, net Decrease (increase) in receivables (482,101) 518,408 Decrease in other financial assets 13,962 40,273 Decrease (increase) in other assets (5,159) 21,828 Change in operating liabilities, net Increase (decrease) in payable 1,674,847 (821,342) Increase (decrease) in other liabilities (170,391 ) 59,126 Net cash flows provided by operating activities 16,336,473 4,621,354 Cash flows from investing activities: Acquisition of financial assets measured at fair value through profit or loss (179,976) - Acquire subsidiaries - (20,437,201) Proceeds of capital decrease of invested companies - 5,000,000 Purchase of fixed assets (967) (327) Increase in bonds and bills purchased under resell agreements 2,398,518 - Net cash flows used in investing activities (2,579,461 ) (15,437,528 ) Cash flow from financing activities: Decrease in short-term borrowings - 4,240,000 Repaid commercial paper - 4,000,000 Bonds issued 11,000,000 - Repayment of bonds (2,000,000) - Issued (repayment) of oversea bonds (10,845,038) 11,111,847 Capital increase by cash 343,092 8,888,267 Net cash flows provided by (used in) financing activities (1,501,946 ) 11,760,114 Effect of exchange rate changes (13,960) (40,274) Net increase in cash and cash equivalents 12,241,106 903,666 Cash and cash equivalents at beginning of period 969,762 366,934 Cash and cash equivalents at end of period $ 13,210,868 1,270,600 Supplemental disclosure of cash flow information: Cash payments of interest $ 509,487 276,598 Cash payments of income tax $ 92 51,446 Financial and investing activities note affecting cash: Cash dividend payable $ 16,277,191 -

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Notes to Consolidated Financial Statements

9) Subsidiaries’ condensed balance sheets and statements of income

1. Condensed balance sheets

Taipei Fubon Bank June 30, June 30, 2010 2009

Cash and cash equivalents $ 30,612,536 20,351,035 Due from Central Bank and call loans to banks 92,109,369 275,768,803 Financial assets measured at fair value through profit 35,120,273 29,157,817 or loss Bonds and bills purchased under resell agreements - 6,621,045 Receivable, net 78,463,832 50,699,317 Loans, net 857,232,878 806,459,182 Available-for-sale financial assets, net 41,004,597 50,861,304 Held-to-maturity investment, net 254,276,678 6,433,651 Investment under equity method, net 333,236 521,434 Other financial assets, net 14,646,467 17,117,842 Fixed asset (including intangible assets) 14,213,892 13,363,586 Other asset, net 568,770 830,785 Total assets $ 1,418,582,528 1,278,185,801 Due to Central Bank and other banks $ 67,591,809 98,861,763 Financial liabilities measured at fair value though 23,002,287 19,460,879 profit or loss Bonds and bills sold under repurchase agreements 17,646,111 5,991,002 Payable 33,155,243 21,997,458 Deposits 1,137,547,938 1,009,687,860 Financial bonds 52,280,683 39,578,186 Other financial liabilities 1,589,867 1,684,761 Other liabilities 3,443,232 2,484,556 Total liabilities 1,336,257,170 1,199,746,465 Common stock 47,948,871 43,589,883 Reserve for capital increase 1,044,000 4,358,988 Capital surplus 13,613,508 13,613,508 Retained earnings 17,979,312 15,567,612 Equity adjustment item 1,739,667 1,309,345 Total stockholders’ equity 82,325,358 78,439,336 Total liabilities and stockholders’ equity $ 1,418,582,528 1,278,185.801

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Notes to Consolidated Financial Statements

Fubon Insurance June 30, June 30, 2010 2009

Current assets $ 37,825,680 39,927,563 Funds and investments 21,063,856 19,720,012 Fixed assets (including intangible assets) 1,471,508 1,608,184 Other assets 1,646,256 1,796,278 Total assets $ 62,007,300 63,052,037 Current liabilities $ 5,036,053 8,865,028 Long-term liabilities 175,014 142,068 Reserve for operations 36,756,119 35,020,606 Other liabilities 85,879 83,374 Total liabilities 42,053,065 44,111,076 Common stock 8,178,396 8,178,396 Capital surplus 8,318,907 8,318,907 Retained earnings 3,481,686 3,004,122 Equity adjustment item (24,754 ) (560,464 ) Total stockholders’ equity 19,954,235 18,940,961 Total liabilities and stockholders’ equity $ 62,007,300 63,052,037

Fubon Life Insurance June 30, June 30, 2010 2009

Current assets $ 317,118,300 179,510,119 Loans 80,355,889 82,193,593 Funds and investments 907,114,953 753,950,427 Fixed assets (including intangible assets) 3,438,776 2,648,582 Other assets 156,586,976 138,101,296 Total assets $ 1,464,614,894 1,156,404,017 Current liabilities $ 30,673,816 18,520,856 Long-term liabilities 4,988,233 9,830,798 Reserve for operations 1,190,355,210 928,533,981 Other liabilities 152,658,275 132,982,687 Total liabilities 1,378,675,534 1,089,868,322 Common stock 15,023,170 15,023,170 Stock dividends to be distributed 2,100,000 - Capital surplus 23,527,473 23,527,473 Retained earnings 21,508,525 19,032,938 Equity adjustment item 23,780,192 8,952,114 Total stockholders’ equity 85,939,360 66,535,695 Total liabilities and stockholders’ equity $ 1,464,614,894 1,156,404,017

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Notes to Consolidated Financial Statements

Fubon Securities June 30, June 30, 2010 2009

Current assets $ 47,666,212 35,514,534 Funds and investments 3,438,028 3,449,284 Fixed assets (including intangible assets) 1,992,481 2,266,852 Other assets 2,321,906 2,154,474 Total assets $ 55,418,627 43,385,144 Current liabilities $ 25,378,130 13,826,345 Long-term liabilities - 508 Other liabilities 506,453 425,385 Total liabilities 25,884,583 14,252,238 Common stock 15,130,500 13,755,000 Capital surplus 3,401,123 4,776,490 Retained earnings 10,474,787 10,834,831 Equity adjustment item 527,634 (233,415 ) Total stockholders’ equity 29,534,044 29,132,906 Total liabilities and stockholders’ equity $ 55,418,627 43,385,144

Fubon Asset Management June 30, June 30, 2010 2009

Current assets $ 733,338 568,482 Funds and investments 136,434 154,435 Fixed assets 9,201 12,925 Other assets 150,077 163,149 Total assets $ 1,029,050 898,991 Current liabilities $ 47,142 35,916 Other liabilities 9,808 10,302 Total liabilities 56,950 46,218 Common stock 500,000 500,000 Stock dividends to be distributed 96,457 - Capital surplus 133,191 183,191 Retained earnings 242,452 169,582 Total stockholders’ equity 972,100 852,773 Total liabilities and stockholders’ equity $ 1,029,050 898,991

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Notes to Consolidated Financial Statements

(HK dollars in thousand) Fubon Bank (Hong Kong) June 30, June 30, 2010 2009

Cash and cash equivalents $ 3,513,687 4,308,672 Due from Central Bank and call loans to banks 1,157,596 2,655,261 Financial assets measured at fair value through profit 1,526,434 1,949,869 or loss Available-for-sale financial assets, net 18,521,831 18,400,910 Holding-to-maturity financial assets, net 908,720 898,596 Receivable, net 3,101,051 3,430,094 Loans, net 530,655 1,184,791 Other financial assets 27,693,204 30,350,372 Fixed asset – net (including intangible assets) 1,062,061 1,090,885 Other assets, net 605,817 581,371 Total assets $ 58,621,056 64,850,821 Due to Central Bank and other banks $ 2,997,359 1,770,432 Payable 666,212 1,225,103 Deposit and remittances 43,526,750 48,834,471 Financial liabilities measured at fair value though 1,220,312 1,576,574 profit or loss Financial bonds payable 2,225,942 2,258,293 Other financial liabilities 2,790,352 4,151,911 Other liabilities 138,740 121,362 Total liabilities 53,565,667 59,938,146 Common stock 2,097,519 2,097,519 Legal reserve 175,211 175,211 Capital surplus 1,142,380 1,136,518 Retained earnings 1,587,064 1,630,357 Equity adjustment item 50,764 (129,888) Minority interest 2,451 2,958 Total stockholders’ equity 5,055,389 4,912,675 Total liabilities and stockholders’ equity $ 58,621,056 64,850,821

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Notes to Consolidated Financial Statements

2. Condensed statements of income

Taipei Fubon Bank 2010 2009

Interest income $ 6,086,948 5,958,078 Non-interest revenue 5,087,170 4,559,550 Net operating income 11,174,118 10,517,628 Bad debt expense 195,859 1,582,664 Operating expense 6,044,845 5,902,761 Income before tax 4,933,414 3,032,203 Net income 4,544,206 2,654,496 Earnings per share – before tax 1.03 0.63 Earnings per share – after tax 0.95 0.55

Fubon Insurance 2010 2009

Operating revenues $ 26,983,555 26,897,260 Operating costs 23,152,543 23,495,347 Operating profits 3,831,012 3,401,913 Operating expense 2,011,577 1,889,400 Non-operating revenues 35,951 20,203 Non-operating expenses 55,171 1,141,958 Income before tax 1,800,215 390,758 Net income 1,470,215 (369,181) Earnings per share – before tax 2.20 0.48 Earnings per share – after tax 1.80 (0.45)

Fubon Life Insurance 2010 2009

Operating revenues $ 297,161,016 213,565,158 Operating costs 287,431,972 203,888,219 Operating profits 9,729,044 9,676,939 Operating expense 4,844,321 5,092,201 Non-operating revenues 56,174 105,459 Non-operating expenses 103,991 1,289,125 Income before tax 4,836,906 3,401,072 Net income 4,103,515 2,965,057 Earnings per share – before tax 3.22 2.26 Earnings per share – after tax 2.73 1.97

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Notes to Consolidated Financial Statements

Fubon Securities 2010 2009

Revenue $ 3,901,857 3,506,412 Expense 3,181,206 2,508,059 Income before tax 720,651 998,353 Net income 597,651 845,353 Earnings per share – before tax 0.48 0.70 Earnings per share – after tax 0.39 0.59

Fubon Asset Management 2010 2009

Operating revenues $ 228,581 178,608 Operating profits 228,581 178,608 Operating expense 189,891 163,259 Non-operating revenues 1,597 5,936 Non-operating expenses 4,225 22,633 Income (loss) before tax 36,062 (1,348) Net income (loss) 41,054 (11,905) Earnings per share – before tax 0.61 (0.03) Earnings per share – after tax 0.69 (0.24)

(HK dollars in thousand) Fubon Bank (Hong Kong) 2010 2009

Operating revenue $ 606,463 882,961 Operating profits 598,230 592,822 Gain (loss) from operation 187,480 129,450 Non-operating expenditure 4,583 14,909 Income before tax 182,897 114,541 Net income 153,295 100,648 Earnings per share – before tax 0.16 0.10 Earnings per share – after tax 0.13 0.09

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Notes to Consolidated Financial Statements

10) Disclosure of investment in Mainland China:

1. Fubon Insurance and Fubon Life Insurance plan to jointly invest RMB$400 million, the Fubon Insurance and Fubon Life Insurance Investment RMB$200 million, respectively, to set up Fubon Insurance Company in Mainland China. The investment project had been approved by the FSC on December 24, 2007. The investment project has been approved by the China Insurance Regulatory Commission on December 24, 2009 and approved by the Investment Commission of Ministry of Economic Affairs on January 27, 2010. The investment amounts authorized by investment commission, MOEA was RMB$500 million.

Fuobn Insurance and Fubon Life Insurance had jointly invested NT$1,876,156, but such investment had not been accomplished as of June 30, 2010.

Investee Main Total Method of Accumulated Investment flows Accumulated Percentage Equity in Carrying Accumulated Company Business Amount of Investment outflow of Outflow Inflow outflow of of the value as of inward Paid-in Investment investment Ownership Earnings June 30, remittance of Capital from Taiwan from Taiwan (gains) 2010 earnings as of (thousand) as of January as of June 30, June 30, 2010 1, 2010 2010 Fubon Insurance - Direct - 1,876,156 - 1,876,156 100% - 1,876,156 - Insurance investment (indirect) Co., Ltd. for China Company

Accumulated investment in Investment amounts Mainland China as of June authorized by investment Upper limited on 30, 2010 commission, MOEA investment 1,876,156 (USD58,789) 2,325,734 (USD73,530) 63,536,157

Fubon Bank (Hong Kong) planned to invest Fubon Leasing Company in Mainland China, which is engaged in leasing of commercial equipment, construction equipment and transportation equipment, etc. The investment has been registered with the authorities by the Company instead of Fubon Bank (Hong Kong). The investment project has been approved by the Investment Commission of Ministry of Economic Affairs on June 18, 2008, but such investment had not been accomplished as of June 30, 2010.

Investee Main Total Method of Accumulated Investment flows Accumulated Percentage Equity in Carrying Accumulated Company Business Amount of Investment outflow of Outflow Inflow outflow of of the value as of inward Paid-in Investment investment Ownership Earnings June 30, remittance of Capital from Taiwan from Taiwan (gains) 2010 earnings as of (thousand) as of January as of June 30 , June 30, 2010 1, 2010 2010 Xiamen Banking RMB500,000 Investment N/A, Investment N/A N/A N/A 14.99% 55,015 1,674,437 - Commercial of Fubon of Fu bon Bank (indirect) Bank Bank (Hong Kong) (HongKong ) (75% of the shares held by the Company)

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Notes to Consolidated Financial Statements

Accumulated investment in Investment amounts Mainland China as of June authorized by investment Upper limited on 30, 2010 commission, MOEA investment N/A, Investment of Fubon N/A N/A Bank (Hong Kong)

2. Commitments and contingencies: see note 36.

3. Significant disaster loss: none.

4. Significant subsequent event: see note 37.

11) The following disclosures are only applicable to Taipei Fubon Bank for the six-month periods ended June 30, 2010 and 2009, in accordance with SFAS No. 28.

1. Asset quality

June 30, 2010 Non- Loan Loss Performing Reserves Coverage Items Loan (NPL) Total Loans NPL Ratio (LLR) Ratio (Note 3) Public Secured - 35,044,429 - - - treasury Non-secured - 116,697,003 - - - loan Finance Secured - 222,572 - 1,416 - loan Non-secured - - - - - Corporate Secured 1,208,315 151,696,545 0.80 1,252,910 103.69 loan Non-secured 1,944,584 233,412,207 0.83 2,335,730 120.11 Consumer Mortgage (Note 4) 418,709 292,411,630 0.14 619,715 148.01 loan Cash card - 71,422 - 40,551 - Micro credit (note 5) 37,203 9,415,271 0.40 914,277 2,457.54 Other (note Secured 2,904 189,696 1.53 15,029 517.53 6) Non- 26,987 23,302,727 0.12 50,996 188.97 secured Total 3,638,702 862,463,502 0.42 5,230,624 143.75 Overdue Account Delinquency Allowance for Coverage Receivable Receivable Ratio Credit Losses Ratio Credit card 44,266 21,494,826 0.21 1,005,864 2,272.32 Account receivable – factoring with - 47,779,417 - 22,661 - no recourse Excluded NPL as a result of debt 1,324,688 consultation and loans agreement (note 8) Excluded overdue receivables as a 1,369,982 result of debt consultation and loans agreements (note 8) Excluded NPL as a result of debt 166,951 solvency and restart plan. (note 9) Excluded overdue receivables as a 721,049 result of debt solvency and restart plan. (note 9) (Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

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Notes to Consolidated Financial Statements

June 30, 2009 Non- Performing Loan Loss Loan (NPL) NPL Ratio Reserves Coverage Items (Note 1) Total Loans (Note 2) (LLR) Ratio (Note 3) Public Secured - 22,419,621 - - - treasury Non-secured - 100,713,090 - - - loan Finance Secured - 370,294 - 1,416 - loan Non-secured - - - - - Corporate Secured 1,547,922 162,495,200 0.95 853,725 55.15 loan Non-secured 2,476,285 234,434,355 1.06 1,706,981 68.93 Consumer Mortgage (Note 4) 1,104,238 259,240,297 0.43 603,719 54.67 loan Cash card - 118,589 - 32,661 - Micro credit (note 5) 156,257 8,760,260 1.78 1,035,412 662.63 Other (note Secured 9,234 662,710 1.39 9,914 107.36 6) Non- 48,129 21,532,358 0.22 43,764 90.93 secured Total 5,342,065 810,746,774 0.66 4,287,592 80.26 Overdue Account Delinquency Allowance for Coverage Receivable Receivable Ratio Credit Losses Ratio Credit card 158,540 22,129,166 0.72 804,119 507.20 Account receivable – factoring with - 21,326,703 - - - no recourse Excluded NPL as a result of debt 1,863,659 consultation and loans agreement (note 8) Excluded overdue receivables as a 1,791,505 result of debt consultation and loans agreements (note 8) Excluded NPL as a result of debt - solvency and restart plan. (note 9) Excluded overdue receivables as a 543,016 result of debt solvency and restart plan. (note 9)

Note 1: For loan business: Overdue loans represent the amounts of reported overdue loans pursuant to the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans” issued by the MoF. For credit card business: Overdue receivables are regulated by the Banking Bureau letter dated July 6, 2005 (Ref. No. 0944000378).

Note 2: For loan business: NPL Ratio = NPL/Total Loans. For credit card business: Delinquency Ratio = Overdue receivable/Account receivable.

Note 3: For loan business: Coverage Ratio = LLR/NPL For credit card business: Coverage Ratio = Allowance for credit losses/Overdue receivables.

Note 4: Household mortgage means the purpose of financing is to purchase, build, or fix up the dwelling, and the dwelling owned by the borrower, spouse, or children fully secures the loan.

Note 5: Micro credit is regulated by the Banking Bureau letter dated December 19, 2005 (Ref. No. 09440010950).

Note 6: Others in consumer loan refers to secured or non-secured loans excluding mortgage, cash card, micro credit, and credit card.

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Notes to Consolidated Financial Statements

Note 7: Account receivable – factoring with no recourse: As required by the Banking Bureau letter dated July 19, 2005 (Ref. No. 094000494), provision for bad debt is recognized once no compensation is received from the factoring or insurance company.

Note 8: The amounts of excluded NPL and excluded overdue receivables through financial debt negotiation and loan agreement were disclosed based on the interpretation issued by the Banking Bureau dated April 25, 2006 (Ref. 19510001270).

Note 9: the amounts of excluded NPL and excluded overdue receivables through debt solvency and restart plan were disclosed based on the interpretation issued by the Banking Bureau dated September 15, 2008 (Ref. 09700318940).

2. Concentration of credit extensions June 30, 2010

(Expressed in thousands of NTD, %) Credit Rank Extensions % of Net Group Name (Note 2) (Note 1) Balance Asset Value (Note 3) 1 A Group 12,936,094 15.71 2 B Company 10,480,026 12.73 3 C Group 9,536,424 11.58 4 D Company 8,037,659 9.76 5 E Company 6,733,542 8.18 6 F Company 6,691,642 8.13 7 G Group 6,593,252 8.01 8 H Group 5,288,319 6.42 9 I Group 5,287,212 6.42 10 J Group 5,106,050 6.20

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Notes to Consolidated Financial Statements

June 30, 2009

(Expressed in thousands of NTD, %) Credit Rank Extensions % of Net Group Name (Note 2) (Note 1) Balance Asset Value (Note 3) 1 A Group 22,404,191 28.56 2 B Group 12,153,497 15.49 3 C Group 9,959,006 12.70 4 D Company 9,793,838 12.49 5 E Group 8,389,349 10.70 6 F Company 8,322,078 10.61 7 G Company 7,989,602 10.19 8 H Group 7,485,530 9.54 9 I Group 6,760,226 8.62 10 J Company 6,632,188 8.45

Note 1: Top ten borrowers (excluding government or state-owned utilities) according to total credit extensions.

Note 2: Groups are regulated in the Supplementary Provisions to the Taiwan Stock Exchange Corporation Criteria for Review of Securities Listings, Article 6.

Note 3: Total credit extensions comprise loans (including import bills negotiated, export bills negotiated, overdrafts, short-term loans, short-term secured loans, receivables from pecuniary finance, medium-term loans, medium-term secured loans, long-term loans, long-term secured loans, and overdue receivables), exchange bills negotiated, factoring receivable without recourse, acceptances receivable, and guarantees issued.

Note 4: The amount includes the credit line vested to Taiwan High Speed Railway.

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Notes to Consolidated Financial Statements

3. Average amounts and average interest rate for interest-earning assets and interest-bearing liabilities

June 30, 2010 Average Average annual amount interest rate %

Interest-earning assets: Cash – due from banks – deposits $ 10,493,737 0.10 Due from Central Bank of China and other banks 149,662,817 0.50 Financial assets measured at fair value through 9,652,744 0.75 profit or loss Bonds and short-term bills purchased under resell 118,719 0.02 agreements Factoring receivable 16,459,752 0.93 Discounts and loans 864,425,165 1.61 Available-for-sale financial assets 32,665,585 2.80 Held-to-maturity investment 200,800,500 0.66 Debt investments in non-active market 13,352,175 2.66 Interest-bearing liabilities: Due to banks 76,787,642 0.71 Bonds and short-term bills sold under repurchase 17,883,768 0.27 agreements Demand deposits 169,221,763 0.08 Demand savings deposits 320,447,254 0.25 Time deposits 348,338,025 0.52 Time savings deposits 231,626,113 1.00 Negotiable certificates of deposit 14,255,106 0.32 Public treasury savings 20,868,838 0.14 Bank debentures 50,968,232 1.76

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Notes to Consolidated Financial Statements

June 30, 2009 Average Average annual amount interest rate %

Interest-earning assets: Cash – due from banks – deposits $ 6,161,877 0.29 Due from Central Bank of China and other banks 263,465,649 0.95 Financial assets measured at fair value through 8,408,409 1.30 profit or loss Bonds and short-term bills purchased under resell 2,177,849 0.04 agreements Factoring receivable 9,802,844 2.22 Discounts and loans 787,647,914 1.91 Available-for-sale financial assets 52,272,632 2.39 Held-to-maturity investment 7,313,661 2.87 Debt investments in non-active market 13,093,251 4.46 Interest-bearing liabilities: Due to banks 74,168,251 0.83 Bonds and short-term bills sold under repurchase 7,854,128 0.36 agreements Demand deposits 125,814,612 0.07 Demand savings deposits 261,059,477 0.31 Time deposits 311,754,732 1.10 Time savings deposits 259,952,634 1.67 Negotiable certificates of deposit 5,916,901 1.44 Public treasury savings 24,423,684 0.16 Bank debentures 41,716,022 1.77

4. Interest rate sensitivity information

Interest rate sensitivity of assets and liabilities (in thousands of NTD, %)

June 30, 2010 181 days ~ Over one 1~90 days 91~180 days 1year year total Interest-rate-sensitive assets $935,676,473 61,897,042 47,160,901 34,906,882 1,079,641,298 Interest-rate-sensitive liabilities 482,379,947 451,765,892 25,066,652 60,722,310 1,019,934,801 Interest-rate-sensitivity gap 453,296,526 (389,868,850) 22,094,249 (25,815,428) 59,706,497 Net worth 79,012,073 Ratio of interest-rate-sensitive assets to liabilities 105.85 Ratio of interest-rate-sensitivity gap to net worth 75.57

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Notes to Consolidated Financial Statements

June 30, 2009 181 days ~ Over one 1~90 days 91~180 days 1year year total Interest-rate-sensitive assets $851,467,276 59,659,204 34,109,678 49,072,727 994,308,885 Interest-rate-sensitive liabilities 331,958,558 462,855,410 62,180,007 42,855,006 899,848,981 Interest-rate-sensitivity gap 519,508,718 (403,196,206) (28,070,329) 6,217,721 94,459,904 Net worth 77,522,090 Ratio of interest-rate-sensitive assets to liabilities 110.50 Ratio of interest-rate-sensitivity gap to net worth 121.85

Note 1: The above amounts include only New Taiwan dollar amounts held by the Bank’s onshore branches (i.e., excluding foreign currency). According to the regulation, these information should be delivered to the Department of Financial Inspection before the middle of the next month from the data base day.

Note 2: Interest-rate-sensitive assets and liabilities refer to the revenues or costs of interest-earning assets and interest-bearing liabilities, which are affected by interest rate changes.

Note 3: Interest-rate-sensitivity 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 (only interest-rate-sensitive assets and liabilities within one year, in New Taiwan dollars).

Interest rate sensitivity of assets and liabilities (in thousands of USD, %)

June 30, 2010 181 days ~ Over one 1~90 days 91~180 days 1year year total Interest-rate-sensitive assets $4,097,554 420,853 180,975 109,510 4,808,892 Interest-rate-sensitive liabilities 5,107,486 383,004 203,225 113,855 5,807,570 Interest-rate-sensitivity gap (1,009,932) 37,849 (22,250) (4,345) (998,678) Net worth 100,197 Ratio of interest-rate-sensitive assets to liabilities 82.80 Ratio of interest-rate-sensitivity gap to net worth (996.71)

June 30, 2009 181 days ~ Over one 1~90 days 91~180 days 1year year total Interest-rate-sensitive assets $3,789,615 230,836 122,662 144,592 4,287,705 Interest-rate-sensitive liabilities 5,225,782 397,426 328,647 46,992 5,998,847 Interest-rate-sensitivity gap (1,436,167) (166,590) (205,985) 97,600 (1,711,142) Net worth 33,803 Ratio of interest-rate-sensitive assets to liabilities 71.48 Ratio of interest-rate-sensitivity gap to net worth (5,062.10)

Note 1: The above amounts include only U.S. dollar amounts held by the onshore branches, OBU, and offshore branches of the Bank and exclude contingent assets and contingent liabilities.

Note 2: Interest-rate-sensitive assets and liabilities refer to the revenues or costs of interest-earning assets and interest-bearing liabilities, which are affected by interest rate changes.

Note 3: Interest-rate-sensitivity 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 (only interest-rate-sensitive assets and liabilities within 180 days, in U.S. dollars)

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Notes to Consolidated Financial Statements

5. Profitability and maturity analysis of assets and liabilities

(a) Profitability Unit: % Item June 30, 2010 June 30, 2009

Return on total Before income tax 0.36 0.24 assets After income tax 0.33 0.21 Return on net Before income tax 6.03 3.84 worth After income tax 5.55 3.36 Profit margin 40.67 25.24

Note 1: Return on total assets = Income before (after) income tax/Average total assets.

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 is the income in the six-month periods ended June 30, 2010 and 2009.

(b) Maturity analysis of assets and liabilities

Maturity analysis (in thousands of NTD)

June 30, 2010 Amount for the Remaining Time Before the Maturity Date Total 181 Days to Over One 1-30 Days 31-90 Days 91-180 Days One Year Year Main capital $1,536,541,542 458,777,733 189,482,663 139,861,020 186,270,608 562,149,518 inflow on maturity Main capital 1,748,749,879 346,335,062 266,005,819 236,113,514 311,753,203 588,542,281 outflow on maturity GAP (212,208,337) 112,442,671 (76,523,156) (96,252,494) (125,482,595) (26,392,763)

June 30, 2009 Amount for the Remaining Time Before the Maturity Date Total 181 Days to Over One 1-30 Days 31-90 Days 91-180 Days One Year Year Main capital $1,354,650,521 366,706,200 190,365,736 98,114,279 141,981,987 557,482,319 inflow on maturity Main capital 1,587,971,651 251,884,287 266,412,895 215,192,956 293,282,473 561,199,040 outflow on maturity GAP (233,321,130) 114,821,913 (76,047,159) (117,078,677) (151,300,486) (3,716,721)

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Notes to Consolidated Financial Statements

Note: The above amounts include only New Taiwan dollar amounts held in the onshore branches of the Bank (i.e., excluding foreign currency).

Maturity analysis (in thousands of USD)

June 30, 2010 Amount for the Remaining Time Before the Maturity Date Total 181 Days to Over One 1-30 Days 31-90 Days 91-180 Days One Year Year Main capital $19,555,212 8,009,259 3,864,468 3,368,518 2,303,847 2,009,120 inflow on maturity Main capital 19,554,868 8,961,938 3,570,348 3,024,383 2,467,083 1,531,116 outflow on maturity GAP 344 (952,679) 294,120 344,135 (163,236) 478,004

June 30, 2009 Amount for the Remaining Time Before the Maturity Date Total 181 Days to Over One 1-30 Days 31-90 Days 91-180 Days One Year Year Main capital $14,847,346 5,741,391 4,668,594 1,564,933 1,059,851 1,812,577 inflow on maturity Main capital 14,913,802 6,801,512 3,960,517 1,709,417 1,290,835 1,151,521 outflow on maturity GAP (66,456) (1,060,121) 708,077 (144,484) (230,984) 661,056

Note 1: The above amounts are book values of the assets and liabilities of the onshore branches and offshore banking unit of the Bank in U.S. dollars, without off-balance-sheet amounts (for example, the issuance of negotiable certificates of deposits, bonds or stocks).

Note 2: If the overseas assets are at least 10% of the total assets, there should be additional disclosures.

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Notes to Consolidated Financial Statements

6. Statement of capital adequacy

June 30, 2010 Consolidated Bank

Eligible Tier 1 capital $ 75,527,275 75,402,819 capital Tier 2 capital 22,469,099 22,344,643 Tier 3 capital - - Eligible capital 97,996,374 97,747,462 Risk- Credit risk Standardized 721,900,162 721,884,144 weighted approach assets Internal rating-based - - approach Securitization 2,566,955 2,566,955 Operational Basic indicator - - risk approach Standardized 44,856,763 44,856,763 approach/Alternativ e standardized approach Advance - - measurement approach Market risk Standardized 48,786,513 48,720,463 approach Internal models - - approach Total risk-weighted assets 818,110,393 818,028,325 Capital adequacy ration 11.98% 11.95% Tier 1 risk-based capital ratio 9.23% 9.22% Tier 2 risk-based capital ratio 2.75% 2.73% Tier 3 risk-based capital ratio - - Ratio of common stockholders’ equity to total assets 3.38% 3.38% Ratio of financial leverage 5.46% 5.45%

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Notes to Consolidated Financial Statements

June 30, 2009 Consolidated Bank

Eligible Tier 1 capital $ 71,735,189 71,512,429 capital Tier 2 capital 13,505,278 13,282,518 Tier 3 capital - - Eligible capital 85,240,467 84,794,947 Risk- Credit risk Standardized 693,408,370 693,307,186 weighted approach assets Internal rating-based - - approach Securitization 1,348,692 1,348,692 Operational Basic indicator - - risk approach Standardized 47,541,413 47,455,438 approach/Alternativ e standardized approach Advance - - measurement approach Market risk Standardized 32,339,813 32,273,875 approach Internal models - - approach Total risk-weighted assets 774,638,288 774,385,191 Capital adequacy ration 11.00% 10.95% Tier 1 risk-based capital ratio 9.26% 9.23% Tier 2 risk-based capital ratio 1.74% 1.72% Tier 3 risk-based capital ratio - - Ratio of common stockholders’ equity to total assets 3.41% 3.41% Ratio of financial leverage 5.75% 5.73%

Note 1: These tables were prepared according to the “Regulations Governing the Capital Adequacy Ratio of Banks” and related calculation tables.

Note 2: The formula: Eligible capital = Tier 1 capital + Tier 2 capital + Tier 3 capital.

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Notes to Consolidated Financial Statements

(39) Disclosure Required

1) Related information of significant transactions:

1. Cumulative purchase or sales of the same investee’s capital stock up to $300,000 or 10% of paid-in capital: None.

2. Acquisition of real estate up to $300,000 or 10% of paid-in capital:

The ex-transferred information (when counter-party is related-party) Price Property Trading Trading Transferred deciding Acquiring Name name date amount Payment Counter-party Relationship Owner Relationship date Amount basis purpose Other Fubon Life Lands and 2010.05 2,200,000 2,200,000 Yuenfoong Ind. Non-related - - - - Accreditation Real estate - Insurance buildings of Co., Ltd. party report investment No. 22, Sec. 2, Yixian Sec., Xinyi Dist., Taipei City Fubon Life Lands and 2010.05 4,711,000 4,711,000 Sin Kong Life Non-related - - - - Bid price Real estate - Insurance buildings of Insurance Co., party investment No. 350, Sec. Ltd. 4, Shihwu Sec., Neihu Dist., Taipei City

3. Disposal of real estate up to $300,000 or 10% of paid-in capital: None.

4. Discount of commission fees for transaction with related parties up to $5,000: None.

5. Receivables from related parties up to $300,000 or 10% of paid-in capital:

(In Thousand of New Taiwan Dollars) Post-due receivables – related Subsequently Company parties received of Balance of amount of accounted receivables receivables Allowance for Relation- from related Turnover from related for doubtful receivable Counter-party ship party rate Amount Resolution party accounts The Fubon Securities Subsidiary 1,643,698 - - - - company of the (Note 1) Company 〃 Fubon Insurance 〃 610,141 - - - - (Note 1) 〃 Fubon Life 〃 725,494 - - - - Insurance (Note 1) 〃 Taipei Fubon 〃 364,673 - - - - Bank (Note 1)

Note 1: The tax receivable is due to linked tax system.

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Notes to Consolidated Financial Statements

6. The transaction information of NPL disposition by the subsidiaries:

(1) Summary of transaction information of NPL disposition

The relationship of the counter- Gain party and Counter- Book Selling (loss) on Additional the Date party Content value price disposal condition Company 2010.03.24 USB AG, Enterprise - 96,066 96,066 - - Stamford unsecured (note) Branch case 2010.05.18 SC LOWY Enterprise 149,241 61,334 (87,907) - - FINANCIAL unsecured (HK) case LIMITED

Note: When the selling price of NPL disposition exceed its book value, the excess recognized as allowance for doubtful accounts.

(2) The information of a transaction of NPL disposition up to $1,000,000 should be disclosed: None.

7. Types of securitization instruments and other relevant information approved by the subsidiaries to issue pursuant to financial assets securitization rules or real estate securitization rules: None.

8. Other significant transactions that may have substantial influence upon the decision made by financial statements users: None.

2) Related information of invesee companies:

1. Names, locations, and relevant information of investees upon which the bank exercises significant-influence:

(In Thousands of New Taiwan Dollars) Aggregate shareholding of the company and its subsidiaries No. of Total Names of Names of Main Investment pro investor investee business Shareholding Carrying gain (loss) forma Number of Shareholdin company company Address scope ratio value recognized No. of shares shares shares g ratio Remark Fubon Fubon Taipei Property 100.00% 19,954,234 1,470,215 817,840 - 817,840 100.00% - Financial Insurance insurance Holding Co., Ltd. Fubon Life Taipei Life 100.00% 61,561,274 4,385,965 1,502,317 - 1,502,317 100.00% - Insurance assurance Co., Ltd. Fubon Taipei Securities 100.00% 29,551,605 603,568 1,513,050 - 1,513,050 100.00% - Securities co., Ltd. Fubon Asset Taipei Asset 100.00% 1,304,021 3,340 50,000 - 50,000 100.00% - Management Management Co., Ltd.

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Notes to Consolidated Financial Statements

Aggregate shareholding of the company and its subsidiaries No. of Total Names of Names of Main Investment pro investor investee business Shareholding Carrying gain (loss) forma Number of Shareholdin company company Address scope ratio value recognized No. of shares shares shares g ratio Remark Fubon Taipei Fubon Taipei Banking 100.00% 81,911,348 4,770,903 4,794,887 - 4,794,887 100.00% - Financial Bank Co., Holding Ltd. Fubon Direct Taipei Direct 100.00% 227,626 47,388 14,500 - 14,500 100.00% - Marketing Marketing Consulting Co., Ltd. Fubon Taipei Venture 91.67% 3,043,191 359,833 273,360 - 273,360 100.00% - Financial Capital Holding Venture Capital Co., Ltd. Fubon Bank Hong Kong Banking 75.00% 14,814,593 348,294 879,120 - 879,120 75.00% - (Hong Kong) Fubon Asset Taipei Creditor’s 100.00% 2,676,235 120,065 250,000 - 250,000 100.00% - Management right Service Co., purchasing Ltd. Taiwan Sport Taipei Information 51.00% (339,013) (58,244) 25,500 - 25,500 51.00% - Lottery Software Technology Service Co., Ltd. Fubon Taipei Investment 100.00% 53,452 2,222 5,000 - 5,000 100.00% - Investment Management Management Co., Ltd. Fubon Fubon Thailand Insurance 25.00% 817 266 625 - 625 25.00% - Insurance Broekrs brokers (Thailand) Co., Ltd. Fubon Taipei Venture 20.00% 15,353 - 9,000 - 9,000 45.00% Dissolved Venture Capital Capital Co., Ltd. Sinostar Taipei Venture 20.83% 22,084 - 22,000 - 22,000 45.83% Dissolved Venture Capital Capital Co., Ltd. Fubon Vietnam Insurance 100.00% 581,941 (29,599) - - - 100.00% - Insurance Business (Vietnam) Co., Ltd. Chung-ke Taipei Venture 3.73% 8,417 - 7,313 - 7,313 22.40% - Venture capital Capital Co., Ltd. Fubon Life Fubon Taipei Venture 20.00% 15,353 - 9,000 - 9,000 45.00% Dissolved Insurance Venture Capital Capital Co., Ltd. Sinostar Taipei Venture 25.00% 41,346 - 22,000 - 22,000 45.83% Dissolved Venture Capital Capital Co., Ltd. Chung-ke Taipei Venture 18.67% 36,875 - 7,313 - 7,313 22.40% - Venture Capital Capital Co., Ltd. Fubon Fubon Taipei Futures 100.00% 1,155,190 20,079 100,000 - 100,000 100.00% - Securities Futures Co., Ltd. Fubon Taipei Securities 100.00% 696,392 (1,176) 6,550 - 6,550 100.00% - Securities (BVI) Ltd. Fubon Taipei Investment 100.00% 312,186 4,861 30,000 - 30,000 100.00% - Securities Management Investment Service Co., Ltd.

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Notes to Consolidated Financial Statements

Aggregate shareholding of the company and its subsidiaries No. of Total Names of Names of Main Investment pro investor investee business Shareholding Carrying gain (loss) forma Number of Shareholdin company company Address scope ratio value recognized No. of shares shares shares g ratio Remark Fubon Fubon Taipei Venture 8.33% 300,601 32,698 273,360 - 273,360 100.00% - Securities Financial Capital Holding Venture Capital Co., Ltd. Taipei Fubon Fubon Taipei Construction 30.00% 73,450 4,331 5,429 - 5,429 30.00% - Bank Construction management, Management real estate Co., Ltd. valuation Fubon Taipei Insurance 100.00% 4,623 96 300 - 300 100.00% - Insurance agent Agent Co., Ltd. Taipei Fubon Taipei Insurance 100.00% 248,912 197,276 2,000 - 2,000 100.00% - Bank Life agent Assurance Agent Co., Ltd. Fubon Taipei Venture 5.00% 6,251 - 9,000 - 9,000 45.00% Dissolved Venture capital Capital Co., Ltd. Fubon Direct Fu-Sheng Taipei Insurance 100.00% 10,716 4,171 300 - 300 100.00% - Marketing Life agent Consulting Assurance Agent Co., Ltd. Fu-Sheng Taipei Insurance 100.00% (15,312) 3,248 300 - 300 100.00% - General agent Insurance Agent Co., Ltd. Fubon Fubon Taipei TV Shopping 67.89% 1,270,249 387,864 55,601 - 55,601 67.89% - Financig Multimedia Holding Technology Venture Co., Ltd. Fu-Sheng Taipei Travel agent 100.00% 1,606 (3,384) 600 - 600 100.00% - Travel Service Co., Ltd. Fuly Life Taipei Insurance 100.00% 12,995 6,006 300 - 300 100.00% - Assurance agent Agent Co., Ltd. Fuly General Taipei Insurance 100.00% 12,764 7,268 300 - 300 100.00% - Insurance agent Agent Co., Ltd. Fubon Bank Fubon Hong Kong Deposit 100.00% HKD 65,000 HKD 65,000 - 65,000 100.00% - (Hong Kong) Financial service 35,283 (Note 1) (H.K.) Ltd. Fubon (H.K.) Hong Kong Trust 100.00% HKD 5,000 HKD 1 5,000 - 5,000 100.00% - Trust Ltd. Fubon Bank Hong Kong Securities 100.00% HKD 8,000 HKD 19 8,000 - 8,000 100.00% - Securities (H.K.) Ltd. Fubon Bank Hong Kong Fund 100.00% HKD 8,000 HKD 150 80 - 80 100.00% - Investment management Management Ltd. Fubon Hong Kong Nominees 100.00% HKD 0.2 - 0.002 - 0.002 100.00% - Nominess service (Hong Kong) Limited Fubon Hong Kong Guarnator 87.00% HKD 26,111 HKD 26,111 - 30,000 100.00% - Capital (HK) and advisor (2,322) Limited of listed company

Note 1: The details of consolidated entities of Fubon Bank (Hong Kong) are its main subsidiary.

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Notes to Consolidated Financial Statements

2. Loans to others: None.

3. Endorsement and guarantees for others: None.

4. Marketable securities held as of June 30, 2010:

(In Thousands of New Taiwan dollars / Thousands shares) Marketable Relationship with June 30, 2010 Held company securities type the securities No. of Shareholding name and name issuer Account shares Book value ratio Market price Remark Fubon Futures Fubon R1 - Available-for- 1,663 18,293 - 18,293 Beneficiary Co., Ltd. sale financial certificate assets 〃 Fubon R2 - 〃 1,677 17,609 - 17,609 〃〃 Trident - 〃 926 8,658 - 8,658 〃〃 Cathay R1 - 〃 5,122 55,062 - 55,062 〃〃 Cathay R2 - 〃 1,891 20,177 - 20,177 〃〃 Shin Kong R1 - 〃 3,852 37,518 - 37,518 〃〃 Taiwan futures - 〃 559 4,460 0.22 4,460 Unlisted Exchange Co., stock Ltd. Fubon Beneficiary - Financial 4,378 65,773 - 65,773 Beneficiary Securities certificate – assets certificate Investment Fubon Chi- measured at Service Co., Hsiang Fund fair value Ltd. through profit or loss 〃 Beneficiary - 〃 3,000 23,100 - 23,100 〃 certificate – Fubon Fu Bao Fund Fubon Overseas - 〃 3,750 USD 3,675 - USD 3,675 Overseas Securities convertible bond bonds (BVI) – Kinko optical ECB Fubon Fubon Chi-Hsing An affiliated Available-for- 1,075 16,156 - 16,156 Beneficiary Construction Fund beneficiary sale financial certificate Management certificate assets Co., Ltd. 〃 Cathay R2 - 〃 800 8,536 - 8,536 〃〃 Cathay R1 - 〃 15,504 166,668 - 166,668 〃 Taipei Fubon ING Taiwan - Financial 2,813 33,028 - 33,028 〃 Bank Life Select Bond Fund assets Assurance measured at Agent fair value through profit or loss Fubon Venture Minton Optic - Other financial 2,246 12,802 3.57 4,881 Unlisted Capital Co., Industry Co., Ltd. asset stock Ltd. 〃 XAUi - 〃 1,142 14,849 2.67 3,939 〃 Technologies Corporation 〃 Uniplus - Available-for- 2,077 13,312 0.71 13,312 〃 Electronics Co., sale financial Ltd. assets 〃 Loyalty Founder - 〃 1,312 10,827 0.55 10,827 〃 Enterprise Co., Ltd. 〃 Liton Technology - 〃 1,107 15,730 1.18 15,730 〃 Corp.

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Notes to Consolidated Financial Statements

Marketable Relationship with June 30, 2010 Held company securities type the securities No. of Shareholding name and name issuer Account shares Book value ratio Market price Remark Fubon Venture Himax - Available-for- 192 17,942 0.05 17,942 Unlisted Capital Co., Technologies, sale financial stock Ltd. Inc. assets Fubon Asset Beneficiary Fund managed Financial 2,291 34,412 - 34,412 Beneficiary Management certificate – under the company assets certificate Co., Ltd. Fubon Chi- measured at Hsiang Fund fair value through profit or loss 〃 Beneficiary 〃〃 3,851 46,026 - 46,026 Beneficiary certificate – Mega certificate Diamond Bond 〃 Beneficiary 〃〃 3,566 46,022 - 46,022 〃 certificate – Fuh Hwa You Li Fund 〃 Beneficiary 〃〃 3,997 46,363 - 46,363 〃 certificate – Pine Bridge Flagship global Conserv FoFs 〃 Beneficiary 〃〃 83 2,196 - 2,196 〃 certificate – Fubon MSCI Taiwan ETF 〃 Beneficiary 〃〃 97 2,670 - 2,670 〃 certificate – Fubon Taiwan Eight Industries ETF 〃 Beneficiary 〃〃 137 3,232 - 3,232 〃 certificate – Fubon Taiwan Finance ETF 〃 Beneficiary 〃〃 66 1,983 - 1,983 〃 certificate – Fubon Taiwan Technology Tracker Fund Fubon Beneficiary Fund managed Financial 3,270 49,130 - 49,130 Beneficiary Investment certificate – under a subsidiary assets certificate Management Fubon Chi- of the Company measured at Co., Ltd. Hsiang Fund fair value through profit or loss 〃 Beneficiary 〃〃 775 10,001 - 10,001 〃 certificate – Fuh Hwa You Li Fund Fubon Fubon Investee company Investments 55,601 1,270,249 67.89 1,270,249 Unlisted Financial Multimedia under equity under Equity stock Holding Technology Co., method Method Venture Capital Ltd. Co., Ltd. 〃 Chi Mei - Available-for- 634 21,161 0.01 21,161 Listed Optoelectronics sale financial stock Corproation assets 〃 KD Holding - 〃 2,375 217,313 5.00 217,313 Emerging Corporation stock 〃 Omniad Media - Other financial 7,675 - 9.07 - 〃 Incorporation asset 〃 Pegation Co. - Available-for- 690 20,734 0.03 20,734 Listed sale financial stock asset

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Notes to Consolidated Financial Statements

Marketable Relationship with June 30, 2010 Held company securities type the securities No. of Shareholding name and name issuer Account shares Book value ratio Market price Remark Fubon Pharmaengine, - Available-for- 2,100 1,830 3.46 1,830 Listed Financial Inc. sale financial stock Holding asset Venture Capital Co., Ltd. EVA - 〃 2,756 47,631 6.60 47,631 〃 Technologies Co., Ltd. Guo Guang - 〃 2,109 9,639 4.00 9,639 Unlisted Petrochemical stock Corp. Fubon Bionime - 〃 977 23,469 2.70 23,469 〃 Financial Corporation Holding Venture Capital Co., Ltd. 〃 ADImmue Corp. - 〃 1,500 31,705 0.94 31,705 〃〃 Phalanx Biotech - 〃 182 2,186 0.62 2,186 〃 Group 〃 ConforMIS, Inc. - 〃 450 61,325 1.33 61,325 〃〃 Rafael - 〃 800 6,280 7.29 6,280 〃 Microelectronics, Inc. 〃 Jeoutai - 〃 1,342 42,000 8.06 42,000 〃 Technology Co., Ltd. 〃 Century - 〃 2,378 31,204 1.00 31,204 〃 Development Corporation 〃 Yuan-tai Foreign - 〃 240 4,800 2.00 4,800 〃 Exchange Brokey Co., Ltd. 〃 Chunghwa - 〃 1,500 51,000 2.14 51,000 〃 chemical Synthesis & Biotech Co., Ltd. 〃 H&Q AP Greater - 〃 - 24,294 4.00 24,294 Private China Growth fund Fund 〃 Optimer - 〃 2,125 14,720 4.00 14,720 Pharmaceuticals, Inc. 〃 Aver Merdia - 〃 550 48,200 0.66 48,200 Information Inc. 〃 Beneficiary Fund managed Financial 56,421 847,584 - 847,584 Beneficiary certificate – under a subsidiary assets certificate Fubon Chi- of the Comapny measured at Hsiang Fund fair value through profit or loss 〃 Beneficiary 〃〃 32,544 450,280 - 450,280 〃 certificate – Fuh Hwa Series Funds 〃 Beneficiary - 〃 3,100 40,011 - 40,011 〃 certficiate – Fuh Hwa You Li Fund Fubon Beneficiary 〃 Financial 853 33,484 - 33,484 Beneficiary Multimedia certificate – assets certificate Technology Fubon Precision measured at Co., Ltd. fund fair value through profit or loss 〃 Beneficiary 〃〃 38,944 585,036 - 585,036 〃 certificate – Fubon Chi- Hsiang Fund

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Notes to Consolidated Financial Statements

Marketable Relationship with June 30, 2010 Held company securities type the securities No. of Shareholding name and name issuer Account shares Book value ratio Market price Remark Fubon Beneficiary Fund managed Financial 1,984 15,278 - 15,278 Beneficiary Multimedia certificate – under a subsidiary assets certificate Technology Fubon Fu-bao of the Comapny measured at Co., Ltd. Fund fair value through profit or loss 〃 Fu-Sheng Travel Investee company Investments 600 1,561 100.00 1,561 Unlisted Service Co., Ltd. under equity under Equity stock method Method 〃 Fuly Life 〃〃 300 12,995 100.00 12,995 〃 Assurance Agent Co., Ltd. 〃 Fuly General Investee company 〃 300 12,764 100.00 12,764 〃 Insurance Agent under equity Co., Ltd. method

Note 1: In accordance with the section 20 of “Principles for Compiling the Financial Statements of Financial Holding Companies”, Taipei Fubon Bank, Fubon Bank (Hong Kong), Fubon Insurance, Fubon Life Insurance and Fubon Securities are not required to disclose their marketable securities held.

5. Cumulative purchase or sales of the same investee’s capital stock up to $300,000 or 10% of paid-in capital: None.

6. Acquisition of real estate up to $300,000 or 10% of paid-in capital:

7. Disposal of real estate up to $300,000 or 10% of paid-in capital: None.

8. Discount of commission fees for transaction with related parties up to $5,000: None.

9. Receivables from related parties up to $300,000 or 10% of paid-in capital:

(In thousands of New Taiwan Dollars) Past-due receivables – Subsequently related parties received Balance of amount of receivables receivables Allowance from related Turnover from related for doubtful Name Counter-party Relationship party rate Amount Resolution party accounts Taipei Fubon Financial Parent 1,075,951 - - - - - Fubon Holding company (Note 1) Bank Fubon Life 〃〃 483,318 - - - - - Insurance (Note 1)

Note 1: Tax payables to the subsidiaries, which derived from tax receivable of the Company as a result of combined income tax declaration starting form 2002.

(Continued) WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc

174

FUBON FINANCIAL HOLDING CO., LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

10. Transactions of financial derivatives: for future information please refer to notes 6, 13, 18, 25 and 33.

11. Transaction information of NPL disposition:

(1) Summary of transaction information of NPL disposition

Note: When the selling price of NPL disposition exceed its book value, the excess recognized as allowance for doubtful accounts.

(2) The information of a transaction of NPL disposition up to $1,000,000 should be disclosed: None.

12. Types of securitization instruments and other relevant information approved to issue pursuant to financial assets securitization rules or real estate securitization rules: None.

13. Other significant transactions that may have substantial influence upon the decision made by financial statement user: None.

3) Related information of subsidiaries’ investment in Mainland China: for further information please refer to Note 38 (10).

(40) Business Segment Financial Information: For further information please refer to Note 38 (7).

WorldReginfo - 68c40a86-c981-4665-8ce1-1a57e31014dc